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 Xxx Xxxxxxxx Xxxx.,
Xxxxx 0000, Xxxxxxxx, XX 00000, X.X.X., 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 xxxxxxx 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
Xxx Xxxxxxxx Xxxx., Xxxxx 0000
Xxxxxxxx, Xxxxxxxxx 00000, X.X.X.
Attn: Xxxxx X. X. Xxxxxxxx, President, or
Xxxxx Xxx, Executive Vice-President
Telephone: (000)000-0000
Telecopier: (000)000-0000
With copy to (which shall not constitute notice):
Xxxxx Xxxxxxx Rain Xxxxxxx, P.C.
000 Xxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxx 00000, X.X.X.
Attn: Xxxxxx Xxxxxxx, Esq.
Telephone: (000)000-0000
Telecopier: (000)000-0000
5.2.2 If to Optionee, to:
Gold Crown Management Limited
c/o ACL Asia Limited
Two Xxxxxxx Xxxxx
00 Xxxxxxxxx
Xxxx Xxxx
Attn: Xxxxx Xxxxxxx-Xxxxxx
Telephone: (000)0000-0000
Telecopier:(000)0000-0000
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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/ Xxxxx X. Xxx By: /s/ Xxxxx Xxxxxxxx
--------------------- ---------------------------
Secretary Name: Xxxxx X. X. Xxxxxxxx
Title: Chairman, President and CEO
Date: 18 December 1997
ATTEST: GOLD CROWN MANAGEMENT LIMITED
(Optionee)
By: /s/ Xxxxx Xxxxxxx Xxxxxx
---------------------- -------------------------------
Secretary Name: Xxxxx Xxxxxxx Xxxxxx
Title: Director
Date: 18 December 1997
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