June 25, 2008 Mr. R. Martin Kelly President Independent Brewers United, Inc.
June 25, 2008
Mr. X. Xxxxxx Xxxxx
President
0 Xxxxxxxx Xxx Xxxx
South Burlington, VT 05403
Dear Xxxxxx:
Xxxxx Capital Management, L.P. (“Basso
Management”), through Basso Private Series LLC on
behalf of Basso Series 3 (MHB)
and/or
another Basso-related entity or entities (with Basso Management,
“Basso”) hereby commits (the
“Commitment”) to provide up to $30,000,000 of
financing (the “Financing”) necessary for
consummation of the proposed transaction with Pyramid Breweries
Inc. (“Pyramid”) whereby Independent Brewers
United, Inc. (including any acquisition vehicle,
“IBU”) will acquire Pyramid through an agreed
all-cash tender offer and subsequent merger, at $2.75 per
outstanding Pyramid share of common stock on a fully-diluted
basis, net to each shareholder in cash (the “Pyramid
Transaction”).
The Financing is presently anticipated to be in the form of
equity financing and debt financing, with the precise amounts of
each to be established (i) once the combined financing
capacity of the entities (i.e., IBU, Magic Hat Brewing
Company & Performing Arts Center, Inc. (“Magic
Hat”) and Pyramid) is determined, and (ii) upon
agreement of Xxxxx and IBU. It is presently anticipated that the
debt portion of the Financing will be in the form of senior
loans secured by the assets of Magic Hat and Pyramid (and those
of the parent and subsidiaries of each). It is also presently
anticipated that the debt portion of the Financing will be in
the form of “bridge” financing and mature in one
(1) year, with the intention that it be replaced as soon as
practicable with permanent debt financing
and/or
converted into equity at Basso’s option under certain
circumstances to be agreed. The equity portion of the Financing
will be purchased by Xxxxx at a price per share determined at no
more than the same valuation as its most recent purchase of
Magic Hat shares.
The Commitment and the Financing are subject to
(i) satisfaction of all terms and conditions to IBU’s
and Magic Hat’s obligation to close the Pyramid Transaction
(without satisfaction by waiver of any such terms and
conditions), (ii) negotiation and execution of definitive
terms sheets and documentation customary for transactions of
this nature, (iii) the Financing closing on or before
August 31, 2008, (iv) execution of employment
agreements with key members of the senior management team of
IBU, Magic Hat and Pyramid, satisfactory to Basso,
(v) Xxxxx’x review and satisfaction with the financial
projections for the combined companies and (v) no material
adverse change in the business or prospects of IBU or Magic Hat.
For providing this Commitment, Basso shall be paid a fee equal
to 2.0% of the Financing (the “Commitment
Fee”), which shall be payable by IBU (or Magic Hat) on
the earlier of August 31, 2008 or the closing of the
Pyramid Transaction. The Commitment Fee will be credited against
any closing fees associated with the Financing and IBU (or Magic
Hat) will be responsible for all of Basso’s legal and other
expenses incurred in connection with the Financing.
IBU only and no other person is the intended beneficiary of this
Commitment. This Commitment may be disclosed as may be necessary
in connection with the Pyramid Transaction, but should not
otherwise be disclosed without the prior written consent of
Xxxxx.
This letter agreement shall be governed by the internal laws of
the State of New York without regard to conf1icts of law
principles thereof. IBU and Xxxxx agree that the state and
federal courts located in New York, New York shall be the
exclusive jurisdiction for the resolution of all disputes
between the parties arising out of or related to this letter.
******
If you are in agreement with the foregoing, please have this
letter executed on behalf of IBU and return it by facsimile to
Xxxxxxx Xxxxx of Xxxxx Management at
(000) 000-0000.
If you have any questions regarding this letter, please contact
Xxxxxxx Xxxxx at
(000) 000-0000.
Very truly yours,
Basso Capital Management, L.P.
| By: |
/s/ Xxxxxx
X. Xxxxxxx Name: Xxxxxx X. Xxxxxxx Title: Authorized Signatory |
Agreed to and Accepted by:
Independent Brewers United, Inc.
Independent Brewers United, Inc.
| By: |
/s/ Name: Title: |
Date: June , 2008
2
