<PAGE> 1
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 April 30, 1997
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, Suite 1714, 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 X No
--- ---
Number of shares of common stock outstanding
At June 16, 1997: 3,696,876
<PAGE> 2
AMERICAN CRAFT BREWING INTERNATIONAL LIMITED
FORM 10-Q
PART I FINANCIAL INFORMATION
ITEM 1. Financial Statements (unaudited):
Consolidated Balance Sheets-
April 30, 1997 and October 31, 1996
Consolidated Statements of Operations-
Three and six months ended April 30, 1997 and 1996
Consolidated Statements of Cash Flows-
Six months ended April 30, 1997 and 1996
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
2
<PAGE> 3
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>
April 30, October 31,
1997 1996
----------- -----------
ASSETS (Unaudited) (Audited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 2,432,071 $ 5,780,672
Accounts receivable, net of allowance for doubtful
accounts of $1,500 and $1,500 167,299 73,581
Inventories 173,528 35,508
Prepaids and other current assets 294,819 126,465
----------- -----------
Total current assets 3,067,717 6,016,226
Equipment and capital leases, net 2,191,936 663,830
Other assets 970,085 235,749
Notes receivable from officer/shareholder 35,000 --
Deferred tax assets 109,538 85,501
----------- -----------
Total assets $ 6,374,276 $ 7,001,306
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities $ 265,322 $ 242,014
Capital lease obligations, current portion 17,462 12,858
----------- -----------
Total current liabilities 282,784 254,872
Capital lease obligations, net of current portion 22,833 17,364
----------- -----------
Total liabilities 305,617 272,236
Minority Interests 393,155 --
Commitments and Contingencies -- --
Shareholders' equity:
Preferred stock, $0.01 par, 500,000 shares
authorized, none issued -- --
Common stock, $0.01 par, 10,000,000 shares
authorized, 3,696,876 shares issued
and outstanding 36,969 36,969
Common stock warrants, 2,090,876 outstanding 181,906 181,906
Additional paid-in capital 7,388,205 7,388,205
Cumulative translation adjustment (31,211) --
Accumulated deficit (1,900,365) (878,010)
----------- -----------
Total shareholders' equity 5,675,504 6,729,070
----------- -----------
Total liabilities and shareholders' equity $ 6,374,276 $ 7,001,306
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
<PAGE> 4
AMERICAN CRAFT BREWING INTERNATIONAL LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts expressed in United States Dollars)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
-------------------------- --------------------------
April 30, April 30, April 30, April 30,
1997 1996 1997 1996
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net sales $ 158,837 $ 120,209 $ 333,401 $ 244,753
Cost of sales (106,358) (20,456) (217,780) (43,055)
----------- ----------- ----------- -----------
Gross profit 52,479 99,753 115,621 201,698
Selling, general and administrative expenses 764,161 117,284 1,144,786 207,094
Interest (income) expense, net (20,163) 12,689 (32,092) 24,908
Other expense, net 32,501 509 68,548 888
----------- ----------- ----------- -----------
Total expenses 776,499 130,482 1,181,242 232,890
Loss before income taxes (724,020) (30,729) (1,065,621) (31,192)
Income tax benefit 9,550 5,071 24,037 5,147
----------- ----------- ----------- -----------
Loss after income taxes (714,470) (25,658) (1,041,584) (26,045)
Minority interests 19,000 -- 19,229 --
----------- ----------- ----------- -----------
Net loss $ (695,470) $ (25,658) $(1,022,355) $ (26,045)
=========== =========== =========== ===========
Net loss per common share $ (0.19) $ (0.01) $ (0.28) $ (0.01)
=========== =========== =========== ===========
Weighted average number of shares outstanding 3,696,876 2,067,273 3,696,876 2,067,273
=========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE> 5
AMERICAN CRAFT BREWING INTERNATIONAL LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts expressed in United States Dollars)
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
--------------------------
April 30, April 30,
1997 1996
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(1,022,355) $ (26,045)
Adjustments to reconcile net loss to net cash used in operating
activities:
Depreciation and amortization 47,947 31,119
Deferred income taxes (24,037) (5,147)
Minority interests (19,229) --
Increase in operating assets, net of assets acquired:
Accounts receivable (91,078) (39,482)
Inventories (116,490) (6,663)
Prepaids and other current assets (171,871) (12,012)
Other assets (661,785) --
Notes receivable from officer/shareholder (35,000) --
Decrease in operating liabilities, net of liabilities acquired:
Accounts payable and accrued liabilities 23,945 (2,596)
----------- -----------
Net cash used in operating activities (2,069,953) (60,826)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of equipment (1,610,805) (59,098)
Investment in AmBrew USA, net of cash received (90,502) --
----------- -----------
Net cash used in investing activities (1,701,307) (59,098)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Contribution from joint venture partner 434,525 --
Payment of capital lease obligations (4,924) (5,783)
Subscription monies received in advance -- 117,659
Stock issuance costs paid -- (31,468)
Repayment of bank loan -- (56,500)
----------- -----------
Net cash provided by financing activities 429,601 23,908
----------- -----------
Effect of exchange rate changes on cash (6,942) --
----------- -----------
Decrease in cash (3,348,601) (96,016)
Cash at beginning of period 5,780,672 102,248
----------- -----------
Cash at end of period $ 2,432,071 $ 6,232
=========== ===========
SUPPLEMENTAL DISCLOSURE TO STATEMENTS OF CASH FLOWS:
Cash interest paid $ 1,000 $ 25,090
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
<PAGE> 6
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, 1996 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, 1996, and the footnotes thereto included in the Company's Annual Report on
Form 10-K (the "Form 10-K").
2. Basis of Presentation
The consolidated financial statements include the accounts of AmBrew
International and its majority-owned subsidiaries. All significant intercompany
accounts and transactions have been eliminated.
3. Net loss per common share
Net loss per common share is computed by dividing net loss by the
weighted average common shares outstanding during the periods, on the basis
that the Share Exchange, the Share Split and the Merger (as defined in the Form
10-K) had been consummated prior to the periods presented. Average common
equivalent shares for common stock warrants and options have not been included,
as the computation would not be dilutive.
4. Inventories
Inventories are composed of the following:
<TABLE>
<CAPTION>
April 30, October 31,
1997 1996
-------- -----------
<S> <C> <C>
Raw materials $ 46,135 $ 31,451
Work-in-process and finished goods 127,393 4,057
-------- --------
$173,528 $ 35,508
======== ========
</TABLE>
6
<PAGE> 7
AMERICAN CRAFT BREWING INTERNATIONAL LIMITED AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Amounts expressed in United States Dollars)
(Unaudited)
5. Subsequent Events
Subsequent to April 30, 1997, the following events took place:
a. On May 1, 1997 the Company announced that it had reached a supply
agreement with Anheuser-Busch, Inc. The agreement will enable the two companies
to work together on future brewing and marketing projects. The companies are
looking at ways to work together to address the growing demand for premium
specialty beers through possible import and international ventures.
b. On May 2, 1997 AmBrew USA entered into a sales and marketing
distribution agreement with Dixie Brewing Co., Inc. The distribution agreement
covers both domestic and export markets.
c. On May 18, 1997 the bottling and labeling systems for Cerveceria
Rio Bravo were shipped from the SMB Technik plant in Germany. In connection
with this shipment an additional payment of $53,445 was made to SMB Technik. A
balance of approximately $10,302 is due on June 24, 1997, as final payment for
this shipment.
d. On May 19, 1997 the final payment of $157,995 was made to JV
Northwest for the Cerveceria Rio Bravo, S.A. de C.V. ("Cerveceria Rio Bravo")
brewery system. Cerveceria Rio Bravo began brewing during the second half of
May 1997.
e. On June 7, 1997 a final payment of $127,635 was made to JV
Northwest for the flash pasteurizers to be located at the South China Brewery
Company ("South China"), Celtic Brew LLC ("Celtic Brew") and Cerveceria Rio
Bravo. Additionally, a payment of $44,980 was made to Aeroglide for the tunnel
pasteurizer to be located at Cerveceria Rio Bravo.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
GENERAL
The following discussion addresses the Company's consolidated
financial condition and results of operations, which, for the three months and
six months ended April 30, 1996 includes only the Hong Kong brewing and
distribution subsidiaries, South China Brewing Company Limited and SCBC
Distribution Company Limited (collectively "the South China Brewery"). The
consolidated information as of and for the three months ended April 30, 1997
also includes AmBrew International, AmBrew USA (which currently distributes
beer in the United States), Celtic Brew, and Cerveceria Rio Bravo. Celtic Brew
and Cerveceria Rio Bravo had not commenced brewing as of April 30, 1997, but
expenses relating to the construction and startup of those operations are
included in the results of operations for the three months and six months ended
April 30, 1997. 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
7
<PAGE> 8
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 additional capital
expenditures once the proceeds of the Company's initial public offering have
been committed.
RESULTS OF OPERATIONS
Net Sales. For the three months ended April 30, 1997 and 1996
the Company had net sales of $158,837 and $120,209, respectively. The Company
experienced an increase in net sales of $38,628 for the three months ended
April 30, 1997 compared to the three months ended April 30, 1996. For the six
months ended April 30, 1997 and 1996 the Company had net sales of $333,401 and
$244,753, respectively. The Company experienced an increase in net sales of
$88,648. The increase in net sales for the three months and six months periods
ended April 30, 1997 is primarily due to the addition of AmBrew USA. While the
Company experienced a sales increase compared to the same period in 1996, the
Company's sales for the three months ended April 30, 1997 decreased by $15,727
compared to three months ended January 31, 1997. Though the combined sales for
the three months and six months ended April 30, 1997 increased compared to the
same periods in 1996, the Company's subsidiaries had varying sales results.
For the three months ended April 30, 1997 the South China
Brewery experienced a decline in sales of $39,394 compared to the same period
in 1996. For the six months ended April 30, 1997 the South China Brewery
experienced a decrease in sales of $98,866 compared to the same period in 1996.
The removal of certain trade barriers resulted in a marked increase in the
number and supply of import labels in the Hong Kong market. Despite continued
intensive competition from such import labels the South China Brewery was able
to increase sales compared to the first quarter. The South China Brewery
experienced a sales increase of $14,000 for the three months ended April 30,
1997 compared to the three months ended January 31, 1997. The increase in sales
was partly due to the continued acceptance of the South China Brewery's
proprietary brands and the introduction of its new commemorative ale, Red Dawn
Ale. The proprietary brands of South China Brewery accounted for 39% of the
Company's net sales and contract brewing accounted for 12% of the Company's net
sales for the three months ended April 30, 1997.
While continuing to aggressively promote its existing brands, the
South China Brewery recently introduced Red Dawn Ale, which was received with
great enthusiasm. The ale was created to commemorate the historic "Handover" of
Hong Kong to China. From its introduction through the three months ended April
30, 1997 Red Dawn Ale accounted for 3% of the Company's net sales. During the
month of its introduction, April, Red Dawn Ale accounted for 15% of South China
Brewery's sales.
The South China Brewery is a party to custom brewing contracts with
Delaney's (Wanchai) Limited, owner of Delaney's Irish Pub ("Delaney's"), and
Iconic America ("Iconic"). The custom brewing contract with Delaney's expires
in September 1997 and the contract with Iconic expires in August 1997.
The sales of AmBrew USA's products accounted for approximately 49% of
the Company's net sales for the three months ended April 30, 1997. For the six
months ended April 30, 1997 the sales of AmBrew USA's products accounted for
56% of the Company's net sales. While the sales of AmBrew USA for the three
months ended April 30, 1997 aided in increasing the Company's net sales from
the corresponding period in 1996, AmBrew USA experienced a sales decrease from
the first quarter of 1997 of $29,727. Sales for this quarter reflect the
repositioning strategy of the AmBrew USA brands to better align them in the
Company's overall market strategy. Sales have been intentionally curtailed in
order to purge the distribution network of existing inventory of Cerveza
Mexicali in preparation for the rollout of AmBrew International's own products
as well as for future labeling and packaging changes. The inventory of Cerveza
Mexicali has been purposely depleted in preparation for Cerveza Mexicali to be
produced at Cerveceria Rio Bravo.
8
<PAGE> 9
With the introduction of Mexican produced Cerveza Mexicali, new
branding for Charles Wells, and the addition of Dixie Brewing Co.'s products to
the portfolio, the Company expects its sales to increase during the third
quarter and beyond. In a continued effort to promote the sale of products from
its breweries the Company has signed a supply agreement with Anheuser-Busch,
Inc.
The Company is proceeding with its efforts to import into the United
States and other markets, the products from all its breweries during the third
quarter of the Company's current fiscal year. The Company believes that the
anticipated global distribution of its products will have a significant
positive impact on net sales.
Cost of Sales. Cost of sales increased as a percentage of sales to 67%
for the three months ended April 30, 1997 from 17% in the corresponding period
in 1996. The increase is primarily the result of the operations AmBrew USA,
which was acquired in December of 1996. AmBrew USA's cost of sales is higher
than the South China Brewery as it functions solely as a distributor. AmBrew
USA's cost of sales for the three months ended April 30, 1997 was $72,427 or
93% of its net sales.
The removal of certain trade barriers in Hong Kong and the resulting
marked increase in import labels contributed to South China Brewery operating
at underutilized capacity. The South China Brewery's cost of sales for the
three months ended April 30, 1997 increased to 42% of sales from 17% in the
three months ended April 30, 1996 as a result of underutilized capacity.
For the six months ended April 30, 1997 the cost of sales increased as
a percentage of sales to 65% from 18% in the corresponding period in 1996. This
increase is primarily due to the addition of AmBrew USA and the less efficient
use of equipment at the South China Brewery as described above.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses for the three months ended April 30, 1997 and 1996 were
$764,161 and $117,284, respectively. The increase is primarily attributable to
the addition of AmBrew International, with expenses of $497,671, AmBrew USA,
with expenses of $106,525, Cerveceria Rio Bravo, with expenses of $37,885 and
Celtic Brew, with expenses of $18,604. The remainder of the increase relates to
additional salaries and marketing costs at the South China Brewery. Selling,
general and administrative expenses for the six months ended April 30, 1997 and
1996 were $1,144,786 and $207,094, respectively. The increase is due to the
addition of AmBrew International, AmBrew USA, Celtic Brew and Cerveceria Rio
Bravo and their corresponding selling, general and administrative expenses.
AmBrew International experienced the high costs of selling, general
and administrative expenses associated with being a publicly traded company.
Such expenses include, but are not limited to annual meeting expenses, legal
fees, audit fees and the preparation of required quarterly and annual reports.
The increase in the selling, general and administrative expenses for
AmBrew International were also caused in part by the addition of new personnel.
During the quarter ended April 30, 1997 AmBrew International signed employment
agreements with Peter Bordeaux, President and Chief Executive Officer, and C.
Brooks Hamaker, Brewmaster. Mr. Hamaker will be instrumental in the planning,
design and development of current and future breweries. During the six months
ended April 30, 1997 the Company had also signed a consulting agreement with
David Haines. This agreement will expire in October 1997. Additional costs were
also incurred as AmBrew International continued to aggressively identify
suitable joint venture partners and future brewery sites.
Additionally, Celtic Brew and the South China Brewery also entered
into new employment agreements. Celtic Brew signed an employment agreement with
William Jenkins as Brewmaster. The South China Brewery signed employment
agreements with Scott Ashen, General Manager, and Cory O'Neel, Brewmaster.
Net Interest (Income) Expense. Net interest (income) expense for the
three months ended April 30, 1997 and 1996 was ($20,163) and $12,689,
respectively and for the six months ended April 30, 1997 and 1996 was ($32,092)
and $24,908 respectively. The increased income relates to the investment of the
proceeds from the Company's initial public offering. Additionally, loans
payable were eliminated with proceeds from the Company's initial public
offering.
9
<PAGE> 10
LIQUIDITY AND CAPITAL RESOURCES
The Company's material commitments for future capital expenditures
relate primarily to the financing of the proposed expansion breweries. The
Company previously placed an order for twenty micro-brewery systems with Micro
Brew Systems and made a $200,000 non-refundable deposit on the equipment. For
the period ended April 30, 1997, the Company paid the balance due of $241,326
on the system completed for Celtic Brew. The Company also made a partial
payment of $318,975 for system to be located at Cerveceria Rio Bravo. In
addition, the Company placed a down payment of $85,090 with JV Northwest for
flash pasteurizing equipment, $31,866 with Beverage Machinery Service for
kegging equipment and $34,220 with Aeroglide for a tunnel pasteurizer. The
Company is required to pay the remaining balances of $473,881 for the equipment
in production, as it is completed and ready for shipment.
In addition to the deposits and down payments placed for brewery
equipment, the Company has also placed deposits totaling $350,000 in connection
with the distribution rights of the Cerveza Mexicali label.
At April 30, 1997, the South China Brewery had fixed capital lease
obligations of $8,586, $17,172 and $6,885 respectively, for each of the three
years in the period ending October 31, 1999. At April 30, 1997, the South China
Brewery had $53,126 in operating lease commitments over the period ending
October 31, 1998 relating to its warehouse and brewery facility.
At April 30, 1997, AmBrew International had an operating lease
obligation of $60,669 over the period ending November 30, 1999 relating to the
lease of its corporate office. AmBrew International also had operating lease
obligations of $47,224 for the period ending February 28, 2000 relating to
company vehicles. Additionally, the Company has fixed annual salary expenses of
$683,516 related to various employment agreements with its employees.
At April 30, 1997, Cerveceria Rio Bravo had obligations of $366,750
for the period ending September 10, 2001 in connection with a related party
operating lease for its brewery site.
At April 30, 1997, approximately $2,213,950 of the proceeds from the
initial public offering remained invested in tax-exempt interest-bearing
accounts and $2,192 was invested in interest bearing accounts. The Company
expects to be able to finance, using its own funds, funds provided by joint
venture partners and third party financing, if available, up to six expansion
breweries or the equivalent capacity in fiscal 1997, including the Tecate and
Dublin breweries. The Company expects that it will require additional external
financing in 1998 to continue its expansion and to meet working capital
requirements. The Company may seek such additional financing in the form of
additional equity or borrowed funds. The Company has not yet begun to
investigate the potential availability of such additional financing whether in
the form of debt or equity.
The Company believes that its working capital will provide it with
sufficient capital resources and liquidity to meet its foreseeable needs.
10
<PAGE> 11
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
(a) At the second annual general meeting of the Company on April 22,
1997, the following resolutions were adopted by the affirmative vote of the
shareholders of the Company, as specified below:
(i) that the following directors be elected until the third annual
general meeting of the Company or until their respective successors
are elected or appointed:
<TABLE>
<CAPTION>
NOMINEE FOR WITHHELD
<S> <C> <C>
Peter W. H. Bordeaux 2,414,483 3,100
John F. Beaudette 2,416,483 2,100
Federico G. Cabo Alvarez 2,416,483 2,100
Wyndam H. Carver 2,414,483 3,100
David K. Haines 1,501,083 916,500
Joseph E. Heid 2,414,483 3,100
Charles F. Jarvie 2,414,483 3,100
Edward F. McDonnell 2,414,483 3,100
Susanna E. Townsend 2,413,483 4,100
Steven A. Rothstein 2,414,483 3,100
TOTAL SHARES VOTED 2,417,583
</TABLE>
(ii) that the Company's 1996 Stock Option Plan (the "Plan") be
amended to increase the number of shares of Common Stock reserved for
issuance thereunder by an additional 300,000 shares to a total of
600,000 shares and to ensure that the stock options granted under the
Plan continue to qualify as performance-based compensation within the
meaning of Section 162(m) of the Internal Revenue Code of 1986, as
amended;
<TABLE>
<CAPTION>
FOR AGAINST WITHHELD TOTAL BROKER NO VOTE
<S> <C> <C> <C> <C>
663,754 16,650 919,900 1,600,304 817,279
</TABLE>
(iii) that Arthur Andersen LLP be appointed auditors of the Company
to hold office until the close of the third annual general meeting.
<TABLE>
<CAPTION>
FOR AGAINST WITHHELD TOTAL
<S> <C> <C> <C>
2,411,083 2,500 4,000 2,417,583
</TABLE>
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
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").
11
<PAGE> 12
3.2 - By-Laws of the Company (incorporated by reference to Exhibit
3.2 of the Registration Statement).
10.1 - Amended and Restated Stock Option Plan of the Company.*
10.2 - Brewmaster Employment Agreement between South China Brewing
Company Limited and Cory O'Neel, effective March 20, 1997.*
10.3 - General Manager Employment Agreement between South China
Brewing Company Limited and Scott Ashen, effective February 1,
1997.*
10.4 - Employment and Non-Competition Agreement between the Company
and Peter W. H. Bordeaux.*
10.5 - Contract Brewing and Packaging Agreement between
Anheuser-Busch, Incorporated and the Company, dated April 29,
1997.*
10.6 - Consulting Agreement among the Company, the South China
Brewing Company Limited, David K. Haines and Lunar Holdings,
Limited, dated February 14, 1997.*
10.7 - Employment Agreement between the Company and C. Brooks
Hamaker, effective March 10, 1997.*
10.8 - Employment Agreement between the Company and William R.
Jenkins, effective March 24, 1997.*
27.0 - Financial Data Schedule.*
*filed herewith
(b) Reports on Form 8-K. None
12
<PAGE> 13
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: June 16, 1997 /s/ James L. Ake
---------------------------------------
James L. Ake
Executive Vice President,
Chief Operating Officer
and Secretary
/s/ Nancy R. Hernandez
---------------------------------------
Nancy R. Hernandez
Controller
13
<PAGE> 14
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<S> <C>
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").
3.2 - By-Laws of the Company (incorporated by reference to Exhibit
3.2 of the Registration Statement).
10.1 - Amended and Restated Stock Option Plan of the Company.*
10.2 - Brewmaster Employment Agreement between South China Brewing
Company Limited and Cory O'Neel, effective March 20, 1997.*
10.3 - General Manager Employment Agreement between South China
Brewing Company Limited and Scott Ashen, effective February 1,
1997.*
10.4 - Employment and Non-Competition Agreement between the Company
and Peter W. H. Bordeaux.*
10.5 - Contract Brewing and Packaging Agreement between
Anheuser-Busch, Incorporated and the Company, dated April 29,
1997.*
10.6 - Consulting Agreement among the Company, the South China
Brewing Company Limited, David K. Haines and Lunar Holdings,
Limited, dated February 14, 1997.*
10.7 - Employment Agreement between the Company and C. Brooks
Hamaker, effective March 10, 1997.*
10.8 - Employment Agreement between the Company and William R.
Jenkins, effective March 24, 1997.*
27.0 - Financial Data Schedule.*
</TABLE>
*filed herewith
<PAGE> 1
EXHIBIT 10.1
AMERICAN CRAFT BREWING INTERNATIONAL LIMITED
AMENDED AND RESTATED STOCK OPTION PLAN
1. Purpose
The purpose of the American Craft Brewing International Limited Amended
and Restated Stock Option Plan (the "Plan"), is to attract and retain employees
(including officers), directors and independent contractors of American Craft
Brewing International Limited, a Bermuda company (the "Company"), or any
subsidiary or affiliate of the Company that now exists or hereafter is
organized or acquired, and to furnish additional incentives to such persons to
enhance the value of the Company over the long term by encouraging them to
acquire a proprietary interest in the Company.
2. Definitions
For purposes of the Plan, the following terms shall be defined as set
forth below:
(a) "Affiliate" means any entity if, at the time of
granting of an Option (i) the Company directly owns at least 20% of the
combined voting power of all classes of stock of such entity or at least 20% of
the ownership interests in such entity or (ii) such entity, directly or
indirectly, owns at least 20% of the combined voting power of all classes of
stock of the Company or at least 20% of the ownership interests in the Company.
(b) "Beneficiary" means the person, persons, trust or
trusts which have been designated by an Optionee in his or her most recent
written beneficiary designation filed with the Company to receive the
Optionee's rights under the Plan upon the Optionee's death, or, if there is no
such designation or no such designated person survives the Optionee, then the
person, persons, trust or trusts entitled by will or applicable law to receive
such rights or, if no such person has such right then the Optionee's executor
or administrator.
(c) "Board" means the Board of Directors of the Company.
(d) "Change in Control" means any of the following: (i)
the acquisition by any person or entity not controlled by the Company's
stockholders of more than 80% 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
a merger, continuation, reorganization or similar transaction with or into
American Craft Brewing International Limited, a British Virgin Islands
company).
(e) "Code" means the United States Internal Revenue Code
of 1986, as amended from time to time.
(f) "Committee" means the committee, consisting
exclusively of at least two Non-Employee Directors (as defined in Rule 16b-3),
as established by the Board to administer the Plan; provided, however, that to
the extent required for the Plan to comply
<PAGE> 2
with the applicable provisions of Section 162(m) of the Code. "Committee"
means either such committee or a subcommittee of that committee, as the case
may be, which shall be constituted to comply with the applicable requirements
of Section 162(m) of the Code and the regulations promulgated thereunder.
(g) "Company" means American Craft Brewing International
Limited, a company organized under the laws of Bermuda, or any successor
company.
(h) "Effective Date" means the date on which the Board
approves the Plan.
(i) "Fair Market Value" means, with respect to Stock or
other property, the fair market value of such Stock or other property
determined by such methods or procedures as shall be established from time to
time by the Board acting in its sole discretion and in good faith.
(j) "ISO" means any Option intended to be and designated
as an incentive stock option within the meaning of Section 422 of the Code.
(k) "NQSO" means any Option not designated as an ISO.
(l) "Option" means a right, granted to an Optionee under
Section 6 of the Plan, to purchase shares of Stock, subject to the terms and
conditions of this Plan. An Option may be either an ISO or an NQSO, provided
that ISOs may be granted only to employees of the Company or a Subsidiary.
(m) "Optionee" means a person who, as an employee, a
director or an independent contractor of the Company, a Subsidiary or an
Affiliate, has been granted an Option.
(n) "Plan" means this American Craft Brewing International
Limited 1996 Stock Option Plan, as amended from time to time.
(o) "Rule 16b-3" means Rule 16b-3, as from time to time in
effect promulgated by the Securities and Exchange Commission under Section 16
of the Securities Exchange Act of 1934, as amended, including any successor to
such Rule.
(p) "Stock" means the common stock, par value $.01 per
share, of the Company.
(q) "Stock Option Agreement" means any written agreement,
contract, or other instrument or document evidencing an Option.
(r) "Subsidiary" means any corporation in which the
Company, directly or indirectly, owns stock possessing 50% or more of the total
combined voting power of all classes of stock of such corporation.
<PAGE> 3
(s) "Ten Percent Shareholder" means a person or persons
who own, directly or indirectly, more than 10% of the total combined voting
power of all classes of stock of the Company or any of its Subsidiaries.
3. Administration
The Plan shall be administered by the Committee. The Committee shall
have full power to construe and interpret the Plan, to establish rules for its
administration and to grant Options. The Committee may establish rules setting
forth terms and conditions for a specified group of Options. The Committee may
act by a majority of a quorum (a quorum being a majority of the members of such
Committee) present at a called meeting or by unanimous written consent of all
of its members. All actions taken and decisions made by the Board of the
Committee pursuant to the Plan shall be binding and conclusive on all persons
interested in the Plan.
4. Eligibility
Options may be granted in the discretion of the Committee to employees
(including officers), directors and independent contractors of the Company and
its present or future Subsidiaries and Affiliates. In determining the persons
to whom Options shall be granted and the type of Options granted (including the
number of shares to be covered by such Options), the Committee shall take into
account such factors as the Committee shall deem relevant in connection with
accomplishing the purposes of the Plan. No person shall be granted during any
calendar year one or more Options under the Plan for, in the aggregate, more
than 300,000 shares of Stock.
5. Stock Subject to the Plan
The maximum number of shares of Stock reserved for the grant of Options
under the Plan shall be 600,000 shares of Stock, subject to adjustment as
provided herein. Such shares may, in whole or in part, be authorized but
unissued shares or shares that shall have been or may be reacquired by the
Company in private transactions or otherwise. The number of shares of Stock
available for issuance under the Plan shall be reduced by the number of shares
of Stock subject to outstanding Options. If any shares subject to an Option
are forfeited, canceled, exchanged or surrendered or if an Option otherwise
terminates or expires without a distribution of shares to the Optionee, the
shares of Stock with respect to such Option shall, to the extent of any such
forfeiture, cancellation, exchange, surrender, termination or expiration, again
be available for Options under the Plan.
In the event that the Committee shall determine, in its sole
discretion, that any dividend or other distribution (whether in the form of
cash, Stock, or other property), recapitalization, stock split, reverse split,
any reorganization, merger, consolidation, spin-off, combination, repurchase,
share exchange, license arrangement, strategic alliance or other similar
corporate transaction or event, affects the Stock such that an adjustment is
appropriate in order to prevent dilution or enlargement of the rights of any
Optionees under the Plan, then the Committee shall make such equitable changes
or adjustments as it deems
<PAGE> 4
necessary or appropriate to any or all of (i) the number and kind of shares of
Stock which may thereafter be issued in connection with Options, (ii) the
number and kind of shares of Stock issued or issuable in respect of outstanding
Options, and (iii) the exercise price, grant price, or purchase price relating
to any Option; provided that, with respect to ISOs, such adjustment shall be
made in accordance with Section 424(h) of the Code.
6. Specific Terms of Options
(a) General. Options may be granted at the discretion of
the Committee. The term of each Option shall be for such period as may be
determined by the Committee. The Committee may make rules relating to Options,
and may impose on any Option or the exercise thereof, at the date of grant or
thereafter, such additional terms and conditions, not inconsistent with the
provisions of the Plan, as the Committee shall determine.
(b) Options. The Committee is authorized to grant Options
to Optionees on the following terms and conditions:
(i) Type of Option. The Stock Option Agreement evidencing
the grant of an Option under the Plan shall designate the
Option as an ISO (in the event its terms, and the individual
to whom it is granted, satisfy the requirements for ISOs under
the Code) or an NQSO.
(ii) Exercise Price. The exercise price per share of Stock
purchasable under an Option shall be determined by the
Committee; provided that, in the case of an ISO, (A) such
exercise price shall be not less than the Fair Market Value of
a share of Stock on the date of grant of such Option or such
other exercise price as may be required by the Code and (B) if
the Optionee is a Ten Percent Shareholder, such exercise price
shall not be less than 110% of the Fair Market Value of a
share of Stock on the date of grant of such Option. In no
event shall the exercise price for the purchase of shares of
Stock be less than par value. Options shall be exercised by
(I) giving written notice thereof to the Company and (II)
paying the exercise price. In addition to any other method of
payment which may be acceptable to the Committee, payment may
be effected, either in whole or in part, by the surrender to
the Company of outstanding Stock. Any Stock so surrendered
shall be valued at the Fair Market Value on the date on which
such shares are surrendered.
(iii) Term and Exercisability of Options. The date on which
the Committee adopts a resolution expressly granting an Option
shall be considered the day on which such Option is granted.
Options shall be exercisable over the exercise period which
shall not exceed ten years (five years in the case of an ISO
granted to a Ten Percent Shareholder) from the date of grant,
at such times and upon such conditions as the Committee may
determine, as reflected in the Stock Option Agreement.
(iv) Payment of Cash or Stock Upon Exercise. Upon exercise
of an Option,
<PAGE> 5
the Company may, in the sole discretion of the Committee,
either (A) issue to the Optionee the shares of Stock subject
to the Option or (B) in lieu of issuing Stock, pay to the
Optionee in cash an amount equal to the excess, if any, of the
aggregate Fair Market Value of the shares of Stock subject to
such Option as of the close of the fiscal year in which
exercise occurs over the aggregate exercise price of the
shares of Stock purchasable under such Option.
Notwithstanding the foregoing, if at the time of exercise of
the Option, the Company has issued Stock in a public offering
it will no longer have the right to pay cash to an Optionee in
lieu of issuing Stock.
(v) Termination of Employment, etc. An Option may not be
exercised unless the Optionee is then in the employ of, or
then maintains an independent contractor relationship with,
the Company or any Subsidiary or Affiliate (or a company or a
parent or subsidiary company of such company issuing or
assuming the Option in a transaction to which Section 424(a)
of the Code applies) and unless the Optionee has continuously
maintained any of such relationships since the date of grant
of the Option; provided that, the Stock Option Agreement may
contain provisions extending the exercisability of Options, in
the event of specified terminations, to a date not later than
the expiration date of such Option. The Committee may
establish a period during which the Beneficiaries of an
Optionee who died while an employee, a director or an
independent contractor of the Company or any Subsidiary or
Affiliate or during any extended period referred to in the
immediately preceding proviso may exercise those Options which
were exercisable on the date of the Optionee's death; provided
that no Option shall be exercisable after its expiration date.
(vi) Nontransferability. Options shall not be transferable
by an Optionee except by will or the laws of descent and
distribution and shall be exercisable during the lifetime of
an Optionee only by such Optionee.
(vii) Other Provisions. Options may be subject to such
other conditions as the Committee may prescribe in its
discretion.
7. Change in Control Provisions
In the event of a Change in Control, any and all Options then
outstanding shall become fully exercisable and vested, whether or not
theretofore vested and exercisable.
8. General Provisions
(a) Fair Market Value of Common Stock. In determining the
Fair Market Value of the Stock for purposes of the Plan, the Board may rely on
a valuation report by an investment banking or valuation firm selected by the
Board. In the event the Stock becomes listed on any national stock exchange or
quoted on the national market quotations system, the Fair Market Value of the
Stock shall, as of any day, be the closing price for the immediately preceding
trading day.
<PAGE> 6
(b) Compliance with Legal and Exchange Requirements. The
Plan, the granting and exercising of Options thereunder, and the other
obligations of the Company under the Plan and any Stock Option Agreement, shall
be subject to all applicable laws, rules and regulations, and to such approvals
by any regulatory or governmental agency as may be required. The Company, in
its discretion, may postpone the issuance or delivery of Stock under any Option
until completion of such stock exchange listing or registration or
qualification of such Stock or other required action under any law, rule or
regulation as the Company may consider appropriate, and may require any
Optionee to make such representations and furnish such information as it may
consider appropriate in connection with the issuance or delivery of Stock in
compliance with applicable laws, rules and regulations.
(c) No Right to Continued Employment, etc. Nothing in the
Plan or in any Option granted or Stock Option Agreement entered into pursuant
to the Plan shall confer upon any Optionee the right to continue as an employee
or director of, or as an independent contractor to, the Company, any Subsidiary
or any Affiliate, as the case may be, or to be entitled to any remuneration or
benefits not set forth in the Plan or such Stock Option Agreement or to
interfere with or limit in any way the right of the Company or any such
Subsidiary or Affiliate to terminate such Optionee's employment or independent
contractor relationship.
(d) Taxes. The Company or any Subsidiary or Affiliate is
authorized to withhold from any Option granted, any payment relating to an
Option under the Plan (including from a distribution of Stock), or any other
payment to an Optionee, amounts of withholding and other taxes due in
connection with any transaction involving an Option, and to take such other
action as the Committee may deem advisable to enable the Company and an
Optionee to satisfy obligations for the payment of withholding taxes and other
tax obligations relating to any Option. This authority shall include authority
to withhold or receive Stock or other property and to make cash payments in
respect thereof in satisfaction of an Optionee's tax obligations.
(e) Amendment and Termination of the Plan. The Board may
at any time and from time to time alter, amend, suspend, or terminate the Plan
in whole or in part. Notwithstanding the foregoing, no amendment shall affect
adversely any of the rights of any Optionee, without such Optionee's consent,
under any Option theretofore granted under the Plan. Unless terminated earlier
by the Board, the Plan shall terminate ten years after the effective date and
no Options shall be granted under the Plan after such date.
(f) No Rights to Options; No Stockholder Rights. No
person shall have any claim to be granted any Option under the Plan, and there
is no obligation for uniformity of treatment of Optionees. Except as provided
specifically herein, an Optionee or a transferee of an Option shall have no
rights as a stockholder with respect to any shares covered by the Option until
the date of the issuance of a stock certificate to such Optionee for such
shares.
<PAGE> 7
(g) Unfunded Status of Options. The Plan is intended to
constitute an "unfunded" plan for incentive and deferred compensation. Nothing
contained in the Plan or any Option shall give any such Optionee any rights
that are greater than those of a general creditor of the Company.
(h) Governing Law. The Plan and all determinations made
and actions taken pursuant hereto shall be governed by the laws of the State of
New York without giving effect to the conflict of laws principles thereof.
(i) Effective Date. The Plan shall take effect upon the
Effective Date, but the Plan (and any grants of Options made prior to the
stockholder approval mentioned herein), shall be subject to the approval of the
holder(s) of a majority of the issued and outstanding shares of voting
securities of the Company entitled to vote, which approval must occur within
twelve months of the date the Plan is adopted by the Board. In the absence of
such approval, such Options shall be null and void.
<PAGE> 1
EXHIBIT 10.2
SOUTH CHINA BREWING COMPANY LIMITED
BREWMASTER EMPLOYMENT AGREEMENT
SOUTH CHINA BREWING COMPANY LIMITED (the Company), and CORY O'NEEL (the
Brewmaster) desire to set forth the terms upon which the Brewmaster will be
employed by the Company during the term of this Agreement, and therefore agree
as follows:
1. Working Relationship
1.1 Term. Unless terminated sooner pursuant to paragraph 4 below,
the term of this Agreement is two (2) years with effect from March 20, 1997
(the Commencement Date). This term may be extended once or more for such
length of time as agreed in a written instrument signed by the parties.
1.2 Location. The Brewmaster shall perform his employment at the
brewing facilities of the Company located Aberdeen, Hong Kong (the Brewery).
1.3 Supervisor. The Brewmaster shall report to and his activities
shall be supervised by the General Manager of the Brewery.
1.4 Duties. The Brewmaster shall use his best efforts, skill and
abilities to faithfully and effectively perform his duties as a master brewer
for the Company. The Brewmaster shall perform such functions as may be
commensurate with his position and such other duties as may from time to time
reasonably be delegated to him by the Company. It is intended that for the
most part the Brewmaster shall perform his duties hereunder during normal
business hours. However, it is agreed by the Brewmaster that he may be
required from time to time to perform his duties hereunder at times other than
normal business hours, and that the Brewmaster shall not be entitled to
additional compensation for work performed during other than normal business
hours.
1.5 Full Time. The Brewmaster shall devote full and exclusive
business time and energies to the performance of his duties under this
Agreement, except that he shall be free to devote reasonable time and attention
to public and charitable affairs and to his personal affairs, consistent with
his duties hereunder, but only if the handling of such charitable and personal
affairs do not interfere with the normal day-to-day operations of the Company.
2. Compensation.
As full compensation to the Brewmaster for performance of his services
hereunder, the Company agrees to pay Brewmaster, and Brewmaster agrees to
accept, the following:
2.1 Salary. The Company will pay the Brewmaster a salary of three
hundred twelve thousand Hong Kong Dollars (HK$312,000.00) per annum by monthly
installments in arrears from the Commencement Date, less any amounts required
to be withheld under any applicable federal, state or local income tax laws or
by any other withholding
<PAGE> 2
requirements, and any other amounts which by agreement may be withheld for
fringe benefits. This salary shall be subject to review 12 months from the
Commencement Date.
2.2 Bonus. Provided this Agreement has not been terminated, the
Company shall pay the Brewmaster a bonus, equal to one (1) month's salary at
the end of 12 months from the Commencement Date. Subsequent bonuses will be at
the sole discretion of the Company but will not be less than one month's
salary.
2.3 Stock Option Plan. The Brewmaster shall be eligible to
participate in the 1996 Stock Option Plan of American Craft Brewing
International Limited on the basis described therein.
3. Benefits.
3.1 Medical Benefits; Life and Disability Insurance Plans. The
Company will pay premiums for the Brewmaster's participation in the life,
health and disability insurance plans of the Company, provided that the
Brewmaster is accepted for coverage which is at the sole discretion of the
insurer. If available, the premiums for coverage of the Brewmaster's
dependents shall be paid by the Brewmaster.
3.2 Business Expenses. The Company will reimburse the Brewmaster
for preapproved expenses actually incurred in connection with the performance
of the duties hereunder, against receipts or other appropriate written evidence
of such expenditures, all in accordance with the policies of the Company as
adopted from time to time.
3.3 Leave. The Brewmaster is entitled to two weeks leave during
the first year and three weeks in the second year of the term of this
Agreement, which shall be taken as determined by the Company, as well as
holidays in accordance with applicable policies from time to time adopted by
the Company. Time at which leave is taken is dependent on seniority, family
circumstances and the exigencies of the Company's business but subject thereto,
leave shall be scheduled insofar as is practicable so as to meet the
Brewmaster's convenience. Leave cannot be accumulated and any unused leave at
the end of the term of this Agreement, or upon termination of this Agreement
for any reason, shall not be compensated.
3.4 Home Leave. During each year of the term of this Agreement,
the Company will pay for one (1) round trip economy fare air ticket to be used
by the Brewmaster for travel to the United States, or the equivalent if the
Brewmaster wishes to take his leave elsewhere.
4. Termination
4.1 By The Brewmaster. The Brewmaster may terminate this
Agreement by giving the Company not less than three (3) months written notice
or payment of three months' salary in lieu of notice.
<PAGE> 3
4.2 By the Company Without Cause. The Company may terminate this
Agreement without cause at anytime by giving to the Brewmaster three (3)
months' written notice or by paying him three (3) months' salary in lieu of
notice.
4.3 By the Company With Cause. The Company may at anytime
terminate this Agreement for cause on immediate written notice and without
payment or compensation whatsoever.
For the purposes of this paragraph and of this Agreement, "cause" shall
mean: (1) fraud, dishonesty or any other intentional wrongful act, whether or
not in connection with employment under this Agreement; (2) any violation of
law (excluding minor traffic violations) conviction thereof or plea of guilty
or nolo contendere thereto, moral turpitude or other willful misconduct by the
Brewmaster; (3) accepting or undertaking any outside employment without prior
written permission of the Company; (4) incompetence or negligence in the
performance of any duties or obligations hereunder; or (5) the failure or
refusal to perform, carry out or comply with any duties or obligations
hereunder.
4.4 Because of Death or Ill Health. This Agreement shall
terminate immediately upon the death or disability of the Brewmaster. "Ill
health" shall mean the inability of the Brewmaster to properly perform his
duties hereunder for a period of ninety (90) or more days by reason of a health
condition not self-induced as certified by a medical practitioner chosen by the
Company.
4.5 No Further Payments by Company. Except for the payment in
lieu of notice provided in paragraph 4.2, upon termination of this Agreement
for any reason the Brewmaster shall not be entitled to any further payments or
compensation from the Company except unpaid salary prorated to the date of
termination.
4.6 Cooperation with the Company after Termination. Following
termination of this Agreement for any reason, the Brewmaster shall fully
cooperate with the Company in all matters relating to the winding up of his
pending work and the orderly transfer of pending work to others as may be
designated by the Company.
5. Confidentiality and Non-Disclosure. The Brewmaster acknowledges that
during the term of this Agreement he will receive confidential, proprietary
information and trade secrets from the Company, and from parents and affiliates
of the Company and from the respective clients thereof (each a Relevant
Entity). Accordingly, the Brewmaster agrees that during the term of this
Agreement (as it may be extended) and thereafter for a period of two years, the
Brewmaster 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 any Trade Secret that he
may learn or has learned by reason of his association with any Relevant Entity.
Upon termination of this Agreement, the Brewmaster shall promptly return to the
Company any and all property, records or papers of any Relevant Entity that may
be or have been in his possession, whether prepared by him or others,
including, but not limited to, trade secrets and keys. For purposes of this
Agreement, "trade secrets" includes all data, analyses, reports,
interpretations, forecasts, documents and information concerning a Relevant
Entity and its affairs, including, without limitation, with respect to clients,
customers, products, policies,
<PAGE> 4
procedures, methodologies, any 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 Brewmaster 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 Brewmaster; 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. For purposes of this Agreement, parent of the Company
is defined herein as American Craft Brewing International Limited.
6. Non-Competition.
6.1 The Brewmaster agrees that during the term of this Agreement
(as it may be extended) and for a period of two years thereafter he shall not
within fifty miles of any location which the Company, its parent or any of its
subsidiaries or affiliates is operating and/or has a letter of intent to form
an operating venture and/or has an agreement for a microbrewery (a) engage in
any activity competitive with the business of the Company, its parent or
subsidiaries or affiliates, for or on behalf of the Brewmaster or any other
person or entity engaged in a line of business which competes with the Company,
its parent or subsidiaries or affiliates; (b) solicit or attempt to solicit the
business of any clients or customers of the Company, its parent or subsidiaries
or affiliates, for products that are the same or similar to those offered, sold
or produced at any time by the Company, its parent or subsidiaries or
affiliates; (c) otherwise divert or attempt to divert from the Company, its
parent or subsidiaries or affiliates, any business whatsoever; (d) hire or
attempt to hire for any business endeavor any employee or prior employee of any
of the Company, its parent or subsidiaries or affiliates; or (e) interfere with
any business relationship of the Company, its parent or subsidiaries or
affiliates, with any other person or entity.
6.2 Severability and Reform. If any portion of Section 6.1 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 6.1, but Section 6.1 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 6.1 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 6.1 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.
<PAGE> 5
7. Intellectual Property. All ideas, innovations, inventions, processes,
and other developments or improvements conceived or reduced to practice by the
Brewmaster, alone or with others, during the term of this employment agreement,
whether or not during working hours, that are within the scope of the
Company's, its parents' or subsidiaries' or affiliates', business operations or
that relate to any of the Company's, its parents' or subsidiaries' or
affiliates' work or projects, shall be the exclusive property of the Company.
The Brewmaster agrees to assist the Company, at its expense, to obtain patents,
trademarks or licenses on any such ideas, inventions, processes, and other
developments, and agrees to execute all documents necessary to obtain such
patent, trademark, and license for the sole use of the Company, its parents or
subsidiaries or affiliates.
8. Notices.
8.1 Addresses. Any notice or communication required or permitted
to be given under this Agreement shall be in writing, and conveyed by hand, air
courier, facsimile, or return receipt registered mail, addressed as follows:
The Company: The Brewmaster
General Manager Cory O'Neel
South China Brewing Co. South China Brewing Co.
Unit Al, 1/F; Vita Tower Unit A1, 1/F; Vita Tower
29 Wong Chuk Hang Rd. 29 Wong Chuk Hang Rd
Aberdeen Aberdeen
Hong Kong Hong Kong
8.2 Date of Notice. Any notice given in accordance with paragraph
8.1 shall be deemed to have been received on, and is effective as of, the date
it was delivered by hand or sent by facsimile, two business days after the date
it was deposited with an air courier, and the date on the return receipt if by
registered mail.
9. Governing, Law; Consent to Jurisdiction. This Agreement, and any
matter arising under or related to it, shall be governed by and construed in
accordance with the laws of the State of Louisiana, U.S.A., without regard to
its choice or conflict of law provision. The Brewmaster irrevocably submits to
personal jurisdiction in the courts of Louisiana with respect to any matter
arising under or related to this Agreement or his employment by the Company.
10. General Provisions.
10.1 Amendments. This Agreement may be amended only pursuant to an
instrument in writing signed by each of the parties hereto.
10.2 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.
<PAGE> 6
10.3 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 of any 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.
10.4 Successors and Assigns. All of the covenants, tenons,
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.
10.5 No Third-Party Beneficiaries. The covenants, obligations and
rights set forth in this Agreement are not intended to benefit any third person
or entity.
10.6 Entire Agreement. This Agreement embodies the entire
understanding and agreement between the parties and supersedes any and all
prior negotiations, understandings or agreements between the parties concerning
the subject matter hereof with respect hereto.
10.7 Attorney's Fees. In the event that either the Brewmaster or
the Company commences a legal proceeding (including arbitration) to enforce or
interpret any of the terms of this Agreement or to terminate this Agreement,
the prevailing party in such action shall receive from the other party
reasonable attorney's fees as may be fixed by the arbitrator, court or jury.
10.8 Arbitration. Any controversy or claim arising out of or
relating to this Agreement shall be settled by arbitration administered by the
American Arbitration Association in accordance with its applicable rules. Any
judgment upon the award rendered in such arbitration may be entered in any
court of competent jurisdiction.
10.9 Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original, and all of which taken
together shall constitute one and the same instrument. The Agreement may be
assembled into a single document by attaching each page bearing a party's
original signature.
The Company The Brewmaster
South China Brewing Company Limited Cory O'Neel
By: /s/ Scott Ashen /s/ Cory O'Neel
- ----------------------------------- ---------------------------------------
Name Name
Date: March 5, 1997 Date: /s/ 3/18/97
---------------------------------
<PAGE> 1
EXHIBIT 10.3
SOUTH CHINA BREWING COMPANY LIMITED
GENERAL MANAGER EMPLOYMENT AGREEMENT
SOUTH CHINA BREWING COMPANY LIMITED (the Company), and SCOTT ASHEN (the
General Manager) desire to set forth the terms upon which the General Manager
will be employed by the Company during the term of this Agreement, and
therefore agree as follows:
1. Working Relationship
1.1 Term. Unless terminated sooner pursuant to paragraph 4 below,
and subject to the review described in paragraph 2.3 below, the term of this
Agreement is one (1) year with effect from February 1, 1997 (the Commencement
Date). This term may be extended once or more for such length of time as
agreed in a written instrument signed by the parties.
1.2 Location. The General Manager shall perform his employment at
the brewing facilities of the Company located at Aberdeen, Hong Kong (the
Brewery).
1.3 Supervisor. The General Manager shall report to and his
activities shall be supervised by the Chief Operating Officer of American Craft
Brewing Company Limited (AmBrew), or his delegate.
1.4 Duties. The General Manager shall use his best efforts, skill
and abilities to faithfully and effectively perform his duties as the manager
and administrator for the Company of the Brewery. The General Manager shall
perform such supervisory, management and administrative functions as may be
commensurate with his position and such other duties as may from time to time
reasonably be delegated to him by the Company. The General Manager shall use
his best efforts, skill and ability to expand and promote the business of the
Company, to properly service the Company's business and to protect the
Company's good will, both as now enjoyed and hereafter acquired. It is
intended that for the most part the General Manager shall perform his duties
hereunder during normal business hours. However, it is agreed by the General
Manager that he may be required from time to time to perform his duties
hereunder at times other than normal business hours, and that the General
Manager shall not be entitled to additional compensation for work performed
during other than normal business hours.
1.5 Full Time. The General Manager shall devote full and
exclusive business time and energies to the performance of his duties under
this Agreement, except that he shall be free to devote reasonable time and
attention to public and charitable affairs and to his personal affairs,
consistent with his duties hereunder, but only if the handling of such
charitable and personal affairs do not interfere with the normal day-to-day
operations of the Company.
<PAGE> 2
2. Compensation.
As full compensation to the General Manager for performance of his
services hereunder, the Company agrees to pay General Manager, and General
Manager agrees to accept, the following:
2.1 Salary. The Company will pay the General Manager a salary of
Hong Kong Dollars Three hundred twelve thousand (HK$312,000) per annum by
monthly installments in arrears from the Commencement Date, less any amounts
required to be withheld under any applicable federal, state or local income tax
laws or by any other withholding requirements, and any other amounts which by
agreement may be withheld for fringe benefits.
2.2 Bonus. Provided this Agreement has not been terminated, the
Company shall pay the General Manager a bonus, equal to a minimum of one (1)
month's salary at the end of 12 months from the Commencement Date. Subsequent
bonuses will be at the sole discretion of the Company.
2.3 Initial Review. The General Manager's employment under this
Agreement shall be subject to review of the General Manager's job performance
within 90 days from the Commencement Date. On or before 90 days from the
Commencement Date, the Company may terminate this Agreement with or without
cause in its sole discretion.
3. Benefits.
3.1 Medical Benefits; Life and Disability Insurance Plans. The
Company will pay premiums for the General Manager's participation in the life,
health and disability insurance plans of the Company, provided that the General
Manager is accepted for coverage which is at the sole discretion of the
insurer. If available, the premiums for coverage of the General Manager's
dependents shall be paid by the General Manager.
3.2 Business Expenses. The Company will reimburse the General
Manager for pre-approved expenses actually incurred in connection with the
performance of the duties hereunder, against receipts or other appropriate
written evidence of such expenditures, all in accordance with the policies of
the Company as adopted from time to time.
3.3 Leave. The General Manager is entitled to three weeks leave
during the first year of the term of this Agreement, which shall be taken as
determined by the Company, as well as holidays in accordance with applicable
policies from time to time adopted by the Company. Time at which leave is
taken is dependent on seniority, family circumstances and the exigencies of the
Company's business but subject thereto, leave shall be scheduled insofar as is
practicable so as to meet the General Manager's convenience. Leave cannot be
accumulated and any unused leave at the end of the term of this Agreement, or
upon termination of this Agreement for any reason, shall not be compensated.
<PAGE> 3
4. Termination
4.1 By The General Manager. The General Manager may terminate
this Agreement by giving the Company not less than three (3) months written
notice or payment of three months' salary in lieu of notice.
4.2 By the Company Without Cause. The Company may terminate this
Agreement without cause at anytime by giving to the General Manager three (3)
months' written notice or by paying him three (3) months' salary in lieu of
notice.
4.3 By the Company With Cause. The Company may at anytime
terminate this Agreement for cause on immediate written notice and without
payment or compensation whatsoever.
For the purposes of this paragraph and of this Agreement, "cause" shall
mean: (1) fraud, dishonesty or any other intentional wrongful act, whether or
not in connection with employment under this Agreement; (2) any violation of
law (excluding minor traffic violations) conviction thereof or plea of guilty
or nolo contendere thereto, moral turpitude or other willful misconduct by the
General Manager; (3) accepting or undertaking any outside employment without
prior written permission of the Company; (4) incompetence or negligence in the
performance of any duties or obligations hereunder; or (5) the failure or
refusal to perform, carry out or comply with any duties or obligations
hereunder.
4.4 Because of Death or Ill Health. This Agreement shall
terminate immediately upon the death or disability of the General Manager.
"III health" shall mean the inability of the General Manager to properly
perform his duties hereunder for a period of ninety (90) or more days by reason
of a health condition not self-induced as certified by a medical practitioner
chosen by the Company.
4.5 No Further Payments by Company. Except for the payment in
lieu of notice provided in paragraph 4.2, upon termination of this Agreement
for any reason the General Manager shall not be entitled to any further
payments or compensation from the Company except unpaid salary prorated to the
date of termination.
4.6 Cooperation with the Company after Termination. Following
termination of this Agreement for any reason, the General Manager shall fully
cooperate with the Company in all matters relating to the winding up of his
pending work and the orderly transfer of pending work to others as may be
designated by the Company.
5. Confidentiality and Non-Disclosure. The General Manager acknowledges
that during the term of this Agreement he will receive confidential,
proprietary information and trade secrets from the Company, and from parents
and affiliates of the Company and from the respective clients thereof (each a
Relevant Entity). Accordingly, the General Manager agrees that during the term
of this Agreement (as it may be extended) and thereafter for a period of two
years, the General Manager 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 any
Trade Secret that he may learn or has learned by reason of his association with
any Relevant Entity. Upon
<PAGE> 4
termination of this Agreement, the General Manager shall promptly return to the
Company any and all property, records or papers of any Relevant Entity that may
be or have been in his possession, whether prepared by him or others,
including, but not limited to, trade secrets and keys. For purposes of this
Agreement, "trade secrets" includes all data, analyses, reports,
interpretations, forecasts, documents and information concerning a Relevant
Entity and its affairs, including, without limitation, with respect to clients,
customers, products, policies, procedures, methodologies, any 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 (h) 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 General Manager 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 General Manager; 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. For purposes of this Agreement, parent of the Company is defined
herein as American Craft Brewing International Limited.
6. Non-Competition.
6.1 The General Manager agrees that during the term of this
Agreement (as it may be extended) and for a period of one year thereafter he
shall not within fifty miles of any location in Asia which the Company, its
parent or any of its subsidiaries or affiliates is operating and/or has a
letter of intent to form an operating venture and/or has an agreement for a
microbrewery (a) engage in any activity competitive with the business of the
Company, its parent or subsidiaries or affiliates, for or on behalf of the
General Manager or any other person or entity engaged in a line of business
which competes with the Company, its parent or subsidiaries or affiliates; (b)
solicit or attempt to solicit the business of any clients or customers of the
Company, its parent or subsidiaries or affiliates, for products that are the
same or similar to those offered, sold or produced at any time by the Company,
its parent or subsidiaries or affiliates; (c) otherwise divert or attempt to
divert from the Company, its parent or subsidiaries or affiliates, any business
whatsoever; (d) hire or attempt to hire for any business endeavor any employee
or prior employee of any of the Company, its parent or subsidiaries or
affiliates; or (e) interfere with any business relationship of the Company, its
parent or subsidiaries or affiliates, with any other person or entity.
6.2 Severability and Reform. If any portion of Section 6.1 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 6.1, but Section 6.1 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 6.1 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 6.1 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.
<PAGE> 5
7. Intellectual Property. All ideas, innovations, inventions, processes,
and other developments or improvements conceived or reduced to practice by the
General Manager, alone or with others, during the term of this employment
agreement, whether or not during working hours, that are within the scope of
the Company's, its parents' or subsidiaries' or affiliates', business
operations or that relate to any of the Company's, its parents' or
subsidiaries' or affiliates' work or projects, shall be the exclusive property
of the Company. The General Manager agrees to assist the Company, at its
expense, to obtain patents, trademarks or licenses on any such ideas,
inventions, processes, and other developments, and agrees to execute all
documents necessary to obtain such patent, trademark, and license for the sole
use of the Company, its parents or subsidiaries or affiliates.
8. Notices.
8.1 Addresses. Any notice or communication required or permitted
to be given under this Agreement shall be in writing, and conveyed by hand, air
courier, facsimile, or return receipt registered mail, addressed as follows:
<TABLE>
<S> <C>
The Company: The General Manager
----------- -------------------
South China Brewing Company Limited Scott Ashen
c/o AmBrew Unit A-1, 1/F, Vita Tower
One Galleria Boulevard, Suite 1714 29 Wong Chuk Hang Road
Metairie, Louisiana 70001 Aberdeen, HONG KONG
U.S.A.
Attention: Jim Ake, Executive Vice-President
</TABLE>
8.2 Date of Notice. Any notice given in accordance with paragraph
8.1 shall be deemed to have been received on, and is effective as of, the date
it was delivered by hand or sent by facsimile, two business days after the date
it was deposited with an air courier, and the date on the return receipt if by
registered mail.
9. Governing Law, Consent to Jurisdiction. This Agreement, and any matter
arising under or related to it, shall be governed by and construed in
accordance with the laws of the State of Louisiana, U.S.A., without regard to
its choice or conflict of law provision. The General Manager irrevocably
submits to personal jurisdiction in the courts of Louisiana with respect to any
matter arising under or related to this Agreement or his employment by the
Company.
10. General Provisions.
10.1 Amendments. This Agreement may be amended only pursuant to an
instrument in writing signed by each of the parties hereto.
10.2 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.
<PAGE> 6
10.3 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 of any 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. AU rights and remedies provided under this Agreement are in addition
to any other rights the parties may have by law, in equity or otherwise.
10.4 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.
10.5 No Third-Party Beneficiaries. The covenants, obligations and
rights set forth in this Agreement are not intended to benefit any third person
or entity.
10.6 Entire Agreement. This Agreement embodies the entire
understanding and agreement between the parties and supersedes any and all
prior negotiations, understandings or agreements between the parties concerning
the subject matter hereof with respect hereto.
10.7 Attorney's Fees. In the event that either the General Manager
or the Company commences a legal proceeding (including arbitration) to enforce
or interpret any of the terms of this Agreement or to terminate this Agreement,
the prevailing party in such action shall receive from the other party
reasonable attorney's fees as may be fixed by the arbitrator, court or jury.
10.8 Arbitration. Any controversy or claim arising out of or
relating to this Agreement shall be settled by arbitration administered by the
American Arbitration Association in accordance with its applicable rules. Any
judgment upon the award rendered in such arbitration may be entered in any
court of competent jurisdiction.
10.9 Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original, and all of which taken
together shall constitute one and the same instrument. The Agreement may be
assembled into a single document by attaching each page bearing a party's
original signature.
The Company The General Manager
South China Brewing Company Limited
By: /s/ James L. Ake /s/ Scott Ashen
------------------------------- --------------------------------
Name: Name:
Date: March 6, 1997 Date: /s/ March 18, 1997
---------------------------
<PAGE> 1
EXHIBIT 10.4
AMERICAN CRAFT BREWING INTERNATIONAL LIMITED
EMPLOYMENT AND NON-COMPETITION AGREEMENT
This Agreement (the "Agreement") is made effective this 12th day of
February, 1997, between American Craft Brewing International Limited, a Bermuda
company ("Company"), and Peter W. H. Bordeaux ("Executive").
WHEREAS, the Company is engaged in the business of developing and
operating international micro-breweries; and
WHEREAS, the Company desires to secure the services of Executive as
President and Chief Executive Officer and to maintain the services of Executive
as Chairman of the Board, and Executive desires to perform such services for
the Company, on the terms and conditions as set forth herein;
NOW, THEREFORE, in consideration of the premises and of the covenants
and agreements set forth below, it is mutually agreed as follows:
1. Effective Date, Term and Duties. The initial term of employment of
Executive by the Company hereunder shall commence upon the date of this
Agreement (the "Commencement Date") and end on the third anniversary of the
Commencement Date, unless extended on terms agreed upon between Executive and
the Company (such term being hereinafter referred to as the "Employment
Period"). The Employment Period may be earlier terminated pursuant to the
provisions of this Agreement. Executive shall have such duties as the Board of
Directors of the Company may from time to time prescribe consistent with his
position as President, Chief Executive Officer and Chairman of the Board of the
Company (the "Services"). Executive shall report directly to the Board of
Directors. Executive shall devote his full time, attention, energies and beat
efforts to the business of the Company, provided however, that during the first
three months of the Employment Period, Executive may devote up to 50% of his
time for the first six weeks and up to 25% of his time thereafter to his former
employer in order to facilitate an orderly transition. The Company shall
maintain an office for the Executive in Metairie, Louisiana.
The Board of Directors shall use its best efforts to have Executive
elected and reelected as Chairman of the Board at each Annual Stockholders
Meeting held during the Employment Period.
2. Compensation. The Company shall pay and Executive shall accept as full
consideration for the Services compensation consisting of the following:
2.1 Base Salary. $200,000 per year in base salary, payable in
installments twice per month, less such deductions or withholdings required by
law.
2.2 Bonus. A target bonus of up to $200,000 per year to be
awarded by the Company's Board of Directors based on the attainment by the
Company of the Company's
<PAGE> 2
Executive Bonus Plan Objectives for such year, which shall be agreed upon by
the Executive and the Company annually and shall be consistent with the
Company's business plan for the relevant year. For Executive's initial year of
employment, Executive will be guaranteed total base salary and bonus of at
least $300,000. The $100,000 guaranteed bonus payment for such initial year of
employment shall be paid in four equal quarterly installments payable in equal
installments at the end of each fiscal quarter of the Company. In addition,
the Company will loan Executive an amount equal to $200,000 with interest
payable quarterly in arrears at a rate per annum equal to the prime rate of
interest as reported in The Wall Street Journal changing as and when such prime
rate shall change. Executive will be required to repay this amount, including
accrued interest, on the fifth anniversary of the date hereof or upon
termination of the Employment Period for Cause (as defined in Section 4.2) or
upon termination of the Employment Period by the Executive for other than Good
Reason (as defined in Section 4.3).
2.3 Stock Options. As additional compensation for the Services,
Executive shall be entitled to a grant of a stock option for 200,000 shares
under the Company's 1996 Stock Option Plan (the "Stock Option Plan"), awarded
by the Stock Option Committee of the Company's Board of Directors administering
the Stock Option Plan, The terms and amounts of such grants are set forth on
Exhibit A attached hereto. Executive shall also be eligible to receive
additional stock option grants under the Stock Option Plan based upon
achievement of the Company's Executive Bonus Plan objectives, The Company shall
use its best efforts to register the shares issuable under the option on a Form
S-8 registration statement prior to the initial vesting date thereunder and to
keep such registration statement in effect for the entire period the option
thereafter remains outstanding.
2.4 Indemnification. In the event Executive is made, or
threatened to be made, a party to any legal action or proceeding, whether civil
or criminal, by reason of the fact that Executive is or was a director or
officer of the Company or serves or served any other corporation fifty percent
(50%) or more owned or controlled by the Company in any capacity at the
Company's request, Executive shall be indemnified by the Company, and the
Company shall pay Executive's related expenses when and as incurred, all to the
fullest extent permitted by law.
3. Benefits. Executive shall be entitled to use of an automobile of his
choice provided by the Company with all operating expenses paid by the Company,
and shall receive such pension, profit sharing and fringe benefits such as
hospitalization, medical, life and other insurance benefits, vacation, sick pay
and short-term disability as the Board of Directors of the Company may, from
time to time, determine to provide for the key Executives of the Company.
Executive shall be provided a country club membership (and dues) for a club of
his choice located in Louisiana. The Company shall not be obliged to pay any
initiation fee.
4. Benefits Upon Termination of Employment Period. Executive's employment
by the Company shall terminate immediately upon Executive's receipt of written
notice by the Company, upon the Company's receipt of written notice by
Executive, or upon Executive's death or permanent disability. Except in
connection with a termination for Cause (as defined in Subsection 4.2) or a
voluntary termination by Executive for other than Good Reason (as defined in
Subsection 4.3), the Company shall provide Executive with termination benefits
upon termination of the Employment Period, as follows:
<PAGE> 3
4.1 Termination Benefits. During a period of time beginning on
the termination of the Employment Period and ending on the earlier to occur of
eighteen months from such date or the third anniversary of the date of this
Agreement (or such later date as this Agreement may be extended form time to
time), Executive's base salary at the time of termination shall continue to be
paid by the Company in installments twice per month less applicable deductions
or withholdings, and Executive shall also be entitled to quarterly bonus
payments based on a bonus of $100,000 per annum, during the eighteen-month
period. Executive shall also be entitled to the benefits provided and shall be
entitled to participate in any plans or other employee benefit arrangements
which are generally available to employees or executives of the Company during
such period other than the Company's tax-qualified pension or profit-sharing
plans. Under no circumstances shall the Company be obligated to make any
payments or continue benefits beyond such eighteen-month period or the third
anniversary of the date of this Agreement, as the case may be. If the
Employment period is Terminated by the Company other than for Cause (as defined
in Section 4.2) or by the Executive for Good Reason (as defined in Section 4.3)
the unvested portion of any options held by the Executive on the date of such
termination shall immediately vest and become exercisable, Prior to the payment
of any termination benefits under this Section 4 or Section 5, Executive and
the Company will enter into a mutual general release; provided, however, that
such release shall not extend to any subsequent claims Executive may have with
respect to those termination benefits or continued option vesting.
4.2 Circumstances Under Which Termination Benefits Would Not Be
Paid. The Company shall not be obligated to pay Executive the termination
benefits or continue the option vesting described in Subsection 4.1 above if
the Employment Period is terminated for Cause. For purposes of this Agreement,
"Cause" shall be limited to (1) Executive's conviction of any felony under
federal or state law, or any fraud, misappropriation or embezzlement or act of
dishonesty; or (2) Executive's commission of a material violation of this
Agreement. In addition, Executive shall not be entitled to any termination
benefits or continued option vesting under Subsection 4.1 if he voluntarily
terminates his service with the Company other than for Good Reason as
determined under Subsection 4.3.
4.3 Constructive Termination. Notwithstanding anything in this
Section 4 or Section 5 to the contrary, the Employment Period will be deemed to
have been terminated (a "Constructive Termination") and Executive will be
deemed to have Good Reason for voluntary termination of the Employment Period
("Good Reason"), if there should occur:
(A) a material adverse change in Executive's position
causing it to be of materially less stature or responsibility without
Executive's written consent, and such a materially adverse change shall in all
events be deemed to occur if Executive no longer serves as President, Chief
Executive Officer and Chairman of the Board of the Company, unless Executive
consents in writing to such change,
(B) a reduction, without Executive's written consent, in
his level of base compensation (including base salary and fringe benefits) by
more than ten percent (10%) or a reduction by more than ten percent (10%) in
his target bonus formula under any performance-based executive incentive plans
from that provided for herein, or
<PAGE> 4
(C) a relocation of his principal place of employment by
more than 50 miles without Executive!a consent.
5. Change in Control Benefits.
Should there occur a Change in Control (as defined below), then the
following provisions shall become applicable:
(A) During the period (if any) following a Change in
Control that Executive shall continue to provide the Services, then the terms
and provisions of this Agreement shall continue in full force and effect, and
Executive shall continue to vest in his outstanding stock options;
(B) in the event of (x) a termination of the Employment
Period by the Company other than for Cause at any time after a Change in
Control (y) a Constructive Termination of the Employment Period at any time
after a Change in Control or (z) the voluntarily termination of the Employment
Period for any reason by the Executive within one hundred eighty (180) days
following a Change in Control, the following benefits shall become due and
payable:
(i) Executive's base salary in effect immediately
prior to termination of the Employment Period shall continue to be paid for a
eighteen-month period by the Company or the successor entity in installments
twice per month less applicable deductions or withholdings, and Executive shall
also be entitled to quarterly bonus payments based on a bonus of $200,000 per
annum, during that eighteen-month period. Executive shall also be entitled to
the benefits provided under this Agreement and shall be entitled to participate
in any plans or other employee benefit arrangements which are generally
available to employees or executives of the Company during such period other
than the Company's tax-qualified pension or profit-sharing plans or the
employee stock purchase plan.
(ii) Executive's opinions shall immediately vest
and become exercisable to the extent those options would have otherwise vested
over the eighteen (18) month period immediately following the effective date of
the Change in Control had Executive continued his employment under this
Agreement. The options as so accelerated shall remain exercisable until their
expiration date.
For purposes of this Section 5, a Change of Control shall be deemed to
occur upon:
(i) the sale, lease, conveyance or other disposition of
all or substantially all of the Company's assets as an entirety or
substantially as an entirety to any person, entity or group of persons acting
in concert other than in the ordinary course of business.
(ii) any transaction or series of related transactions (as
a result of a tender offer, merger, consolidation or otherwise) that results in
any Person (as defined in Section 13(h)(8)(E) under the Securities Exchange Act
of 1934), directly or indirectly, of more than 50% of the aggregate voting
power of all classes of common equity of the Company, except if such Person is
(a) a subsidiary of the Company, (b) an employee stock ownership plan for
employees of the Company or (c) a company formed to hold the Company's common
equity
<PAGE> 5
securities and whose shareholders constituted at the time such company became
such holding company, substantially all the shareholders of the Company (the
"AmBrew Holding Company).
(iii) individuals who are members of the Incumbent Board
cease for any reason (other than death) to constitute at least a majority of
the members of the board of directors of the company or an Ambrew Holding
Company. A person shall be a member of the Incumbent Board if he or she was a
member of the Board of Directors of the Company on February 1, 1997 or if the
election, or nomination for election by the holders of common equity securities
of the Company or an Ambrew Holding Company of such Person was approved by a
vote of at least a majority of the members of the Incumbent Board.
6. Arbitration.
6.1 Except for proceedings seeking injunctive relief, including,
without limitation, allegations of misappropriation of trade secrets, copyright
or patent infringements, or breach of any anti-competition provisions of this
Agreement, any controversy or claim arising out of or in relation to this
Agreement, or the breach thereof, shall be settled by arbitration in accordance
with the Commercial Arbitration rules of the American Arbitration Association
("AAA"), and judgement upon the award rendered by the arbitrator may be entered
in any court having jurisdiction thereof. Arbitration of this Agreement shall
include claims of fraud or fraud in the inducement relating to this Agreement,
Arbitration further includes all claims, regardless of whether the dispute
arises during the term of the Agreement, at the time of termination or
thereafter.
6.2 Either party may initiate the arbitration proceedings, for
which the provision is herein made, by notifying the opposing party, in
writing, of its demand to arbitrate. In any such arbitration there shall be
appointed one arbitrator who shall be selected in accordance with the AAA
Commercial Arbitration Rules. The place of arbitration shall be New Orleans,
Louisiana.
6.3 The parties agree that the award of the arbitrator shall be
the sole and exclusive remedy between them regarding any claims, counterclaims,
issues or accountings presented or plead to the arbitrator; that the arbitrator
shall be the final judge of both law and fact in arbitration of disputes
arising out of or relating to this Agreement, including the interpretation of
the terms of this Agreement. The parties further agree it shall be the sole
and exclusive duty of the arbitrator to determine the arbitrability of issues
in dispute and that neither party shall have recourse to the court for such a
determination.
7. Cooperation with the Company After Termination of the Employment
Period. Following any notice of termination of Employment Period (as it may be
extended from time to time) 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 the Company and the orderly transfer of any such
pending work to other employees of the Company as may be designated by the
Company.
<PAGE> 6
8. Confidentiality: Return of Property. The Executive acknowledges that
during the Employment Period 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
Employment Period (as it may be extended from time to time) 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" 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.
9. Non-Competition. The provisions of this Section 9.1 shall not apply if
the Employment Period is terminated by the Company without Cause (as defined in
Section 4.2 hereof) or by the Executive for Good Reason (as defined in Section
4.3 hereof).
9.1 Non-Competition. During the Employment Period (as it may be
extended from time to time) and, subject to the limitation described above,
thereafter for a period of two years the Executive agrees that he and his
affiliates shall not, at any 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 in developing and operating international micro-breweries;
(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)
hire or attempt to hire for any business endeavor any employee or prior
employee with which the Executive has had direct contact during the two year
period proceeding termination of Services (except those employees whose salary
is below $25,000) from any of the AmBrew Companies; or (iv) interfere with any
business relationship between any of the AmBrew Companies and any other person
or entity.
<PAGE> 7
9.2 Severability and Reform. If any portion of Section 9.1 shall
for any reason be held invalid, illegal or unenforceable in any respect, such
invalidity, illegality or enforceability shall not affect any other provisions
in Section 9.1, but Section 9.1 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 9.1 is held to cover a geographic area or to be for a
length of time 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 9.1 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.
IN WITNESS WHEREOF, the parties have executed this Agreement on the
date first above written.
AMERICAN CRAFT BREWING EXECUTIVE
INTERNATIONAL, LTD.
By: /s/ John F. Beaudette /s/ Peter W. H. Bordeaux
------------------------------ -----------------------------
Peter W. H. Bordeaux
Name: John F. Beaudette
-----------------------------
Title: Director and Attorney in Fact
-----------------------------
<PAGE> 1
EXHIBIT 10.5
CONTRACT BREWING AND PACKAGING AGREEMENT
This Agreement is made this 29th day of April, 1997, by and between
ANHEUSER-BUSCH, INCORPORATED ("ANHEUSER-BUSCH"), a Missouri corporation, with
its principal place of business at One Busch Place, St. Louis, Missouri 63118,
and AMERICAN CRAFT BREWING INTERNATIONAL LIMITED ("AMBREW"), a Bermuda
corporation, with its principal place of business at One Galleria Boulevard,
Metairie, Louisiana 70001.
BACKGROUND
A. ANHEUSER-BUSCH has brewed, sold and advertised beer throughout
the United States and worldwide.
B. ANHEUSER-BUSCH desires to grant a license to AMBREW and
Cerveceria Rio Bravo S.A. de C.V. to utilize the Trademarks and the Formula
referred to herein in connection with the manufacturing and packaging of beer
in Mexico.
C. AMBREW desires to utilize the Trademarks and Formula, and
desires to cause its majority controlled subsidiary, Cerveceria Rio Bravo S.A.
de C.V, to utilize such Trademarks and Formula.
AGREEMENT
1. DEFINITIONS
For purposes of this Agreement, the following terms shall have the
meanings indicated below:
1.1 "Approved Brewery" means the brewery controlled by AMBREW in
Tecate, Mexico, and approved in writing by ANHEUSER-BUSCH for brewing and/or
packaging of PRODUCT.
1.2 "PRODUCT" means the beer brewed and packaged by AMBREW and/or
AMBREW's subsidiary, Cerveceria Rio Bravo S.A. de C.V. (using the Formula)
pursuant to this Agreement and named by ANHEUSER-BUSCH, at its sole discretion,
or any other beer brewed by AMBREW at ANHEUSER-BUSCH's request.
1.3 "Confidential Information" means any data, analysis,
compilations, forecasts, studies, specifications, formulations, experience,
samples, models, procedures, processes, devices, other documents or information
relating to the business or affairs of AMBREW or ANHEUSER-BUSCH (including, in
relation to ANHEUSER-BUSCH, the Formula). Confidential Information shall not
include information (other than, in relation to ANHEUSER-BUSCH, such
information which collectively makes up the Formula) which:
<PAGE> 2
(i) was already known to the party receiving it at the
time of its receipt, unless such information was provided
subject to an obligation of confidentiality;
(ii) was published or otherwise generally known to the
public at the time of its disclosure to the receiving party;
or
(iii) became known or available to the receiving party from
a source having a right to make such disclosure and without
restriction on said disclosure.
1.4 "CPI Adjustment" is the product derived by multiplying: (i)
the then-existing Price for the term in effect (ii) by one-half of the
fraction, the numerator of which is the "CPI" (defined herein) as reported on
December 31 of the current calendar year for the term in effect, and the
denominator of which is the CPI as reported on December 31 of the immediately
preceding calendar year. The term "CPI" is the Consumer Price Index for All
Urban Consumers for All Cities which is published monthly by the Bureau of
Labor Statistics of the U.S. Department of Labor, or its successor.
1.5 "Effective Date" means the execution date of this Agreement.
1.6 "Force Majeure" means causes or contingencies beyond the
reasonable control of the respective parties, including but not limited to acts
of God, war, hostilities between nations, rebellion, riots, civil commotions,
accidents, explosions, fire, wind, cyclones, storms, earthquakes, floods,
epidemics, acts of a public enemy, strikes, lockouts, sabotages, boycotts,
picketing, labor disturbances or labor difficulties of any and all kinds,
embargo, delays in the transportation of materials, delays or defaults caused
by public carriers, governmental actions, laws, regulations or orders, which
shall render it impossible for such party to perform its obligations under this
Agreement. If, as a result of legislation or other governmental action, any
party or parties are precluded from receiving any benefit to which they are
entitled hereunder, then the parties shall review the terms of this Agreement
so as to use their best efforts to restore the party or parties to the same
relative positions as previously obtained hereunder.
1.7 "Formula" shall mean any and all of ANHEUSER-BUSCH's
procedures, processes, technology, recipes (including, without limitation,
ANHEUSER-BUSCH's yeast, malt and other ingredients and brewing materials),
specifications, inventions, brewing processes, trade secrets, know-how, and
scientific and technical information necessary for the production and packaging
of an alcoholic malt beverage having the taste, color, makeup, character and
product profile corresponding to the PRODUCT and as more specifically contained
in the manual attached hereto as Exhibit 1 (as may be amended from time to time
by ANHEUSER-BUSCH), all of which shall be considered Confidential Information.
1.8 "Territory" means the countries of Mexico and the United States
of America, including the territories and possessions of the United States of
America.
<PAGE> 3
1.9 "Trademarks" shall mean all trademarks (whether or not
registered) and trademark registrations listed in Schedule A, as well as all
trademarks, trade names, slogans and designs now or hereafter owned by
ANHEUSER-BUSCH, some of which will appear on the labels and packaging of
PRODUCT or will be used in connection with the advertising, promotion or
marketing of PRODUCT.
2. APPOINTMENT
2.1 Pursuant to the license contained herein, ANHEUSER-BUSCH
hereby authorizes AMBREW to produce and package, and AMBREW agrees to produce
and package, PRODUCT at the Approved Brewery in accordance with the Formula,
subject to the terms of this Agreement. PRODUCT produced and packaged by
AMBREW under this Agreement shall be sold only to ANHEUSER-BUSCH and its
authorized agents.
2.2 ANHEUSER-BUSCH shall provide the technical advisory services
reasonably required by AMBREW in order to allow AMBREW to produce PRODUCT in
accordance with the Formula.
2.3 During the term of this Agreement, AMBREW and its affiliates
agree that they will not contract brew or package other malt beverages for
brewers that brew in excess of 1,000,000 barrels of malt beverages per year, as
determined by the Beer Institute or other reputable industry analyst designated
by ANHEUSER-BUSCH.
3. APPROVAL OF BREWERIES.
The Approved Brewery must meet ANHEUSER-BUSCH's requirements, in its
sole discretion, and be approved by ANHEUSER-BUSCH in writing no later than May
15, 1997.
4. PURCHASE OF BREWING MATERIALS
4.1 In order to assure the highest quality of PRODUCT, AMBREW
acknowledges that it is essential to use brewing materials and only ingredients
meeting the specifications set forth in the Formula. AMBREW shall purchase
from ANHEUSER-BUSCH, or other suppliers who are approved in writing by
ANHEUSER-BUSCH, the yeast, malt, hopping materials, silica xerogel, tannin,
diatomaceous earth and all other brewing and finished materials required to
produce PRODUCT; provided, however, that ANHEUSER-BUSCH shall not unreasonably
withhold its approval of any supplier proposed by AMBREW if such supplier is
capable of supplying such brewing materials and ingredients (other than yeast)
in accordance with the specifications set forth in the Formula or otherwise
specified by ANHEUSER-BUSCH, and on terms which are more favorable than those
offered by ANHEUSER-BUSCH. If AMBREW purchases yeast from ANHEUSER-BUSCH,
AMBREW shall promptly return all empty yeast kegs to ANHEUSER-BUSCH, at
AMBREW's expense, in a clean and sanitary condition. ANHEUSER-BUSCH shall have
the option, at any time, of supplying any or all of the brewing materials, at
ANHEUSER-BUSCH's cost, necessary to produce PRODUCT, and upon such action the
Price shall decrease as more fully set forth in Section 8 hereof.
<PAGE> 4
4.2 AMBREW shall not (i) authorize or permit any third party to
use any brewing materials or ingredients obtained from ANHEUSER-BUSCH or (ii)
sell, transfer or convey any brewing materials or ingredients obtained from
ANHEUSER-BUSCH to any third party.
4.3 If AMBREW purchases brewing materials from ANHEUSER-BUSCH,
AMBREW shall take title of such materials in the United States and shall be
responsible for importing such materials into Mexico at its sole cost and
expense.
5. PAYMENT OF COSTS: ADDITIONAL CAPACITY
5.1 AMBREW shall be responsible for the payment of the purchase
price, installation costs and any taxes associated with the acquisition of any
additional equipment or the upgrade of any existing equipment required by
AMBREW to produce PRODUCT in accordance with the Formula.
5.2 Upon a request by ANHEUSER-BUSCH for AMBREW to provide
additional capacity to produce PRODUCT at the Approved Brewery or for the
designation of an additional Approved Brewery, AMBREW will cooperate with
ANHEUSER-BUSCH. AMBREW will complete any modifications as soon as practicable
in order to allow for availability of the additional capacity when required by
ANHEUSER-BUSCH. AMBREW specifically agrees that (i) upon thirty (30) days
advance written notice by ANHEUSERBUSCH to AMBREW, AMBREW shall add a third
shift to the Approved Brewery to increase capacity of the Approved Brewery to
200,000 cases; and (ii) upon six (6) months advance written notice from a duly
authorized officer of ANHEUSER-BUSCH, AMBREW shall increase the overall
capacity of the Approved Brewery up to 300,000 or 400,000 cases per year to
meet ANHEUSER-BUSCH's demands, as ANHEUSER-BUSCH directs. In the event
ANHEUSER-BUSCH requests a capacity increase pursuant to Section 5.2(ii) and
such capacity increase is undertaken by AMBREW for the sole benefit of
ANHEUSER-BUSCH, ANHEUSER-BUSCH agrees that one-half of the cost of such
expansion, not to exceed $200,000 for an increase to 300,000 cases per year or
$400,000 for an increase to 400,000 cases per year, shall be attributed (i.e.,
no cash outlay) to ANHEUSER-BUSCH and shall be amortized by $1.00 per case for
each case purchased by ANHEUSER-BUSCH from AMBREW after completion of such
capacity increase. If this Agreement is terminated before reduction of such
attribution to $0, ANHEUSER-BUSCH shall pay to AMBREW such remaining
unamortized attribution amount in immediately available funds.
6. PRODUCTION AND PACKAGING: QUALITY CONTROL.
AMBREW agrees to produce and package PRODUCT exclusively for sale to
ANHEUSER-BUSCH and/or its authorized agents, and ANHEUSER-BUSCH agrees to
purchase PRODUCT from AMBREW, on the following terms:
6.1 Until and unless otherwise determined by ANHEUSER-BUSCH, and
subject to the limitations set forth in Section 7.4, AMBREW will sell to
ANHEUSERBUSCH such
<PAGE> 5
quantities of PRODUCT in such packages as ANHEUSER-BUSCH may order from time to
time. AMBREW represents and warrants to ANHEUSER-BUSCH that it shall have a
minimum annual production capacity available for PRODUCT of 30,000 cases
(twenty-four (24) twelve (12) ounce bottles) of beer at all times hereunder and
a minimum daily output of 520 cases. Further, AMBREW will use its best efforts
to have available at all times sufficient production capacity at its Approved
Breweries to satisfy ANHEUSER-BUSCH's requests.
6.2 All PRODUCT shall be brewed and packaged by AMBREW in
accordance with all applicable laws and regulations of the United States of
America and Mexico. Likewise, all bottles, cans, kegs and other packages of
the PRODUCT supplied by AMBREW hereunder shall be labeled in accordance with
all applicable laws and regulations and in accordance with specifications
furnished by ANHEUSER-BUSCH to AMBREW from time to time; provided, however,
that ANHEUSER-BUSCH shall be responsible for such labeling with respect to
items supplied by it to AMBREW. The label on each individual bottle or can of
PRODUCT shall also bear a statement to the effect that it is "brewed and
packaged by Cerveceria Rio Bravo S.A. de C.V. in Tecate, Mexico and imported by
Anheuser-Busch, Inc." or such other notice as may reasonably be required by
ANHEUSER-BUSCH.
6.3 AMBREW shall monitor PRODUCT code dates and destroy, in
accordance with the policies of ANHEUSER-BUSCH from time to time, all PRODUCT
in its brewery warehouses which exceed the following age limits (measured from
date of packaging):
Bottles/Cans - 30 days
Kegs - 7 days
If the overaged PRODUCT is present at AMBREW's brewery warehouses due
to ANHEUSER-BUSCH's failure to comply with the forecast and ordering procedures
set forth in this Agreement, then the cost of destruction shall be borne by
ANHEUSERBUSCH. If the overaged PRODUCT is present at AMBREW's brewery
warehouses due to any other reason, then AMBREW shall bear the cost of such
destruction and shall reimburse ANHEUSER-BUSCH for ANHEUSER-BUSCH's
out-of-pocket costs related to such destruction, including but not limited to
packaging and brewing materials supplied to AMBREW for such destroyed product.
6.4 AMBREW shall purchase from ANHEUSER-BUSCH, or other suppliers
who are approved in writing by ANHEUSER-BUSCH, all primary and secondary
packaging materials, necessary for the packaging of PRODUCT hereunder,
including but not limited to all bottles, crowns, labels (if any), cartons,
carriers and boxes. ANHEUSERBUSCH shall promptly reimburse AMBREW for such
costs in addition to the Price; provided, however, that AMBREW shall be
responsible, and ANHEUSER-BUSCH shall have no obligation to reimburse AMBREW,
for any import duties, VAT or import fees related to such items.
6.5 AMBREW shall deliver to ANHEUSER-BUSCH the initial order of
PRODUCT no later than June 16, 1997. AMBREW hereby grants to ANHEUSERBUSCH
<PAGE> 6
access to the Approved Brewery and its other facilities by any of
ANHEUSERBUSCH's employees or representatives to assist AMBREW in meeting such
deadline, including, but not limited to, any brewing, engineering,
environmental, legal or other personnel.
6.6. PRODUCT shall be free from microbiological contamination or
defects in aroma, flavor or appearance. AMBREW shall ensure that PRODUCT is
produced and packaged at all times in accordance with the Formula, which may be
varied from time to time by ANHEUSER-BUSCH; and ANHEUSER-BUSCH shall provide,
at ANHEUSERBUSCH's expense, all reasonable technical assistance to enable
AMBREW to comply with any change in the Formula. ANHEUSER-BUSCH shall provide
AMBREW with any relevant know-how not contained in the Formula and, from time
to time, any improvements or amendments to either the Formula or such know-how.
6.7. ANHEUSER-BUSCH shall have the right, during normal business
hours, upon reasonable notice and at its expense, to verify AMBREW's compliance
with the Formula by (a) inspecting the Approved Brewery and all facilities and
equipment used by AMBREW to brew, package and store PRODUCT, as well as any
ingredients, processing aids, materials, supplies and containers used in
brewing or packaging PRODUCT; (b) tasting samples of PRODUCT at the Approved
Brewery; and (c) obtaining samples of the ingredients used in making PRODUCT.
Such inspection may include a complete review of the entire brewing and
packaging process for PRODUCT by one or more ANHEUSER-BUSCH brewmasters or
members of its technical staff.
6.8. Samples of packaged PRODUCT, ingredients, processing aids and
brewing water shall be provided (in accordance with the schedule set forth in
the Formula) unless ANHEUSER-BUSCH detects a problem which requires more
thorough sampling or unless ANHEUSER-BUSCH requests samples from one or more of
the various stages of brewing in which case AMBREW shall furnish such samples
as ANHEUSER-BUSCH may request. AMBREW shall also, at ANHEUSER-BUSCH's request,
provide ANHEUSER-BUSCH with the results of tests and analyses of PRODUCT made
by AMBREW, using normal packaged beer analyses as set forth in the Formula, as
well as other analytical methods acceptable to ANHEUSER-BUSCH or as mutually
agreed between the brewmasters of ANHEUSER-BUSCH and AMBREW. As appropriate,
ANHEUSER-BUSCH shall furnish its comments and recommendations to AMBREW with
respect to the samples and test results submitted by AMBREW as aforesaid.
AMBREW agrees to abide by ANHEUSER-BUSCH's determination in such matters and to
implement, at AMBREW's expense whatever corrective action ANHEUSER-BUSCH may
require under the circumstances in order to produce PRODUCT having a taste
which is satisfactory to ANHEUSER-BUSCH.
6.9. If ANHEUSER-BUSCH determines that the taste of PRODUCT is
unsatisfactory, it shall so notify AMBREW in writing and the parties shall
immediately work together in good faith in attempting to resolve such taste
problem. The first step shall be a meeting at the Approved Brewery or other
facility where the problem exists, which shall be held as soon as practicable,
but in any event within two calendar days after the date of such notice.
Depending on the severity of the problem, ANHEUSERBUSCH may require AMBREW to
(i) suspend brewing, packaging and shipment of PRODUCT until the problem
<PAGE> 7
is resolved to ANHEUSER-BUSCH's satisfaction, and (ii) recover from wholesalers
and retailers previous shipments of unsatisfactory PRODUCT, which AMBREW shall
then destroy or use in another mutually agreeable manner.
6.10. ANHEUSER-BUSCH shall provide AMBREW with full technical and
analytical support to assist AMBREW in identifying the problem and determining
the correct procedures for resolving the same. Until the problem is resolved,
AMBREW shall undertake sampling as requested by ANHEUSER-BUSCH, and only beer
which ANHEUSER-BUSCH has approved shall be packaged and sold as PRODUCT
pursuant to this Agreement. ANHEUSER-BUSCH and AMBREW shall continue to
cooperate in good faith to resolve the problem and shall take such action as
they shall agree is reasonably necessary in connection therewith.
6.11. ANHEUSER-BUSCH's determinations and conclusions in the foregoing
matters shall be final and shall not be subject to arbitration or judicial
review.
7. PROCEDURES RELATING TO FORECASTING AND ORDERING
7.1 Annual Volume Projection. ANHEUSER-BUSCH shall supply AMBREW,
on or before October 31 of each year, with a non-binding schedule of
ANHEUSER-BUSCH's projected monthly purchases by package for the following
calendar year (the "Annual Volume Projection").
7.2 Monthly Forecasts. On or before the 15th day of each month,
ANHEUSERBUSCH will provide to AMBREW a non-binding, month-by-month forecast of
ANHEUSER-BUSCH 's total requirements for production by AMBREW hereunder for the
three-month period commencing in the next month following the month in which
such forecast is given.
7.3 Inventory Information. AMBREW shall monitor inventory levels
of PRODUCT as well as packaging and brewing materials and will advise
ANHEUSERBUSCH weekly as to the levels of AMBREW's inventory of packaging and
brewing materials required for the production of the PRODUCT, and of any
anticipated shortages in the supply of any such materials.
7.4 Ordering Procedures. Subject to the other provisions of this
Agreement, all purchases by ANHEUSER-BUSCH hereunder shall be on an
order-to-order basis. Upon receipt by AMBREW of an order for PRODUCT which
complies with the foregoing requirements, each order shall represent a firm
commitment by ANHEUSER-BUSCH to purchase and a firm commitment by AMBREW to
sell and deliver the quantity and package mix of the PRODUCT so ordered,
subject to the following:
(i) ANHEUSER-BUSCH shall place firm orders, specifying the
quantity of each package, not later than 35 days prior to the
scheduled date of packaging and delivery, and shall be
obligated to take delivery of the products promptly upon
completion of packaging, which shall be no later than such 35
days.
<PAGE> 8
(ii) AMBREW shall use its good faith efforts to accommodate
any request for changes in firm orders if such request is
received within 30 days after receipt of the order.
7.5 Title. Risk of loss, damage or destruction to the PRODUCT
ordered by ANHEUSER-BUSCH hereunder shall pass from AMBREW to ANHEUSER-BUSCH at
the time of delivery by AMBREW to the ANHEUSER-BUSCH designated freight
forwarder at AMBREW's dock; provided, however, that title shall not pass until
PRODUCT reaches its destination as designated by ANHEUSER-BUSCH.
ANHEUSER-BUSCH shall notify AMBREW in writing of the name and address of the
freight forwarder to use with respect to the PRODUCT, and ANHEUSER-BUSCH shall
reimburse AMBREW for the cost and expense of such freight forwarder.
8. PRICING
ANHEUSER-BUSCH shall pay to AMBREW in United States of America currency
a fixed cost of Four and 40/1 00 Dollars (US$4.40) per case (the "Price") for
PRODUCT produced by AMBREW and ordered by ANHEUSER-BUSCH pursuant to this
Agreement; provided that (i) if ANHEUSER-BUSCH supplies at its cost any brewing
materials hereunder, the Price shall be reduced by the corresponding cost last
paid by AMBREW for such brewing material(s). In addition, the Price is based
upon an aggregate cost to AMBREW of the brewing materials equaling U.S.$1.4103
per case based upon an all malt formula. If the aggregate cost per case of the
brewing materials for the initial Formula is different than U.S.$1.4103 per
case, the Price shall be adjusted for any such change in the aggregate cost of
the brewing materials, and any subsequent change in such Formula will adjust
the Price equal to the change in the aggregate cost of such brewing materials.
All charges for PRODUCT ordered in accordance with Section 7.4 hereunder shall
be invoiced to ANHEUSER-BUSCH when shipped. AMBREW's invoice shall be due and
payable by electronic funds transfer thirty (30) days after the later of
delivery or the date of invoice. ANHEUSER-BUSCH shall not be responsible for
any other costs or expenses, including, but not limited to, VAT, Mexican beer
excise taxes or other special taxes.
9. CONFIDENTIAL INFORMATION; PROPRIETARY RIGHTS AND TRADEMARKS
9.1 AMBREW acknowledges that ANHEUSER-BUSCH has disclosed or will
disclose to AMBREW, whether directly or indirectly, certain Confidential
Information. AMBREW shall have no proprietary rights of any kind in such
Confidential Information or in the Trademarks. All rights in such Confidential
Information and in the Trademarks shall remain the exclusive property of
ANHEUSER-BUSCH. AMBREW shall not disclose any such Confidential Information or
make any such Confidential Information available, directly or indirectly, to
anyone other than those of its employees, agents, representatives or attorneys
who need such Confidential Information to enable them to perform their
obligations under this Agreement. AMBREW will not use such Confidential
Information or the Trademarks to produce or identify any beer other than
PRODUCT. AMBREW shall
<PAGE> 9
ensure that each of its employees, agents, representatives or attorneys who has
access to the Confidential Information shall keep the Confidential Information
secret. These secrecy obligations shall survive the termination of this
Agreement and each party's right to use the Confidential Information and
Trademarks shall immediately cease upon termination of this Agreement.
9.2 ANHEUSER-BUSCH acknowledges that AMBREW has disclosed or will
disclose to ANHEUSER-BUSCH certain Confidential Information. ANHEUSER-BUSCH
shall not have any proprietary rights of any kind in such Confidential
Information. All rights in such Confidential Information shall remain the
exclusive property of AMBREW, subject only to the rights expressly granted to
ANHEUSER-BUSCH herein. ANHEUSERBUSCH shall not disclose any such Confidential
Information or make any such Confidential Information available, directly or
indirectly, to anyone other than those of its employees, agents,
representatives or attorneys who need such Confidential Information to enable
them to perform their obligations under this Agreement. ANHEUSER-BUSCH shall
ensure that each of its employees, agents, representatives or attorneys who has
access to the Confidential Information shall keep the Confidential Information
secret. These secrecy obligations shall survive the termination of this
Agreement.
9.3 If either party learns of any misuse or unauthorized use by a
third party of any Confidential Information disclosed to it as referred to
above, it shall promptly notify the other party, whereupon the other party
shall take such action as it may reasonably deem necessary to protect such
Confidential Information against such misuse or unauthorized use, at its own
expense.
9.4 In order that ANHEUSER-BUSCH may at all times be assured that
AMBREW is taking adequate steps to protect ANHEUSER-BUSCH's Confidential
Information, AMBREW agrees to permit ANHEUSER-BUSCH or its designated
representative to enter upon any premises where the Confidential Information is
used, to inspect the measures being taken to protect the confidentiality of
ANHEUSERBUSCH's Confidential Information. AMBREW further agrees that after the
expiration or termination of this Agreement, it will permit, on reasonable
notice, the inspection of any of its facilities by an independent inspector, so
that ANHEUSER-BUSCH can determine whether ANHEUSER-BUSCH's Confidential
Information is being used.
10. LICENSE:ANHEUSER-BUSCH TRADEMARKS
10.1 ANHEUSER-BUSCH hereby grants to AMBREW, upon the terms and
conditions herein set forth, the non-exclusive and non-transferable right and
license during the term of this Agreement to use (i) the Formula to produce and
package PRODUCT pursuant to this Agreement; (ii) the Trademarks solely in
connection with the labeling and packaging of PRODUCT in the Territory; and
(iii) other copyrighted material of ANHEUSER-BUSCH in labeling and packaging of
PRODUCT; provided, however, that all Trademarks and copyrights of
ANHEUSER-BUSCH shall be and remain the exclusive property of ANHEUSER-BUSCH,
and all use thereof by AMBREW shall inure to the exclusive benefit of
ANHEUSER-BUSCH. Notwithstanding the foregoing, ANHEUSER-
<PAGE> 10
BUSCH or its affiliates may label, package, manufacture, advertise, promote,
distribute, otherwise use or sell in the Territory any product bearing the
Trademarks.
10.2 AMBREW will use the Trademarks only on PRODUCT manufactured,
packaged, and stored in strict compliance with specifications, standards and
directions established by ANHEUSER-BUSCH in writing from time to time. AMBREW
will use the Trademarks only on labels, containers, packages, advertising
materials, literature, and the like in strict compliance with written
instructions supplied to AMBREW by ANHEUSER-BUSCH, and ANHEUSER-BUSCH shall
have the right to approve in advance all uses of the Trademarks.
10.3 In order that ANHEUSER-BUSCH may at all times be assured that
goods on or in relation to which AMBREW uses the Trademarks are manufactured,
packaged, and stored in strict accordance with this Agreement, AMBREW will at
all reasonable times permit ANHEUSER-BUSCH to enter upon any premises where
such goods are, or where they are intended to be, used, manufactured, packaged,
or stored, so as to allow ANHEUSER-BUSCH to inspect the methods, processes,
containers and materials used by AMBREW in the manufacture, packaging, or
storage thereof and to procure samples of such goods, and AMBREW agrees to
submit, including by overnight courier if requested, samples of such goods and
materials used in the manufacture thereof to ANHEUSER-BUSCH upon request.
10.4 AMBREW represents and warrants that PRODUCT, its packaging and
sales shall meet or exceed all applicable laws, ordinances, standards,
regulations and guidelines in the Territory, including, but not limited to,
those pertaining to product safety, quality, labeling and propriety. AMBREW
agrees that it will not package any PRODUCT or cause or permit any PRODUCT to
be packaged or sold in violation of any such law, ordinance, standard,
regulation or guideline.
10.5 All PRODUCT packaging (primary and secondary), as well as
labels on such packaging, shall bear such Trademarks as ANHEUSER-BUSCH
specifies from time to time. The label on each container of PRODUCT shall bear
a statement to the effect that PRODUCT is "brewed and packaged by Cerveceria
Rio Bravo S.A. de C.V. in Tecate, Mexico and imported by Anheuser-Busch, Inc."
or such other notice, if any, as may be required or deemed advisable by
ANHEUSER-BUSCH to preserve ANHEUSER-BUSCH's ownership of the Trademarks in the
Territory and the goodwill symbolized thereby.
10.6 The Trademarks shall remain the exclusive property of
ANHEUSER-BUSCH, whether or not registered in the Territory, and AMBREW shall
comply fully with ANHEUSER-BUSCH's instructions concerning the use of the
Trademarks. No right, title or interest of any kind in or to the Trademarks or
the registrations thereof is transferred by this Agreement to AMBREW, except a
nonexclusive license to use said Trademarks during the term and subject to the
terms and conditions of this Agreement. AMBREW agrees that as between the
parties ANHEUSER-BUSCH owns the Trademarks throughout the Territory. AMBREW
agrees that it will not attempt to register the Trademarks, or any marks
similar thereto, in any language or anywhere in the Territory. AMBREW further
<PAGE> 11
agrees that it will not contest the validity of the Trademarks or
ANHEUSER-BUSCH's ownership thereof, or take any action that would harm the
Licensed trademarks or impair ANHEUSER-BUSCH's rights therein. AMBREW's use of
the Trademarks will inure to the benefit of ANHEUSERBUSCH.
10.7 AMBREW shall at all times recognize, respect and protect
ANHEUSERBUSCH's right of exclusive ownership of the Trademarks, as well as all
of ANHEUSER-BUSCH's copyrights used in conjunction with the packaging,
advertising and promotion of PRODUCT, and AMBREW shall not take any action
which would in any way derogate, diminish or weaken such rights.
10.8 This Agreement and AMBREW's limited right to use the
Trademarks shall not apply to goods other than PRODUCT. ANHEUSER-BUSCH shall
have the exclusive right to license the manufacture. sale and distribution of
all other goods bearing the Trademarks
10.9 AMBREW agrees to notify ANHEUSER-BUSCH in writing of any
infringements or counterfeits of, or any unfair competition affecting the
Trademarks immediately upon gaining knowledge thereof, and to cooperate fully
in any action thereon which ANHEUSER-BUSCH may, in its sole discretion, deem
appropriate. AMBREW shall not, however, be entitled to take or institute any
action thereon, either by way of informal protest or legal, equitable or
criminal proceedings, without ANHEUSER-BUSCH's express written approval, nor
shall AMBREW be entitled to call upon ANHEUSER-BUSCH to take action thereon;
all such matters shall be entirely within the discretion of ANHEUSER-BUSCH.
ANHEUSER-BUSCH shall pay the third party costs and expenses of any actions
taken by AMBREW under this Section at the request of ANHEUSER-BUSCH. Any legal
proceedings instituted pursuant to this Section shall be for the sole benefit
of ANHEUSER-BUSCH.
10.10 The parties shall cooperate and jointly make such application
as ANHEUSER-BUSCH shall consider necessary or desirable for the registration of
AMBREW as a licensee of the Trademarks in the Territory or any part thereof and
will cooperate in obtaining and maintaining the trademark registrations.
AMBREW agrees to cooperate with ANHEUSER-BUSCH in the prosecution of any
trademark applications that ANHEUSER-BUSCH may desire to file or in the conduct
of any litigation relating to the Trademarks. AMBREW shall supply to
ANHEUSER-BUSCH such samples, containers, labels, sales information and similar
material and, upon ANHEUSERBUSCH's request shall procure evidence, give
testimony and cooperate with ANHEUSER-BUSCH as may reasonably be required in
connection with any such application or litigation.
10.11 ANHEUSER-BUSCH shall provide to AMBREW such technical
assistance in connection with the manufacturing, packaging and sale of PRODUCT
as may be required or requested from time-to-time by AMBREW, such technical
assistance to be provided by one of ANHEUSER-BUSCH's brewmasters or other of
its qualified employees.
<PAGE> 12
10.12 The parties agree that all artwork and designs created by
AMBREW and used or proposed to be used in connection with PRODUCT are works
made for hire within the meaning of the United States Copyright Act and shall
be the property of ANHEUSER-BUSCH. To the extent any artwork or design created
by AMBREW is not a work made for hire, AMBREW agrees to assign to
ANHEUSER-BUSCH the copyright in such artwork or design. The parties agree that
any trademark in connection with PRODUCT shall be the sole property of
ANHEUSER-BUSCH.
11. INSURANCE
11.1 AMBREW shall carry product liability insurance, in the amount
of US$1,000,000.00, naming ANHEUSER-BUSCH as additional insureds on its
policies and providing that ANHEUSER-BUSCH and ANHEUSER-BUSCH shall be notified
at least thirty days prior to cancellation of or a material change in any of
such policies. AMBREW shall furnish ANHEUSER-BUSCH with a copy of the current
insurance certificate confirming the existence of such insurance coverage.
Such coverage shall include the territories of both the United States of
America and Mexico.
11.2 AMBREW shall at all times during the term of this Agreement
carry "keyman" life insurance on Peter Bordeaux and James Ake of AMBREW.
12. INDEMNIFICATION
12.1 AMBREW agrees to indemnify, defend and hold harmless
ANHEUSERBUSCH from and against all losses, damages, costs and expenses
(including, without limitation, reasonable legal fees and costs) suffered or
incurred by either of them or by any of their employees, agents or directors in
respect of or resulting from (i) a claim by a third party for personal injury
or death resulting from the use or consumption of any PRODUCT produced by
AMBREW; and/or (ii) AMBREW's manufacture and packaging of PRODUCT; provided,
however, that in the event that such losses, damages, costs and expenses result
from a cause attributable to ANHEUSER-BUSCH or any of their employees, agents
or directors, ANHEUSER-BUSCH shall indemnify AMBREW to such extent against the
losses, damages, costs and expenses (including, without limitation, reasonable
legal fees, costs and expenses) suffered or incurred by AMBREW or any of its
employees, agents or directors in respect thereof.
12.2 ANHEUSER-BUSCH agrees to indemnify, defend and hold harmless
AMBREW from and against all losses, damages, costs and expenses (including,
without limitation, reasonable legal fees and costs) suffered or incurred by
them or by any of their employees, agents or directors in respect of or
resulting from AMBREW's use of the Trademarks pursuant to this Agreement.
13. TERMINATION.
This Agreement shall become effective on the Effective Date, and shall
continue in full force and effect thereafter until:
<PAGE> 13
13.1 the parties shall mutually agree to terminate the Agreement;
13.2 either party shall violate in any material respect any of its
obligations under this Agreement and (if such default shall be curable) such
default shall continue unremedied for a period of 30 days after written notice
from the other party of such default, in which event the non-defaulting party
shall have the right to terminate this Agreement on written notice to the
defaulting party;
13.3 December 31, 1997; or
13.4 July 1, 1997, if the brewing, packaging and delivery of the
initial order of PRODUCT is not completed pursuant to the terms and conditions
contained herein by such date.
13.5 Termination of this Agreement shall be without prejudice to
the rights of either party accrued prior to the date of termination of this
Agreement; provided, that neither party shall have any liability to the other
party solely as a result of such termination as provided above.
13.6 Upon termination of this Agreement:
(i) AMBREW shall discontinue all use of the Trademarks and
any Confidential Information received from ANHEUSER-BUSCH;
(ii) ANHEUSER-BUSCH shall discontinue all use of any
Confidential Information received from AMBREW; and
(iii) each party shall immediately surrender and deliver to
the other party all Confidential Information received from the
other party, including any and all copies thereof and
extracts, and shall execute and deliver to the other party all
documents and take such action as the other party may
reasonably deem necessary to evidence (1) that such party has
ceased using the Confidential Information and (2) the
termination of such party's right to use the Confidential
Information.
13.7 Notwithstanding the foregoing in Section 13.3, ANHEUSER-BUSCH
shall have the option to renew this Agreement for successive one year periods
("Renewal Term") upon advance written notice no later than October 31 of each
calendar year upon all the terms and conditions contained herein except Price,
which shall be mutually agreed upon by the parties. If Price cannot be
mutually agreed by the parties hereto in good faith by December 31 of such
calendar year, the Price shall be determined according to the CPI Adjustment.
13.8 In addition to the foregoing, if a sale, merger or change of
control of AMBREW occurs, or the sale or other transfer of a substantial
portion of the assets of AMBREW, as determined by ANHEUSER-BUSCH in its sole
discretion, to any third party
<PAGE> 14
occurs, ANHEUSER-BUSCH shall have the right to terminate this Agreement
effective immediately with no further obligation hereunder.
14. REPRESENTATIONS AND WARRANTIES.
14.1 ANHEUSER-BUSCH represents and warrants to AMBREW as follows:
(i) The execution, delivery and performance by
ANHEUSER-BUSCH of this Agreement is within the corporate power
and authority of ANHEUSER-BUSCH, and has been duly authorized
by all requisite corporate and other action on the part of
ANHEUSER-BUSCH, and constitutes the valid and binding
obligation of ANHEUSER-BUSCH in accordance with its terms.
(ii) The execution, delivery and performance by
ANHEUSER-BUSCH of this Agreement will not conflict with, or be
contrary to, any applicable law or governmental restriction or
any agreement or other undertaking on the part of
ANHEUSER-BUSCH or to which ANHEUSER-BUSCH or its properties
are bound or subject.
(iii) There is no litigation or other proceeding pending or,
to the knowledge of ANHEUSER-BUSCH, threatened against it,
which, if adversely determined, would prohibit the execution,
delivery or performance by ANHEUSER-BUSCH of this Agreement or
materially impair its ability to perform its obligations
hereunder.
14.2 AMBREW represents and warrants to ANHEUSER-BUSCH as follows:
(i) The execution, delivery and performance by AMBREW of
this Agreement is within the corporate power and authority of
AMBREW, and has been duly authorized by all requisite
corporate and other action on the part of AMBREW, and
constitutes the valid and binding obligation of AMBREW in
accordance with its terms.
(ii) The execution, delivery and performance by AMBREW of
this Agreement and the related Agreements will not conflict
with, or be contrary to, any applicable law or governmental
restriction or any agreement or other undertaking on the part
of AMBREW or to which AMBREW or its properties are bound or
subject.
(iii) AMBREW has the power and authority to bind Cerveceria
Rio Bravo S.A. de C.V. with respect to any and all obligations
and activities contained herein.
(iv) AMBREW owns 99.98% of the outstanding shares of
Cerveceria Rio Bravo S.A. de C.V.
<PAGE> 15
(v) Cerveceria Rio Bravo S.A. de C.V. is a duly organized
and validly existing corporation in good standing under the
laws of the jurisdiction of its incorporation, and has the
legal and corporate power and authority to own, lease and
operate its assets and properties and to conduct its business
as now being conducted.
(vi) There is no litigation or other proceeding pending or,
to the knowledge of AMBREW, threatened against it, which, if
adversely determined, would prohibit the execution, delivery
or performance by AMBREW of this Agreement or materially
impair its ability to perform its obligations hereunder.
(vii) In order to fulfill the requirements of the United
States Foreign Corrupt Practices Act, AMBREW and its
affiliates have not taken nor will take any action which would
be illegal under United States' law by directly or indirectly
paying, offering, giving or promising to pay or give, or
authorizing the payment or gift of, any monies or other thing
of value to (A) an official or employee of any government, (B)
an official or employee of any agency or instrumentality of
any government, (C) a candidate for political office, (D) a
political party or party official in any non-U.S. territory or
country or (E) any other person, individual or entity at the
suggestion, request or direction or for the benefit of any of
the persons described in clauses (A) through (D) above, for
the purpose of (a) influencing any act or decision of any such
persons in his or its official capacity, including a decision
to fail to perform his or its official function, or (b)
inducing any such persons specified above to use his or its
influence to affect or induce any act or decision of such
government or instrumentality, in order to assist the parties
in obtaining or retaining business or to engage in acts or
transactions otherwise in violation of the Foreign Corrupt
Practices Act of the United States of America of 1977, as
amended from time to time.
(viii) AMBREW has received all consents, approvals, licenses,
permits and/or authorizations necessary for the execution,
delivery and performance by AMBREW of the transactions
contemplated hereunder, including from any and all
governmental authorities.
15. FORCE MAJEURE
If either party shall be prevented from performing any obligation
hereunder (other than an obligation for the payment of money) by reason of
Force Majeure, then such party shall not be deemed to be in default hereunder
by reason of its failure to perform such obligation; provided, that (i) the
party which is so prevented from performing shall give prompt notice to the
other party of the occurrence of such event of Force Majeure, as to the cause
for such circumstance, the expected duration of such condition and the steps
which it is taking to correct such circumstance and (ii) if such condition
shall continue for a period of more than 150 days, the other party shall have
the right to terminate this Agreement.
<PAGE> 16
16. ARBITRATION
16.1 All disputes arising under or in connection with this
Agreement, including its interpretation, validity, scope and enforceability,
shall be referred to and finally resolved by arbitration in accordance with the
UNCITRAL rules then in force (the "Rules") by three arbitrators (each of whose
native language is English). Each party shall nominate one arbitrator. The
two arbitrators so nominated by the parties shall attempt to reach agreement on
a third arbitrator within 30 days following confirmation of the second
arbitrator. If the third arbitrator has not been selected within such 30-day
period, the third arbitrator shall be appointed as provided by the Rules.
16.2 The arbitration shall be conducted in English and its seat
shall be where agreed by the parties, or failing their agreement as set by the
arbitrator, and such arbitration shall proceed pursuant to the Rules.
16.3 The parties shall facilitate the arbitration by producing,
upon request of each other, all documents and records relevant to the issues of
the arbitration, the scope and timetable of such requests and production to be
determined by the arbitrators and the Rules in the event of a dispute.
16.4 In the event of any arbitration or legal proceeding brought by
either party hereto against the other with regard to any matter arising out of
or relating to this Agreement, the final award shall include an award which
allocates and divides between the parties, on a basis which is just and
equitable under the circumstances, all costs of such proceedings, including
court costs, the arbitrators' fee and reasonable attorneys' fees (including
disbursements) incurred in connection with such proceedings, including, to the
extent allowed by applicable law, court costs.
16.5 At the request of either party, the arbitrators may take any
interim measures they deem necessary with respect to the subject matter of the
dispute, including measures for the conservation of the goods forming the
subject matter of the dispute, such as ordering their deposit with a third
person or the sale of perishable goods. Such interim measures may be set out
in the form of an interim award. The arbitrators may require the posting of
security for the cost of such interim measures. Any interim award of the
arbitrators may be enforced in a court of competent jurisdiction.
16.6 Judgment on the award of the arbitrators may be entered in any
court having jurisdiction over either party or over its assets, and neither
party shall interfere with the entering of such judgment on the award. Any
award of the arbitrators shall be enforceable pursuant to the provisions of the
Convention on the Recognition and Enforcement of Foreign Arbitral Awards,
T.I.A.S. No. 6997, 330 U.N.T.S. 38.
16.7 The award of the arbitrators may be, alternatively or
cumulatively, for monetary damages, an order or award requiring the performance
OF either mandatory on non-mandatory obligations, including specific
performance, injunctive relief or any other appropriate remedy.
<PAGE> 17
17. MISCELLANEOUS
17.1 Notices. Any notice to either party hereunder shall be given
in writing and shall be effective when received by the party to which it is
addressed, and may be sent by delivery, mail, telex or telefax, addressed to
the parties at the addresses set forth below or at such other address as either
party may specify as aforesaid from time to time hereafter:
If to ANHEUSER-BUSCH:
Anheuser-Busch, Incorporated
One Busch Place
St. Louis, Missouri 63118
Attn: Vice President - Michelob Brands, Specialty Beers and Imports
with copies to:
ANHEUSER-BUSCH COMPANIES, INC.
One Busch Place
St. Louis, Missouri 63118
Attn: General Counsel
FAX: (314) 577-0776
If to AMBREW:
One Galleria Plaza
Metairie, Louisiana 70001
Attn: James Ake, Executive Vice President
with copies to:
Donald Ensenat, Esq.
2400 Pan American Life Center
601 Poydras Street
New Orleans, Louisiana 70130
FAX: (504) 558-5200
17.2 Governing Law. This Agreement, including Section 16 hereof,
shall be governed, and construed in accordance with, the substantive laws of
the State of New York, including the Uniform Commercial Code as enacted in New
York, and without regard to its choice of laws, rules or provisions. The
parties specifically exclude the application of the 1980 United Nations
Convention on Contracts for the International Sale of Goods.
17.3 Amendments. This Agreement may be amended only by a written
instrument signed by both parties.
<PAGE> 18
17.4 Successors and Assigns. Except as otherwise provided herein,
neither party shall have the right to assign or transfer its rights or
obligations under this Agreement without the consent of the other party.
Subject to the foregoing, this Agreement shall be binding upon, and inure to
the benefit of, the parties hereto and their respective successors and assigns.
17.5 Full Agreement. This Agreement and the other agreements
referred to herein, taken together, constitute the entire agreement of the
parties with respect to the matters covered hereby and thereby, and supersede
any prior or simultaneous oral or written agreements or understandings of the
parties relating to any such matter.
17.6 [INTENTIONALLY LEFT BLANK]
17.7 No Partnership or Joint Venture. Nothing contained herein
shall be deemed to create a partnership or joint venture between AMBREW and
ANHEUSER-BUSCH or to authorize either party to represent the other or to
contract any liability on behalf of the other party.
17.8 Severability. If any provision of this Agreement shall be
determined to be illegal or unenforceable, the remaining provisions of this
Agreement shall remain in full force and effect, and this Agreement shall be
construed as if the illegal or unenforceable provision were not a part hereof,
so long as the remaining provisions of this Agreement shall be sufficient to
carry out the overall intent of the parties as expressed herein.
17.9 No Waiver. No delay or forbearance by either party in
enforcing any obligation of the other party under this Agreement shall be
deemed to be a waiver of any rights of such party to enforce this Agreement,
and no waiver of any provision of this Agreement shall be valid unless in
writing and signed by the party against which such waiver is to be enforced. A
waiver of any provision of this Agreement on any one occasion shall not
constitute a waiver for any other purpose.
17.10 Right of First Refusal.
(i) Notwithstanding anything herein to the contrary, if
Cerveceria Rio Bravo S.A. de CM., a controlled subsidiary of
AMBREW, receives a bona fide offer to purchase any or all of
its interest in the Approved Brewery, and Cerveceria Rio Bravo
S.A. de C.V. desires to sell such interest pursuant to such
offer, then it or AMBREW must so notify ANHEUSER-BUSCH, and
must provide ANHEUSERBUSCH with a copy of such offer, the
identity of the offeror (including such offeror's beneficial
owners) and such other information as ANHEUSER-BUSCH may
request to substantiate the offeror's ability to consummate
the proposed transaction. Failure of the Cerveceria Rio Bravo
S.A. de C.V. or AMBREW to promptly provide such information
results in a tolling of the 30 day period referred to in the
next sentence until such reasonably requested information is
provided to ANHEUSER-BUSCH. For a period of 30 days following
the giving of such notice referenced above,
<PAGE> 19
ANHEUSER-BUSCH has the option to acquire any or all of the
Cerveceria Rio Bravo S.A. de C.V.'s interest on the same terms
and conditions as set forth in the offer, including any
interest in the lease with respect to the Approved Brewery.
(ii) If Cerveceria Rio Bravo S.A. de C.V. receives a bona
fide offer to purchase a material portion of the assets of the
Approved Brewery, and Cerveceria Rio Bravo S.A. de C.V.
desires to sell a material portion of the assets pursuant to
such offer, Cerveceria Rio Bravo S.A. de C.V. or AMBREW must
so notify ANHEUSER-BUSCH, and must provide ANHEUSER-BUSCH with
a copy of such offer, the identity of the offeror (including
such offeror's beneficial owners) and such other information
as ANHEUSER-BUSCH may request to substantiate the offeror's
ability to consummate the proposed transaction. Failure of
the Cerveceria Rio Bravo S.A. de C.V. or AM BREW to promptly
provide such information results in a tolling of the 30 day
period referred to in the next sentence until such reasonably
requested information is provided to ANHEUSER-BUSCH. For a
period of 30 days following the giving of such notice
reference above, ANHEUSER-BUSCH has the option to acquire any
or all of Cerveceria Rio Bravo S.A. de C.V.'s interest in the
assets on the same terms and conditions as set forth in the
offer, including any interest in the lease with respect to the
Approved Brewery.
(iii) If Cerveceria Rio Bravo S.A. de C.V. or AMBREW desires
to close the Approved Brewery, Cerveceria Rio Bravo S.A. de
C.V. or AMBREW must promptly so notify ANHEUSER-BUSCH. For a
period of 30 days following the giving of such notice
reference above, ANHEUSER-BUSCH has the option to acquire any
or all of Cerveceria Rio Bravo S.A. de C.V.'s interest,
including any interest in the lease with respect to the
Approved Brewery, in the Approved Brewery for the book value
of such brewery as carried on the books of Cerveceria Rio
Bravo S.A. de C.V..
(iv) If AMBREW receives a bona fide offer to purchase any
or all of its interest Cerveceria Rio Bravo S.A. de C.V., and
AMBREW desires to sell such interest pursuant to such offer,
then AMBREW must so notify ANHEUSERBUSCH, and must provide
ANHEUSER-BUSCH with a copy of such offer, the identity of the
offeror (including such offeror's beneficial owners) and such
other information as ANHEUSER-BUSCH may request to
substantiate the offeror's ability to consummate the proposed
transaction. Failure of AMBREW to promptly provide such
information results in a tolling of the 30 day period referred
to in the next sentence until such reasonably requested
information is provided to ANHEUSER-BUSCH. For a period of 30
days following the giving of such notice referenced above,
ANHEUSER-BUSCH has the option to acquire any or all of
AMBREW's interest in Cerveceria Rio Bravo S.A. de C.V.'s on
the same terms and conditions as set forth in the offer,
including any interest in the lease with respect to the
Approved Brewery.
<PAGE> 20
(v) With respect to this Section 17.1 0, Cerveceria Rio
Bravo S.A. de C.V. and/or AMBREW will use its best efforts to
obtain the consent of any landlord regarding the assignment of
the lease of the Approved Brewery to ANHEUSER-BUSCH or its
affiliate.
(vi) With respect to this Section 17.1 0, AMBREW represents
and warrants that it has, and shall have at all times during
the Term of this Agreement, the power to bind Cerveceria Rio
Bravo S.A. de C.V. to the obligations contained herein.
17.11 Exhibits. All of the exhibits and schedules attached to this
Agreement are deemed incorporated herein by reference.
17.12 Audit Rights. During the term of this Agreement and for a
period of at least two (2) years thereafter, AMBREW shall maintain such books
and records (collectively, "Records") as are necessary to substantiate that (i)
all invoices and other charges submitted to ANHEUSER-BUSCH for payment
hereunder were valid and proper, and (ii) no payments have been made, directly
or indirectly, by or on behalf of AMBREW to or for the benefit of any
ANHEUSER-BUSCH employee or agent who may reasonably be expected to influence
ANHEUSER-BUSCH's decision to enter into this Agreement, or the amount to be
paid by ANHEUSER-BUSCH pursuant hereto. (As used herein "payments" shall
include money, property, services and all other forms of consideration.) All
Records shall be maintained in accordance with generally accepted accounting
principles consistently applied. ANHEUSER-BUSCH and/or its representative
shall have the right, at any time during normal business hours, upon
twenty-four (24) hours' notice, to examine said Records. The provisions of
this paragraph shall survive the expiration or earlier termination of this
Agreement.
17.13 Publicity. Any publicity release, advertisement, filing,
public statement or announcement made by or at the request of any Party
regarding this Agreement is to be first reviewed by and must be reasonably
satisfactory to the other party.
17.14. Facsimile Execution. For purposes of executing this
Agreement, a document signed and transmitted by facsimile machine or telecopier
is to be treated as an original document. The signature of either party
thereon, for purposes hereof, is to be considered as an original signature, and
the document transmitted is to be considered to have the same binding effect as
an original signature on an original document. At the request of either party,
any facsimile or telecopy document is to be re-executed in original form by the
parties who executed the facsimile or telecopy document. No party may raise
the use of a facsimile machine or telecopier or the fact that any signature was
transmitted through the use of a facsimile or telecopier machine as a defense
to the enforcement of this Agreement or any amendment or other document
executed in compliance with this Section.
<PAGE> 21
17.15 Counterparts. This Agreement may be executed by the parties
on any number of separate counterparts, and all such counterparts so executed
constitute one agreement binding on the parties notwithstanding that the
parties are not signatories to the same counterpart.
IN WITNESS WHEREOF, the parties have executed and delivered this Agreement
as of the date first written above.
ANHEUSER-BUSCH, INC. AMERICAN CRAFT BREWING
INTERNATIONAL LIMITED
By: /s/ August Busch, IV By: /s/ James L. Ake
-------------------------------- -----------------------------------
Title: Vice President Marketing Title: Executive Vice President
----------------------------- --------------------------------
<PAGE> 1
EXHIBIT 10.6
CONSULTING AGREEMENT
This Agreement is effective as of the 1st day of January, 1997, unless
herein, and is entered into by and between AMERICAN CRAFT BREWING INTERNATIONAL
LIMITED (the Company), a Bermuda corporation, having its principal address at
One Galleria Boulevard, Suite 1714, Metairie, Louisiana 70001; the SOUTH CHINA
BREWING COMPANY LIMITED (South China), a Hong Kong company and a wholly owned
subsidiary of the Company; DAVID K. HAINES (Haines or the Consultant), an
individual whose principal address is written beneath his signature below; and
LUNAR HOLDINGS, LIMITED (Lunar), a Hong Kong company wholly owned and operated
by Haines.
The Company, South China, Lunar and the Consultant together wish to
terminate any and all prior agreements respecting the working relationship
and/or employments among and by them, including but not limited to (1) the
Management Agreement, dated April 1, 1995 by and between Lunar and South China,
and (2) the Agreement, dated as of August 31, 1996, among the Company, South
China, Haines and Lunar; and now wish to set forth herein the terms of the
relationship between the Consultant and the Company.
Therefore, the parties agree as follows:
1. PRIOR AGREEMENTS
1.1 TERMINATION. All prior agreements by and among the parties
respecting the working relationship and/or employments among and by them,
including but not limited to the agreements described above, are terminated
with effect as of the close of business on December 31, 1996, unless otherwise
provided herein.
1.2 SUPERSEDING AGREEMENT. This Agreement supersedes any and all
of the prior agreements and/or employments among the parties, including but not
limited to those
<PAGE> 2
described above, and constitutes the entire agreement and working relationship
by and among the parties.
2. WORKING RELATIONSHIP
2.1 RETENTION OF CONSULTANT. The Company retains the services of
the Consultant, and the Consultant shall provide services to the Company for
the compensation and under the terms and conditions herein provided.
2.2 TERMS. The term of this Agreement shall commence on the 1st
day of January, 1997, and shall continue through and end on October 31, 1997 or
until terminated by the Company or the Consultant as herein provided.
2.3 DUTIES. The Consultant shall furnish consultation and advice
to the Company as requested by the Company, subject to the following
conditions:
(a) The Consultant shall receive assignments from, report
to, and be supervised by James L. Ake, his delegate
or successor.
(b) The Consultant is required to devote part and
reasonable time and attention to the Company and shall
exercise his best efforts to timely perform
assignments.
(c) The Consultant shall perform assignments, to the
extent practicable, at the place, time and in the
manner requested by the Company.
(d) The Consultant understands that he is not an employee
of the Company, that the Company is not required to
provide him with worker's compensation or other
similar insurance coverages, and that he is
responsible for paying and/or withholding any and all
taxes applicable to the compensation received from the
Company, including but not limited to income, social
security, unemployment and disability taxes.
<PAGE> 3
2.4 INDEPENDENT CONTRACTOR STATUS. In performing this Agreement,
the Consultant shall be acting as an independent contractor of the Company.
Accordingly, the Consultant shall have no authority to act for or on behalf of
the Company or to bind the Company without its express written consent and
shall not be considered as having employee status for the purpose of any
employee benefit plan applicable to the Company's employees generally.
3. COMPENSATION
3.1 BASE COMPENSATION. As compensation for his services
hereunder, the Company shall pay the Consultant during the term of this
Agreement US$4,500.00 per calendar month in arrears. If this Agreement is
terminated for any reason before the last day of a calendar month the Company
shall pay the Consultant 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.
All compensation shall be paid by telegraphic transfer through South
China Brewing Company Limited's accounts on the 25th of each month or nearest
previous business day.
3.2 BONUS. The Company shall pay a bonus of 3% of net profit
before income tax of South China Brewing Company Limited for the period January
1, 1997 through October 31, 1997.
3.3 PARTICIPATING IN BENEFIT AND INSURANCE PLANS. During the term
of this Agreement, the Company shall pay an allowance of US$500.00 per calendar
month, in the
<PAGE> 4
aggregate, for participation by the Consultant in the life, health and
disability insurance plans of the Company.
4. EXPENSES
4.1 CAR ALLOWANCE. During the term of this Agreement, the Company
shall pay the Consultant an allowance of US$500.00 per month, in the aggregate,
for the automobile used by the Consultant in performing his duties hereunder.
The consultant shall be responsible for taxes, fees, maintenance, and insurance
of such automobile.
4.2 REIMBURSEMENT OF PRE-APPROVED EXPENSES. The Company shall
reimburse the Consultant for pre-approved 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 applicable
policies of the Company. The Consultant shall be reimbursed for coach class
airfare on domestic flights and business class airfare on international
flights.
5. TERMINATION OF AGREEMENT
5.1 EVENTS OF TERMINATION. This Agreement, and all of the
obligations hereunder except the post- termination obligations below, shall
immediately terminate upon the earliest to occur of the following:
(a) immediately upon written notice of termination to the
Company by the Consultant;
(b) immediately upon written notice of termination for
cause to the Consultant 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 contendere
<PAGE> 5
thereto, moral turpitude or other willful misconduct
by the Consultant or (ii) the Consultant's failure or
refusal to perform, carry out or comply with the
Consultant's duties or obligations hereunder in any
material respect;
(c) immediately upon written notice of termination without
cause to the Consultant by the Company; if termination
is without cause to the Consultant by the Company
salary and benefits are guaranteed through the term of
this agreement; /S/ AND SECTION 6.1 IS DELETED.
(d) upon the death or permanent disability of Consultant;
"permanent disability" shall mean the inability of the
Consultant to perform his duties hereunder by reason
of physical or mental disability during any continuous
period of two months or for periods aggregating two
months during the term of this agreement.
5.2 COOPERATION WITH THE COMPANY AFTER TERMINATION. Following any
notice of termination of this Agreement, the Consultant shall fully cooperate
with the Company in all matters relating to the winding up of his pending work
on behalf of the Company and the orderly transfer of any such pending work to
others as may be designated by the Company.
5.3 CONFIDENTIALITY, RETURN OF PROPERTY. The Consultant
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), and accordingly the
Consultant agrees that during the term of this Agreement and thereafter for a
period of two years, the Consultant 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
<PAGE> 6
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 Consultant shall promptly
return to the Company any and all properties, records, papers of any Relevant
Entity, that may have been in his possession at the time of termination,
whether prepared by the Consultant 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 Consultant 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
Consultant; for the 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.
<PAGE> 7
6. NON-COMPETITION
6.1 NON-COMPETITION. The Consultant agrees that during the term
of this Agreement and for a period of one year thereafter, he and his
affiliates shall not in Asia for those locations that AmBrew and/or its
subsidiaries are operating and/or have a letter of intent to form an operating
venture and/or have an agreement for a microbrewery (a) engage in any activity
competitive with the business of the Company, its parent or affiliates, for or
on behalf of himself or any other person or entity engaged in a line of
business which competes with the Company, its parent or affiliates; (b) solicit
or attempt to solicit the business of any clients or customers of the Company,
its parent or affiliates, for products that are the same or similar to those
offered, sold or produced at any time by the Company, its parent or affiliates;
(c) otherwise divert or attempt to divert from the Company, its parent or
affiliates, any business whatsoever; (d) hire or attempt to hire for any
business endeavor any employee or prior employee of any of the Company, its
parent or affiliates; or (e) interfere with any business relationship of the
Company, its parent or affiliates, with any other person or entity.
6.2 SEVERABILITY AND REFORM. If any portion of Section 6.1 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 6.1, but Section 6.1 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 6.1 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
<PAGE> 8
competent jurisdiction shall construe and interpret or reform Section 6.1 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.
7. MISCELLANEOUS
7.1 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 James L. Ake at the
address set forth above, or if to the Consultant at his address set forth
below, or at such 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.
7.2 GOVERNING LAW; CONSENT TO JURISDICTION. This Agreement, and
its application or interpretation, shall be governed by the laws of Louisiana
applicable to agreements made and to be performed entirely therein. The
Consultant irrevocably submits to the jurisdiction over his person by the
courts of Louisiana.
7.3 AMENDMENTS. This Agreement may be amended only pursuant to an
instrument in writing signed by each of the parties hereto.
7.4 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.
7.5 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
<PAGE> 9
contained in this Agreement shall not constitute a waiver thereof or of any
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.
7.6 SEVERABILITY. 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.
7.7 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.
7.8 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.
7.9 NO THIRD-PARTY BENEFICIARIES. The covenants, obligations and
rights set forth in this Agreement are not intended to benefit any third person
or entity.
7.10 ENTIRE AGREEMENT. This Agreement embodies the entire
understanding and agreement between the parties and supersedes any and all
prior negotiations, understandings or agreements between the parties concerning
the subject matter hereof with respect hereto.
<PAGE> 10
7.11 ATTORNEY'S FEES. In the event that either the Company or
Consultant commences a legal proceeding (including arbitration) to enforce or
interpret any of the terms of this Agreement or to terminate this Agreement,
the prevailing party in such action shall receive from the other party
reasonable attorney's fees as may be fixed by the arbitrator, court or jury.
7.12 ARBITRATION. Any controversy or claim arising out of or
relating to this Agreement shall be settled by arbitration administered by the
American Arbitration Association in accordance with its applicable rules. Any
judgment upon the award rendered in such arbitration may be entered in any
court of competent jurisdiction.
THUS DONE AND SIGNED in the Parish of Jefferson, State of Louisiana on
this 14th day of February, 1997, in the presence of the undersigned competent
witnesses and me, Notary Public, after due reading of the whole.
WITNESSES: AMERICAN CRAFT BREWING
INTERNATIONAL LIMITED
/s/ Nancy Hernandez By: /s/ James L. Ake
- ---------------------------------- ------------------------------------
Name: James L. Ake
Title: Executive Vice-President
/s/ Bridgette J. Craft Date: /s/ 2/14/97
- ---------------------------------- ----------------------------------
/s/ Ilene H. Goldman
-------------------------------------------
NOTARY PUBLIC
Commissioned for Life
THUS DONE AND SIGNED in the Parish of Jefferson, State of Louisiana on
this 14th day of February, 1997, in the presence of the undersigned competent
witnesses and me, Notary Public, after due reading of the whole.
WITNESSES: SOUTH CHINA BREWING COMPANY LIMITED
/s/ Nancy Hernandez By: /s/ James L. Ake
- ---------------------------------- ------------------------------------
Name: James L. Ake
Title: /s/ Director
---------------------------------
/s/ Bridgette J. Craft Date: /s/ 2/14/97
- ---------------------------------- ----------------------------------
/s/ Ilene H. Goldman
-------------------------------------------
NOTARY PUBLIC
Commissioned for Life
<PAGE> 11
THUS DONE AND SIGNED in the Parish of Jefferson, State of Louisiana on
this 14th day of February, 1997, in the presence of the undersigned competent
witnesses and me, Notary Public, after due reading of the whole.
WITNESSES:
/s/ Nancy Hernandez By: /s/ David K. Haines
- ---------------------------------- ------------------------------------
DAVID K. HAINES, Individually
Address A-3, 3/F Universal Heights
----------------------------
/s/ Bridgette J. Craft 42 Katewall Rd., Mid-levels,
- ---------------------------------- Hong Kong
------------------------------------
Date: /s/ 2/14/97
------------------------------
/s/ Ilene H. Goldman
-------------------------------------------
NOTARY PUBLIC
Commissioned for Life
THUS DONE AND SIGNED in the Parish of Jefferson, State of Louisiana on
this 14th day of February, 1997, in the presence of the undersigned competent
witnesses and me, Notary Public, after due reading of the whole.
WITNESSES: LUNAR HOLDINGS, LIMITED
/s/ Nancy Hernandez By: /s/ David K. Haines
- ---------------------------------- ------------------------------------
Name: David K. Haines
Title: Executive Vice-President
/s/ Bridgette J. Craft Date: 2/14/97
- ---------------------------------- ----------------------------------
/s/ Ilene H. Goldman
-------------------------------------------
NOTARY PUBLIC
Commissioned for Life
<PAGE> 1
EXHIBIT 10.7
AMBREW
BREWMASTER EMPLOYMENT AGREEMENT
AMERICAN CRAFT BREWING INTERNATIONAL LIMITED (AmBrew International or
the Company), and BROOKS HAMAKER (the Brewmaster) desire to set forth the terms
upon which the Brewmaster will be employed by the Company during the term of
this Agreement, and therefore agree as follows:
1. Working Relationship
1.1 Term. Unless terminated sooner pursuant to paragraph
4 below, the term of this Agreement is two (2) year with effect from March 10,
1997 (the Commencement Date). This term may be extended once or more for such
length of time as agreed in a written instrument signed by the parties.
1.2 Location. The Brewmaster permanent office shall be at
the Company's headquarters office currently located in Metairie, Louisiana; and
his duties will require him to tenure temporary assignments to various
locations throughout the world.
1.3 Supervisor. The Brewmaster shall report to and his
activities shall be supervised by the Chief Operating Officer.
1.4 Duties. The Brewmaster shall use his best efforts,
skill and abilities to faithfully and effectively perform his duties as a head
brewer for the Company. The Brewmaster shall be involved with the
establishment, start-up and training for new breweries, as well as providing
ongoing assistance for all breweries within the Company; and to establish
standardized brewing and quality control procedures and criteria for Company
breweries. The Brewmaster shall perform such functions as may be commensurate
with his position and such other duties as may from time to time reasonably be
delegated to him by the Company. It is intended that for the most part the
Brewmaster shall perform his duties hereunder during normal business hours.
However, it is agreed by the Brewmaster that he may be required from time to
time to perform his duties hereunder at times other than normal business hours,
and that the Brewmaster shall not be entitled to additional compensation for
work performed during other than normal business hours.
1.5 Full Time. The Brewmaster shall devote full and
exclusive business time and energies to the performance of his duties under
this Agreement, except that he shall be free to devote reasonable time and
attention to public and charitable affairs and to his personal affairs,
consistent with his duties hereunder, but only if the handling of such
charitable and personal affairs do not interfere with the normal day-to-day
operations of the Company.
<PAGE> 2
2. Compensation
As full compensation to the Brewmaster for performance of his services
hereunder, the Company agrees to pay Brewmaster, and Brewmaster agrees to
accept, the following:
2.1 Salary. The Company will pay the Brewmaster a salary
of sixty-five thousand United States Dollars (US$65,000.00) per annum by
bimonthly installments in arrears from the Commencement Date, less any amounts
required to be withheld under any applicable federal, state or local income tax
laws or by any other withholding requirements, and any other amounts which by
agreement may be withheld for fringe benefits. This salary shall be subject to
review 12 months from the Commencement Date.
2.2 Stock Option Plan. The Brewmaster shall be eligible
to participate in the Stock Option Plan of American Craft Brewing International
Limited on the basis described therein.
3. Benefits
3.1 Medical Benefits; Life and Disability Insurance Plans.
The Company will pay premiums for the Brewmaster's participation in the life,
health and disability insurance plans of the Company, provided that the
Brewmaster is accepted for coverage which is at the sole discretion of the
insurer. The premiums for health insurance coverage of the Brewmaster's
dependents shall be paid by the Company. The Brewmaster shall be provided
company paid life insurance in the amount of $250,000.
3.2 Business Expenses. The Company will reimburse the
Brewmaster for pre-approved expenses actually incurred in connection with the
performance of the duties hereunder, against receipts or other appropriate
written evidence of such expenditures, all in accordance with the policies of
the Company as adopted from time to time.
3.3 Leave. The Brewmaster is entitled to three weeks
leave per year during the term of this Agreement, which shall be taken as
determined by the Company, as well as holidays in accordance with applicable
policies from time to time adopted by the Company. Time at which leave is
taken is dependent on seniority, family circumstances and the exigencies of the
Company's business but subject thereto, leave shall be scheduled insofar as is
practicable so as to meet the Brewmaster's convenience. Leave cannot be
accumulated and any unused leave at the end of the term of this Agreement, or
upon termination of this Agreement for any reason, shall not be compensated.
4. Termination
4.1 By the Company With Cause. The Company may at anytime
terminate this Agreement for cause on immediate written notice and without
payment or compensation whatsoever.
<PAGE> 3
For purposes of this paragraph and of this Agreement,
"cause" shall mean: (1) fraud, dishonesty or any other intentional wrongful
act, whether or not in connection with employment under this Agreement; (2) any
violation of law (excluding minor traffic violations) conviction thereof or
plea of guilty or nolo contendere thereto, moral turpitude or other willful
misconduct by the Brewmaster; (3) accepting or undertaking any outside
employment without prior written permission of the Company; (4) incompetence or
negligence in the performance of any duties or obligations hereunder; or (5)
the failure of refusal to perform, carry out or comply with any duties or
obligations hereunder.
4.2 Because of Death or Ill Health. This Agreement shall
terminate immediately upon the death or disability of the Brewmaster. "Ill
health" shall mean the inability of the Brewmaster to properly perform his
duties hereunder for a period of ninety (90) or more days by reason of a health
condition not self-induced as certified by a medical practitioner chosen by the
Company.
4.3 No Further Payments by Company. Except for the
payment in lieu of notice provided in paragraph 4.2, upon termination of this
Agreement for any reason the Brewmaster shall not be entitled to any further
payments or compensation from the Company except unpaid salary prorated to the
date of termination.
4.4 Cooperation with the Company after Termination.
Following termination of this Agreement for any reason, the Brewmaster shall
fully cooperate with the Company in all matters relating to the winding up of
his pending work and the orderly transfer of pending work to others as may be
designated by the Company.
5. Confidentiality and Non-Disclosure. The Brewmaster
acknowledges that during the term of this Agreement he will receive
confidential, proprietary information and trade secrets from the Company, and
from parents and affiliates of the Company and from the respective clients
thereof (each a Relevant Entity). Accordingly, the Brewmaster agrees that
during the term of this Agreement (as it may be extended) and thereafter for a
period of two years, the Brewmaster 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 any
Trade Secret that he may learn or has learned by reason of his association with
any Relevant Entity. Upon termination of this Agreement, the Brewmaster shall
promptly return to the Company any and all property, records or papers of any
Relevant Entity that may be or have been in his possession, whether prepared by
him or others, including, but not limited to, trade secrets and keys. For
purposes of this Agreement, "trade secrets" includes all data, analyses,
reports, interpretations, forecasts, documents and information concerning a
Relevant Entity and its affairs, including, without limitation, with respect to
clients, customers, products, policies, procedures, methodologies, any 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 Brewmaster is required to disclose under any applicable
laws, regulations or directives of any government agency,
<PAGE> 4
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 Brewmaster; 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. For purposes of this Agreement, parent of the Company is defined
herein as American Craft Brewing International Limited.
6. Non-Competition
6.1 The Brewmaster agrees that during the term of this
Agreement (as it may be extended) and for a period of two years thereafter he
shall not within fifty miles of any location which the Company, its parent or
any of its subsidiaries or affiliates is operating and/or has a letter of
intent to form an operating venture and/or has an agreement for a microbrewery
(a) engage in any activity competitive with the business of the Company, its
parent or subsidiaries or affiliates, for or on behalf of the Brewmaster or any
other person or entity engaged in a line of business which competes with the
Company, its parent or subsidiaries or affiliates; (b) solicit or attempt to
solicit the business of any clients or customers of the Company, its parent or
subsidiaries or affiliates, for products that are the same or similar to those
offered, sold or produced at any time by the Company, its parent or
subsidiaries or affiliates; (c) otherwise divert or attempt to divert from the
Company, its parent or subsidiaries or affiliates, any business whatsoever; (d)
hire or attempt to hire for any business endeavor any employee or prior
employee of any of the Company, its parent or subsidiaries or affiliates; or
(e) interfere with any business relationship of the Company, its parent or
subsidiaries or affiliates, with any other person or entity.
6.2 Severability and Reform. If any portion of Section
6.1 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 6.1, but Section 6.1 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 6.1 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 6.1 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.
7. Intellectual Property. All ideas, innovations, inventions,
processes, and other developments or improvements conceived or reduced to
practice by the Brewmaster, alone or with others, during the term of this
employment agreement, whether or not during working hours, that are within the
scope of the Company's, its parents' or subsidiaries' or affiliates' business
operations or that relate to any of the Company's, its parents' or
<PAGE> 5
subsidiaries' or affiliates' work or projects, shall be the exclusive property
of the Company. The Brewmaster agrees to assist the Company, at its expense,
to obtain patents, trademarks or licenses on any such ideas, inventions,
processes, and other developments, and agrees to execute all documents
necessary to obtain such patent, trademark, and license for the sole use of the
Company, its parents or subsidiaries or affiliates.
8. Notices
8.1 Addresses. Any notice or communication required or
permitted to be given under this Agreement shall be in writing, and conveyed by
hand, air courier, facsimile, or return receipt registered mail, addressed as
follows:
<TABLE>
<S> <C>
The Company: The Brewmaster
------------ --------------
Chief Operating Officer Brooks Hamaker
American Craft Brewing International 71507 Keller Street
One Galleria Boulevard Abita Springs, LA 70420
Suite 1714
Metairie, Louisiana 70001
</TABLE>
8.2 Date of Notice. Any notice given in accordance with
paragraph 8.1 shall be deemed to have been received on, and is effective as of,
the date it was delivered by hand or sent by facsimile, two business days after
the date it was deposited with an air courier, and the date on the return
receipt if by registered mail.
9. Governing Law; Consent to Jurisdiction. This Agreement, and
any matter arising under or related to it, shall be governed by and construed
in accordance with the laws of the State of Louisiana, U.S.A., without regard
to its choice or conflict of law provision. The Brewmaster irrevocably submits
to personal jurisdiction in the courts of Louisiana with respect to any matter
arising under or related to this Agreement or his employment by the Company.
10. General Provisions.
10.1 Amendments. This Agreement may be amended only
pursuant to an instrument in writing signed by each of the parties hereto.
10.2 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.
10.3 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 of any 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
<PAGE> 6
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.
10.4 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.
10.5 No Third-Party Beneficiaries. The covenants,
obligations and rights set forth in this Agreement are not intended to benefit
any third person or entity.
10.6 Entire Agreement. This Agreement embodies the entire
understanding and agreement between the parties and supersedes any and all
prior negotiations, understandings or agreements between the parties concerning
the subject matter hereof with respect hereto.
10.7 Attorney's Fees. In the event that either the
Brewmaster or the Company commences a legal proceeding (including arbitration)
to enforce or interpret any of the terms of this Agreement or to terminate this
Agreement, the prevailing party in such action shall receive from the other
party reasonable attorney's fees as may be fixed by the arbitrator, court or
jury.
10.8 Arbitration. Any controversy or claim arising out of
or relating to this Agreement shall be settled by arbitration administered by
the American Arbitration Association in accordance with its applicable rules.
Any judgment upon the award rendered in such arbitration may be entered in any
court of competent jurisdiction.
10.9 Counterparts. This Agreement may be executed in
multiple counterparts, each of which shall be deemed an original, and all of
which taken together shall constitute one and the same instrument. The
Agreement may be assembled into a single document by attaching each page
bearing a party's original signature.
The Company The Brewmaster
American Craft Brewing International Brooks Hamaker
By:/s/ James L. Ake /s/ C. Brooks Hamaker
--------------------------------- -----------------------------
Name Name
Date: March 10, 1997 Date:
<PAGE> 1
EXHIBIT 10.8
CELTIC BREW LLC
BREWMASTER EMPLOYMENT AGREEMENT
CELTIC BREW LLC (the Company), and William Robert Jenkins (the
Brewmaster) desire to set forth the terms upon which the Brewmaster will be
employed by the Company during the term of this Agreement, and therefore agree
as follows:
1. Working Relationship
1.1 Term. Unless terminated sooner pursuant to paragraph
4. below, the term of this Agreement is one (1) year with effect from March 24,
1997 (the Commencement Date). This term may be extended once or more for such
length of time as agreed in a written instrument signed by the parties.
1.2 Location. The Brewmaster shall perform his employment
at the brewing facilities of the Company located at Enfield, Co. Meath, Ireland
(the Brewery).
1.3 Supervisor. The Brewmaster shall report to and his
activities shall be supervised by the General Manager of the Brewery.
1.4 Duties. The Brewmaster shall use his best efforts,
skill and abilities to faithfully and effectively perform his duties as a
master brewer for the company. The Brewmaster shall perform such functions as
may be commensurate with his position and such other duties as may from time to
time reasonably be delegated to him by the Company. It is intended that for
the most part the Brewmaster shall perform his duties hereunder during normal
business hours. However, it is agreed by the Brewmaster that he may be
required from time to time to perform his duties hereunder at times other than
normal business hours, and that the Brewmaster shall not be entitled to
additional compensation for work performed during other than normal business
hours.
1.5 Full Time. The Brewmaster shall devote full and
exclusive business time and energies to the performance of his duties under
this Agreement, except that he shall be free to devote reasonable time and
attention to public and charitable affairs and to his personal affairs,
consistent with his duties hereunder, but only if the handling of such
charitable and personal affairs do not interfere with the normal day-to-day
operations of the Company.
2. Compensation.
As full compensation to the Brewmaster for performance of his services
hereunder, the Company agrees to pay Brewmaster, and Brewmaster agrees to
accept, the following:
2.1 Salary. The Company will pay the Brewmaster in Irish
Pounds the equivalent of a salary of Forty thousand United States Dollars
(US$40,000.00) per annum
<PAGE> 2
by monthly installments in arrears from the Commencement Date, less any amounts
required to be withheld under any applicable federal, state or local income tax
laws or by any other withholding requirements, and any other amounts which by
agreement may be withheld for fringe benefits. This salary shall be subject to
review 12 months from the Commencement Date.
2.2 Bonus. Provided the Agreement has not been
terminated, the Company shall pay the Brewmaster a bonus, equal to one (1)
month's salary at the end of 12 months from the Commencement Date. Subsequent
bonuses will be at the sole discretion of the Company.
2.3 Stock Option Plan. The Brewmaster shall be eligible
to participate in the 1996 Stock Option Plan of American Craft Brewing
International Limited on the basis described therein.
2.4 Tax Equalization. The Company agrees to assume and
pay the Brewmaster's actual foreign and United States income tax liabilities in
excess of the Brewmaster's hypothetical tax liability. For purposes of this
paragraph, "hypothetical tax liability" means the amount agreed to by the
Company by which the Brewmaster's actual foreign and United States tax
liabilities exceed the Brewmaster's tax liability on the salary set forth in
paragraph 2.1 above had the Brewmaster received that salary while residing in
the United States.
3. Benefits.
3.1 Medical Benefits: Life and Disability Insurance
Plans. The Company will pay premiums for the Brewmaster's participation in the
life, health and disability insurance plans of the Company, provided that the
Brewmaster is accepted for coverage which is at the sole discretion of the
insurer. If available, the premiums for coverage of the Brewmaster's
dependents shall be paid by the Brewmaster.
3.2 Business Expenses. The Company will reimburse the
Brewmaster for pre-approved expenses actually incurred in connection with the
performance of the duties hereunder, against receipts or other appropriate
written evidence of such expenditures, all in accordance with the policies of
the Company as adopted from time to time.
3.3 Leave. The Brewmaster is entitled to two weeks leave
during the first year and three weeks in the second year of the term of this
Agreement, which shall be taken as determined by the Company, as well as
holidays in accordance with applicable policies from time to time adopted by
the Company. Time at which leave is taken is dependent on seniority, family
circumstances and the exigencies of the Company's business but subject thereto,
leave shall be scheduled insofar as is practicable so as to meet the
Brewmaster's convenience. Leave cannot be accumulated and any unused leave at
the end of the term of this Agreement, or upon termination of this Agreement
for any reason, shall not be compensated.
<PAGE> 3
3.4 Home Leave. During each year of the term of this
Agreement, the company will pay for one (1) round trip economy fare air ticket
to be used by the Brewmaster for travel to the United States, or the equivalent
if the Brewmaster wishes to take his leave elsewhere.
4. Termination.
4.1 By the Brewmaster. The Brewmaster may terminate this
Agreement by giving the Company not less than three (3) months written notice
or payment of three months' salary in lieu of notice.
4.2 By the Company Without Cause. The Company may
terminate this Agreement without cause at anytime by giving to the Brewmaster
three (3) months' written notice or by paying him three (3) months' salary in
lieu of notice.
4.3 By the Company With Cause. The Company may at anytime
terminate this Agreement for cause on immediate written notice and without
payment or compensation whatsoever.
For the purposes of this paragraph and of this Agreement,
"cause" shall mean: (1) fraud, dishonesty or any other intentional wrongful
act, whether or not in connection with employment under this Agreement; (2) any
violation of law (excluding minor traffic violations) conviction thereof or
plea of guilty or nolo contendere thereto, moral turpitude or other willful
misconduct by the Brewmaster; (3) accepting or undertaking any outside
employment without prior written permission of the Company; (4) incompetence or
negligence in the performance of any duties or obligations hereunder; or (5)
the failure or refusal to perform, carry out or comply with any duties or
obligations hereunder.
4.4 Because of Death or Ill Health. This Agreement shall
terminate immediately upon the death or disability of the Brewmaster. "Ill
health" shall mean the inability of the Brewmaster to properly perform his
duties hereunder for a period of ninety (90) or more days by reason of a health
condition not self-induced as certified by a medical practitioner chosen by the
Company.
4.5 No Further Payments by Company. Except for the
payment in lieu of notice provided in paragraph 4.2, upon termination of this
Agreement for any reason the Brewmaster shall not be entitled to any further
payments or compensation from the Company except unpaid salary prorated to the
date of termination.
4.6 Cooperation with the Company after Termination.
Following termination of this Agreement for any reason, the Brewmaster shall
fully cooperate with the Company in all matters relating to the winding up of
his pending work and the orderly transfer of pending work to others as may be
designated by the Company.
<PAGE> 4
5. Confidentiality and Non-Disclosure. The Brewmaster
acknowledges that during the term of this Agreement he will receive
confidential, proprietary information and trade secrets from the Company, and
from parents and affiliates of the Company and from the respective clients
thereof (each a Relevant Entity). Accordingly, the Brewmaster agrees that
during the term of this Agreement (as it may be extended) and thereafter for a
period of two years, the Brewmaster 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 any
Trade Secret that he may learn or has learned by reason of this association
with any Relevant Entity. Upon Termination of this Agreement, the Brewmaster
shall promptly return to the Company any and all property, records or papers of
any Relevant Entity that may be or have been in his possession, whether
prepared by him or others, including, but not limited to, trade secrets and
keys. For purposes of this Agreement, "trade secrets" includes all data,
analyses, reports, interpretations, forecasts, documents and information
concerning a Relevant Entity and its affairs, including, without limitation,
with respect to clients, customers, products, policies, procedures,
methodologies, any 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 Brewmaster 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 Brewmaster; 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. For purposes of this Agreement, parent of the company
is defined herein as American Craft Brewing International Limited.
6. Non-Competition.
6.1 The Brewmaster agrees that during the term of this
Agreement (as it may be extended) and for a period of two years thereafter he
shall not within fifty miles of any location which the Company, its parent or
any of its subsidiaries or affiliates is operating and/or has a letter of
intent to form an operating venture and/or has an agreement for a microbrewery
(a) engage in any activity competitive with the business of the Company, its
parent or subsidiaries or affiliates, for or on behalf of the Brewmaster or any
other person or entity engaged in a line of business which competes with the
Company, its parent or subsidiaries or affiliates; (b) solicit or attempt to
solicit the business of any clients or customers of the Company, its parent or
subsidiaries or affiliates, for products that are the same or similar to those
offered, sold or produced at any time by the Company, its parent or
subsidiaries or affiliates; (c) otherwise divert or attempt to divert from the
Company, its parent or subsidiaries or affiliates, any business whatsoever; (d)
hire or attempt to hire for any business endeavor any employee or prior
employee of any of the Company, its parent or subsidiaries or affiliates; or
(e) interfere with any business relationship of the Company, its parent or
subsidiaries or affiliates, with any other person or entity.
<PAGE> 5
6.2 Severability and Reform. If any portion of Section
6.1 shall for any reason be held invalid, illegal or unenforceable in any
resect, such invalidity, illegality or unenforceability shall not affect any
other provisions of Section 6.1, but Section 6.1 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 6.1 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 6.1 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.
7. Intellectual Property. All ideas, innovations, inventions,
processes, and other developments or improvements conceived or reduced to
practice by the Brewmaster, alone or with others, during the term of this
employment agreement, whether or not during working hours, that are within the
scope of the Company's, its parents' or subsidiaries' or affiliates', business
operations or that relate to any of the Company's, its parents' or
subsidiaries' or affiliates' work or projects, shall be the exclusive property
of the Company. The Brewmaster agrees to assist the Company, at its expense,
to obtain patents, trademarks or licenses on any such ideas, inventions,
processes, and other developments, and agrees to execute all documents
necessary to obtain such patent, trademark, and license for the sole use of the
Company, its parents or subsidiaries or affiliates.
8. Notices.
8.1 Addresses. Any notice or communication required or
permitted to be given under this Agreement shall be in writing, and conveyed by
hand, air courier, facsimile, or return receipt registered mail, addressed as
follows:
<TABLE>
<S> <C>
The Company: The Brewmaster
----------- --------------
General Manger William Robert Jenkins
Celtic Brew LLC Celtic Brew LLC
Enfield Industrial Estate Enfield Industrial Estate
Enfield, Co. Meath Enfield, Co. Meath
Ireland Ireland
</TABLE>
8.2 Date of Notice. Any notice given in accordance with
paragraph 8.1 shall be deemed to have been received on, and is effective as of,
the date it was delivered by hand or sent by facsimile, two business days after
the date it was deposited with an air courier, and the date on the return
receipt if by registered mail.
<PAGE> 6
9. Governing Law; Consent to Jurisdiction. This Agreement, and
any matter arising under or related to it, shall be governed by and construed
in accordance with the laws of the State of Louisiana, U.S.A., without regard
to its choice or conflict of law provision. The Brewmaster irrevocably submits
to personal jurisdiction in the courts of Louisiana with respect to any matter
arising under or related to this Agreement or his employment by the Company.
10. General Provisions.
10.1 Amendments. This Agreement may be amended only
pursuant to an instrument in writing signed by each of the parties hereto.
10.2 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.
10.3 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 of any 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.
10.4 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.
10.5 No Third-Party Beneficiaries. The covenants,
obligations and rights set forth in this Agreement are not intended to benefit
any third person or entity.
10.6 Entire Agreement. This Agreement embodies the entire
understanding and agreement between the parties and supersedes any and all
prior negotiations, understandings or agreements between the parties concerning
the subject matter hereof with respect hereto.
10.7 Attorney's Fees. In the event that either the
Brewmaster or the Company commences a legal proceeding (including arbitration)
to enforce or interpret any of the terms of this Agreement or to terminate this
Agreement, the prevailing party in such action shall receive from the other
party reasonable attorney's fees as may be fixed by the arbitrator, court or
jury.
10.8 Arbitration. Any controversy or claim arising out of
or relating to this Agreement shall be settled by arbitration administered by
the American Arbitration Association in accordance with its applicable rules.
Any judgment upon the award rendered in such arbitration may be entered in any
court of competent jurisdiction.
<PAGE> 7
10.9 Counterparts. This Agreement may be executed in
multiple counterparts, each of which shall be deemed an original, and all of
which taken together shall constitute one and the same instrument. The
Agreement may be assembled into a single document by attaching each page
bearing a party's original signature.
The Company The Brewmaster
Celtic Brew LLC William Robert Jenkins
By: /s/ James L. Ake /s/ William Robert Jenkins
----------------------- ----------------------------------
Name Name
Date: March 4, 1997 Date: 3/7/97
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> OCT-31-1997
<PERIOD-END> APR-30-1997
<CASH> 2,432,071
<SECURITIES> 0
<RECEIVABLES> 167,299
<ALLOWANCES> 1,500
<INVENTORY> 173,528
<CURRENT-ASSETS> 3,067,717
<PP&E> 2,330,337
<DEPRECIATION> 138,401
<TOTAL-ASSETS> 6,374,276
<CURRENT-LIABILITIES> 282,784
<BONDS> 0
0
0
<COMMON> 36,969
<OTHER-SE> 5,638,535
<TOTAL-LIABILITY-AND-EQUITY> 6,374,276
<SALES> 333,401
<TOTAL-REVENUES> 333,401
<CGS> 217,780
<TOTAL-COSTS> 1,362,566
<OTHER-EXPENSES> 68,548
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (32,092)
<INCOME-PRETAX> (1,065,621)
<INCOME-TAX> (24,037)
<INCOME-CONTINUING> (1,041,584)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> (19,229)
<NET-INCOME> (1,022,355)
<EPS-PRIMARY> (0.28)
<EPS-DILUTED> 0.00
</TABLE>
