EXHIBIT 10.42
OPTION AGREEMENT NO. 1
This agreement ("Agreement") is entered into as of the 18th day of
December, 1997 between AMERICAN CRAFT BREWING INTERNATIONAL LIMITED ("AmBrew" or
the "Company"), a Bermuda company with its principal office at Xxx Xxxxxxxx
Xxxx., Xxxxx 0000, Xxxxxxxx, XX 00000, X.X.X., and GOLD CROWN MANAGEMENT LIMITED
(registered number 258702), with its registered offices at P. O. Box 957,
Offshore Incorporation Center, Road Town, Tortola, British Virgin Islands
("Optionee").
R E C I T A L S:
1. Optionee and Company entered into a stock purchase agreement dated
December 18, 1997 (the "Purchase Agreement") pursuant to which Optionee
purchased from the Company one hundred percent (100%) of the issued and
outstanding shares of: (1) South China Brewing Company Limited (registered
number 479793), a Hong Kong company ("Brewing"); and (2) SCBC Distribution
Company Limited (registered number 447434), a Hong Kong company ("SCB").
2. In conjunction therewith, the Company desires to grant to Optionee on
the terms and conditions set forth herein an Option (as hereinafter defined) to
exchange thirty percent (30%) of the shares then issued and outstanding of each
of Brewing and SCB for an aggregate of one hundred and twenty-five thousand
(125,000) shares of the common stock, par value US$0.01 per share, of AmBrew
("AmBrew Common Stock").
NOW, THEREFORE, in consideration of the mutual covenants, provisions and
agreements set forth herein, the consummation of the transactions contemplated
by the Purchase Agreement
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and for other valuable consideration, the receipt and sufficiency of which are
hereby acknowledged by the Company and Optionee, the parties hereto, intending
to be legally bound hereby, agree as follows:
1. GRANT AND EXERCISE OF OPTION.
1.1 Grant of Option. The Company hereby grants to Optionee the option
(hereinafter the "Option") to transfer and deliver to the Company that certain
number of shares of Brewing and SCB such that after the exercise of this Option
and on the Closing Date (as hereinafter defined), the Company shall be the
record owner of thirty percent (30%) of the issued and outstanding shares of
each of Brewing and SCB, and in exchange and as consideration therefor the
Company shall transfer and deliver to the Optionee an aggregate of one hundred
and twenty-five thousand (125,000) shares of AmBrew Common Stock.
The Optionee must exercise the Option as to all, and not less than all, of
the shares of Brewing and SCB covered by the Option. The Option shall be
exercisable commencing one hundred and eighty (180) days after the date of the
Purchase Agreement, or beginning May 31, 1998, whichever is earlier, and shall
terminate on November 30, 2000, or at such later date as the Company, in its
sole discretion, so agrees in writing ("Option Period").
Optionee understands and acknowledges that the AmBrew Common Stock to be
delivered upon exercise of the Option will not be registered under the
Securities Act of 1933, as amended (the "Securities Act"), in reliance on
exemptions from the registration requirements of the Act or in reliance upon
regulations applicable to offers and sales of securities outside of the United
States.
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The Company's obligation to deliver on the Closing Date shares of AmBrew
Common Stock upon exercise of the Option is subject to the satisfaction of the
conditions set forth below. If such conditions are not satisfied, the Company
shall have no obligation to deliver on the Closing Date shares of AmBrew Common
Stock notwithstanding any exercise of the Option by the Optionee.
1.2 Conditions Precedent. The obligation of the Company to transfer
and deliver shares of AmBrew Common Stock on the Closing Date after the
Optionee's exercise of the Option is subject to the fulfillment to the Company's
satisfaction of each of the following conditions:
1.2.1 After the Closing Date, Optionee shall be the beneficial owner
of not less than fifty percent (50%) of the issued and outstanding shares of
each of Brewing and SCB, unless agreed otherwise in writing by Optionee and the
Company.
1.2.2 On the Closing Date, Brewing and SCB shall have on the Closing
Date combined net assets excluding shareholder advances, as stated under
generally accepted accounting principles, of at least US$700,000.00.
1.2.3 On the Closing Date, the Optionee shall be the lawful owner and
have good and marketable title to the shares of SCB and Brewing to be
transferred and delivered to the Company, free and clear of all liens, pledges
and encumbrances, and have complete power, right and authority to assign and
transfer the shares to the Company.
1.2.4 On the Closing Date, Optionee and the Company, as applicable,
shall have obtained all requisite governmental approvals for Optionee to become
the owner of the
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AmBrew Common Stock, including but not limited to the approval of the Bermuda
Monetary Authority.
1.2.5 On the Closing Date, there is no action, suit or proceeding
before or by any court or governmental agency or body, domestic or foreign,
pending or threatened against or affecting either Brewing or SCB, or any of
their properties, which could reasonably be anticipated to result in any
material adverse change in the condition (financial or otherwise) or in the
earnings, business affairs, properties or assets of either Brewing or SCB.
1.2.6 On the Closing Date, Brewing and SCB do not have any material
liabilities or material obligations, direct or indirect, actual or contingent,
or have not entered into any material transactions not in the ordinary course of
business, that could result in a change in capitalization or material adverse
change in financial condition as at October 31, 1997.
1.2.7 On the Closing Date, Brewing and SCB shall have conducted, are
conducting and will conduct their business so as to comply in all material
respects with all applicable statutes and regulations, and are not charged with
and, to their knowledge, are not under investigation with respect to any
violation or alleged violation of any statutes or regulations nor are the
subject of any pending or threatened adverse proceedings by any regulatory
authority having jurisdiction over their business or operations.
1.2.8 All representations and warranties contained in this Agreement
shall be true, complete and correct in all material respects on the date of this
Agreement, on the date of the exercise of the Option, and on the Closing Date.
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1.3 Exercise of Options. Optionee may exercise the Option by
delivery prior to the expiration of the Option Period of written notice
("Notice") to the Company, pursuant to Section 4 below, of Optionee's exercise
of the Option.
1.4 Closing. The exchange of the shares of Brewing and SCB by
Optionee for the AmBrew Common Stock from the Company shall be closed at the
offices of the Company in New Orleans, Louisiana, U.S.A., or at such other
location that is mutually agreed, at 10:00 A.M., local time, on the date
specified by Optionee in the Notice or by the Company if the Notice fails to
specify a date (the "Closing Date"); provided, however, that the specified
Closing Date shall be not less than thirty (30) days after receipt by the
Company of such Notice and further provided that the Closing Date may be
extended if additional time is needed. Either party may attend the closing
through a duly authorized representative. On the Closing Date, the Optionee
shall transfer and deliver to the Company, and the Company shall transfer and
deliver to Optionee, certificates for the shares of Brewing and SCB, and the
AmBrew Common Stock, covered by the Option (collectively, the "Covered Shares").
Certificates representing the Brewing and SCB shares shall be duly endorsed in
blank, or accompanied by stock powers duly executed in blank, by the
transferring party, with signatures guaranteed by a commercial bank or trust
company, with any necessary transfer tax or other revenue stamps, acquired at
the transferring party's expense, affixed and cancelled. The transferring party
agrees to cure any deficiencies with respect to the certificates representing
the Covered Shares delivered by the transferring party or with respect to the
stock power accompanying any such certificates prior to the closing.
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Optionee as follows:
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2.1 AmBrew Common Stock. The Company shall transfer the number of
shares of the AmBrew Common Stock to the Optionee upon exercise of the Option,
free and clear of all liens, encumbrances, and claims of every kind. The
Company has full and legal right, power and authority to sell, assign, transfer
and convey such AmBrew Common Stock in accordance with the terms and subject to
the conditions of this Agreement. The delivery to the Optionee of the AmBrew
Common Stock pursuant to this Agreement on the Closing Date will transfer to the
Optionee valid title thereto, free and clear of any and all adverse claims.
2.2 Existence and Good Standing of the Company. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation and has requisite power and authority
to own, lease and operate its properties and to carry on its business as now
being conducted.
2.3 No Violation. The execution and delivery of this Agreement by the
Company and the delivery to the Optinee of the AmBrew Common Stock pursuant to
this Agreement on the Closing Date (a) will not violate any provision of the
memorandum of association or bye-laws of the Company, (b) to the knowledge of
the Company will not violate any statute, rule, regulation, order or decree of
any governmental authorities by which the Company is bound or is binding upon
any of its properties or assets, and (c) will result in a violation or breach
of, or consitute a default under, any material license, permit indenture,
agreement or other instrument which the Company or any of its assets or
properties is bound; excluding from clauses (b) and (c) above violations,
breaches or defaults which either individually or in the aggregate, would not
have a material adverse effect on the business, financial condition or results
of operations of the Company.
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2.4 Litigation. There is no action, suit or proceeding at law or in
equity by any person or any arbitration or administrative or proceeding by or
before any governmental or other instrumentality or agency, pending or, to the
knowledge of the Company, threatened against it which would have a material
effect on the business, financial condition or results of operations of the
Company.
2.5 Compliance with Laws. To the best knowledge of the Company, it
is in compliance with all applicable laws, regulations, orders, judgments and
decrees except where the failure to so comply would not have a material adverse
effect on the business, financial condition or results of operations of the
Company.
3. REPRESENTATIONS AND WARRANTIES OF OPTIONEE
Optionee represents and warrants to the Company as follows:
3.1 Disclosure; Investment Intention. Optionee acknowledges that it
has received all requested information concerning the Company, and that Optionee
has been given the opportunity to review the Company's books and records,
including its filings with the U.S. Securities and Exchange Commission, and made
such inquiries of its officers as Optionee in its discretion deemed appropriate
in connection with the transactions contemplated by this Agreement. Optionee
represents and warrants that its acquisition of AmBrew Common Stock pursuant to
the exercise of the Option is for investment, for its own account, and not with
a view to the distribution of any part thereof. Optionee understands that the
Option and the shares of AmBrew Common Stock issuable upon exercise of the
Option, and the Option, are not and will not be registered under the Securities
Act, and must be held by Optionee indefinitely unless they are first registered
or unless exemptions from registration under those laws are or become
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available. Optionee understands that it has no right to require the Company to
register under those laws the Option or the shares of AmBrew Common Stock
issuable upon exercise of the Option.
Optionee further acknowledges that it understand that the certificate
evidencing the shares of AmBrew Common Stock acquired upon exercise of the
Option shall contain a legend to the effect that the shares have not been
registered under the Securities Act and may not be transferred without
registration or an exemption therefrom and, in the case of an exemption, without
delivery to AmBrew of a legal opinion that an exemption is available, which
counsel and opinion shall be satisfactory to AmBrew and that transfer of the
shares of AmBrew may be subject to additional restrictions as may be determined
by counsel.
3.2 Tax Matters. Optionee acknowledges that it understands the
federal, state and local income tax considerations relevant to the granting of
the Option pursuant to this Agreement, the exercise of the Option and the
acquisition of the shares of AmBrew Common Stock.
3.3 Financial Condition. Optionee has adequate means to otherwise
conduct its affairs, has no need for liquidity in its investment in the shares
of AmBrew Common Stock, and is able to bear the substantial economic risks of an
investment in the shares of AmBrew Common Stock for an indefinite period of
time.
3.4 Authorization. Optionee, and any representative acting for it,
have all necessary power and authority to execute, deliver and perform this
Agreement and the transactions contemplated hereby. This Agreement has been
duly executed and delivered by Optionee and constitutes a valid and binding
obligation of, and is enforceable against, Optionee
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in accordance with its terms, except insofar as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting creditors' rights generally, or by principles governing the
availability of equitable remedies.
4. OTHER AGREEMENTS.
4.1 Share Legend. Unless the shares have been registered under the
Securities Act, each certificate representing shares of AmBrew Common Stock
issued upon exercise of this Option shall bear the following legend or any other
legend deemded applicable by AmBrew's counsel:
"THESE SHARES HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES FEDERAL
SECURITIES LAWS AND INSTEAD ARE BEING ISSUED PURSUANT TO EXEMPTIONS FROM THE
REGISTRATION REQUIREMENTS OF THE FEDERAL SECURITIES LAWS OR IN RELIANCE UPON
REGULATIONS THEREUNDER APPLICABLE TO OFFERS AND SALES OF SECURITIES OUTSIDE OF
THE UNITED STATES. THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE
TRANSFERRED UNLESS (A) A REGISTRATION STATEMENT SHALL BE EFFECTIVE UNDER THE
UNITED STATES SECURITIES ACT OF 1933 OR (B) AMERICAN CRAFT BREWING INTERNATIONAL
LIMITED SHALL HAVE RECEIVED AN OPINION OF COUNSEL WHICH COUNSEL AND OPINION ARE
REASONABLY SATISFACTORY TO IT THAT NO VIOLATION OF THE FEDERAL SECURITIES LAWS
WILL BE INVOLVED IN SUCH TRANSFER."
4.2 "Piggyback" Registration. Whenever the Company proposes to
register any of its securities under the Securities Act and the registration
form to be used may be used for the registration of the AmBrew Common Stock that
is covered by this Option (the "Piggyback Registration"), the Company will give
prompt written notice to Optionee of its intention to effect such a
registration. If the Company has received a written response from Optionee
within 15 days of the notice requesting inclusion in the Piggyback Registration,
then the AmBrew Common
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Stock will be so included, subject to the parties entering into a Registration
Rights Agreement setting forth in further detail the rights and obligations of
the parties with respect to the Piggyback Registration.
4.3 No Transferability. The Option may not be transferred or
assigned by the Optionee without the written approval of the Company, such
consent to be not unreasonably withheld.
4.4 Termination. This Agreement shall terminate upon the earlier to
occur of (i) the expiration of the Option Period or (ii) an agreement in writing
between Optionee and Company. Upon the termination of this Agreement, neither
party shall have any further liability to the other party with respect to the
subject matter of this Agreement.
4.5 Rights as Stockholder. Neither Company nor Optionee shall have
any rights of a stockholder with respect to shares to be transferred and
delivered upon exercise of the Option unless and until a certificate
representing such shares has been duly issued and delivered to it.
5. MISCELLANEOUS.
5.1 Survival of Representations, Warranties and Covenants. The
representations and warranties contained herein shall survive the Closing Date
and the transfer of the shares covered by this Agreement.
5.2 Notices. All notices, and other communications, hereunder shall
be in writing and shall be deemed to have been duly given as of the second day
after being both transmitted by telecopier and sent by express air courier:
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5.2.1 If to the Company, to:
American Craft Brewing International Limited
Xxx Xxxxxxxx Xxxx., Xxxxx 0000
Xxxxxxxx, Xxxxxxxxx 00000, X.X.X.
Attn: Xxxxx X. X. Xxxxxxxx, President, or
Xxxxx Xxx, Executive Vice-President
Telephone: (000)000-0000
Telecopier: (000)000-0000
With copy to (which shall not constitute notice):
Xxxxx Xxxxxxx Rain Xxxxxxx, P.C.
000 Xxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxx 00000, X.X.X.
Attn: Xxxxxx Xxxxxxx, Esq.
Telephone: (000)000-0000
Telecopier: (000)000-0000
5.2.2 If to Optionee, to:
Gold Crown Management Limited
c/o ACL Asia Limited
Two Xxxxxxx Xxxxx
00 Xxxxxxxxx
Xxxx Xxxx
Attn: Xxxxx Xxxxxxx-Xxxxxx
Telephone: (000)0000-0000
Telecopier:(000)0000-0000
5.2.3 The addresses to which notices must be sent under this Agreement
may be changed by notice given to other parties in writing in the manner set
forth above.
5.3 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware, without regard
to its conflict of law rules.
5.4 Counterpart Execution. This Agreement may be executed in
several counterparts, each of which will be deemed to be an original but all of
which together will constitute one and the same instrument.
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5.5 Faxed Documents. For purposes of this Agreement, a document
signed and transmitted by facsimile machine ("faxed") is to be treated as an
original document. The faxed signature of any party is to be considered an
original signature, and the faxed document has the same binding effect as an
original signature on an original document. At the request of any party, a
faxed document is to be re-executed in original form by the parties thereto. No
party may raise the use of faxed signatures as a defense to the enforcement of
this Agreement or the authenticity of any document relating thereto.
5.6 Entire Agreement; Amendments. This Agreement contains the
entire understanding of the parties with respect to its subject matter and
supersedes all prior representations, agreements and understandings between the
parties with respect to its subject matter. This Agreement may be amended only
by a written instrument duly executed by the parties hereto.
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by
the parties hereto as of the date above written.
ATTEST: AMERICAN CRAFT BREWING
INTERNATIONAL LIMITED (Company)
/s/ Xxxxx X. Xxx By: /s/ Xxxxx Xxxxxxxx
---------------- ---------------------
Secretary Name: Xxxxx X. X. Xxxxxxxx
Title: Chairman, President and CEO
Date: 18 December 1997
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ATTEST: GOLD CROWN MANAGEMENT LIMITED
(Optionee)
______________________ By: ___________________________________
Secretary Name:
Title:
Date:
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