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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED) DECEMBER 22, 1997
AMERICAN CRAFT BREWING INTERNATIONAL LIMITED
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
1-12119
(COMMISSION FILE NUMBER)
BERMUDA 72-1323940
(STATE OF OTHER JURISDICTION OF INCORPORATION) (I.R.S. EMPLOYER
IDENTIFICATION NUMBER)
ONE GALLERIA BOULEVARD, SUITE 1714, METAIRIE, LOUISIANA 70001
(ADDRESS, INCLUDING ZIP CODE, OF PRINCIPAL EXECUTIVE OFFICES)
(504) 849-2739
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
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Item 2. Acquisition and Disposition of Assets.
On December 22, 1997, American Craft Brewing International Limited (the
"Company") (i) sold to Gold Crown Management Limited ("Gold Crown") all of the
issued and outstanding shares of capital stock of South China Brewing Company
Limited ("Brewing") and SCB Distribution Company Limited ("SCB") owned by the
Company (referred to collectively as the "Shares") and (ii) assigned to Gold
Crown loans from the Company to Brewing and SCB collectively in the amount of
$1,719,448 (referred to collectively as the "Loans"). Prior to the sale,
Brewing, which operates a brewery in Hong Kong, and SCB, which distributes
Brewing's product, where wholly-owned subsidiaries of the Company.
The total consideration to be paid to the Company in connection with the
sale of the Shares and the assignment of the Loans, which was based on arms
length negotiations and is as follows. Gold Crown paid $500,000 to the Company
on December 22, 1997. Gold Crown will pay to the Company $50,000 upon proof of
shipment of certain bottling and labeling equipment from SMB Technik to Brewing,
$40,000 upon Brewing's receipt of such equipment and $10,000 upon the shipment
of flow meters from Danfoss to Brewing. It is anticipated that the bottling and
labeling equipment will be shipped to Brewing on or about the January 15, 1998
and that the labeling and bottling equipment will be received on or about
January 18, 1998 (assuming no delays in transit). It is anticipated that the
flow meters will be shipped on or about February 15, 1998. Finally, upon
resolution of certain outstanding issues between Brewing and the Customs and
Excise Agency of Hong Kong, Gold Crown will pay to the Company an amount equal
to the difference between $100,000 and the amount paid to the Customs and Excise
Agency. It is anticipated that matters between Brewing and the Customs &
Excise Agency will be resolved in the near future. As a result of this sale,
the Company will record a book loss of approximately $1.0 million in the fourth
quarter of the year ended October 31, 1997. However, as a result of the sale,
the Company will no longer be required to provide additional capital
contributions to Brewing and SCB.
In connection with the sale of the Shares and the assignment of the Loans,
the Company and Gold Crown entered into an Option Agreements pursuant to which
the Company granted to Gold Crown an option allowing Gold Crown, at its
election, to exchange 30% of the issued and outstanding shares of capital stock
of Brewing and SCB for an aggregate of 125,000 shares of the common stock of the
Company. The option is exercisable by Gold Crown during the period commencing
May 31, 1998 and ending November 30, 2002 or such later date as the Company, in
its sole discretion, shall determine. The Company's obligations to deliver
shares of its common stock upon Gold Crown's exercise of the option is subject
to certain conditions specified in the option agreement.
The Company and Gold Crown also entered into a second option agreement
pursuant to which the Company granted to Gold Crown an option allowing Gold
Crown to exchange 100% of the issued and outstanding shares of each of Brewing
and SCB for that certain number of shares of common stock of the Company
calculated by dividing (a) $700,000 plus the lesser of any Invested Working
Capital (as defined below) or $500,000 (b) by the average closing bid price on
the NASDAQ Small Cap Market for one share of common stock of the Company for the
10 trading days preceding the date of Gold Crown's exercise of the Option.
"Invested Working Capital" means the amount of capital contributed by Gold Crown
to Brewing and SCB after December 22, 1997 and up to the date of the exercise of
the option. Gold Crown may exercise the option only if the government of Hong
Kong fails to unconditionally renew Brewing's license to operate a brewery and
the Company has not cured such non-renewal within 45 days of the date on which
Gold Crown notifies the Company that such license has not been unconditionally
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renewed. The Company's obligation to deliver shares of its common stock upon
Gold Crown's exercise of the option is subject to certain conditions specified
in the option agreement.
Item 5. Other Events
AmBrew USA, Inc., a wholly-owned subsidiary of the Company ("AmBrew USA"),
and SCB, on December 18, 1997 entered into supply agreements pursuant to which
AmBrew USA appointed SCB as its exclusive distributor of beer products in Hong
Kong and the Peoples Republic of China and SCB appointed AmBrew USA its
exclusive distributor of beer products in the United States and its territories
or possessions, Canada and Mexico. Each of the supply agreements is for a term
of four years through December 31, 2001, subject to earlier termination as set
forth in such supply agreements. Neither SCB nor AmBrew has any obligation to
take a minimum quantity of beer products under its respective supply agreements.
Item 7. Financial Statements and Exhibits.
(a) Financial Statements of Business Acquired.
Not Applicable
(b) Proforma Financial Information.
Not Applicable
(c) Exhibits.
The following exhibits are filed herewith:
10.41 Agreement for the sale and purchase of all issued share capital of South
China Brewing Company Limited and SCB Distribution Company Limited between
American Craft Brewing International Limited and Gold Crown Management
Limited.
10.42 Option Agreement No. 1 between American Craft Brewing International
Limited and Gold Crown Management Limited.
10.43 Option Agreement No. 2 between American Craft Brewing International
Limited and Gold Crown Management Limited.
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SIGNATURES
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 hereunder duly authorized.
AMERICAN CRAFT BREWING
INTERNATIONAL LIMITED
Date: January 5, 1998 By: /s/ James L. Ake
---------------------------------
James L. Ake
Executive Vice President
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EXHIBIT INDEX
10.41 Agreement for the sale and purchase of all the issued share capital of
South China Brewing Company Limited and SCBC Distribution Company Limited
between American Craft Brewing International Limited and Gold Crown
Management Limited.
10.42 Option Agreement No. 1 between American Craft Brewing International
Limited and Gold Crown Management Limited.
10.43 Option Agreement No. 2 between American Craft Brewing International
Limited and Gold Crown Management Limited.
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EXHIBIT 10.41
Dated
December 18, 1997
AMERICAN CRAFT BREWING INTERNATIONAL LIMITED
and
Gold Crown Management Limited
--------------------------------
AGREEMENT
for the sale and purchase of
all the issued share capital
of South China Brewing Company Limited
and
SCBC Distribution Company Limited
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CONTENTS
1. INTERPRETATION............................................... 1
2. SALE AND PURCHASE OF THE SHARES.............................. 3
3. CONSIDERATION................................................ 3
4. WARRANTIES................................................... 4
5. LIMITATION................................................... 5
6. COMPLETION................................................... 6
7. ANNOUNCEMENTS................................................ 7
8. NOTICES AND RECEIPTS......................................... 7
9. RESOLUTIONS AND WAIVERS...................................... 8
10. GENERAL...................................................... 8
11. WHOLE AGREEMENT.............................................. 9
12. GOVERNING LAW................................................ 9
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THIS AGREEMENT is made on BETWEEN:
(1) AMERICAN CRAFT BREWING INTERNATIONAL LIMITED whose registered office is
at One Galleria Blvd., Suite 1714, Metairie, LA 70001 USA (the
"Se1ler"); and
(2) GOLD CROWN MANAGEMENT LIMITED (registered number 253702) whose
registered office is at P.O Box 957, Offshore Incorporations Center,
Road Town Tortola, British Virgin Islands (the "Purchaser").
WHEREAS:
(A) South China Brewing Company Limited ("Brewing") is a private company
limited by shares short particulars of which. are set out in Schedule I
having an authorized capital of HK$10,000 divided into 10,000 shares of
HK$1.00 each, all of which have been issued fully paid or credited as
fully paid ("Brewing Shares").
(B) SCBC Distribution Company Limited ("SCB") is a private company limited
by shares short particulars of which are set out in Schedule 2 having an
authorized capital of HK$1,000 divided into 1,000 shares of HK$1.00
each, all of which have been issued fully paid or credited as fully paid
("SCB Shares")
(C) The Seller is the legal and beneficial owner of the Brewing Shares and
the SCB shares.
(D) The Seller wishes to sell and, in reliance upon (inter alia) the
representations, warranties and undertakings set out in this agreement,
the Purchaser wishes to purchase all the issued share capital of the
Brewing shares and SCB shares and the benefit or the Shareholder's Loans
on the terms set out in this agreement.
It Is AGREED as follows:
1. INTERPRETATION
(1) In this agreement:
"ACCOUNTS DATE" means October 31, 1997
"BREWING MANAGEMENT ACCOUNTS" means the balance sheet of Brewing as at
October 31 1997 and the profit and loss account of Brewing for the period
from November 1, 1996 to October 31, 1997 (a copy of each of which has
been annexed hereto and initialed for the purposes of identification);
"BREWING SHAREHOLDER'S LOAN" shall be the loans with all interest payable
thereon outstanding from Brewing to the Seller; as at completion.
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"COMPLETION" means completion of the sale and purchase of the Brewing
Shares and SCB Shares and the Shareholder's Loans in accordance with
clause 6;
"DISCLOSED" means disclosed in this agreement (including the Schedules
and the Annexures) or in the Brewing Management Accounts or in the SCB
Management Accounts;
"DISTRIBUTION AGREEMENTS" shall be the distribution agreements and/or
supply agreements signed between the parties and in the form attached
hereto as Annexure 1;
"OPTION AGREEMENT" shall be the option agreement signed between the
parties and in the form attached hereto as Annexure 2;
"PREMISES" means the premises at Unit Al, 1/F and Unit 7/F Vita Tower,
29 Wang Chuk Hang R9ad, Aberdeen, Hong Kong and subject to the tenancy
agreements dated December 12, 1994 and April 26, 1995 respectively
between Brewing and Ping Ping Investments Company Limited;
"PURCHASER'S GROUP" means the Purchaser and all its subsidiaries (other
than Brewing and SCB);
"SCB MANAGEMENT ACCOUNTS" means the balance sheet of SCB as at October
31, 1997 and the profit and loss account of SCB for the period from
November 1, 1996 to October 3l, 1997 (a copy of which has been annexed
hereto and initialed for the purposes of identification);
"SCB SHAREHOLDER'S LOAN" shall be the loans all interest payable thereon
outstanding from SCB to the Seller as at Completion;
"SELLER'S GROUP" means the Seller and all its subsidiaries (other than
Brewing and SCB);
"SHAREHOLDER'S LOANS" means the Brewing Shareholder's Loan and the SCB
Shareholder's Loan;
"SUBSIDIARY" means a subsidiary for the purposes of the Companies
Ordinance (Cap 32) of the laws of Hong Kong, SAR;
"WARRANTIES" means the representations and warranties on the part of the
Seller contained in clause 4(1).
(2) Any reference, express or implied, to an enactment Includes reference
to:
(a) that enactment as amended7 extended or applied by or under any
other enactment before or after this agreement;
(b) any enactment which that enactment re-enacts (with or without
modification); and
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(c) any subordinate legislation made (before or after this agreement)
under any enactment, including one within (a) or (b) above.
(3) Where any statement is qualified by the expression "so far as the Seller
is aware" or "to the best of the Seller's knowledge information and
belief" or any similar expression that statement shall be deemed to
include an additional statement that it has been made after due and
careful inquiry.
(4) Words denoting persons shall include bodies corporate and unincorporated
associations or persons.
(5) Subclauses (1) to (4) above apply unless the contrary intention appears.
(6) The headings in this agreement do not affect its interpretation.
(7) The schedules and the Annexures for an integral part of this agreement
and shall be construed and have the same full force and effect as if
expressly set out in the body of this agreement.
2. SALES AND PURCHASE OF THE SHARES AND THE SHAREHOLDER LOANS
(1) The Seller as legal and beneficial owner shall sell and the Purchaser
shall purchase the Brewing Shares and SCB Shares free from the liens,
charges, equities and encumbrances and together with all rights
attaching to them with effect from the date of Completion.
(2) The Seller as legal and beneficial owner shall assign to the Purchaser
the Shareholder's Loans free from all liens, charges, equities and
encumbrances with effect front the date of completion.
3. CONSIDERATION
The consideration for the sale of the Brewing Shares and SCB Shares and
the assignment or the shareholder's Loans shall be the sum or US$700,000
(being US$100 for the Brewing Shares, US$100 for the SCB Shares, US$100
for the Brewing Shareholder's Loan and US$699.700 for the SCB
Shareholder's Loan) payable in cash as follows.
(a) $500,000 shall be payable in cash at Completion;
(b) $200,000 shall be released and payable to Seller with interest,
as follows:
(i) US$50,000 upon delivery of proof of ownership shipment and the
insurance during shipment to Brewery of the Bottler and
Labeler from Germany; US$10,000 upon shipment to Brewery of
the Flow Meters; and US$40,000 upon arrival of the Bottler and
Labeler in Hong Kong, consent to these releases shall not be
unreasonably withheld.
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(ii) $100,000 to be used to fund any Customs (C&E) duty fees and
fines and the balance shall be release upon confirmation by Hong
Kong Customs and excise that they have satisfactory resolved all
outstanding issues with Brewer and certification by Seller's Hong
Kong counsel of the settlement of Brewery's pending C&E legal
issues.
4. WARRANTIES
(1) The Seller represents and warrants to the purchaser that
a. the Seller is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation and has
requisite power and authority to own, lease and operate its properties
and to carry on its business as now being conducted
b. the Seller is the lawful and beneficial owner of all of the Brewing
Shares and the SCB Shares to be transferred to the Purchaser pursuant to
this agreement, free and clear of all liens, encumbrances, restrictions
and claims of every kind. The Company has full and legal right, power,
and authority to sell, assign, transfer and convey such shares in
accordance with the terms and subject to the conditions of this
agreement. The delivery to the Purchaser of the Brewing Shares and the
SCB Shares pursuant to this agreement on the date of Completion will
transfer to the Purchaser valid title thereto, free and clear of any and
all adverse claims.
c. The execution and delivery of this agreement by the Seller and the
delivery to the purchaser of the Brewing Shares and the SCB Shares
pursuant to this agreement on the date of Completion (i) will not
violate any provision of the memorandum of association or bye-laws of
the Seller (ii) to the knowledge of the Seller will not violate any
statute rule, regulation, order or decree of any governmental
authorities by which the Seller is bound or is binding upon any of its
properties or assets, and (iii) will not result in a violation or breach
of, or constitute a default under any material license, permit,
indenture, agreement or other instrument which the Seller or any of its
assets or properties is bound; excluding from clauses (ii) and (iii)
above violations. breaches or defaults which either individually or in
the aggregate, would not have a material adverse effect on the business
financial condition or results of the operations of the Seller.
d. The assets of Brewing and SCB are not pledged as collateral for any bank
or other facilities of sellers, its subsidiaries and associates.
is ture and accurate in all material respects as at the date of
Completion.
(2) Each of the Warranties made by the Seller in respect of each of Brewing
and SCB set out in Schedule 3 is separate and independent and except as
expressly provided to the contrary in the agreement is not limited;
(a) by reference to any other paragraph of Schedule 3; or
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(b) by anything in this agreement;
and none of the Warranties shall be treated as qualified by any actual or
constructive knowledge on the part of the Purchaser or any of its agents.
(3) Subject to clause 5 and without prejudice to any other remedy available
to the Purchaser or its ability to claim damages on any basis which is
available to it by reason of any of the Warranties being untrue or
misleading or being breached, the Seller undertakes with the Purchaser
(for itself and as trustee for Brewing and SCB) that it will, at the
direction of the Purchaser, pay to the Purchaser, Brewing or SCB (as
applicable) or (in the case of liability to another person which has not
been discharged) the person to whom the liability has been incurred an
amount equal to any deficiency or liability of Brewing or SCB which
arises from any of the Warranties being untrue, misleading or breached
and which would not have existed or arisen if the Warranty in question
had not been untrue, misleading or breached.
5. LIMITATION
5.1 (i) No claim or claims shall be made under or pursuant to this Agreement
against the Seller unless the aggregate amount of all such claims
shall exceed US$50,000;
(ii) The maximum liability of the Seller for all the claims under this
Agreement shall not exceed the aggregate consideration received by
the Seller hereunder; and
(iii) no claims shall be raised by the Purchaser against the Seller under
this agreement after a date of 12 months after Completion save any
claim for which the purchaser had no knowledge prior to the expiry
of this time period.
5.2 The Seller shall not be liable for any breach of the Warranties to the
extent that any depletion, diminution or reduction in the value or
amount of any of the assets of Brewing or SCB (as the case may be)
occurs as a result of or is otherwise attributable to any legislation
not In force at the date of Completion or any change or law or
administrative practice which takes effect retroactively or occurs as a
result of any increase in the rates of taxation in force at the date of
Completion or any voluntary act of Brewing or SCB (as the case maybe)
after the date of Completion at the direction of the Purchaser otherwise
than in the ordinary course of trading.
5.3 The Seller shall not be liable for any claim under this Agreement which
would not have arisen but for any act omission or transaction by the
Purchaser or Brewing or SCB (as the case may be) occurring after
Completion.
5.4 The Purchaser shall reimburse to The Seller an amount equal to any sum
paid by the Seller under this Agreement which is subsequently recovered
by or paid to the Purchaser or Brewing or SCB (as the case may be) by
any third party in relation to this Agreement and without prejudice to
the generality of the foregoing where a breach of any of the Warranties
shall be in respect of a matter where Brewing or SCB (as the case may
be) shall be insured against any loss or damage arising therefrom the
Purchaser shall not make any claim against the Seller for breach of any
warranty
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without first procuring that Brewing or SCB (as the case may be) shall
make a claim against their insurers for compensation for the loss or
damage suffered and thereafter; any claim against the Seller shall be
limited (in addition to the limitations on the Sellers liability
elsewhere referred to herein) to the amount by which the loss or damage
suffered by the Purchaser as a result of such breach shall exceed the
compensation paid by the said insurers to Brewing or SCB (as the cast
may be) without prejudice to the rights of subrogation of the relevant
insurers.
6. COMPLETION
(1) Completion shall take place at the offices of. ACL Asia Ltd., Two
Pacific Place, 88 Queensway, Hong Kong immediately after the signature
of this agreement
(2) At completion the Seller shall procure:
(a) the delivery to the Purchaser of:
(i) duly executed transfers and bought and sold notes in favour of
the Purchaser or its nominee(s) of all the Brewing Shares and
SCB Shares;
(ii) the share certificates representing the Brewing Shares and SCB
Shares (or an express indemnity in a form satisfactory to the
purchaser in the case of any found to be missing);
(iii) the certificate of incorporation, common seal, minute books,
statutory registers and share certificate books of Brewing and
SCB;
(iv) the resignations of all the directors and the secretary of
Brewing and SCB, in each case acknowledging under seal that he
has no claim against Brewing or SCB whether for loss of office
or otherwise;
(v) execution copies of the Distribution Agreements duly executed
by the seller;
(vi) an execution copy of the Options Agreement duly signed by
the Seller;
(vii) confirmation from the landlord of the Premises, in a form
acceptable to the Purchaser, that the existing tenancy shall
remain in place following change of ownership of Brewing and
SCB;
(viii) new contracts of employment, on terms approved by the
Purchaser, that have been entered into with the senior
management (as defined by the parties) Brewing and SCB; and
(ix) confirmation that all sums have been paid in relation to the
balance of the purchase price and shipping cost of the
bottler, labeler and pasteurizer and a shipping date has been
agreed.
(b) that a Board Meeting of Brewing and SCB is held at which it is resolved
that:
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(i) such persons as the Purchaser nominates are appointed as
additional directors and the secretary of Brewing and SCB;
(ii) the transfers referred to in paragraph (a) are approved for
registration; and
(iii) Brewing's and SCB's bank mandates are revised in such manner
as the Purchaser requires.
(c) an acknowledgment of the assignment of the Shareholders's Loans to
the Purchaser duly signed by Brewing and SCB.
(3) Upon Completion of all the matters referred to in subclause (2) the
Purchaser shall deliver to the Seller by with transfer the consideration
for the sale of the Brewing Shares and SCB Shares and the assignment of
the Shareholder's Loans pursuant to clause 3 hereof.
(4) Upon Completion, the Shareholder's Loans shall be deemed to have been
assigned hereby without any further act or document to be done or
executed by the Seller.
(5) If the transfers and the bought and sold notes are signed in Hong Kong
and within thirty days if they are signed outwith Hong Kong, the
Purchaser shall proceed with stamping the Brewing Shares and the SCB
Shares. The stamp duty shall be borne equally by the parties and the sum
of US$1,000 shall be withheld from the sum payable as consideration
pursuant to clause 3 in respect thereof
(6) If for any reason the provisions of subclause (2) are not finally
complied with as at the date of Completion the Purchaser may elect (in
addition and without prejudice to all other rights or remedies available
to it) to rescind this agreement or to fix a new date for Completion.
(7) The parties hereby agree that the bottling and labeling line currently
ordered will be paid for and shipped by the Seller to the purchaser in
Hong Kong. The Purchaser shall be responsible for installation and
commissioning, and it is agreed that the consideration in clause 3 shall
be reduced by US$5,000 upon release of the final payment under clause
3 (b) (1).
7. ANNOUNCEMENTS
No announcement concerning this sale and purchase or any ancillary
matter will be made before, on or after Completion by any member of the
Seller's Group or the purchaser's Group except as required by law or any
competent regulatory authority or with the written approval of the
Seller and the Purchaser (such approval not to be unreasonably withheld
or delayed).
8. NOTICES AND RECEIPTS
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(1) Any notice or other document to he served under this agreement may be
delivered or sent by first class recorded delivery post or facsimile
process to the party to be served at its address appearing in this
agreement or at such other address as it may have notified to the other
parties in accordance with this clause.
(2) Any notice or document shall be deemed to have been served:
(a) if delivered, at the time of delivery; or
(b) if posted, at 10.00 a.m. on the second business day after it was
put into the post; or
(c) if sent by facsimile process, at the expiration of 2 hours after
the time of dispatch, if dispatched before 3.00 p.m. or any
business day, and in any other case at 10:00 a.m. on the business
day following the date of dispatch.
(3) In proving service of a notice or document it shall be sufficient to
prove that delivery was made or that the envelope containing the notice
or document was properly addressed and posted as a prepaid first class
recorded delivery letter or that the facsimile message as properly
addressed and dispatched as the case may be.
9. RESOLUT1ONS, WAIVERS AND UNDERTAKINGS
(1) The Seller waives (and shall procure the waiver by its nominee(s)) of
all rights of preemption which it (or such nominee(s)) may have (whether
under Brewing's and SCB's articles of association or otherwise) in
respect of the transfer to the Purchaser (or its nominee(s)) of the
Brewing Shares and SCB Shares or any of them.
(2) For so long after Completion as it remains the registered holder of any
of the Brewing Shares and SCB Shares the Seller will hold them and any
distributions, property and rights deriving from them in trust for the
Purchaser and will deal with the Brewing Shares and SCD Shares and
distributions, property and rights deriving from them as the Purchaser
directs; in particular, the Seller will exercise all voting rights as
the Purchase directs or will execute an instrument of proxy or other
document which enables the Purchaser or its representative to attend and
vote at any meeting of Brewing and SCB.
(3) Save as disclosed and subject to the provisions of clause 5, the Seller
hereby undertakes to indemnify the purchaser against any claims for
which Brewing or SCB become liable up to completion (whether any
liability becomes due before or after Completion) in respect of any
investigation or inquiry by Hong Kong Customs and Excise or other Hong
Kong regulatory body. In particular it has been disclosed to the
Purchaser that there is presently a dispute with the Hong Kong tax
authorities. Notwithstanding the terms of this clause and clause 5 the
Seller hereby expressly indemnifies the Purchaser against any costs
involved with settling this dispute.
10. GENERAL
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(1) Each of the obligations, Warranties and undertakings set out in this
agreement which is not fully performed at Completion will continue in
force after Completion.
(2) This agreement shall be binding upon each party's successors and
assignees but, if the Brewing Shares and SCB Shares are sold or
transferred after Completion to any company within the Purchaser's
Group, the benefit of each of the obligations Warranties and undertaken
or given by the Seller shall not be assignable to the purchaser or
transferee of the Brewing Shares and SCB Shares unless with the written
consent of the Seller, which shall not be unreasonably withheld.
(3) Time is of the essence in relation to this agreement.
(4) Each party shall pay the costs and expenses incurred by it in
connection with the entering into and completion of this agreement. For
the avoidance of doubt the stamp duty payable hereunder shall be borne
equally between the parties subject to clause 6(5) above.
(5) This agreement may be executed in any number of counterparts, all of
which taken together shall constitute one and the same agreement and
any party may enter into this agreement by executing a counterpart.
(6) For the purposes of this agreement, a document signed and transmitted
by facsimile machine ("faxed") is to be treated as an original
document. The faxed signature of any party is to be considered as an
original signature, and the faxed document has the same binding effect
as an original signature on an original document. At the request of any
party, a faxed document is to be re-executed in the original form by
the parties thereto. No party may raise the use of faxed signatures as
a defense to the enforcement of this agreement or the authenticity of
any document relating thereto.
(7) For the limited purpose of preparing Seller's audited financial
statements, Seller's auditors shall have reasonable access to the books
and records of Brewing and SCB for a period of no longer than six (6)
months from Completion.
11. WHOLE AGREEMENT
(1) This agreement and the documents referred to in it contain the whole
agreement between the parties relating to the transactions contemplated
by this agreement and supersede all previous agreements between the
parties relating to these transactions.
(2) Each of the parties acknowledges that in agreeing to enter into this
agreement it has not relied on any representation, warranty or other
assurance except those set out in this agreement.
12. GOVERNING LAW
(1) This agreement is governed by and shall be construed in accordance with
The laws at the State of Delaware without regard to its conflict of law
rules.
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13. ARBITRATION
Any and all disputes, controversies or claims arising out of or relating to
this agreement shall be referred to and finally resolved by arbitration under
the UNCITRAL Arbitration Rules then in force. The number of the arbitrators
shall be three (3). The place of arbitration shall be Hong Kong or such other
value as agreed by the parties. The arbitration shall be conducted in English.
As WITNESS the hands of the duly authorized officers of the Seller and the
Purchaser on the date which appears first on page 1.
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SCHEDULE 1
SOUTH CHINA BREWING COMPANY LIMITED
Registered number 479793
Registered office: Unit Al, 1/F Vita Tower,
29 Wong Chuk Hang Road,
Aberdeen, Hong Kong
Date and place of
incorporation: May 26, 1994, Hong Kong
Directors: James L. Ake
Peter W.H. Bordeaux
David Haines
Secretary: J.P. Walsh & Company, Ltd.
Auditors: Coopers & Lybrand
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SCHEDULE 2
SCBC DISTRIBUTION COMPANY LIMITED
Registered number 447434
Registered office: Unit Al, 1/F Vita Tower,
29 Wong Chuk Hang Road,
Aberdeen, Hong Kong
Date and place of
incorporation: August 31, 1993, Hong Kong
Directors: James L. Ake
Peter W.H. Bordeaux
David Haines
Secretary: J.P. Walsh & Company, Ltd.
Auditors: Coopers & Lybrand
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SCHEDULE 3
WARRANTIES
A. GENERAL
A.1 ACCURACY OF RECITALS AND SCHEDULES
The particulars relating to the Brewing and SCB set out in the recitals
and schedules l and 2 to this agreement are true and accurate.
A.2 MEMORANDUM AND ARTICLES OF ASSOCIATION, STATUTORY BOOKS AND RETURNS
(1) The copy of the memorandum and articles of association of Brewing and
SCB which have been given to the Purchaser are accurate and complete in
all respects and have been annexed or incorporated copies of all
resolutions or agreements required to be so annexed or incorporated.
(2) The register of members and other statutory books and registers of
Brewing and SCB have been properly kept and no notice or allegation that
any of them are incorrect or should be rectified has been received.
(3) All returns and particulars, resolutions and other documents which
Brewing and SCB are required by law to file with or deliver to the
registrar of companies have been correctly made up and duly filed or
delivered.
A.3 OWNERSHIP OF THE BREWING SHARES AND THE SCB SHARES
(1) The Brewing Shares and the SCB Shares constitute the whole of the
issued and allotted share capital of Brewing and SCB respectively.
(2) No person is entitled or has claimed to be entitled to require Brewing
or SCB to issue any share or loan capital either now or at any future
date and whether contingently or not.
(1) As of Completion, there is no option, right of pre-emption, right to
acquire, mortgage, charge, pledge, lien or other form of security or
encumbrance on, over or affecting any of the Brewing Shares or the SCB
Shares nor is there any commitment to give or create any of the
foregoing, and no person has claimed to be entitled to any or the
foregoing.
(4) The Seller is the beneficial owner of the Brewing Shares and the SCB
Shares and has full and legal right power and authority to sell and
procure the transfer of the full legal and beneficial ownership in the
Brewing Shares and the SCB Shares to the Purchaser on the terms set out
in this agreement. The delivery to the Purchaser of the Brewing Shares
and SCB Shares pursuant to this Agreement on the date of completion will
transfer to the Purchaser valid title thereto free and clear of any and
claims.
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A.4 OWNERSHIP OF ASSETS
(1) Brewing and SCB owned at the Accounts Data all the assets included in
the Brewing Management Accounts and SCB Management Accounts respectively
and has not acquired or agreed to acquire any fixed assets since the
Accounts Date.
(2) Neither Brewing nor SCB have since the Accounts Date disposed of any of
the assets included in the Brewing Management Accounts or SCB Management
Accounts respectively or any assets acquired or agreed to be acquired
since the Accounts Date which disposal or acquisition would have a
material adverse effect on the business financial condition or results
of the operation of Brewing and SCB respectively.
(3) None of the property, assets, undertakings, goodwill or uncalled capital
Brewing or SCB is subject to any encumbrance or any agreement or
commitment to give or create any of the foregoing
A.5 SUBSIDIARIES AND ASSOCIATIONS
Neither Brewing nor SCB:
(1) hold or beneficially own or have agreed to acquire any securities of any
other corporation (wherever incorporated); or
(2) is or has agreed to become a member of any partnership or other
unincorporated association, joint venture or consortium.
A.6 COMPLIANCE WITH STATUTES
So far as the Seller is aware, neither Brewing, SCB nor any of their
officers, agents or employees have (during the course of their duties),
done or omitted to do anything which is in contravention of any statute,
order, regulation or the like giving rise to any fine, penalty or other
liability or sanction on the part of Brewing or SCB.
A.7 LICENSES AND CONSENTS
Both Brewing and SCB have all Licenses (and in particular, hut without
limitation necessary to carry on brewing in Hong Kong) and consents
necessary to own and operate their assets and carry on their business as
they do at present and the Seller is not aware of anything (including,
without limitation, the consummation of the transactions contemplated
hereby) that might result in the revocation, Suspension or modification
of any of those licenses or consents or that might prejudice their
renewal.
A.8 INSURANCES
(1) All assets are insured in amounts representing their all replacement or
reinstatement value against fire and other risks normally insured by
owners of similar assets.
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(2) All insurance policies are currently in full force and effect, all
premiums payable thereunder have been paid and nothing has been done or
omitted to be done by Brewing or SCB which will make such policies void
or voidable and there are no claims outstanding under any such policy.
A.9 LITIGATION
(1) Neither Brewing nor SCB is engaged in any litigation or arbitration
proceedings and there are no such proceedings pending or threatened by
or against Brewing or SCB.
(2) The Seller does not know of anything which is likely to give rise to any
litigation or arbitration proceedings by or against Brewing or SCB.
(3) Except as has been disclosed to the Purchaser, neither Brewing nor SCB
is the subject of any investigation or inquiry by any governmental,
administrative or regulatory body nor is the Seller aware of any thing
which is likely to give rise to any such investigation or inquiry. In
particular nor is the Seller aware of any existing investigations or
inquiries regarding outstanding duties or licenses by Hong Kong Customs
and Excise department, nor is the Seller aware of anything that is
likely to give rise to such an investigation or inquiry.
A.1O INSOLVENCY
(1) No receiver or administrative receiver has been appointed in respect of
either Brewing or SCB nor in respect of the whole or any part of the
assets or undertakings of Brewing or SCB.
(2) No meeting has been convened at which a resolution will be proposed, no
resolution has been passed, no petition has been presented and no order
has been made for the winding-up of either Brewing or SCB.
(3) Neither Brewing or SCB have stopped or suspended payment of their debts,
become unable to pay their debts or otherwise become insolvent.
(4) No unsatisfied judgment, order or award is outstanding against Brewing
or SBC and no written demand has been made against Brewing or SCB and no
distress or execution has been levied on, or other process commenced
against, any asset of Brewing or SCB.
(5) No voluntary arrangement has been proposed in respect of Brewing or SCB.
(6) No circumstances have arisen which entitle any person to take any
action, appoint any person, commence proceedings or obtain any order of
the type mentioned in subparagraphs (1) to (5) above
A.11 CAPACITY AND CONSEQUENCES OR SALE
(1) The Seller has the requisite power and authority to enter into and
perform this
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agreement.
(2) This agreement constitutes binding obligations on the Seller an
accordance with its terms.
(3) Compliance with the terms of this agreement does not and will not:
(a) conflict with or constitute a default in any material respect
under any provision of:
(i) any agreement or instrument to which the Seller or Brewing or
SCB is a party; or
(ii) Brewing's or SCB's or the seller's memoranda or articles of
association; or
(iii) any lien, lease, order, judgment, award, injunction decree,
ordinance or regulation or any other restriction or any kind
or character by which the Seller or Brewing or SCB is bound;
or
(b) relieve any other party to a contract with Brewing or SCB of its
obligations or enable that party to vary or terminate its rights or
obligations under that contract; or
(c) result in the creation or imposition of any lien, charge or
encumbrance of any nature on any of the property or assets of
Brewing or SCB.
B. ACCOUNTS AND FINANCIAL
B.1 BOOKS AND RECORDS
All accounts, books, ledgers and other financial records of Brewing and
SCB:
(a) have been prepared in accordance with generally accepted accounting
principles and contain accurate records of all matters required to
be entered in them by all applicable statutes and regulations; and
(b) give a true and fair view or the matters which ought to appear in
them.
B.2 MANAGEMENT ACCOUNTS
The Brewing Management Accounts and the SCB Management Accounts give a
true and fair view in all material aspects the financial condition and
results of the operation of Brewing and SCB respectively for the period
ended on the Accounts Date.
B.3 POSITION SINCE ACCOUNTS DATE
Since the Accounts Date:
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(a) Brewing and SCB have conducted their business in a normal and
proper manner; and
(b) Brewing and SCB have not entered into any unusual contract or
commitment or otherwise departed from its normal course of trading.
B.4 DIVIDENDS AND DISTRIBUTIONS
No dividend or other distribution of profits or assets has been or agreed
to be declared, made or paid by Brewing and SCB since the Accounts Date.
B.5 LOAN CAPITAL AND GUARANTEES
Brewing and SCB do not have outstanding any loan capital or any money
borrowed or raised (other than the Shareholder's Loans) or any liability
(whether present or future, contingent or actual) in respect of any
guarantee or indemnity.
C. TAXATION
C.1 TAX RETURNS
No accounts, computations or returns are required to be submitted by
Brewing and SCB to any relevant taxation or excise authorities and no
taxation is payable by Brewing and SCB.
C.2 TAXATION LIABILITIES
Except as has been disclosed to the purchaser, all tax for which Brewing
and SCB are liable has been duly paid ([insofar as such taxation ought to
have been paid).
D. SHAREHOLDER'S LOANS
D.1 TITLE
The Seller is the beneficial owner of the Shareholder's Loans
D.2 ENCUMBRANCES
(1) The shareholder's Loans are free from any encumbrance (including,
without limitation, any debenture, mortgage, charge, lien or deposit by
way of security), any agreement or commitment to create any foregoing or
any waiver of the repayment of the Shareholder's Loans or any part
thereof or any agreement or commit to so waive.
(2) The Shareholder's Loans are not subject to any option or i\ght of
pre-emption.
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EXHIBIT 10.42
OPTION AGREEMENT NO. 1
This agreement ("Agreement") is entered into as of the 18th day of
December, 1997 between AMERICAN CRAFT BREWING INTERNATIONAL LIMITED ("AmBrew" or
the "Company"), a Bermuda company with its principal office at One Galleria
Blvd., Suite 1714, Metairie, LA 70001, U.S.A., and GOLD CROWN MANAGEMENT LIMITED
(registered number 258702), with its registered offices at P. O. Box 957,
Offshore Incorporation Center, Road Town, Tortola, British Virgin Islands
("Optionee").
R E C I T A L S:
1. Optionee and Company entered into a stock purchase agreement dated
December 18, 1997 (the "Purchase Agreement") pursuant to which Optionee
purchased from the Company one hundred percent (100%) of the issued and
outstanding shares of: (1) South China Brewing Company Limited (registered
number 479793), a Hong Kong company ("Brewing"); and (2) SCBC Distribution
Company Limited (registered number 447434), a Hong Kong company ("SCB").
2. In conjunction therewith, the Company desires to grant to Optionee on
the terms and conditions set forth herein an Option (as hereinafter defined) to
exchange thirty percent (30%) of the shares then issued and outstanding of each
of Brewing and SCB for an aggregate of one hundred and twenty-five thousand
(125,000) shares of the common stock, par value US$0.01 per share, of AmBrew
("AmBrew Common Stock").
NOW, THEREFORE, in consideration of the mutual covenants, provisions and
agreements set forth herein, the consummation of the transactions contemplated
by the Purchase Agreement
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and for other valuable consideration, the receipt and sufficiency of which are
hereby acknowledged by the Company and Optionee, the parties hereto, intending
to be legally bound hereby, agree as follows:
1. GRANT AND EXERCISE OF OPTION.
1.1 Grant of Option. The Company hereby grants to Optionee the option
(hereinafter the "Option") to transfer and deliver to the Company that certain
number of shares of Brewing and SCB such that after the exercise of this Option
and on the Closing Date (as hereinafter defined), the Company shall be the
record owner of thirty percent (30%) of the issued and outstanding shares of
each of Brewing and SCB, and in exchange and as consideration therefor the
Company shall transfer and deliver to the Optionee an aggregate of one hundred
and twenty-five thousand (125,000) shares of AmBrew Common Stock.
The Optionee must exercise the Option as to all, and not less than all, of
the shares of Brewing and SCB covered by the Option. The Option shall be
exercisable commencing one hundred and eighty (180) days after the date of the
Purchase Agreement, or beginning May 31, 1998, whichever is earlier, and shall
terminate on November 30, 2000, or at such later date as the Company, in its
sole discretion, so agrees in writing ("Option Period").
Optionee understands and acknowledges that the AmBrew Common Stock to be
delivered upon exercise of the Option will not be registered under the
Securities Act of 1933, as amended (the "Securities Act"), in reliance on
exemptions from the registration requirements of the Act or in reliance upon
regulations applicable to offers and sales of securities outside of the United
States.
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The Company's obligation to deliver on the Closing Date shares of AmBrew
Common Stock upon exercise of the Option is subject to the satisfaction of the
conditions set forth below. If such conditions are not satisfied, the Company
shall have no obligation to deliver on the Closing Date shares of AmBrew Common
Stock notwithstanding any exercise of the Option by the Optionee.
1.2 Conditions Precedent. The obligation of the Company to transfer
and deliver shares of AmBrew Common Stock on the Closing Date after the
Optionee's exercise of the Option is subject to the fulfillment to the Company's
satisfaction of each of the following conditions:
1.2.1 After the Closing Date, Optionee shall be the beneficial owner
of not less than fifty percent (50%) of the issued and outstanding shares of
each of Brewing and SCB, unless agreed otherwise in writing by Optionee and the
Company.
1.2.2 On the Closing Date, Brewing and SCB shall have on the Closing
Date combined net assets excluding shareholder advances, as stated under
generally accepted accounting principles, of at least US$700,000.00.
1.2.3 On the Closing Date, the Optionee shall be the lawful owner and
have good and marketable title to the shares of SCB and Brewing to be
transferred and delivered to the Company, free and clear of all liens, pledges
and encumbrances, and have complete power, right and authority to assign and
transfer the shares to the Company.
1.2.4 On the Closing Date, Optionee and the Company, as applicable,
shall have obtained all requisite governmental approvals for Optionee to become
the owner of the
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AmBrew Common Stock, including but not limited to the approval of the Bermuda
Monetary Authority.
1.2.5 On the Closing Date, there is no action, suit or proceeding
before or by any court or governmental agency or body, domestic or foreign,
pending or threatened against or affecting either Brewing or SCB, or any of
their properties, which could reasonably be anticipated to result in any
material adverse change in the condition (financial or otherwise) or in the
earnings, business affairs, properties or assets of either Brewing or SCB.
1.2.6 On the Closing Date, Brewing and SCB do not have any material
liabilities or material obligations, direct or indirect, actual or contingent,
or have not entered into any material transactions not in the ordinary course of
business, that could result in a change in capitalization or material adverse
change in financial condition as at October 31, 1997.
1.2.7 On the Closing Date, Brewing and SCB shall have conducted, are
conducting and will conduct their business so as to comply in all material
respects with all applicable statutes and regulations, and are not charged with
and, to their knowledge, are not under investigation with respect to any
violation or alleged violation of any statutes or regulations nor are the
subject of any pending or threatened adverse proceedings by any regulatory
authority having jurisdiction over their business or operations.
1.2.8 All representations and warranties contained in this Agreement
shall be true, complete and correct in all material respects on the date of this
Agreement, on the date of the exercise of the Option, and on the Closing Date.
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1.3 Exercise of Options. Optionee may exercise the Option by
delivery prior to the expiration of the Option Period of written notice
("Notice") to the Company, pursuant to Section 4 below, of Optionee's exercise
of the Option.
1.4 Closing. The exchange of the shares of Brewing and SCB by
Optionee for the AmBrew Common Stock from the Company shall be closed at the
offices of the Company in New Orleans, Louisiana, U.S.A., or at such other
location that is mutually agreed, at 10:00 A.M., local time, on the date
specified by Optionee in the Notice or by the Company if the Notice fails to
specify a date (the "Closing Date"); provided, however, that the specified
Closing Date shall be not less than thirty (30) days after receipt by the
Company of such Notice and further provided that the Closing Date may be
extended if additional time is needed. Either party may attend the closing
through a duly authorized representative. On the Closing Date, the Optionee
shall transfer and deliver to the Company, and the Company shall transfer and
deliver to Optionee, certificates for the shares of Brewing and SCB, and the
AmBrew Common Stock, covered by the Option (collectively, the "Covered Shares").
Certificates representing the Brewing and SCB shares shall be duly endorsed in
blank, or accompanied by stock powers duly executed in blank, by the
transferring party, with signatures guaranteed by a commercial bank or trust
company, with any necessary transfer tax or other revenue stamps, acquired at
the transferring party's expense, affixed and cancelled. The transferring party
agrees to cure any deficiencies with respect to the certificates representing
the Covered Shares delivered by the transferring party or with respect to the
stock power accompanying any such certificates prior to the closing.
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Optionee as follows:
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2.1 AmBrew Common Stock. The Company shall transfer the number of
shares of the AmBrew Common Stock to the Optionee upon exercise of the Option,
free and clear of all liens, encumbrances, and claims of every kind. The
Company has full and legal right, power and authority to sell, assign, transfer
and convey such AmBrew Common Stock in accordance with the terms and subject to
the conditions of this Agreement. The delivery to the Optionee of the AmBrew
Common Stock pursuant to this Agreement on the Closing Date will transfer to the
Optionee valid title thereto, free and clear of any and all adverse claims.
2.2 Existence and Good Standing of the Company. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation and has requisite power and authority
to own, lease and operate its properties and to carry on its business as now
being conducted.
2.3 No Violation. The execution and delivery of this Agreement by the
Company and the delivery to the Optinee of the AmBrew Common Stock pursuant to
this Agreement on the Closing Date (a) will not violate any provision of the
memorandum of association or bye-laws of the Company, (b) to the knowledge of
the Company will not violate any statute, rule, regulation, order or decree of
any governmental authorities by which the Company is bound or is binding upon
any of its properties or assets, and (c) will result in a violation or breach
of, or consitute a default under, any material license, permit indenture,
agreement or other instrument which the Company or any of its assets or
properties is bound; excluding from clauses (b) and (c) above violations,
breaches or defaults which either individually or in the aggregate, would not
have a material adverse effect on the business, financial condition or results
of operations of the Company.
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2.4 Litigation. There is no action, suit or proceeding at law or in
equity by any person or any arbitration or administrative or proceeding by or
before any governmental or other instrumentality or agency, pending or, to the
knowledge of the Company, threatened against it which would have a material
effect on the business, financial condition or results of operations of the
Company.
2.5 Compliance with Laws. To the best knowledge of the Company, it
is in compliance with all applicable laws, regulations, orders, judgments and
decrees except where the failure to so comply would not have a material adverse
effect on the business, financial condition or results of operations of the
Company.
3. REPRESENTATIONS AND WARRANTIES OF OPTIONEE
Optionee represents and warrants to the Company as follows:
3.1 Disclosure; Investment Intention. Optionee acknowledges that it
has received all requested information concerning the Company, and that Optionee
has been given the opportunity to review the Company's books and records,
including its filings with the U.S. Securities and Exchange Commission, and made
such inquiries of its officers as Optionee in its discretion deemed appropriate
in connection with the transactions contemplated by this Agreement. Optionee
represents and warrants that its acquisition of AmBrew Common Stock pursuant to
the exercise of the Option is for investment, for its own account, and not with
a view to the distribution of any part thereof. Optionee understands that the
Option and the shares of AmBrew Common Stock issuable upon exercise of the
Option, and the Option, are not and will not be registered under the Securities
Act, and must be held by Optionee indefinitely unless they are first registered
or unless exemptions from registration under those laws are or become
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available. Optionee understands that it has no right to require the Company to
register under those laws the Option or the shares of AmBrew Common Stock
issuable upon exercise of the Option.
Optionee further acknowledges that it understand that the certificate
evidencing the shares of AmBrew Common Stock acquired upon exercise of the
Option shall contain a legend to the effect that the shares have not been
registered under the Securities Act and may not be transferred without
registration or an exemption therefrom and, in the case of an exemption, without
delivery to AmBrew of a legal opinion that an exemption is available, which
counsel and opinion shall be satisfactory to AmBrew and that transfer of the
shares of AmBrew may be subject to additional restrictions as may be determined
by counsel.
3.2 Tax Matters. Optionee acknowledges that it understands the
federal, state and local income tax considerations relevant to the granting of
the Option pursuant to this Agreement, the exercise of the Option and the
acquisition of the shares of AmBrew Common Stock.
3.3 Financial Condition. Optionee has adequate means to otherwise
conduct its affairs, has no need for liquidity in its investment in the shares
of AmBrew Common Stock, and is able to bear the substantial economic risks of an
investment in the shares of AmBrew Common Stock for an indefinite period of
time.
3.4 Authorization. Optionee, and any representative acting for it,
have all necessary power and authority to execute, deliver and perform this
Agreement and the transactions contemplated hereby. This Agreement has been
duly executed and delivered by Optionee and constitutes a valid and binding
obligation of, and is enforceable against, Optionee
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in accordance with its terms, except insofar as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting creditors' rights generally, or by principles governing the
availability of equitable remedies.
4. OTHER AGREEMENTS.
4.1 Share Legend. Unless the shares have been registered under the
Securities Act, each certificate representing shares of AmBrew Common Stock
issued upon exercise of this Option shall bear the following legend or any other
legend deemded applicable by AmBrew's counsel:
"THESE SHARES HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES FEDERAL
SECURITIES LAWS AND INSTEAD ARE BEING ISSUED PURSUANT TO EXEMPTIONS FROM THE
REGISTRATION REQUIREMENTS OF THE FEDERAL SECURITIES LAWS OR IN RELIANCE UPON
REGULATIONS THEREUNDER APPLICABLE TO OFFERS AND SALES OF SECURITIES OUTSIDE OF
THE UNITED STATES. THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE
TRANSFERRED UNLESS (A) A REGISTRATION STATEMENT SHALL BE EFFECTIVE UNDER THE
UNITED STATES SECURITIES ACT OF 1933 OR (B) AMERICAN CRAFT BREWING INTERNATIONAL
LIMITED SHALL HAVE RECEIVED AN OPINION OF COUNSEL WHICH COUNSEL AND OPINION ARE
REASONABLY SATISFACTORY TO IT THAT NO VIOLATION OF THE FEDERAL SECURITIES LAWS
WILL BE INVOLVED IN SUCH TRANSFER."
4.2 "Piggyback" Registration. Whenever the Company proposes to
register any of its securities under the Securities Act and the registration
form to be used may be used for the registration of the AmBrew Common Stock that
is covered by this Option (the "Piggyback Registration"), the Company will give
prompt written notice to Optionee of its intention to effect such a
registration. If the Company has received a written response from Optionee
within 15 days of the notice requesting inclusion in the Piggyback Registration,
then the AmBrew Common
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Stock will be so included, subject to the parties entering into a Registration
Rights Agreement setting forth in further detail the rights and obligations of
the parties with respect to the Piggyback Registration.
4.3 No Transferability. The Option may not be transferred or
assigned by the Optionee without the written approval of the Company, such
consent to be not unreasonably withheld.
4.4 Termination. This Agreement shall terminate upon the earlier to
occur of (i) the expiration of the Option Period or (ii) an agreement in writing
between Optionee and Company. Upon the termination of this Agreement, neither
party shall have any further liability to the other party with respect to the
subject matter of this Agreement.
4.5 Rights as Stockholder. Neither Company nor Optionee shall have
any rights of a stockholder with respect to shares to be transferred and
delivered upon exercise of the Option unless and until a certificate
representing such shares has been duly issued and delivered to it.
5. MISCELLANEOUS.
5.1 Survival of Representations, Warranties and Covenants. The
representations and warranties contained herein shall survive the Closing Date
and the transfer of the shares covered by this Agreement.
5.2 Notices. All notices, and other communications, hereunder shall
be in writing and shall be deemed to have been duly given as of the second day
after being both transmitted by telecopier and sent by express air courier:
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5.2.1 If to the Company, to:
American Craft Brewing International Limited
One Galleria Blvd., Suite 1714
Metairie, Louisiana 70001, U.S.A.
Attn: Peter W. H. Bordeaux, President, or
James Ake, Executive Vice-President
Telephone: (504)849-2739
Telecopier: (504)849-2740
With copy to (which shall not constitute notice):
Locke Purnell Rain Harrell, P.C.
601 Poydras Street, Suite 2400
New Orleans, Louisiana 70130, U.S.A.
Attn: Donald Ensenat, Esq.
Telephone: (504)558-5100
Telecopier: (504)558-5200
5.2.2 If to Optionee, to:
Gold Crown Management Limited
c/o ACL Asia Limited
Two Pacific Place
88 Queensway
Hong Kong
Attn: James Collins-Taylor
Telephone: (852)2525-8151
Telecopier:(852)2810-5590
5.2.3 The addresses to which notices must be sent under this Agreement
may be changed by notice given to other parties in writing in the manner set
forth above.
5.3 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware, without regard
to its conflict of law rules.
5.4 Counterpart Execution. This Agreement may be executed in
several counterparts, each of which will be deemed to be an original but all of
which together will constitute one and the same instrument.
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5.5 Faxed Documents. For purposes of this Agreement, a document
signed and transmitted by facsimile machine ("faxed") is to be treated as an
original document. The faxed signature of any party is to be considered an
original signature, and the faxed document has the same binding effect as an
original signature on an original document. At the request of any party, a
faxed document is to be re-executed in original form by the parties thereto. No
party may raise the use of faxed signatures as a defense to the enforcement of
this Agreement or the authenticity of any document relating thereto.
5.6 Entire Agreement; Amendments. This Agreement contains the
entire understanding of the parties with respect to its subject matter and
supersedes all prior representations, agreements and understandings between the
parties with respect to its subject matter. This Agreement may be amended only
by a written instrument duly executed by the parties hereto.
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by
the parties hereto as of the date above written.
ATTEST: AMERICAN CRAFT BREWING
INTERNATIONAL LIMITED (Company)
/s/ James L. Ake By: /s/ Peter Bordeaux
- ---------------- ---------------------
Secretary Name: Peter W. H. Bordeaux
Title: Chairman, President and CEO
Date: 18 December 1997
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ATTEST: GOLD CROWN MANAGEMENT LIMITED
(Optionee)
______________________ By: ___________________________________
Secretary Name:
Title:
Date:
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EXHIBIT 10.43
OPTION AGREEMENT NO. 2
This agreement ("Agreement") is entered into as of the 18th day of December,
1997 between AMERICAN CRAFT BREWING INTERNATIONAL LIMITED ("AmBrew" or the
"Company"), a Bermuda company with its principal office at One Galleria Blvd.,
Suite 1714, Metairie, LA 70001, U.S.A., and GOLD CROWN MANAGEMENT LIMITED
(registered number 258702), with its registered offices at P. O. Box 957,
Offshore Incorporation Center, Road Town, Tortola, British Virgin Islands
("Optionee").
R E C I T A L S:
1. Optionee and Company entered into a stock purchase agreement dated December
18, 1997 (the "Purchase Agreement") pursuant to which Optionee purchased from
the Company one hundred percent (100%) of the issued and outstanding shares of:
(1) South China Brewing Company Limited (registered number 479793), a Hong Kong
company ("Brewing"); and (2) SCBC Distribution Company Limited (registered
number 447434), a Hong Kong company ("SCB").
2. Brewing has an unresolved dispute with the Hong Kong authorities regarding
Customs and Excise fees and penalties ("C&E"), and an upcoming renewal of its
license from the Hong Kong government to operate a brewery ("Brewing License").
The Company and the Optionee mutually desire to provide a safeguard to Optionee
for its investment in Brewery and SCB should the Brewing License not be
unconditionally renewed.
3. Therefore, in conjunction with the Purchase Agreement, the Company desires
to grant to Optionee on the terms and conditions set forth herein an Option (as
hereinafter defined)
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to exchange one hundred percent (100%) of the shares then issued and outstanding
of each of Brewing and SCB for an aggregate of such number of shares of the
common stock, par value US$0.01 per share, of AmBrew ("AmBrew Common Stock") as
is calculated by the formula set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants, provisions and
agreements set forth herein, the consummation of the transactions contemplated
by the Purchase Agreement and for other valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by the Company and Optionee, the
parties hereto, intending to be legally bound hereby, agree as follows:
1. GRANT AND EXERCISE OF OPTION.
1.1 Grant of Option. The Company hereby grants to Optionee the option
(hereinafter the "Option") to transfer and deliver to the Company one hundred
percent (100%) of the issued and outstanding shares of each of Brewing and SCB,
and in exchange and as consideration therefor the Company shall transfer and
deliver to the Optionee an aggregate of that number of shares of AmBrew Common
Stock as is calculated by the following formula:
The number determined by dividing (a) US$700,000, plus the lesser of any
Invested Working Capital or US$500,000, (b) by the average closing bid
price on the NASDAQ Small Cap Market for AmBrew Common Stock for the ten
(10) trading days preceding the date that Optionee exercises this Option,
and (c) rounding the result to the nearest whole number. For purposes here
only, "Invested Working Capital" shall mean the amount of additional
capital contributed by Optionee to Brewing and SCB after the Completion of
the Purchase Agreement and up to the date of the exercise of this Option,
as stated under the accounting methods presently in use by Brewing and SCB.
The Optionee must exercise the Option as to all, and not less than all, of the
shares of Brewing and SCB covered by the Option.
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The Option shall be exercisable if, and only if, because of C&E arising from
activities prior to the Completion of the Purchase Agreement the Brewing License
is not unconditionally renewed and the Company has not cured the non-renewal
within forty-five (45) days of notice, given as provided herein, to the Company
by Optionee of the non-renewal. (The "Option Period").
Optionee understands and acknowledges that the AmBrew Common Stock to be
delivered upon exercise of the Option will not be registered under the
Securities Act of 1933, as amended (the "Securities Act") in reliance on
exemptions from the registration requirements of the Act or in reliance upon
regulations applicable to offers and sales of securities outside of the United
States.
The Company's obligation to deliver on the Closing Date (as defined below)
shares of AmBrew Common Stock upon exercise of the Option is subject to the
satisfaction of the conditions set forth below. If such conditions are not
satisfied, the Company shall have no obligation to deliver on the Closing Date
shares of AmBrew Common Stock notwithstanding any exercise of the Option by the
Optionee.
1.2 Conditions Precedent. The obligation of the Company to transfer
and deliver shares of AmBrew Common Stock on the Closing Date after the
Optionee's exercise of the Option is subject to the fulfillment to the Company's
satisfaction of each of the following conditions:
1.2.1 On the Closing Date, Brewing and SCB shall have on the Closing
Date combined net assets excluding shareholder advances, as stated under their
present accounting methods, of at least US$700,000.00.
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1.2.2 On the Closing Date, the Optionee shall be the lawful owner and
have good and marketable title to the shares of SCB and Brewing to be
transferred and delivered to the Company, free and clear of all liens, pledges
and encumbrances, and have complete power, right and authority to assign and
transfer the shares to the Company.
1.2.3 On the Closing Date, Optionee and the Company, as applicable,
shall have obtained all requisite governmental approvals for Optionee to become
the owner of the AmBrew Common Stock, including but not limited to the approval
of the Bermuda Monetary Authority.
1.2.4 On the Closing Date, except the C&E dispute and the non-renewal of
the Brewing License that is the basis for the exercise of this Option, there is
no action, suit or proceeding before or by any court or governmental agency or
body, domestic or foreign, pending or threatened against or affecting either
Brewing or SCB, or any of their properties, which could reasonably be
anticipated to result in any material adverse change in the condition (financial
or otherwise) or in the earnings, business affairs, properties or assets of
either Brewing or SCB.
1.2.5 On the Closing Date, Brewing and SCB do not have any material
liabilities or material obligations, direct or indirect, actual or contingent,
or have not entered into any material transactions not in the ordinary course of
business, that could result in a change in capitalization or material adverse
change in financial condition as at October 31, 1997.
1.2.6 On the Closing Date, Brewing and SCB shall have conducted, are
conducting and will conduct their business so as to comply in all material
respects with all applicable statutes and regulations, and are not charged with
and, to their knowledge, are not
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under investigation with respect to any violation or alleged violation of any
statutes or regulations nor are the subject of any pending or threatened adverse
proceedings by any regulatory authority having jurisdiction over their business
or operations.
1.2.7 All representations and warranties contained in this Agreement
shall be true, complete and correct in all material respects on the date of this
Agreement, on the date of the exercise of the Option, and on the Closing Date.
1.3 Exercise of Options. Optionee may exercise the Option by delivery prior
to the expiration of the Option Period of written notice ("Notice") to the
Company, pursuant to Section 4 below, of Optionee's exercise of the Option.
1.4 Closing. The exchange of the shares of Brewing and SCB by Optionee for
the AmBrew Common Stock from the Company shall be closed at the offices of the
Company in New Orleans, Louisiana, U.S.A., or at such other location that is
mutually agreed, at 10:00 A.M., local time, on the date specified by Optionee in
such Notice or by the Company if the Notice fails to specify a date (the
"Closing Date"); provided, however, that the specified Closing Date shall be not
less than thirty (30) days after receipt by the Company of such Notice and
further provided that the Closing Date may be extended if additional time is
needed. Either party may attend the closing through a duly authorized
representative. On the Closing Date, the Optionee shall transfer and deliver to
the Company, and the Company shall transfer and deliver to Optionee,
certificates for the shares of Brewing and SCB, and the AmBrew Common Stock,
covered by the Option (collectively, the "Covered Shares"). Certificates
representing the Brewing and SCB shares shall be duly endorsed in blank, or
accompanied by stock powers duly executed in blank, by the transferring party,
with signatures guaranteed by a commercial bank or trust
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company, with any necessary transfer tax or other revenue stamps, acquired at
the transferring party's expense, affixed and cancelled. The transferring party
agrees to cure any deficiencies with respect to the certificates representing
the Covered Shares delivered by the transferring party or with respect to the
stock power accompanying any such certificates prior to the closing .
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Optionee as follows:
2.1 AmBrew Common Stock. The Company shall transfer the number of shares of
the AmBrew Common Stock to the Optionee upon exercise of the Option, free and
clear of all liens, encumbrances, restrictions and claims of every kind. The
Company has full and legal right, power and authority to sell, assign, transfer
and convery such AmBrew Common Stock in accordance with the terms and subject to
the conditions of this Agreement. The delivery to the Optionee of the AmBrew
Common Stock pursuant to this Agreement on the Closing Date will transfer to the
Optionee valid title thereto, free and clear of any and all adverse claims.
2.2 Existence and Good Standing of the Company. The Company is a corporation
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has requisite power and authority to own,
lease and operate its properties and to carry on its business as now being
conducted.
2.3 No Violation. The execution and delivery of this Agreement by the
Company and the delivery to the Optinee of the AmBrew Common Stock pursuant to
this Agreement on the Closing Date (a) will not violate any provision of the
memorandum of association or bye-laws of the Company, (b) to the knowledge of
the Company will not violate any statute, rule, regulation, order or decree of
any governmental authorities by which the
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Company is bound or is binding upon any of its properties or assets, and (c)
will result in a violation or breach of, or consitute a default under, any
material license, permit indenture, agreement or other instrument which the
Company or any of its assets or properties is bound; excluding from clauses (b)
and (c) above violations, breaches or defaults which either individually or in
the aggregate, would not have a material adverse effect on the business,
financial condition or results of operations of the Company.
2.4 Litigation. There is no action, suit or proceeding at law or in
equity by any person or any arbitration or administrative or proceeding by or
before any governmental or other instrumentality or agency, pending or, to the
knowledge of the Company, threatened against it which would have a material
effect on the business, financial condition or results of operations of the
Company.
2.5 Compliance with Laws. To the best knowledge of the Company, it is in
compliance with all applicable laws, regulations, orders, judgments and decrees
except where the failure to so comply would not have a material adverse effect
on the business, financial condition or results of operations of the Company.
3. REPRESENTATIONS AND WARRANTIES OF OPTIONEE
Optionee represents and warrants to the Company as follows:
3.1 Disclosure; Investment Intention. Optionee acknowledges that it has
received all requested information concerning the Company, and that Optionee has
been given the opportunity to review the Company's books and records, including
its filings with the U.S. Securities and Exchange Commission, and made such
inquiries of its officers as Optionee in its discretion deemed appropriate in
connection with the transactions contemplated by this
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Agreement. Optionee represents and warrants that its acquisition of AmBrew
Common Stock pursuant to the exercise of the Option is for investment, for its
own account, and not with a view to the distribution of any part thereof.
Optionee understands that the Option and the shares of AmBrew Common Stock
issuable upon exercise of the Option, and the Option, are not and will not be
registered under the Securities Act, and must be held by Optionee indefinitely
unless they are first registered or unless exemptions from registration under
those laws are or become available. Optionee understands that it has no right to
require the Company to register under those laws the Option or the shares of
AmBrew Common Stock issuable upon exercise of the Option.
Optionee further acknowledges that it understand that the certificate
evidencing the shares of AmBrew Common Stock acquired upon exercise of the
Option shall contain a legend to the effect that the shares have not been
registered under the Securities Act and may not be transferred without
registration or an exemption therefrom and, in the case of an exemption, without
delivery to AmBrew of a legal opinion that an exemption is available, which
counsel and opinion shall be satisfactory to AmBrew and that transfer of the
shares of AmBrew may be subject to additional restrictions as may be determined
by counsel.
3.2 Tax Matters. Optionee acknowledges that it understands the federal,
state and local income tax considerations relevant to the granting of the Option
pursuant to this Agreement, the exercise of the Option and the acquisition of
the shares of AmBrew Common Stock.
3.3 Financial Condition. Optionee has adequate means to otherwise
conduct its affairs, has no need for liquidity in its investment in the shares
of AmBrew Common Stock,
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and is able to bear the substantial economic risks of an investment in the
shares of AmBrew Common Stock for an indefinite period of time.
3.4 Authorization. Optionee, and any representative acting for it, have
all necessary power and authority to execute, deliver and perform this Agreement
and the transactions contemplated hereby. This Agreement has been duly executed
and delivered by Optionee and constitutes a valid and binding obligation of, and
is enforceable against, Optionee in accordance with its terms, except insofar as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights
generally, or by principles governing the availability of equitable remedies.
4. OTHER AGREEMENTS.
-----------------
4.1 Share Legend. Unless the shares have been registered under the
Securities Act, each certificate representing shares of AmBrew Common Stock
issued upon exercise of this Option shall bear the following legend or any other
legend deemded applicable by AmBrew's counsel:
"THESE SHARES HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES FEDERAL
SECURITIES LAWS AND INSTEAD ARE BEING ISSUED PURSUANT TO EXEMPTIONS FROM THE
REGISTRATION REQUIREMENTS OF THE FEDERAL SECURITIES LAWS OR IN RELIANCE UPON
REGULATIONS THEREUNDER APPLICABLE TO OFFERS AND SALES OF SECURITIES OUTSIDE OF
THE UNITED STATES. THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE
TRANSFERRED UNLESS (A) A REGISTRATION STATEMENT SHALL BE EFFECTIVE UNDER THE
UNITED STATES SECURITIES ACT OF 1933 OR (B) AMERICAN CRAFT BREWING INTERNATIONAL
LIMITED SHALL HAVE RECEIVED AN OPINION OF COUNSEL WHICH COUNSEL AND OPINION ARE
REASONABLY SATISFACTORY TO IT THAT NO VIOLATION OF THE FEDERAL SECURITIES LAWS
WILL BE INVOLVED IN SUCH TRANSFER."
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4.2 "Piggyback" Registration. Whenever the Company proposes to register
any of its securities under the Securities Act and the registration form to be
used may be used for the registration of the AmBrew Common Stock that is covered
by this Option (the "Piggyback Registration"), the Company will give prompt
written notice to Optionee of its intention to effect such a registration. If
the Company has received a written response from Optionee within 15 days of the
notice requesting inclusion in the Piggyback Registration, then the AmBrew
Common Stock will be so included, subject to the parties entering into a
Registration Rights Agreement setting forth in further detail the rights and
obligations of the parties with respect to the Piggyback Registration.
4.3 No Transferability. The Option may not be transferred or assigned by
the Optionee without the written approval of the Company, such consent to be not
unnecessarily withheld.
4.4 Termination. This Agreement shall terminate upon the earlier to
occur of (i) the expiration of the Option Period or (ii) an agreement in writing
between Optionee and Company. Upon the termination of this Agreement, neither
party shall have any further liability to the other party with respect to the
subject matter of this Agreement.
4.5 Rights as Stockholder. Neither Company nor Optionee shall have any
rights of a stockholder with respect to shares to be transferred and delivered
upon exercise of the Option unless and until a certificate representing such
shares has been duly issued and delivered to it.
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5. MISCELLANEOUS.
5.1 Survival of Representations, Warranties and Covenants. The
representations and warranties contained herein shall survive the Closing Date
and the transfer of the shares covered by this Agreement.
5.2 Notices. All notices, and other communications, hereunder shall be in
writing and shall be deemed to have been duly given as of the second day after
being both transmitted by telecopier and sent by express air courier:
5.2.1 If to the Company, to:
American Craft Brewing International Limited
One Galleria Blvd., Suite 1714
Metairie, Louisiana 70001, U.S.A.
Attn: Peter W. H. Bordeaux, President, or
James Ake, Executive Vice-President
Telephone: (504)849-2739
Telecopier: (504)849-2740
With copy to (which shall not constitute notice):
Locke Purnell Rain Harrell, P.C.
601 Poydras Street, Suite 2400
New Orleans, Louisiana 70130, U.S.A.
Attn: Donald Ensenat, Esq.
Telephone: (504)558-5100
Telecopier: (504)558-5200
5.2.2 If to Optionee, to:
Gold Crown Management Limited
c/o ACL Asia Limited
Two Pacific Place
88 Queensway
Hong Kong
Attn: James Collins-Taylor
Telephone: (852)2525-8151
Telecopier:(852)2810-5590
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5.2.3 The addresses to which notices must be sent under this Agreement
may be changed by notice given to other parties in writing in the manner set
forth above.
5.3 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware, without regard to its
conflict of law rules.
5.4 Counterpart Execution. This Agreement may be executed in several
counterparts, each of which will be deemed to be an original but all of which
together will constitute one and the same instrument.
5.5 Faxed Documents. For purposes of this Agreement, a document signed and
transmitted by facsimile machine ("faxed") is to be treated as an original
document. The faxed signature of any party is to be considered an original
signature, and the faxed document has the same binding effect as an original
signature on an original document. At the request of any party, a faxed
document is to be re-executed in original form by the parties thereto. No party
may raise the use of faxed signatures as a defense to the enforcement of this
Agreement or the authenticity of any document relating thereto.
5.6 Entire Agreement; Amendments. This Agreement contains the entire
understanding of the parties with respect to its subject matter and supersedes
all prior representations, agreements and understandings between the parties
with respect to its subject matter. This Agreement may be amended only by a
written instrument duly executed by the parties hereto.
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IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by the
parties hereto as of the date above written.
ATTEST: AMERICAN CRAFT BREWING
INTERNATIONAL LIMITED (Company)
/s/ James L. Ake By: /s/ Peter Bordeaux
- --------------------- ---------------------------
Secretary Name: Peter W. H. Bordeaux
Title: Chairman, President and CEO
Date: 18 December 1997
ATTEST: GOLD CROWN MANAGEMENT LIMITED
(Optionee)
By: /s/ James Collins Taylor
- ---------------------- -------------------------------
Secretary Name: James Collins Taylor
Title: Director
Date: 18 December 1997
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