LOAN AGREEMENT
This LOAN AGREEMENT (the "Agreement") is being entered into as of this 11th
day of November, 1997, by and between AMERICAN CRAFT BREWING INTERNATIONAL
LIMITED, a Bermuda company ("AmBrew" or "Company"), with offices at Xxx Xxxxxxxx
Xxxxxxxxx, Xxxxx 0000, Xxxxxxxx, Xxxxxxxxx 00000 and ENTREPRENEURIAL INVESTORS,
LTD. ("Holder"), whose address is Entrepreneurial Investors, Ltd., Xxxxxxx
Xxxxxxxx, 0xx Xxxxx, Xxxx Xxxx Xxxxx, X.X. Xxx 00000, Freeport, Bahamas.
W I T N E S S E T H:
WHEREAS, Holder desires to loan (the "Loan") the Company Nine Hundred
Thousand Dollars ($900,000.00) (the "Funds") and the Company desires to borrow
the Funds from the Holder;
WHEREAS, the Loan shall be senior to all other indebtedness of the Company;
WHEREAS, the Loan and the Company shall be subject to the terms and
conditions set forth below.
NOW, THEREFORE, the parties hereto, intending to be legally bound hereby,
agree as follows:
1. Loan. On the date of this Agreement, Holder shall loan the Company the
sum of Nine Hundred Thousand (U.S. $900,000.00). The Funds shall be delivered
to the Company by wire transfer.
2. Note.
(a) As evidence of the Loan, the Company shall execute and deliver to
Holder a senior promissory note (the "Senior Note") substantially in the form
attached hereto as Exhibit "A". The Senior Note shall be senior to all other
indebtedness of the Company and shall not be subordinated.
(b) The principal of the Senior Note shall be finally due and payable on
March 31, 1998 (the "Maturity Date").
(c) Interest on the Senior Note shall accrue at the rate of Ten Percent
(10%) per annum (not compounded) and shall be due and payable on the Maturity
Date. Interest on the Senior Note will be paid by the Company in cash, unless
otherwise agreed by the Company and Holder in writing.
3. Collateral. The Note will be secured and collateralized by the
Company's pledge of (a) Nine Hundred Fifty (950) shares of the common stock, no
par value per share, of AmBrew USA, Inc. represented by Certificate No. 2
registered in the name of Debtor; (b) Nine Hundred Ninety Nine (999) shares of
the capital stock of Cerveceria Rio Bravo, S.A. de C.V. represented by
Certificate No. 1 registered in the name of Debtor; (c) the sixty percent (60%)
percentage interest of Debtor in Celtic Brew LLC (as evidenced by certified
copies of (i) the Articles of Organization of Celtic Brew LLC, and (ii) the
Operating Agreement of Celtic Brew LLC, such certified copies to be delivered to
Holder on or prior to the date hereof), and (d) Four Thousand Seven Hundred and
Forty Nine (4,749) shares of South China Brewing Company Limited represented by
Certificate No. 17 registered in the name of Debtor (the items described in
Sections 3(a) through 3(d) above are hereinafter collectively referred to as the
"Collateral"), such pledge to be evidenced by a pledge agreement (the "Pledge
Agreement") in substantially the form attached hereto as Exhibit "B".
Concurrently with the execution of this Agreement, the Company hereby covenants
and agrees to (i) execute and deliver the Pledge Agreement and the portion of
the Collateral described in Sections 3(a) and 3(b) above to Cardinal
International Bank & Trust Company, Ltd. (the "Escrow Agent"), (ii) deliver to
Locke, Purnell, Rain, Xxxxxxx, P.C. (New Orleans office), as escrow agent for
Holder, the portion of the Collateral described in Section 3(d) above, along
with executed stock powers in blank, and (iii) execute and deliver to Holder any
and all documents necessary to perfect the security interest of the portion of
the Collateral described in Section 3(c) above.
4. Use of Proceeds.
The Company will use the Funds for the continuing operations of the Company
during the negotiations of a private placement of the Company's securities by
Equity Services, Ltd. (the "Private Placement"). Nevertheless, even if the
Private Placement is not consummated, the Company shall remain obligated to the
Holder for the Loan.
5. Holder's Representations and Covenants.
Holder represents, warrants, and covenants to Company as follows:
(a) Holder is an "accredited investor" within the meaning of Rule 501 of
Regulation D promulgated under the Securities Act of 1933, as amended (the
"Securities Act").
(b) Holder understands that the Loan is being made in reliance on specific
provisions of federal and state securities laws and that the Company is relying
upon the trust and accuracy of the representations, warranties, agreements,
acknowledgements and understandings of Holder set forth herein in order to
determine the applicability of such provisions.
(c) Holder is capable of evaluating the risks and merits of this Loan by
virtue of its experience as an investor and its knowledge, experience, and
sophistication in financial and business matters.
(d) Holder has not employed any investment banker, broker, or finder or
incurred any liability for any brokerage fees, commissions, or finder's fees in
connection with the transactions contemplated by this Agreement.
6. Company's Representations and Covenants. The Company represents,
warrants, and covenants to Holder as follows:
(a) The Company has been duly incorporated and is validly existing and in
good standing under the laws of Bermuda, with full corporate power and authority
to own, lease and operate its properties and to conduct its business as
currently conducted, and is duly registered and qualified to conduct its
business and is in good standing in each jurisdiction or place where the nature
of its properties or the conduct of its business requires such registration or
qualification.
(b) The Company has registered the outstanding shares of its Common Stock
pursuant to Section 12 of the Securities Exchanges Act of 1934, as amended (the
"Exchange Act'), is in full compliance with all reporting requirements of the
Exchange Act, and the Common Stock is quoted on the Nasdaq Small Cap Market
(trading symbol ABREF).
(c) The Company has furnished Holder with copies of its most recent Annual
Report on Firm 10-K filed with the Securities and Exchange Commission (the
"Commission") and all Forms 10-Q and 8-K filed thereafter, if any (collectively,
the "Public Documents"). The Public Documents at the time of their filing did
not include any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements contained therein, in
light of the circumstances under which they were made, not misleading.
(d) This Agreement has been duly authorized, validly executed and delivered
on behalf of the Company and is the valid and binding agreement of the Company
enforceable in accordance with its terms.
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(e) Except for Castle Developments Limited through Xxxxxxx X. Xxxx, the
Company has not employed any investment banker, broker, or finder or incurred
any liability for any brokerage fees, commissions, or finder's fees in
connection with the transactions contemplated by this Agreement.
7. Proceeds of Loan. Holder and Company hereby agree that a portion of
the proceeds of the Loan will be used as follows:
(a) to pay off that certain One Hundred Thousand ($100,000) loan from
Equity Services, Ltd. ("ESL") to Company;
(b) to pay the following fees and expenses owed to ESL by Company, as
follows:
i) One Hundred Eight Thousand Dollars ($108,000) as a loan fee;
and
ii) Twenty Seven Thousand Dollars ($27,000) as a non-accountable
expense allowance;
iii) Five Thousand Dollars ($5,000) as reimbursement to ESL for
attorney fees incurred; and
(c) to pay a Eighteen Thousand Dollars ($18,000) fee to Capital
Solutions, Inc.
8. Miscellaneous.
(a) This Agreement shall be governed by, and interpreted in accordance
with, the laws of the State of Delaware, without giving effect to the rules
governing the conflicts of laws.
(b) Each of the parties agrees to pay its own expenses incident to
this Agreement and the performance of its obligations hereunder, including,
without limitation, the fees and expenses of each such party's legal counsel.
(c) All notices and other communications provided for or permitted
hereunder will be made in writing by hand delivery, express overnight courier,
registered first class mail, overnight courier, or telecopied, initially to the
address set forth below, and thereafter at such other address, notice of which
is given in accordance with the provisions of this Section 8:
IF TO COMPANY:
American Craft Brewing International Limited
Xxx Xxxxxxxx Xxxx., Xxxxx 0000
Xxxxxxx, Xxxxxxxxx 00000
Attn: Xxxxx X. X. Xxxxxxxx, Chairman or
Xxxxx Xxx, Executive Vice-President
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
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WITH A COPY (WHICH SHALL NOT CONSTITUTE NOTICE) TO:
Locke, Purnell, Rain, Xxxxxxx, P.C.
000 Xxxxxxx Xx., Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxx 00000
Attn: Xxxxxx Xxxxxxx, Esq.
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
IF TO HOLDER:
Entrepreneurial Investors, Ltd.
Xxxxxxx Xxxxxxxx, 0xx Xxxxx
Xxxx Xxxx Xxxxx
X.X. Xxx 00000
Freeport, Bahamas
Attn: Xx. Xxxxxx X. Xxxxxx, Director
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
WITH A COPY (WHICH SHALL NOT CONSTITUTE NOTICE) TO:
Novakov, Davidson & Xxxxx, P.C.
0000 Xx. Xxxx Xxxxx
000 X. Xx. Xxxx Xxxxxx
Xxxxxx, Xxxxx 00000-0000
Attn: I. Xxxxx Xxxxxxxx, Esq.
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
All such notices and communications shall be deemed to have been duly given: (i)
when delivered by hand, if personally delivered; (ii) three (3) business days
after being deposited in the mail, postage prepaid, if mailed; (iii) the next
business day after being deposited with an overnight courier, if deposited with
a nationally recognized, overnight courier service; or (iv) upon receipt, if
telecopied.
(d) This Agreement may be executed in one or more counterparts, each
of which shall be deemed an original, and all of which shall constitute one and
the same instrument, but in making proof of this Agreement, only one counterpart
must be accounted for or produced.
(e) Each party to this Agreement is entitled to rely on a facsimile
signature of any other party to this Agreement upon receipt of facsimile
transmission via telecopier. Any party initially providing his or her signature
via telecopier will deliver an original signature page to the other party
promptly after transmission of the facsimile.
(f) This Agreement constitutes the entire agreement of the parties
with respect to the subject matter hereof and supersedes all prior oral or
written proposals or agreements relating thereto. This Agreement may not be
amended or any provisions hereof waived in whole or in part, except by a written
amendment signed by both of the parties.
COMPANY:
AMERICAN CRAFT BREWING
INTERNATIONAL LIMITED
By: /s/ Xxxxx X. X. Xxxxxxxx
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XXXXX X. X. XXXXXXXX, Chairman
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HOLDER:
ENTREPRENEURIAL INVESTORS, LTD.
By: /s/ Xxxxxx X. Xxxxxx
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XXXXXX X. XXXXXX, Director
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EXHIBIT "A"
Senior Note
EXHIBIT TO LOAN AGREEMENT
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EXHIBIT "B"
Pledge Agreement
EXHIBIT TO LOAN AGREEMENT
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