UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Amendment No. 1
to
FORM 10-QSB
[X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 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: 0-27800
Frederick Brewing Co.
----------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
Maryland 52-1769647
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(State or other jurisdiction of incorporation (I.R.S. Employer
or organization) Identification No.)
4607 Wedgewood Boulevard, Frederick, Maryland 21703
--------------------------------------------- -----
(Address of principal executive offices) (Zip Code)
(301) 694-7899
- -------------------------------------------------------------------------------
(Issuer's telephone number, including area code)
Not Applicable
- --------------------------------------------------------------------------------
(Former name, former address and former
fiscal year, if changed since last report)
Indicate by check mark whether the issuer (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exhcange 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. [ X ]Yes [ ]No
Common Stock, $0.00004 Par Value 1,954,876
-------------------------------- ---------
(Title of Each Class) (Number of Shares Outstanding
as of May 13, 1997)
Transitional Small Business Disclosure Format (Check one):
Yes [ ] No [ X ]
<PAGE>
Item 6. Exhibits and Reports on 8-K
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(a) Exhibits Filed:
Index to Exhibits
- --------------------------------------------------------------------------------
(I.) Report filed on Form 8-K, March 31, 1997 /1/
(II.) Registration Statement filed on Form S-3, April 24, 1997 /2/
(III.) Press release, May 12, 1997
10 Material Contracts
(I.) Corporate Relations Group, Inc.
(II.) Arrow Marketing Inc.
(III.) Gulf Atlantic Publishing Inc.
27 Financial Data Schedule
99 Safe Harbor Under the Private Securities Litigation
Reform Act of 1995 /3/
1 Incorporated by reference from Form 8-K filed with the SEC on March 31, 1997.
2 Incorporated by reference from Form S-3 filed with the SEC on April 24, 1997.
3 Incorporated by reference from Form 8-K filed with the SEC on February 27,
1997.
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities and Exchange Act of 1934,
the Registrant has caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Frederick Brewing Co.
Date May, 1997 /s/ Kevin E. Brannon
------------ ------------------------------------------
Kevin E. Brannon
Chairman of the Board and
Chief Executive Officer
Date May, 1997 /s/ Craig J. O'Connor
------------ ------------------------------------------
Craig J. O'Connor
Vice President - Finance & Administration
<PAGE>
PRESS RELEASE
Frederick Brewing Co.
4607 Wedgewood Blvd.
Frederick, MD 21703
Frederick Brewing Co. Hires
Corporate Relations Group, Inc.
For Immediate Release
Monday, May 12, 1997
Frederick, MD---Frederick Brewing Co. (Nasdaq: BLUE), a U.S. craft brewery that
kegs and bottles quality ales, porters, stouts and lagers, announced today that
it has retained the services of Corporate Relations Group, Inc. (CRG) to handle
its investor and broker relations.
Frederick Brewing Co. was founded in 1992 and is one of the fastest growing
craft breweries in the United States. Annual sales for BLUE multiplied nearly 20
times from 660 barrels in 1993 to nearly 11,000 in 1996. In February 1997 BLUE
opened a new multi-million dollar, 57,000 square foot Frederick, MD brewery.
From it newly built brewery, BLUE kegs and bottles 11 styles of distinctive,
international award winning, supreme quality ales, porters, stouts and lagers
under its Blue Ridge and Hempen Ale brand names for some 25 independent
wholesale distributors.
Corporate Relations Group, Inc., a subsidiary of Stratcomm Media Ltd., is an
award-winning direct response advertising and marketing agency specializing in
investor/broker relations. For more information, contract Chris Zafiroff with
corporate Relations Group, Inc. at 800-444-4980 or Kevin E. Brannon with
Frederick Brewing Co. at 301-694-7899.
LEAD GENERATION / CORPORATE RELATIONS AGREEMENT
THIS AGREEMENT is made this 13th day of March, 1997, between CORPORATE RELATIONS
GROUP, INC., a Florida corporation (hereinafter "CRG"), and FREDERICK BREWING
CO., (hereinafter the "Client").
RECITALS
1. The Client wishes to retain CRG to provide corporate relations services to
the Client.
2. CRG is willing to provide such corporate relations services as are more fully
described herein.
NOW THEREFORE, in consideration of the mutual promises contained herein, it is
agreed as follows:
1. Furnishing of Information by Client. The Client shall furnish to CRG
information about the Client such as copies of disclosure and filing
materials, financial statements, business plans, promotional information and
background of the Client's officers and directors ("Information Package").
The Client shall update the Information Package on a continuous basis. The
Client understands that the sole purpose for providing CRG with the
Information Package is for utilization in a Lead Generation/Corporate
Relations program. CRG is not obligated to assess the financial viability of
the Client. CRG may rely on, and assume the accuracy of the Information
Package.
2. Representations and Warranties of Client. The Client represents that all
information included in the Information Package furnished to CRG shall
disclose all material facts and shall not omit any facts necessary to make
statements made on behalf of the Client not misleading.
3. Covenants of the Client. The Client covenants and warrants that any
information submitted for dissemination will be truthful, accurate, in
compliance with all copyright and all other applicable laws and regulations
and will not be submitted in connection with any improper or illegal act or
deed.
RV KB
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<PAGE>
4. Based on the Information Package. CRG will perform the services more fully
described in Exhibit "A" for a period of sixty (60) months pursuant to the
terms hereof, which services shall specifically include CRG making oral
representations on behalf of the Client pursuant to the following
procedures:
(a) Preparation of Proofs. CRG shall prepare proofs and or tapes of the
agreed upon materials and information, as set for dissemination, for the
Client's review and approval;
(b) Correction and Changes of Proofs and or Tapes. CRG shall make all
corrections and changes that the Client may request.
(c) Sign Offs. All approvals, corrections and change of proofs by the Client
shall be signed by a duly authorized representative of the Client. The
Client hereby designates the individual(s) listed in Exhibit "C" hereof
as authorized representatives for purposes of this paragraph 4(a), (b)
and (c); and CRG may rely upon this designation.
5. Compensation. Refer to Exhibit "B".
6. It is understood and agreed by the Parties that the above compensation in
U.S. currency, or free trading shares of the Company, should be paid timely
upon execution of this Agreement. CRG will retain the option, but is not
compelled to begin it's performance under this Agreement prior to the
payment of such compensation in U.S. currency or free trading shares.
7. Assumption of Liability and Indemnification. The Client assumes and claims
all responsibility and liability for the content of all information
disseminated on behalf of the Client which have been approved by Client. The
Client shall indemnify and hold CRG, its subsidiaries and parent company
harmless from and against all demands, claims or liability arising for any
reason due to the context of information disseminated on behalf of the
Client. This indemnity shall include any costs incurred by CRG including,
but not limited to, legal fees and expenses incurred both in administrative
proceeds, at trial and appellate levels, in settlement of claims and payment
of any judgment against CRG.
8. Assignment and Delegation. Neither party may assign any rights or delegate
any duties hereunder without the other party's express prior written
consent.
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<PAGE>
9. Entire Agreement. This writing contains the entire agreement of the parties.
No representations were made or relied upon by either party, other than
those expressly set forth. Furthermore, the Client understands that CRG
makes no guarantees, assurances or representations in regard to the results
of its corporate relations program. No agent, employee or other
representative of either party is empowered to alter any of the above terms,
unless done in writing and signed by an executive officer of the respective
parties.
10. Controlling Law and Venue. This Agreement's validity, interpretation and
performance shall be controlled by and construed under the laws of the State
of Florida. The proper venue and jurisdiction shall be the Circuit Court in
Orange County, Florida.
11. Prevailing Party. In the event of the institution of any legal proceedings
or litigation, at the trial level or appellate level, with regard to this
Agreement, the prevailing party shall be entitled to receive from the
non-prevailing party all costs, reasonable attorney's fees and expenses.
12. Failure to Object not a Waiver. The failure of either party to this
Agreement to object to, or to take affirmative action with respect to any
conduct of the other which is in violation of the terms of this Agreement
shall not be construed as a waiver of the violation or breach, or of any
future violation, breach or wrongful conduct.
13. Notices. All notices or other documents under this Agreement shall be in
writing and delivered personally or mailed by certified mail, postage
prepaid, addressed to the representative or Company as follows:
COMPANY: CORPORATE RELATIONS GROUP, INC.
1801 Lee Road, Suite 301
Winter Park, FL 32789
Attention: Roberto E. Veitia, President
CLIENT: FREDERICK BREWING COMPANY
4607 Wedgewood Blvd.
Frederick, MD 21703
Attention: Kevin E. Brannon, Chairman/CEO
<PAGE>
14. Headings. Headings in this Agreement are for convenience only and shall not
be used to interpret or construe its provisions.
15. Time. For all intents and purposes, time is of the essence with this
Agreement.
16. Agreement Not To Hire. The Client understands and appreciates that CRG has
invested a tremendous amount of time, energy and expertise in the training
of its employees to be able to provide the very service that Client desires.
Client further understands that should an employee be enticed to leave, then
CRG will be damaged in an amount the parties are incapable of calculating at
this time. Therefore, the Client agrees not to offer employment to any
employee or subcontractor of CRG, nor to allow any officer or director of
Client to offer such employment with Client or any other company with whom
officers and directors of Client are employed or hold a financial stake for
a period of three (3) years.
IN WITNESS WHEREOF, this Agreement is executed as of the date first above
written.
CORPORATE RELATIONS GROUP, INC.
BY: /s/ Roberto E. Veitia BY: /s/ James W. Spratt III
------------------------- ------------------------
Roberto E. Veitia James W. Spratt III
President Consultant
FREDERICK BREWING COMPANY
BY: /s/ Kevin E. Brannon
-------------------------
Kevin E. Brannon
Chairman/CEO
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<PAGE>
EXHIBIT "A"
The Corporate Relations Services to be provided by CRG for a sixty (60) month
period are as follows:
I. ADVERTISING and PRINTING SERVICES
A. MoneyWorld Magazine - Lead Generation mailing (300,000 print run total
for the sixty month period)
o Twenty-Eight page, four color magazine will be created of which a
four page advertorial will be dedicated to the Client.
o Creative concept, color separations, copy work and printing
o 300,000 to be mailed
B. Growth Industry Report - Four page, four color follow-up mail piece
designed for additional informational purposes that is mailed to
respondents. A total of 15,000 will be printed.
C. The Core Broker Program - CRG will produce a core of 8-10 retail
brokers, market makers and/or money managers who will take positions in
the stock of "FREDERICK BREWING COMPANY." This process will begin
immediately upon CRG receiving the payment as stipulated in Exhibit "B"
and will be completed no later than a month before mailing occurs. Upon
completion, selection and approval of the Core Broker Group, CRG will
arrange a Core Broker meeting. This will last for two days, which will
include; a show and tell from the top management of "FREDERICK BREWING
COMPANY" in intense training of these core brokers.
D. Public relations exposure to newsletter writers, trade publications and
financial gurus. At CRG's discretion, it will pay for any special
reports that may be required. The Client shall be totally responsible
for all travel expenses for the purpose of due diligence of the
company by financial newsletter writers and/or brokers. The Client will
have total pre-approval rights on these trips.
E. Inclusion as a featured "Lead Generator of the Month" in Confidential
Fax Alert, a newsletter transmitted by fax to over 5,000 Brokers.
F. Preparation of a Broker Bullet Sheet to be sent to every broker who
shows interest in working the leads and the stock. (As soon as
possible).
G. Lead Tracking Summary maintained for all response leads generated and
provided.
H. Follow-up with shareholders, brokers, funds and institutions.
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<PAGE>
EXHIBIT "B"
PAYMENT AGREEMENT
made by and between
FREDERICK BREWING COMPANY
and
CORPORATE RELATIONS GROUP, INC.
THIS AGREEMENT is made this 13th day of March, 1997, and will serve as
confirmation of payment terms for services to be provided FREDERICK BREWING CO.,
("CLIENT") whereby CORPORATE RELATIONS GROUP, INC. ("CRG") has agreed to perform
said services as defined in the "Lead Generation/ Corporate Relations
Agreement."
TERMS
A. CLIENT will pay to CRG, SIX HUNDRED FIFTY THOUSAND DOLLARS ($650,000 U.S.
cy).
B. This Agreement is subject to compliance with the rules of the Exchanges and
Securities Commissions on which Client is listed and registered.
C. It is understood and agreed by the Parties that the above compensation in
U.S. currency, or free trading shares of the Company, should be paid timely
upon execution of this Agreement. CRG will retain the option, but is not
compelled to begin it's performance under this Agreement prior to the
payment of such compensation in U.S. currency or free trading shares.
D. In the event of termination of the Agreement by Client, CRG shall be fully
released and forever discharged by Client from any further obligations or
liabilities with respect to the "Lead Generation/Corporate Relations
Agreement" and any results therefrom, save and except liabilities arising
from CRG's own negligence during the term of this Agreement. Concurrently,
Client shall be fully released and forever discharged by CRG from any and
all obligations of further payments or liabilities with respect to the "Lead
Generation/Corporate Relations Agreement." This release in no way affects
Point #7, Page 2 of the "Lead Generation/Corporate Relations Agreement."
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<PAGE>
EXHIBIT "B"
continued
E. Shares shall be made free trading through the registration that is mutually
agreed upon by the Company's attorney and CRG's attorney.
F. Company shall issue options to CRG as outlined below.
Amount Price Duration
------ ----- --------
100,000 shares at $4.00 One (1) year from the date of this Agreement
100,000 shares at $4.80 Two (2) years from the date of this Agreement
100,000 shares at $5.60 Three (3) years from the date of this Agreement
100,000 shares at $6.40 Four (4) years from the date of this Agreement
100,000 shares at $7.20 Five (5) years from the date of this Agreement
G. The Client further agrees to issue immediately at no cost to CRG 100,000
Common Shares of 144 restricted stock; (1) the shares shall be returned in
full if the Client completes the appropriate registration allowing CRG to
exercise its options within a period of 120 days from the signing of this
contract. (2) Should the Company fail to affect the appropriate registration
within the aforementioned time, the Company and CRG agree that CRG shall be
entitled to keep all 100,000 shares of 144 Restricted stock and then the
shares will become the property of CRG and be considered additional payment
of this agreement. It is further agreed that CRG will have piggyback
registration rights to register the aforementioned stock on any future
registration at the Company's expense.
IN WITNESS WHEREOF, this Agreement is executed as of the date first above
written.
CORPORATE RELATIONS GROUP, INC.
BY: /s/ Roberto E. Veitia BY: /s/ James W. Spratt III
------------------------- ------------------------
Roberto E. Veitia James W. Spratt III
President Consultant
FREDERICK BREWING COMPANY
BY: /s/ Kevin E. Brannon
-------------------------
Kevin E. Brannon
Chairman/CEO
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<PAGE>
EXHIBIT "C"
FREDERICK BREWING COMPANY hereby designates the following person or persons to
act on its behalf for purposes of signing off on all copies pursuant to
Paragraph 4 of this Corporation Relations Agreement. CRG may rely upon the
signature of any of the following:
/s/ Kevin E. Brannon /s/ Kevin E. Brannon
- --------------------------------------- ----------------------------------
CHAIRMAN & CHIEF EXECUTIVE OFFICER DIRECTOR (PLEASE PRINT)
- --------------------------------------- ----------------------------------
PRESIDENT (PLEASE SIGN) PRESIDENT (PLEASE PRINT)
- --------------------------------------- ----------------------------------
VICE PRESIDENT (PLEASE SIGN) VICE PRESIDENT (PLEASE PRINT)
CREATIVE DEVELOPMENT AGREEMENT
THIS AGREEMENT is made this 7th day of March, 1997, between ARROW
MARKETING INC., a Florida corporation, (hereinafter "Arrow") and FREDERICK
BREWING COMPANY, (hereinafter "the client").
RECITALS
1. The Client wishes to retain ARROW MARKETING INC. to provide certain
creative services for integration in the Lead Generation/Corporate Relations
campaign for the client to be run by CRG.
2. Arrow Marketing is willing to provide such creative services as are
more fully described below.
NOW THEREFORE, in consideration of the mutual promises contained
herein, it is agreed as follows:
DUE DILIGENCE PACKAGE
1. That Arrow Marketing will write, design, supervise production and
print 1,000 packages of creative materials for use by CRG to use in a campaign
for the client company. This package shall include:
(a) 12 page color brochure.
(b) Logo folder. (1,000 extra to be printed and delivered to the
client within 30 days.)
(c) Mailing envelope.
(d) Four (4) inserts:
Chairman's or President's letter
3 Financial charts
Management bio
Reply form keyed to CRG
(e) Market management report
12 page analyst type report on your company
(f) Road show blow-ups.
1
<PAGE>
2. The client, in turn, shall pay Arrow Marketing, Inc. the sum of
Seventy-Five Thousand and 00/100 Dollars, U.S. ($75,000.00) for the total
package described above.
3. The client understands and agrees that the project price of
$75,000.00, to be paid to Arrow Marketing prior to inception of the project,
does not include photography, shipping, D.H.L. and any travel and accommodations
to perform needed services. If the client has professional photography and art
work already done, Arrow will integrate that photography and art work into the
campaign to lower the client's photography costs. The client further understands
and agrees that if photography is needed, the client will be quoted and billed
directly for this. No such work shall be done and no bills therefore shall be
paid by the client unless the work and fees have been approved in advance by the
client.
4. The client agrees to grant access to Arrow Marketing personnel to
corporate and promotional materials and management interviews and to fully
cooperate in the due diligence process.
5. The client covenants and warrants that any information submitted for
dissemination will be truthful, accurate, in compliance with all copyright laws
and all other applicable laws and regulations and will not be submitted in
connection with any improper or illegal act or deed.
6. The client understands and agrees that the fee for the above listed
services are $75,000.00, U.S. for a six (6) month period, the fee to be paid in
advance.
7. The client further understands that it will be billed at cost for
telephone, Federal Express, postage and all campaign related expenses.
8. The client will be charged and billed an additional $5,000.00
retainer against which actual wire costs to the news services will be billed.
9. The parties understand and agree that Arrow Marketing shall prepare
proofs and/or tapes of the agreed upon materials and information, except for
dissemination, for the clients review and approval.
(a) Arrow shall make all corrections and changes that the client
may request.
(b) All approvals, corrections and change of proofs by the client
shall be signed by a duly authorized representative of the
client.
10. The client assumes and claims all responsibility and liability of
the content of all information disseminated on behalf of the Client which has
been approved by the client. The client shall indemnify and hold Arrow harmless
from and against all demands, claims or liability
2
<PAGE>
arising for any reason due to the context of information disseminated on behalf
of the client. This indemnity shall include any costs incurred by Arrow
including, but not limited to, legal fees and expenses incurred both in
administrative proceedings, at trial and appellate levels, in settlement of
claims an payment of any judgment against Arrow.
11. This writing contains the entire agreement of the parties. No
representations were made or relied upon by either party, other than those
expressly set forth herein.
12. This Agreement's validity, interpretation and performance shall be
controlled by and construed under the laws of the State of Florida. The proper
venue and jurisdiction shall be the Circuit Court in Orange County, Florida.
13. In the event of the institution of any legal proceeding or
litigation at the trial level or appellate level, with regard to this agreement,
the prevailing party shall be entitled to receive from the non-prevailing party
all costs, reasonable attorneys fees and expenses.
14. Notices. All notices or other documents under this Agreement shall
be in writing and delivered personally or mailed by certified mail, postage
prepaid, addressed to the representative or company as follows:
COMPANY: ARROW MARKETING, INC.
1801 Lee Road, Suite 306
Winter Park, Florida 32789
Attn: Irmgard Dotzauer, President
CLIENT: FREDERICK BREWING COMPANY
4607 Wedgewood Blvd.
Frederick, MD 21703
Attn: Kevin E. Brannon, Chairman/CEO
IN WITNESS WHEREOF, this Agreement is executed as of the date first
above written.
ARROW MARKETING, INC.
By: /s/ Irmgard Dotzauer
- -----------------------------
Irmgard Dotzauer, President
FREDERICK BREWING COMPANY
By: /s/ Kevin E. Brannon
- ------------------------------
Kevin E. Brannon, Chairman/CEO
3
MONEYWORLD MAGAZINE
ADVERTISING INSERT AGREEMENT
GULF ATLANTIC PUBLISHING INC.
THIS AGREEMENT is made this 7th day of March, 1997, between GULF ATLANTIC
PUBLISHING INC., a Florida corporation (hereinafter "GAP"), and FREDERICK
BREWING COMPANY, (hereinafter the "Client").
RECITALS
1. The Client wishes to retain GAP for an Insert (AD) in MoneyWorld Magazine.
2. GAP is willing to provide such services as are more fully described herein.
NOW THEREFORE, in consideration of the mutual promises contained herein, it is
agreed as follows:
1. Furnishing of Information by Client. The Client shall furnish to GAP
information about the Client such as copies of disclosure and filing
materials, financial statements, business plans, promotional information and
background of the Client's officers and directors ("Information Package").
The Client understands that the sole purpose for providing GAP with the
Information Package is for utilization in the preparation of the Ad. GAP is
not obligated to assess the financial viability of the Client. GAP may rely
on, and assume the accuracy of the Information Package.
2. Representations and Warranties of Client. The Client represents that all
information included in the Information Package furnished to GAP shall
disclose all material facts and shall not omit any facts necessary to make
statements made on behalf of the Client not misleading.
3. Covenants of the Client. The Client covenants and warrants that any
information submitted for dissemination will be truthful, accurate, in
compliance with all copyright laws and all other applicable laws and
regulations and will not be submitted in connection with any improper or
illegal act or deed.
JL KB
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4. Based on the Information Package, GAP will perform the services more
fully described in Exhibit "A", and follow the procedures outlined below
4(A), 4(B), and 4(C).
(a) Preparation of Proofs. GAP shall prepare proofs of the agreed upon
materials and information, as set for dissemination, for the Client's
review and approval;
(b) Correction and Changes of Proofs. GAP shall make all corrections and
changes that the Client may request.
(c) Sign Offs. All approvals, corrections and change of proofs by the Client
shall be signed by a duly authorized representative of the Client. The
Client hereby designates the individual(s) listed in Exhibit "C" hereof
as authorized representatives for purposes of this paragraph 4(a), (b)
and (c); and GAP may rely upon this designation.
5. Compensation. Refer to Exhibit "B".
6. It is understood and agreed by the Parties that the above compensation in
U.S. currency, or free trading shares of the Company, should be paid timely
upon execution of this Agreement. GAP will retain the option, but is not
compelled to begin it's performance under this Agreement prior to the
payment of such compensation in U.S. currency or free trading shares.
7. Assumption of Liability and Indemnification. The Client assumes and claims
all responsibility and liability for the content of all information
disseminated on behalf of the Client which have been approved by Client. The
Client shall indemnify and hold GAP, its subsidiaries and parent company
harmless from and against all demands, claims or liability arising for any
reason due to the context of information disseminated on behalf of the
Client. This indemnity shall include any costs incurred by GAP including,
but not limited to, legal fees and expenses incurred both in administrative
proceedings, at trial and appellate levels, in settlement of claims and
payment of any judgment against GAP.
8. Assignment and Delegation. Neither party may assign any rights or delegate
any duties hereunder without the other party's express prior written
consent.
JL KB
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<PAGE>
9. Entire Agreement. This writing contains the entire agreement of the parties.
No representations were made or relied upon by either party, other than
those expressly set forth. Furthermore, the Client understands that GAP
makes no guarantees, assurances or representations in regard to the results
of the running of Advertising in its publication MoneyWorld Magazine. No
agent, employee or other representative of either party is empowered to
alter any of the above terms, unless done in writing and signed by an
executive officer of the respective parties.
10. Controlling Law and Venue. This Agreement's validity, interpretation and
performance shall be controlled by and construed under the laws of the State
of Florida. The proper venue and jurisdiction shall be the Circuit Court in
Orange County, Florida.
11. Prevailing Party. In the event of the institution of any legal proceedings
or litigation, at the trial level or appellate level, with regard to this
Agreement, the prevailing party shall be entitled to receive from the
non-prevailing party all costs, reasonable attorney's fees and expenses.
12. Failure to Object not a Waiver. The failure of either party to this
Agreement to object to, or to take affirmative action with respect to any
conduct of the other which is in violation of the terms of this Agreement
shall not be construed as a waiver of the violation or breach, or of any
future violation, breach or wrongful conduct.
13. Notices. All notices or other documents under this Agreement shall be in
writing and delivered personally or mailed by certified mail, postage
prepaid, addressed to the representative or Company as follows:
COMPANY: GULF ATLANTIC PUBLISHING INC.
1801 Lee Road, Suite 301
Winter Park, FL 32789
Attention: Joseph H. Landis, President
CLIENT: FREDERICK BREWING COMPANY
4607 Wedgewood Blvd.
Frederick, MD 21703
Attention: Kevin E. Brannon, Chairman/CEO
JL KB
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<PAGE>
14. Headings. Headings in this Agreement are for convenience only and shall not
be used to interpret or construe its provisions.
15. Time. For all intents and purposes, time is of the essence with this
Agreement.
16. Agreement Not To Hire. The Client understands and appreciates that GAP has
invested a tremendous amount of time, energy and expertise in the training
of its employees to be able to provide the very service that Client desires.
Client further understands that should an employee be enticed to leave, then
GAP will be damaged in an amount the parties are incapable of calculating at
this time. Therefore, the Client agrees not to offer employment to any
employee or subcontractor of GAP, nor to allow any officer or director of
Client to offer such employment with Client or any other company with whom
officers and directors of Client are employed or hold a financial stake for
a period of three (3) years.
IN WITNESS WHEREOF, this Agreement is executed as of the date first above
written.
BY: /s/ Joseph H. Landis
- --------------------------
Joseph H. Landis
President
BY: /s/ Kevin E. Brannon
- --------------------------
Kevin E. Brannon
Chairman/CEO
-4-
<PAGE>
ADVERTISING INSERT ORDER
EXHIBIT "A"
I. ADVERTISING and PRINTING SERVICES
A. MoneyWorld Magazine - Lead Generation mailing (1,000,000 - 1 Million
print run Total).
A minimum Eighteen page, four color magazine will be created of
which:
/x/ $ 75,000 Junior Page
/ / $125,000 2 Page Spread
/ / $275,000 4 Page Spread
advertorial will be dedicated to the Client.
Creative concept, color separations, copy work and printing 1 Million
Copies Mailed (of which 30,000 copies will be mailed to brokers).
B. Growth Industry Report - Four page, follow-up mail piece designed for
additional informational purposes that is mailed to respondents. A
total of 7,500 will be printed and mailed to respondents via first
class mail.
C. Lead Tracking Summary maintained for all response leads generated and
provided.
D. Supply Companies with copies of all Inquiries in either, Diskett or
Labels.
E. Supply company in separate Diskett or Labels Broker Inquiries
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<PAGE>
EXHIBIT "B"
PAYMENT AGREEMENT
made by and between
FREDERICK BREWING COMPANY
and
GULF ATLANTIC PUBLISHING INC.
THIS AGREEMENT is made this 7th day of March, 1997, and will serve as
confirmation of payment terms for services to be provided FREDERICK BREWING
COMPANY, ("CLIENT") whereby GULF ATLANTIC PUBLISHING INC. ("GAP") has agreed to
perform said services as defined in the "Advertising Insert Only."
TERMS
A. CLIENT will pay to GAP,
/x/ $ 75,000 Junior Page
/ / $125,000 2 Page Spread
/ / $275,000 4 Page Spread
B. This Agreement is subject to compliance with the rules of the Exchanges and
Securities Commissions on which Client is listed and registered.
C. It is understood and agreed by the Parties that the above compensation in
U.S. currency, or free trading shares of the Company, should be paid timely
upon execution of this Agreement. GAP will retain the option, but is not
compelled to begin it's performance under this Agreement prior to the
payment of such compensation in U.S. currency or free trading shares.
D. In the event of termination of the Agreement by Client, GAP shall be fully
released and forever discharged by Client from any further obligations or
liabilities with respect to the Advertising Insert and any results therefrom,
save and except liabilities arising from GAP's own negligence during the term
of this Agreement. Concurrently, Client shall be fully released and forever
discharged by GAP from any and all obligations of further payments or
liabilities with respect to the "Advertising Insert." This release in no way
affects Point #7, Page 2 of the "Advertising Insert."
JL KB
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Initials
-1-
<PAGE>
EXHIBIT "B"
continued
E. Shares shall be made free trading through the registration that is mutually
agreed upon by the Company's attorney and GAP's attorney.
IN WITNESS WHEREOF, this Agreement is executed as of the date first above
written.
BY: /s/ Joseph H. Landis
------------------------------
Joseph H. Landis
President
BY: /s/ Kevin E. Brannon
-----------------------------
Kevin E. Brannon
Chairman/CEO
-2-
<PAGE>
EXHIBIT "C"
FREDERICK BREWING COMPANY hereby designates the following person or persons to
act on its behalf for purposes of signing off on all copies pursuant to
Paragraph 4 of this Advertising Insert. GAP may rely upon the signature of any
of the following:
/s/ Kevin E. Brannon /s/ Kevin E. Brannon
- ------------------------------- -----------------------------
DIRECTOR (Please Sign) DIRECTOR (Please Print)
- ------------------------------- ----------------------------
PRESIDENT (Please Sign) PRESIDENT (Please Print)
- ------------------------------- ----------------------------
VICE-PRESIDENT (Please Sign) VICE-PRESIDENT (Please Print)
