EXHIBIT 10.9
STOCK OPTION AGREEMENT
This Stock Option Agreement ("Agreement") dated as of August 1, 1997 by and
between MICHIGAN BREWERY, INC., A MICHIGAN CORPORATION, whose address is 000 X.
Xxxxxxxxx, X.X. Xxx 0000, Xxxxxxx, XX 00000 hereinafter referred to as "Company"
and XXXXXXX X. XXXX, an individual, whose address is 0000 X. Xxxxxxxx Xxxxxx,
Xxxxxxx, XX 00000 hereinafter referred to as "Holder".
W I T N E S S E T H :
WHEREAS, the Company has the authority to issue additional shares of the
Company's common stock (all of the Company's shares of common stock being
hereinafter referred to as "Common Stock");
WHEREAS, Holder has provided valuable services to the Company by, among
other things, assisting the Company to obtain a construction loan to enable the
Company to construct a new microbrewery/restaurant on property owned by the
Company in Auburn Hills, Michigan, and by allowing a partnership in which Holder
is the managing general partner to act as co-borrower on such construction loan;
WHEREAS, the Company desires to xxxxx Xxxxxx an option to purchase a
portion of the Company's Common Stock, upon the price, terms and conditions
hereinafter set forth.
NOW, THEREFORE, in consideration of the terms and covenants contained
herein, and for other good and valuable consideration, the sufficiency of which
is hereby acknowledged, the parties hereto agree as follows:
1. OPTION.
Holder shall have the right, at his sole and absolute option, to
purchase on terms and conditions hereinafter set forth, all or any
part of the aggregate of 50,000 shares of Common Stock of the Company
(collectively, the "Option Shares") at the purchase price of $5.00 per
share (the "Option Price"). Such right is hereinafter referred to as
the "Option".
2. EXERCISE; EXPIRATION DATE.
The Stock Option may be exercised only during the period (the
"Exercise Period") beginning on the date of the execution of this
Agreement and ending on the Expiration Date (as defined herein). In
addition, the Stock Option may only be exercised within the thirty day
period following (a) the filing by the Company with the Securities and
Exchange Commission ("SEC") during the Exercise Period of each of its
quarterly reports on Form 10-Q (or 10-QSB, if applicable) or (b) the
filing by the Company with the SEC during the Exercise Period of each
of its annual reports on Form 10-K (or 10-KSB, if applicable). The
Option may be exercised in whole or in part, at the option of Holder,
on or before the Expiration Date (hereinafter defined) by delivering
to the Company written notice of Holder's exercise ("Exercise Notice")
stating the amount of Option Shares to be purchased thereby,
accompanied by a check ("Check") made payable to the order of the
Company for the aggregate sum due for the Option Shares then being
purchased. An Exercise Notice, once delivered, may not be canceled or
withdrawn without the written consent of the Company. As soon as
practicable thereafter, and in any event within ten (10) business days
of the Company's receipt of the Exercise Notice and a Check, the
Company shall issue and deliver to Holder a certificate representing
the Option Shares being purchased pursuant to such Exercise Notice.
Each such certificate shall bear a legend substantially similar to the
following:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933 OR ANY STATE SECURITIES ACT. THEY MAY NOT BE TRANSFERRED UNLESS
THEY ARE REGISTERED UNDER ALL SUCH APPLICABLE ACTS OR THE TRANSFER
SATISFIES AVAILABLE EXEMPTIONS FROM THE REGISTRATION PROVISIONS
THEREOF. THE COMPANY SHALL HAVE NO OBLIGATION TO TRANSFER THESE
SECURITIES ON ITS BOOKS AND RECORDS UNLESS IT RECEIVES THE OPINION OF
COUNSEL TO THE TRANSFEROR, IN FORM AND SUBSTANCE REASONABLY
SATISFACTORY TO COUNSEL FOR THE COMPANY, TO THE EFFECT THAT SUCH
TRANSFER MAY BE MADE WITHOUT VIOLATION OF SUCH REGISTRATION
REQUIREMENTS, OR UNLESS THE TRANSFEROR DEMONSTRATES TO THE REASONABLE
SATISFACTION OF COUNSEL FOR THE COMPANY THAT THE TRANSFER IS MADE IN
COMPLIANCE WITH THE PROVISIONS OF RULE 144 UNDER THE SECURITIES ACT OF
1933, AS AMENDED.
Simultaneously, Holder shall deliver to the Company an acknowledgment
in writing that the shares have not been registered pursuant to the
Securities Act of 1933 or any applicable state securities law, an
acknowledgment that such shares are being acquired for investment and
with no current intention to resell, distribute, fractionalize or
subdivide such shares, an undertaking not to sell or transfer such
shares unless they are registered under the Securities Act of 1933 and
all applicable state securities laws or such transfer is exempt from
the registration provisions thereof, and an acknowledgment that the
Company will issue stop transfer instructions to its transfer agent to
prohibit the transfer of the shares represented by such certificates
in violation of the foregoing restrictions. In the case of an
exercise for less than all of the Option Shares permitted to be
purchased hereunder, the Holder shall reserve the right to exercise
the Option at any time and from time to time prior to the Expiration
Date for the remainder of the Option Shares.
3. STOCK DIVIDEND/DISTRIBUTION.
In case the Company shall declare a stock dividend or other
distribution upon its common stock payable in common stock of the
Company, then the total maximum number of Option Shares issuable upon
the exercise of this Option shall be increased by an amount equal to
the number of shares of common stock which would have been issued to
Holder as a result of the issuance of such dividend or other
distribution if, immediately prior to the record date relating to such
dividend or other distribution, Holder had Option Shares then
remaining subject to purchase. The Option Price in effect immediately
prior to such dividend or other distribution shall be proportionately
reduced.
4. STOCK SPLIT/COMBINATION.
In case the Company shall at any time subdivide or split its
outstanding shares of Common Stock into a greater number of shares,
the Option Price in effect immediately prior to such subdivision or
split shall be proportionately reduced, and conversely, in case the
outstanding shares of Common Stock of the Company shall be combined
into a smaller number of share, the Option Price in effect immediately
prior to such combination shall be proportionately increased. Upon
each adjustment of the Option Price pursuant to this Section 4, Holder
shall thereafter be entitled to purchase, at the then applicable
Option Price, the number of shares obtained by multiplying the Option
Price in effect immediately prior to adjustment by the number of
shares purchasable pursuant hereto immediately prior to such
adjustment and dividing the product thereof by the applicable Option
Price resulting from such adjustment.
5. EXPIRATION DATE.
The term "Expiration Date" shall mean five (5) years from the date of
execution of this Agreement, at 5:00 P.M. Detroit time on such date or
if such date shall be a federal holiday, a Saturday or a Sunday, then
5:00 P.M. Detroit time the next following day which is not a federal
holiday, a Saturday or a Sunday.
6. ASSIGNABILITY.
The Option granted herein may not be pledged, assigned, transferred,
sold or otherwise disposed of by Holder without the prior written
consent of the Company other than to Holder's family trusts, family
members, household members, estate trusts, retirement plans or by will
or by the laws of descent and distribution.
7. NOTICE.
Any notice and other communication given pursuant to the provisions of
this Agreement shall be in writing and shall be given (i) by mailing
the same by certified mail or registered mail, return receipt
requested, postage prepaid, (ii) by hand, providing for receipted
delivery, or (iii) by reputable overnight courier providing for
receipted delivery. Except as may be expressly otherwise provided in
this Agreement, any such notice or other communication given by mail
shall be deemed given two (2) business days after same is mailed and
any such notice or other communication given by hand or overnight
courier as aforesaid shall be deemed given when received or when
receipt is refused. If sent to the Company, such notices or other
communication shall be sent to the Company at 000 X. Xxxxxxxxx, X.X.
Xxx 0000, Xxxxxxx, XX 00000, or at such other address or addresses as
the Company may hereafter designate by notice to Holder. If sent to
Holder, such notices or other communications shall be sent to Holder
at 0000 X. Xxxxxxxx Xxxxxx, Xxxxxxx, XX 00000, or at such other
address or addresses as Holder may hereafter designate by notice to
the Company.
8. GOVERNING LAW.
This Agreement shall be governed by and construed in accordance with,
the laws of the State of Michigan, without giving effect to any
conflicts of laws.
9. SUCCESSORS AND ASSIGNS.
This Agreement shall inure to the benefit of the Company and Holder
and their respective successors and permitted assigns.
10. ENTIRE AGREEMENT.
This Agreement constitutes the entire agreement of the Company and
Holder as to its subject matter and supersedes any previous written or
oral agreement or understanding between the Company and Holder with
respect to such subject matter.
11. COUNTERPARTS.
This Agreement may be executed in duplicate originals, each of which
when taken together shall be deemed an original.
12. AMENDMENT.
This Agreement may not be modified except in a writing signed by both
parties hereto.
MICHIGAN BREWERY, INC.
/s/ Xxxxxxx X. Xxxx By: /s/ Xxxxxxx Xxxxxxxx
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Xxxxxxx X. Xxxx
Name: Xxxxxxx Xxxxxxxx
Title: President
