Exhibit 10.12
American Craft Brewing International Limited
Unit A1, 1/F Vita Tower
00 Xxxx Xxxx Xxxx
Xxxxxxxx, Xxxx Xxxx
May 31, 1996
Xxxx Xxxx Xxxxxxxxx
_____________________________
_____________________________
(Address)
_____________________________
_____________________________
Dear Sir:
American Craft Brewing International Limited, a British Virgin
Islands company (the "Company"), or its successor, xxxxxx agrees to issue and
sell, and Xxxx Xxxx Xxxxxxxxx (the "Purchaser"), hereby agrees to purchase (the
"Issuance and Sale") US$30,000 principal amount (the "Principal Amount") of a
Redeemable Convertible Note. "Redeemable Convertible Note" shall mean a note
issued by the Company or its successor in the form attached hereto as Exhibit A
with the following terms: interest on the Redeemable Convertible Note shall
accrue at the rate of 12% per annum; provided, that if the Company, or its
successor, does not consummate an initial public offering of its shares of
capital stock, par value US$0.01 per share (the "Shares"), in the United States
(the "IPO") prior to September 1, 1996, interest on the Redeemable Convertible
Note shall accrue at the rate of 14% per annum for the period from but excluding
September 1, 1996 to but including September 1, 1997 (the "Conversion Date");
provided further that if the IPO is not consummated prior to the Conversion
Date, the Purchaser shall have the right to convert the Redeemable Convertible
Note into that number of Shares so that immediately after such conversion the
Purchaser shall hold 0.75% of the issued and outstanding Shares. Upon the date
of the consummation of the IPO (the "Closing Date"), the Purchaser shall have
the right to convert the Redeemable Convertible Note into that number of Shares
equal to the quotient obtained by dividing the Principal Amount by the product
of 0.5 and
2
the price per Share of the price to public in the IPO (the "IPO Price"). In
addition, upon the Closing Date, the Company or its successor shall issue to the
Purchaser a redeemable warrant (the "Redeemable Warrant"), in the form attached
to the Convertable Note as Exhibit A, entitling the Purchaser to purchase up to
the number of Shares issued to it in accordance with the immediately preceding
sentence at a price per Share equal to the product of 1.5 and the IPO Price on
one or more occasions during the period commencing thirteen months (the
"Commencement Date") from the date of the prospectus relating to the IPO (the
"Effective Date") and terminating on the fifth anniversary of the Commencement
Date. Commencing 18 months after the Effective Date, the Company or its
successor shall be entitled to redeem the Redeemable Warrant at a price equal to
the product of the number of Shares into which the Redeemable Warrant is
convertable and US$0.10 on 30 days prior written notice to the holder of the
Redeemable Warrant if the per Share closing bid quotation on the Nasdaq SmallCap
Market equals or exceeds 160% of the IPO Price for any 20 trading days within a
period of 30 consecutive trading days, ending on the fifth trading day prior to
the notice of redemption. The Redeemable Convertible Note shall mature on the
earlier of the Closing Date and the Conversion Date and shall be redeemable by
the Company or its successor at any time.
2. Lock-Up Agreement. The Purchaser agrees that, for a period of
six months following the effective date of the Company's or its successor's
registration statement on Form S-1 relating to the IPO, he will not, without the
prior written consent of the Company, or its successor, and the representative
of the underwriter(s) of the IPO, directly or indirectly, issue, offer, agree to
offer to sell, sell, grant an option for the purchase or sale of, transfer,
pledge, assign, hypothecate, distribute or otherwise encumber or dispose of the
Redeemable Convertible Note, the Shares or the Redeemable Warrant (or the Shares
underlying the Redeemable Warrant) or options, rights, warrants or other
securities convertible into exchangeable or exercisable for or evidencing any
right to purchase or subscribe for the Redeemable Convertible Note, the Shares
or the Redeemable Warrant (or the Shares underlying the Redeemable Warrant)
(whether or not beneficially owned), or any beneficial interest therein, other
than (i) Shares transferred pursuant to bona fide gifts where the transferee
agrees in writing to be similarly bound or (ii) Shares transferred through the
laws of descent.
3. Registration and Transfer of the Redeemable Convertible Note,
the Shares or the Redeemable Warrant (or the Shares underlying the Redeemable
Warrant). The Company shall not register any transfer of the Redeemable
Convertible Note, the Shares or the Redeemable Warrant (or the Shares underlying
the Redeemable Warrant) unless there are effective registrations under the
Securities Act of 1933 (the "Act"), pursuant to Regulation S promulgated under
the Act ("Regulation S") or pursuant to another exemption under the Act.
4. Resale of the Redeemable Convertible Note, the Shares or the
Redeemable Warrant (or the Shares underlying the Redeemable Warrant). The
Purchaser shall not resell or otherwise transfer either the Redeemable
Convertible Note, the Shares or the Redeemable Warrant (or the Shares underlying
the Redeemable Warrant) unless (i) there are effective registrations under the
Act, pursuant to Regulation S or pursuant to another exemption under the Act and
(ii) if requested by the Company, or its successor, the Purchaser delivers to
the
3
Company an opinion of counsel, in form and substance satisfactory to counsel for
the Company, to the effect that such sale is in conformance with the
registration requirements of the Act, pursuant to Regulation S or pursuant to
another exemption under the Act.
5. Legend on Share Certificates. The certificates evidencing the
Shares shall bear the following legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE
PROVISIONS OF A LETTER AGREEMENT, DATED AS OF MAY 31, 1996
BETWEEN AMERICAN CRAFT BREWING INTERNATIONAL LIMITED AND XXXX
XXXX XXXXXXXXX, AND MAY NOT BE SOLD OR TRANSFERRED EXCEPT IN
ACCORDANCE THEREWITH. A COPY OF SUCH AGREEMENT IS ON FILE AT THE
OFFICE OF THE EXECUTIVE VICE PRESIDENT AND SECRETARY OF AMERICAN
CRAFT BREWING INTERNATIONAL LIMITED.
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE "ACT"). THESE
SHARES MAY NOT BE OFFERED FOR SALE, SOLD OR OTHERWISE TRANSFERRED
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
ACT, PURSUANT TO REGULATION S PROMULGATED THEREUNDER OR PURSUANT
TO ANOTHER EXEMPTION FROM REGISTRATION UNDER THE ACT."
6. Representations and Warranties. The Purchaser hereby
represents and warrants to, and expressly agrees with, the Company that:
(a) he is not a U.S. person (as defined in Regulation S) and is
not acquiring the Redeemable Convertible Note, the Shares or the
Redeemable Warrant (or the Shares underlying the Redeemable Warrant) for
the account or benefit of any U.S. person;
(b) the Redeemable Convertible Note, the Shares and the
Redeemable Warrant (and the Shares underlying the Redeemable Warrant)
will be acquired by him for his own account, for investment purposes
only, and not with a view to the resale or distribution thereof, unless
there are effective registrations under the Act, pursuant to Regulation
S or pursuant to another exemption under the Act;
(c) he is not, and does not intend to become, a "distributor" (as
defined in Regulation S) of the Redeemable Convertible Note, the Shares
or the Redeemable Warrant (or the Shares underlying the Redeemable
Warrant) provided that if he does become a distributor, he shall
promptly notify the Company, or its successor, and he shall comply with
all applicable requirements of Regulation S;
(d) he is an "accredited investor" (as defined in Regulation D
promulgated under the Act);
4
(e) he is a sophisticated investor with such knowledge and
experience in business and financial matters as will enable him to
evaluate the merits and risks of an investment in the Company; and
(f) he understands that the Redeemable Convertible Note, the
Shares and the Redeemable Warrant (and the Shares underlying the
Redeemable Warrant), have not been, and will not be, registered under
the Act or any U.S. state securities laws, and are being offered and
sold in reliance upon U.S. federal and state exemptions and the
Purchaser recognizes that reliance upon such exemptions is based in part
upon his representations contained herein.
7. Understanding Among the Parties. The determination of the
Purchaser to enter into this Agreement and to purchase the Redeemable
Convertible Note, the Shares and the Redeemable Warrant (and the Shares
underlying the Redeemable Warrant) has been made by the Purchaser independently
of the Company and its subsidiaries and their respective representatives, agents
and employees and independently of any statement or opinion as to the
advisability of executing this Agreement or as to the properties, business,
prospects or conditions (financial or otherwise) of the Company, which may have
been made or given by the Company or any of its subsidiaries or their respective
representatives, agents or employees. The Purchaser further acknowledges and
agrees that he will acquire the Redeemable Convertible Note, the Shares and the
Redeemable Warrant (and the Shares underlying the Redeemable Warrant) "as is,"
without any express or implied representations or warranties.
8. Modification or Waiver in Writing. This Agreement shall not be
modified or amended except by a writing signed by both of the parties hereto. No
waiver of this Agreement or of any promises, obligations or conditions contained
herein shall be valid unless in writing and signed by the party against whom
said waiver is to be enforced and any party hereto that shall be adversely
affected by said waiver. No delay on the part of any person in exercising any
right, remedy or power hereunder shall operate as a waiver thereof, nor shall
any waiver on the part of any person of such right, remedy or power, nor any
single or partial exercise of any such right, remedy or power, preclude any
further exercise thereof or the exercise of any other right, remedy or power.
9. Survival. All representations, warranties, covenants and
agreements shall survive the execution and delivery of this Agreement, the
Redeemable Convertible Note and the Redeemable Warrant and the consummation of
the transactions contemplated hereby and thereby, regardless of any
investigation made by any party hereto or on behalf of such party.
10. Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of the parties hereto, their affiliates and their
respective predecessors, successors, assigns, heirs, executives, administrators
and personal representatives, and each of them, whether so expressed or not.
This Agreement is not assignable by the Purchaser, and any attempted assignment
of this Agreement without the prior written consent of the Company, or its
successor, and any attempted assignment of this Agreement, without such prior
written consent, shall be void. This Agreement shall inure to the benefit of and
constitute an obligation of any successor to the Company's business.
5
11. Severability. Whenever possible, each provision of this
Agreement shall be interpreted in such a manner as to be effective and valid
under applicable law, but if any provision of this Agreement is held to be
invalid, illegal or unenforceable under any applicable law, rule or regulation
in any jurisdiction, such provision will be ineffective only to the extent of
such invalidity, illegality or unenforceability in such jurisdiction, without
invalidating the remainder of this Agreement in such jurisdiction or any
provision hereof in any other jurisdiction.
12. Entire Agreement. This Agreement embodies the complete
agreement and understanding among the parties with respect to the subject matter
hereof and supersedes any prior understandings, agreements or representations,
written or oral, which may have related to the subject matter hereof in any way.
13. Counterparts. This Agreement may be executed in two
counterparts, each of which shall be an original and both of which shall
constitute one and the same instrument when a counterpart hereof has been signed
by both parties hereto.
14. Governing Law. This Agreement, the Redeemable Convertible
Note and the Redeemable Warrant shall be governed by the laws of New York, but
without giving effect to applicable principles of conflicts of law to the extent
that the application of the laws of another jurisdiction would be required
thereby.
15. Headings. The section headings in this Agreement are for
convenience of reference only and shall in no event affect the meaning or
interpretation of this Agreement.
If the terms of this Agreement have been correctly set forth
herein, please confirm this by signing and returning to us the enclosed copy of
this Agreement.
Very truly yours,
AMERICAN CRAFT BREWING
HOLDINGS LIMITED
by
/s/ Xxxxx X. Xxxxxx
_______________________________
Xxxxx X. Xxxxxx
Managing Director for Hong Kong
Agreed to and accepted this
29th day of May 1996.
/s/ Xxxx Xxxx Xxxxxxxxx
____________________________
