LICENSING AND PRODUCTION AGREEMENT
This Agreement is dated this 18 day of February, 1997 by and among
Minnesota Brewing Company ("Minnesota Brewing") and Xxxxxxx & Xxxxx, Inc.
("WSI"), and to be agreed to and accepted by Santa Xxxxxx Bank ("Bank").
WHEREAS, WSI has been engaged in the business of selling alcoholic
beverage products under the trade name and trademark "Rhino Chasers;" and
WHEREAS, Minnesota Brewing has brewed the Rhino Chasers' products
pursuant to a contract with WSI; and WHEREAS, WSI is unable to pay its debts as
they mature and is contemplating a filing under Chapter 7 of the United States
Bankruptcy Code; and
WHEREAS, Bank has a perfected security interest in all of
the assets of WSI; and
WHEREAS, Minnesota Brewing has a perfected security interest in WSI's
inventory, account receivables, equipment, and intellectual property, and said
security interest is subordinate to the Bank's security interest; and
WHEREAS, WSI desires to enter into an agreement with Minnesota Brewing
and Bank which would enable WSI or a Trustee under Chapter 7 of the United
States Bankruptcy Code to maximize the value of WSI's assets and the return to
all of WSI's creditors;
NOW, THEREFORE, for good and valuable consideration, the sufficiency
and receipt of which is hereby acknowledged, Minnesota Brewing and WSI agree as
follows:
1. WSI hereby agrees to license Minnesota Brewing with all of WSI's
right, title, and interest, in all of WSI's intellectual property interest in
the trademark and trade name "Rhino Chasers" and all products bearing said name
or xxxx.
2. Minnesota Brewing agrees to use its best efforts to promote and
enhance the value of the trademark and trade name "Rhino Chasers" and all
products associated with said xxxx and name.
3. Minnesota Brewing agrees to produce, take orders for, ship, xxxx,
and collect all xxxxxxxx for shipments of all Rhino Chasers' products owned by
WSI and licensed to Minnesota Brewing pursuant to this Agreement.
4. Minnesota Brewing will price Rhino Chasers' products which it brews
at such price as determined by WSI (a copy of the current FOB pricing is
attached hereto as Exhibit A) or such other person as any Bankruptcy Trustee may
appoint. Minnesota Brewing will ship said products directly to the distributors
appointed by WSI for the sale of Rhino Chasers products.
5. Minnesota Brewing will deduct from the receipts it received from
xxxxxxxx for the Rhino Chasers' products the cost incurred in brewing said
products. Minnesota Brewing's costs shall be determined in accordance with the
same pricing formula that exists pursuant to the present contractual brewing
agreement between Minnesota Brewing and WSI (a copy of said agreement is
attached hereto as Exhibit B).
6. The difference between the amount of the receipts received by
Minnesota Brewing from its sales of the Rhino Chasers' products and the
production costs incurred by Minnesota Brewing as set forth above and deducted
from said receipts will be divided in the following manner:
a. 80% of the difference to be sent to Bank; and
b. the remaining 20% of the difference shall be
deposited in a trust account to be maintained by
Minnesota Brewing or an independent court appointed
trustee to be distributed by Minnesota Brewing or
trustee to WSI's creditors in accordance with the
priorities established by the United States
Bankruptcy Code.
c. After Bank has been paid in full, 100% of the
difference shall be distributed by Minnesota Brewing
or an independent court appointed trustee to WSI's
creditors in accordance with the priorities
established by the United States Bankruptcy Code.
d. After all of WSI's creditors have been paid in full,
80% of the difference shall be paid to Minnesota
Brewing and 20% shall be distributed to WSI.
7. Minnesota Brewing shall be entitled to an administrative expense for
its costs incurred in connection with the licensing and other related expenses
for maintaining the trademark and trade name for the Rhino Chasers' products but
not to exceed $.50 per case.
8. After all creditors have been paid in full pursuant to the
provisions of paragraph 6 herein, any proceeds from any subsequent sale of WSI's
intellectual property rights in the name or xxxx "Rhino Chasers" shall be
equally divided between Minnesota Brewing and the shareholders of WSI. Minnesota
Brewing and WSI shall agree on a third party to conduct any sale in a
commercially reasonable manner for the intellectual property rights in the name
or xxxx "Rhino Chasers." In connection with any such sale, Minnesota Brewing
shall have a right of first refusal to purchase said property rights.
9. This Agreement shall be for a term of three years commencing on
February ___, 1997, and shall be automatically renewable for additional one-year
periods unless either party gives written notice to the other of the intent to
terminate the Agreement at least six months prior to the expiration date of the
Agreement. Any such notices shall be sent by certified mail to Minnesota Brewing
Company, Attention: Xxxx XxXxxxx, 000 Xxxx Xxxxxxx Xxxxxx, Xx. Xxxx, XX 00000,
Xxxxxxxxx & Xxxxxx P.L.L.P., Attention: Xxxxxx X. Xxxxxx, 4200 IDS Center, 00
Xxxxx Xxxxxx Xxxxxx, Xxxxxxxxxxx, XX 00000, and Xxxxxxx & Xxxxx, Inc.,
Attention: Xxxxx Xxxxxxx, 0000 Xxxx Xxxxxx, Xxxxxxxxxx Xxxxx, XX 00000.
10. Notwithstanding the termination provisions of the preceding
paragraph, WSI, any Bankruptcy Trustee, Minnesota Brewing, or Bank may terminate
this Agreement upon thirty (30) days notice by giving written notice of such
intent to terminate in accordance with the preceding paragraph and at the
addresses in the preceding paragraph if the amount available for distribution to
Bank and other creditors pursuant to paragraph 6 herein is less than an average
of $8,000 per month for three consecutive months.
11. Any dispute arising under this Agreement shall be submitted to
arbitration under the auspices of the American Arbitration Association in
Minneapolis, Minnesota, for resolution in accordance with its rules and
procedures.
MINNESOTA BREWING COMPANY
By: __________________________
Its: _______________________
XXXXXXX & XXXXX, INC.
By: ____________________________
Its:__________________________
Agreed and Accepted:
SANTA XXXXXX BANK
By:________________________
Its:______________________
