Draft: 7/21/97
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement") is entered into
as of ____________, 1997, by and among United Craft Brewers, Inc., a Delaware
corporation (the "Company"), United Breweries of America, Inc. ("Purchaser"),
and James W. Bernau ("Bernau").
WHEREAS, Purchaser and Bernau are parties to the Investment Agreement,
dated January 30, 1997 (the "Investment Agreement"), pursuant to which
Nor'Wester Brewing Company, Inc., North Country Joint Venture, LLC, Willamette
Valley, Inc. Microbreweries Across America ("WVI") and each of the subsidiaries
of WVI specified in the Investment Agreement agreed to consolidate so that each
of such companies became a wholly owned subsidiary of the Company;
WHEREAS, pursuant to the Investment Agreement, the Company desires to
issue and sell to Purchaser shares of its Common Stock (the "Purchase Shares");
WHEREAS, pursuant to the Investment Agreement, the Company desires to
issue shares of its equity securities to Purchaser upon any conversion of the
Bridge Loans (the "Bridge Loan Shares");
WHEREAS, Purchaser desires, upon the terms and conditions provided in
the Investment Agreement, to purchase the Purchase Shares from the Company and
to have the Bridge Loan Shares issued to it by the Company;
WHEREAS, pursuant to the Investment Agreement, Bernau has agreed to
transfer to Purchaser certain shares of the Company's Common Stock (the
"Transfer Shares" and, together with the Purchase Shares and the Bridge Loan
Shares, the "Shares");
WHEREAS, after the Consolidation and the transfer of the Transfer
Shares, Bernau will own ________________ shares of the Company's Common Stock
(the "Bernau Shares"); and
WHEREAS, the Investment Agreement requires that certain registration
rights be granted to Purchaser with respect to the Shares and the Executive
Employment Agreement dated as of the date hereof with Bernau requires that
certain registration rights be granted to Bernau with respect to the Bernau
Shares.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements set forth herein, the parties hereto hereby agree as
follows:
1. CERTAIN DEFINED TERMS. For purposes of this Agreement:
(a) The terms "register," "registered," and "registration" refer
to a registration effected by preparing and filing a registration statement or
similar document in compliance with the Securities Act, and the declaration or
ordering of effectiveness of such registration statement or document;
(b) The term "Registrable Securities" means: (i) as to the
Purchaser, any Shares issued or transferred on or after the date hereof to
Purchaser pursuant to the Investment Agreement, any other shares of the
Company's Common Stock held or acquired by Purchaser (or its permitted assigns)
on or after the date hereof and any securities issued or issuable to Purchaser
(or its permitted assigns) in respect of any Registrable Securities by way of
any stock split or stock dividend or in connection with any combination of
shares, recapitalization, merger, consolidation, reorganization or otherwise;
and (ii) as to Bernau, fifty percent (50%) of the Bernau Shares and any
securities issued or issuable to Bernau in respect of any Registrable Securities
by way of any stock split or stock dividend or in connection with any
combination of shares, recapitalization, merger, consolidation, reorganization
or otherwise. As to any particular Registrable Securities, such securities
shall only be treated as Registrable Securities if and so long as (A) they have
not been sold to or through a broker or dealer or underwriter in a public
distribution or a public securities transaction, (B) they have not been sold in
a transaction exempt from the registration and prospectus delivery requirements
of the Securities Act under Section 4(1) thereof so that all transfer
restrictions and restrictive legends with respect thereto are removed upon the
consummation of such sale and (C) if the holder of the Registrable Securities
holds less than seven and one-half percent (7 1/2%) of the outstanding Common
Stock of the Company, such Registrable Securities are not eligible for resale
without restriction (including legending) under Rule 144(k) of the Securities
Act;
(c) The term "Securities Act" means the Securities Act of 1933,
as amended, and any successor statute;
(d) The term "Exchange Act" means the Securities Exchange Act of
1934, as amended, and any successor statute;
(e) The term "SEC" means the Securities and Exchange Commission;
and
(f) The term "Person" means a corporation, an association, a
limited liability company, a partnership, an organization, a business, an
individual, a government or a subdivision thereof, or a governmental agency or
authority.
2. SHELF REGISTRATION. Upon receipt of a written request from
Purchaser, the Company shall file with the SEC a registration statement under
the Securities Act on Form S-1 or S-3 with respect to the Registrable
Securities. The Company shall use its best efforts to cause such registration
statement to become effective at the earliest practicable date following the
filing thereof and, subject to the following, to remain continuously effective
for a period of two years from and after the effective date of such registration
statement. During the period that such
2
registration statement is effective, it shall be available for use by Purchaser
only for a period of 30 days following a filing by the Company of (i) a
quarterly report on Form 10-Q or (ii) an annual report on Form 10-K.
Notwithstanding the foregoing, the Company may suspend the effectiveness of such
registration statement from time to time at any time upon the good faith
determination of the Company's board of directors that such action is desirable
in connection with any proposed acquisition, transaction or other matters. If
the Company so elects to suspend the effectiveness of any registration
statement, the obligation of the Company to maintain the effectiveness of such
registration statement shall be reinstated at the conclusion of such suspension
and shall be extended such that the period during which the registration
statement is actually effective totals not less than two years.
3.1. DEMAND REGISTRATION.
(a) Upon receipt of a written request from Purchaser to register
under the Securities Act (whether for purposes of a public offering, an exchange
offer or otherwise) all or part of the Registrable Securities held by Purchaser,
the Company shall as expeditiously as reasonably possible (but in any event not
later than sixty (60) days after receipt of such request) prepare and file, and
use its best efforts to cause to become effective as soon thereafter as
practicable, a registration statement under the Securities Act to effect the
offering of such Registrable Securities in the manner specified in such request.
(b) Purchaser shall be entitled to select and retain one or more
investment bankers or managers reasonably acceptable to the Company in
connection with any underwritten offerings made pursuant to this Section 3.1.
(c) Subject to the terms and conditions set forth in Section 3.2
below, Purchaser may request the Company to register Registrable Securities
under the Securities Act pursuant to this Section 3.1 at any time and from time
to time; PROVIDED, HOWEVER, that Purchaser may not request the Company to
register Registrable Securities pursuant to this Section 3.1 more than once in
any 365-day period.
3.2. TERMS AND CONDITIONS OF DEMAND REGISTRATION. Notwithstanding
anything to the contrary contained in this Agreement, the registration rights
granted to Purchaser in Section 3.1 above are expressly subject to the following
terms and conditions:
(a) Purchaser shall only be entitled to three (3) requests to
register Registrable Securities under the terms of Section 3.1. For purposes of
this provision, a "request" shall be deemed to have occurred only upon
completion of a requested registration and the subsequent sale of Registrable
Securities under that registration.
(b) In no event shall the number of Registrable Securities to be
offered under a registration statement prepared and filed pursuant to Section
3.1 constitute less than five percent (5%) of the then outstanding shares of
common stock of the Company.
(c) The Company shall be entitled to defer for a reasonable
period of time, but not in excess of ninety (90) days, the filing of any
registration statement otherwise
3
required to be prepared and filed by it under Section 3.1 above if the Company
notifies Purchaser within five (5) business days after Purchaser requested the
registration that the Company (i) is at such time conducting or about to conduct
an underwritten public offering of its securities for its own account (other
than a registration statement relating to a Rule 145 transaction, an offering
solely to employees or any other registration statement which is not appropriate
for the registration of Registrable Securities) and the Board of Directors of
the Company determines in good faith that such offering would be materially
adversely affected by the registration requested by Purchaser or (ii) would, in
the opinion of its counsel, be required to disclose in such registration
statement information not otherwise then required by law to be publicly
disclosed and, in the good faith judgement of the Board of Directors of the
Company, such disclosure might adversely affect any material business
transaction or negotiation in which the Company is then engaged. The foregoing
notwithstanding, the Company shall not be entitled to defer the filing of any
registration statement under this Section 3.2(c) more than once in any twelve
(12) month period. If the Company elects to defer the filing of a registration
statement pursuant to this Section 3.2(c), Purchaser may withdraw its request,
in writing, during the time of such deferral and such request shall not be
counted toward the limit on requests set forth in Section 3.2(a).
(d) Purchaser shall not exercise its rights pursuant to Section
3.1 during the 60-day period immediately following the effective date of any
registration statement filed by the Company under the Securities Act (other than
a registration of securities in a Rule 145 transaction or with respect to an
employee benefit plan) in respect of an offering or sale of securities of the
Company for its own account.
4.1. PIGGYBACK REGISTRATION. If at any time or from time to time the
Company shall propose to register any of its Common Stock for public sale under
the Securities Act, the Company shall, at such time, promptly give Purchaser and
Bernau written notice of such registration. Upon the written request of
Purchaser or Bernau given within 20 days after the mailing of such notice by the
Company, the Company shall, subject to the provisions of this Agreement
(including, without limitation, Section 4.2 below), cause to be registered under
the Securities Act any and all Registrable Securities as Purchaser or Bernau
shall request; PROVIDED, HOWEVER, that the Company may at any time prior to the
effectiveness of any such registration statement, in its sole discretion and
without the consent of Purchaser or Bernau, abandon the proposed offering; and
PROVIDED, FURTHER, that Purchaser and Bernau shall be entitled to withdraw any
or all Registrable Securities included in a registration statement pursuant to
this Section 4.1 at any time prior to the date on which the registration
statement with respect to such Registrable Securities is declared effective by
the SEC. The Company shall be entitled to select the investment bankers and/or
managers, if any, to be retained in connection with any registration referred to
in this Section 4.1, provided such investment bankers and/or managers are
reasonably acceptable to Purchaser and Bernau.
4.2. UNDERWRITING REQUIREMENTS IN PIGGYBACK REGISTRATIONS. In
connection with any offering involving an underwriting covered by Section 4.1
hereof:
(a) The Company shall not be required to include any of
Purchaser's or Bernau's Registrable Securities in such underwriting unless
Purchaser and Bernau,
4
respectively, accept the terms of the underwriting agreement between the Company
and the underwriters selected by it (an "Underwriting Agreement"), and then only
in such quantity as the underwriters determine will not jeopardize the success
of the offering by the Company. If the total amount of securities (including
Registrable Securities) requested by Purchaser and Bernau to be included in such
offering exceeds the amount of securities to be sold other than by the Company
that the underwriters determine is compatible with the success of the offering,
then the Company shall be obligated to include in the offering only that number
of such securities (including Registrable Securities) which the underwriters
determine will not jeopardize the success of the offering (the Registrable
Securities so included to be apportioned pro rata among Purchaser and Bernau
according to the total amount of securities owned by Purchaser and Bernau and
the number of Registrable Securities requested by Purchaser or Bernau pursuant
hereto to be sold in such offering shall be reduced prior to any reduction in
the number of securities requested to be sold by the Company).
(b) The Company shall not be obligated to include any
Registrable Securities in any registration by the Company of any of its Common
Stock in connection with any merger, acquisition, exchange offer or any other
business combination, including any transaction within the scope of Rule 145
promulgated pursuant to the Securities Act, subscription offer, dividend
reinvestment plan or stock option or other director or employee incentive or
benefit plan.
(c) The Company shall use all commercially reasonable efforts to
cause the managing underwriter or underwriters of a proposed underwritten
offering to permit the Registrable Securities requested to be included in a
registration pursuant to Section 4.1 above to be included on the same terms and
conditions as any similar securities included therein.
(d) No Registrable Securities excluded from the underwriting by
reason of this Section 4.2 shall be included in the Registration Statement.
(e) In the event that some, but less than all, of Purchaser's or
Bernau's Registrable Securities are included in an offering contemplated by a
registration statement pursuant to Section 4.1 above, Purchaser and Bernau
shall, at the Company's or underwriters' request, execute a "lockup" letter, in
customary form, setting forth the agreement of Purchaser and Bernau,
respectively, not to offer for sale, sell, grant any option for the sale of, or
otherwise dispose of, directly or indirectly, any Registrable Securities not
included in the offering for a period of 90 days from the date such offering
commences.
5. PURCHASER'S RIGHT OF FIRST REFUSAL. (a) If Bernau shall request
the registration of any Registrable Securities pursuant to Section 4.1 above,
Purchaser shall have the right, upon the delivery of written notice to Bernau at
any time prior to the date on which the applicable Underwriting Agreement is
entered into by the Company and the underwriters, to purchase all or any part of
such Registrable Securities from Bernau at the price to be paid by the
underwriters for Registrable Securities under the applicable Underwriting
Agreement. The purchase of the Registrable Securities by Purchaser shall occur
simultaneously with the closing of the purchases provided for in the
Underwriting Agreement and Purchaser's obligation to
5
purchase the Registrable Securities shall be subject to the same terms and
conditions as the underwriters' obligations to purchase securities under the
Underwriting Agreement.
(b) If Bernau proposes to sell any Registrable Securities owned by
Bernau, other than pursuant to Section 4.1 above or Section 5.2(c) below, upon
receipt by Bernau of an acquisition proposal from a bona fide creditworthy
purchaser that is subject only to customary closing conditions, which Bernau
desires to accept (an "Acquisition Proposal"), Bernau shall offer (the "Offer"),
by written notice to Purchaser, to sell the Registrable Securities referred to
in the Acquisition Proposal for the price and on the terms set forth in the
Acquisition Proposal. The Offer shall be delivered to Purchaser and shall state
(i) the number of Registrable Securities to be sold pursuant to the Acquisition
Proposal, the consideration to be paid therefor, the price to be paid for the
Registrable Securities and the closing date under the Acquisition Proposal and
(ii) contain a true and complete copy of the Acquisition Proposal. If the
consideration to be paid for the Registrable Securities referred to in the
Acquisition Proposal is other than cash, then for purposes of this section only,
the price per share for such Registrable Securities shall be determined by the
volume weighted average closing sale price of the Company's Common Stock as
reported by The Nasdaq Stock Market for the 20 business days preceding the Offer
(the "Volume Weighted Market Price"). Within 20 days from the receipt of the
Offer, Purchaser may elect to purchase from Bernau, at the price and on the
terms specified in the Acquisition Proposal, any or all of the Registrable
Securities offered in the Offer, by providing written notice to Bernau prior to
the expiration of the 20-day exercise period. Bernau shall be free to transfer
any of the Registrable Securities referred to in the Acquisition Proposal, which
Purchaser has elected not to purchase pursuant to this section, for a period of
30 days following the expiration of the 20-day exercise period but only on the
terms set forth in the Acquisition Proposal.
(c) If Bernau proposes to sell any Registrable Securities owned by
Bernau under Rule 144 promulgated under the Securities Act (except Rule 144(k)),
Bernau shall first offer (the "Rule 144 Offer"), by written notice to Purchaser,
to sell for cash the Registrable Securities referred to in the Rule 144 Offer at
the Volume Weighted Market Price (based on the 20 business days preceding the
Rule 144 Offer). Within 20 days from receipt of the Rule 144 Offer, Purchaser
may elect to purchase from Bernau any or all of the Registrable Securities
offered in the Rule 144 Offer, by providing written notice to Bernau prior to
the expiration of the 20-day exercise period. Bernau shall be free to transfer
any of the Registrable Securities referred in the Rule 144 Offer, which
Purchaser has elected not to purchase pursuant to this section, for a period of
30 days following the expiration of the 20-day exercise period, but only
pursuant to Rule 144 (except Rule 144(k)).
6. FAVORED STATUS/CONFLICTING RIGHTS. Except as herein provided,
the Company shall not provide registration rights to any other party that, taken
as a whole, are more favorable than those provided to Purchaser hereunder
without also offering to Purchaser such more favorable rights. The Company
shall give Purchaser notice, within 15 days after the execution of any such
agreement, of any agreement between the Company and a third party that triggers
a right of Purchaser to invoke the favored status provisions of this Section 6.
In the event that any rights of Purchaser under this Agreement conflict with or
diminish any rights granted to a third party under another agreement with the
Company, Purchaser's rights under
6
this Agreement shall be deemed superior to, and shall take precedence over, the
rights of any such third party. The Company covenants and agrees that in the
event it grants registration rights to any third party or parties, the
instrument or instruments granting such rights shall contain a provision
referencing this Agreement and the precedence and superiority of Purchaser's
registration rights as against the registration rights of such third party.
7.1. COVENANTS OF THE COMPANY. In the case of each registration
effected by the Company pursuant to this Agreement, the Company will keep
Purchaser advised in writing as to the initiation of each registration and as to
the completion thereof. Whenever Purchaser has requested that any Registrable
Securities be registered pursuant to this Agreement, the Company will at its
expense and as expeditiously as possible:
(a) Prepare and file with the Commission such amendments and
post-effective amendments to the registration statement as may be necessary to
keep the registration statement effective for a period of not less than 120
days, or such shorter period which will terminate when all Registrable
Securities covered by such registration statement have been sold or withdrawn at
the request of Purchaser (except for any registration statement referred to in
Section 2, which shall be kept effective in accordance with the terms thereof);
and cause the prospectus to be supplemented by any required prospectus
supplement, and as so supplemented to be filed pursuant to Rule 424 under the
Securities Act;
(b) Furnish to Purchaser and to each managing underwriter, if
any, (i) at least two (2) business days prior to filing with the SEC, any
registration statement covering any Registrable Securities, any amendment or
supplement thereto, and any prospectus used in connection therewith, which
documents will be subject to the reasonable review of Purchaser and such
underwriter, and, with respect to a registration statement prepared pursuant to
Section 2 or Section 3.1, the Company shall not file any such documents with the
SEC to which Purchaser shall reasonably object; and (ii) a copy of any and all
transmittal letters or other correspondence with the SEC or any other
governmental agency or self-regulatory body or other body having jurisdiction
(including any domestic or foreign securities exchange) relating to such
offering of Registerable Securities;
(c) Furnish to Purchaser and each managing underwriter, if any,
such number of copies of such registration statement, each amendment and
supplement thereto (in each case including all exhibits thereto and documents
incorporated by reference therein) and the prospectus included in such
registration statement (including each preliminary prospectus and prospectus
supplement) as Purchaser or such underwriter may reasonably request in order to
facilitate the sale of the Registerable Securities;
(d) After the filing of such registration statement, promptly
notify Purchaser of any stop order issued or, to the knowledge of the Company,
threatened to be issued by the SEC and promptly take all reasonable actions to
prevent the entry of such stop order or to obtain its withdrawal if entered;
(e) Use its commercially reasonable efforts to qualify such
Registerable Securities for offer and sale under the securities, "blue sky" or
similar laws of such jurisdictions
7
(including any foreign country or any political subdivision thereof in which
shares of the Company's common stock are then listed) as Purchaser or any
underwriter shall reasonably request and use its commercially reasonable efforts
to obtain all appropriate registrations, permits and consents required in
connection therewith, except that the Company shall not for any such purpose be
required to qualify generally to do business as a foreign corporation in any
jurisdiction wherein it is not so qualified, or to subject itself to taxation or
to file a general consent to service of process in any such jurisdiction;
(f) Furnish to each managing underwriter, if any, an opinion of
counsel for the Company addressed to each of them, dated as of the date of the
closing of the offering of Registerable Securities, and a "comfort" letter or
letters signed by the Company's independent public accountants, each in
reasonable and customary form and covering such matters of the type customarily
covered by opinions or comfort letters delivered by such parties in underwritten
public offerings, and use its commercially reasonable efforts to have such
opinions and comfort letters addressed to and delivered to Purchaser;
(g) Furnish unlegended certificates representing ownership of
the Registerable Securities being sold in such denominations as shall be
requested by Purchaser or the managing underwriter, if any, provided such
request is made at least two (2) business days prior to the closing of the sale
of such Registerable Securities;
(h) Promptly inform Purchaser (i) in the case of any offering of
Registerable Securities in respect of which a registration statement is filed
under the Securities Act, of the date on which such registration statement or
any post-effective amendment thereto becomes effective and, if applicable, of
the date of filing a Rule 430A prospectus (and, in the case of an offering
abroad of Registerable Securities, of the date when any required filing under
the securities and other laws of such foreign jurisdictions shall have been made
and when the offering may be commenced in accordance with such laws) and (ii) of
any request by the SEC, any securities exchange, government agency, self
regulatory body or other body having jurisdiction for any amendment of or
supplement to any registration statement or preliminary prospectus or prospectus
included therein or any offering memorandum or other offering document relating
to such offering;
(i) Subject to subparagraph (k) below, until the earlier of (i)
such time as all of the Registerable Securities being offered have been disposed
of in accordance with the intended method of disposition by Purchaser set forth
in the registration statement or other offering document (and the expiration of
any prospectus delivery requirements in connection therewith) or (ii) the
expiration of nine (9) months after such registration statement or other
offering document becomes effective (unless the offering is a continuous
offering of securities under Rule 415, in which case until the earliest of the
date the offering is completed and the second anniversary of such effective
date), keep effective and maintain any registration, qualification or approval
obtained in connection with the offering of the Registerable Securities, and
amend or supplement the registration statement or prospectus or other offering
document used in connection therewith to the extent necessary in order to comply
with applicable securities laws;
8
(j) Use its commercially reasonable efforts to have the
Registerable Securities listed on any domestic and foreign securities exchanges
on which the common stock of the Company is then listed;
(k) As promptly as practicable, notify Purchaser at any time
when a prospectus relating to the sale of Registerable Securities is required by
law to be delivered in connection with sales by an underwriter or dealer, of the
occurrence of an event requiring the preparation of a supplement or amendment to
such prospectus so that, as thereafter delivered to the purchasers of such
shares, such prospectus will not contain an untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading, and as promptly as practicable make available to Purchaser
and to each managing underwriter, if any, any such supplement or amendment; in
the event the Company shall give such notice, the Company shall extend the
period during which such registration statement shall be maintained effective as
provided in Section 7.1(i) above by the number of days during the period from
and including the date of the giving of such notice to the date when the Company
shall make available to Purchaser such supplemented or amended prospectus;
(l) Make available for inspection during the normal business
hours of the Company by Purchaser, any underwriter participating in such
offering, and any attorney, accountant or other agent retained by Purchaser or
any such underwriter in connection with the sale of Registerable Securities (an
"Inspector"), all relevant financial and other records, pertinent corporate
documents and properties of the Company as shall be reasonably necessary to
enable them to exercise their due diligence responsibility, and cause the
officers, directors and employees of the Company to supply all information
reasonably requested by any such Inspector in connection with such registration
statement; PROVIDED, HOWEVER, that (i) in connection with any such inspection,
any such Inspector shall cooperate to the extent reasonably practicable to
minimize any disruption to the operation of the Company's business and (ii) any
records, information or documents shall be kept confidential by such Inspector,
unless (1) such records, information or documents are in the public domain or
otherwise publicly available or (2) disclosure of such records, information or
documents is required by a court or administrative order or by applicable law
(including, without limitation, the Securities Act);
(m) Enter into usual and customary agreements (including an
underwriting agreement in usual and customary form) and take such other actions
as are reasonably required in order to expedite or facilitate the sale of the
Registerable Securities.
(n) Make "generally available to its security holders" (within
the meaning of Rule 158 of the Securities Act) an earnings statement satisfying
the provisions of Section 11(a) of the Securities Act and Rule 158 thereunder no
later than 45 days after the end of the 12-month period beginning with the first
day of the Company's first fiscal quarter commencing after the effective date of
the registration statement, which earnings statement shall cover said 12-month
period;
(o) If requested by any managing underwriter or underwriters or
the Purchaser, promptly incorporate in a prospectus supplement or post-effective
amendment such
9
information as the managing underwriter or underwriters or Purchaser, as the
case may be, reasonably requests to be included therein, including, without
limitation, information with respect to the number of Registerable Securities
being sold by Purchaser to any underwriter or underwriters, the purchase price
being paid therefor by such underwriter or underwriters and with respect to any
other terms of an underwritten offering of the Registerable Securities to be
sold in such offering, and promptly make all required filings of such prospectus
by supplement or post-effective amendment;
(p) As promptly as practicable after the filing with the SEC of
any document that is incorporated by reference in a prospectus contained in a
registration statement, deliver a copy of such document to Purchaser; and
(q) Cause all such Registerable Securities to be listed on each
securities exchange on which similar securities issued by the Company are then
listed or, if not then listed, cause such Registerable Securities to be included
in a national automated quotation system.
(r) Provide a transfer agent and registrar for all Registerable
Securities and a CUSIP number for all such Registerable Securities, in each case
not later than the effective date of such registration.
(s) Take all other steps necessary to effect the registration of
the Registerable Securities contemplated hereby.
7.2. COVENANT OF STOCKHOLDERS. Purchaser agrees and covenants that,
upon receipt of any notice from the Company of the happening of any event of the
kind described in Section 7.1(k) above, Purchaser will forthwith discontinue
disposition of Registerable Securities pursuant to the registration statement
covering such Registerable Securities until Purchaser receives copies of the
supplemented or amended prospectus contemplated by Section 7.1(k) above, and, if
so directed by the Company, Purchaser will deliver to the Company all copies,
other than permanent file copies, then in Purchaser's possession of the most
recent prospectus covering such Registerable Securities at the time of receipt
of such notice.
8. RULE 144 REPORTING. With a view to making available to Purchaser
the benefits of certain rules and regulations of the SEC which may permit
Purchaser to sell securities of the Company to the public without registration,
the Company agrees to:
(a) Make and keep public information available as those terms
are understood and defined in Rule 144 under the Securities Act;
(b) Use its commercially reasonable best efforts to file with
the Commission in a timely manner all reports and other documents required of
the Company under the Securities Act and the Exchange Act; and
(c) So long as Purchaser owns any Registrable Securities,
furnish to Purchaser forthwith upon request a written statement by the Company
as to its compliance with the reporting requirements of Rule 144, the Securities
Act and the Exchange Act, a copy of the
10
most recent annual or quarterly report of the Company, and such other reports
and documents so filed as Purchaser may reasonably request in availing itself of
any rule or regulation of the SEC allowing Purchaser to sell any such securities
without registration.
9. RESTRICTIONS ON PUBLIC SALE. The Company agrees:
(a) Not to effect any public sale or distribution of any
securities during the 90-day period commencing on the effective date of a
registration statement filed pursuant to Section 3.1, except in connection with
any merger, acquisition, exchange offer, or any other business combination,
including any transaction within the scope of Rule 145 promulgated pursuant to
the Securities Act, subscription offer, dividend reimbursement plan or stock
option or other director or employee incentive or benefit plan;
(b) That any agreement entered into after the date hereof
pursuant to which the Company grants registration rights with respect to the
Company's securities shall contain a provision under which holders of such
securities agree, to the extent not inconsistent with applicable laws, not to
effect any public sale or distribution of any such securities (excluding any
sale in accordance with Rule 144 under the Securities Act) during the period
commencing with the effective date of a registration statement pursuant to
Section 3.1 through the 90-day period beginning on the date that the
registration statement filed pursuant to Section 3.1 becomes effective.
10. FURNISH INFORMATION. It shall be a condition precedent to the
obligations of the Company to take any action pursuant to this Agreement with
respect to the Registrable Securities that Purchaser and Bernau shall furnish to
the Company such information regarding themselves, the Registrable Securities
held by each of them, and the intended method of disposition of such securities
as shall be required to effect the registration of the Registrable Securities.
11. EXPENSES OF REGISTRATION. Except as set forth below, the Company
shall bear and pay all expenses incurred in connection with any registration,
filing, listing and qualification of Registrable Securities effected pursuant to
this Agreement, including, without limitation, all registration, filing, listing
and qualification fees, printers' and accounting fees relating or apportionable
thereto, rating agency fees, costs of appraisals and other reports, the fees and
disbursements of counsel for the Company and the reasonable fees and
disbursements of counsel for each of Purchaser and Bernau selected by Purchaser
and Bernau, respectively, but excluding underwriting discounts and commissions
relating to Registrable Securities.
12. INDEMNIFICATION. In the event any Registrable Securities are
included in a registration statement under this Agreement:
(a) To the extent permitted by law, the Company shall indemnify
and hold harmless Purchaser, Bernau, any underwriter (as defined in the
Securities Act) for Purchaser or Bernau and each Person, if any, who controls
Purchaser or such underwriter within the meaning of the Securities Act or the
Exchange Act, against any losses, claims, damages, or liabilities (joint or
several) to which they may become subject under the Securities Act, or the
11
Exchange Act or other federal or state law, insofar as such losses, claims,
damages, or liabilities (or actions in respect thereof) arise out of or are
based upon any of the following statements, omissions, or violations
(collectively a "Violation"): (i) any untrue statement or alleged untrue
statement of a material fact contained in such registration statement, including
any preliminary prospectus or final prospectus contained therein or any
amendments or supplements thereto, (ii) the omission or alleged omission to
state therein a material fact required to be stated therein, or necessary to
make the statements therein not misleading, or (iii) any violation or alleged
violation by the Company of the Securities Act, the Exchange Act, any state
securities law or any rule or regulation promulgated under the Securities Act,
the Exchange Act or any state securities law; and, subject to the provisions of
subsection (c) below, the Company shall pay to Purchaser, Bernau, such
underwriter or controlling Person, as incurred, any legal or other expenses
reasonably incurred by them in connection with investigating or defending any
such loss, claim, damage, liability, or action; PROVIDED, HOWEVER, that the
indemnity agreement contained in this subsection (a) shall not apply to amounts
paid in settlement of any such loss, claim, damage, liability, or action if such
settlement is effected without the consent of the Company (which consent shall
not be unreasonably withheld), nor shall the Company be liable in any such case
for any such loss, claim, damage, liability, or action to the extent that it
arises out of or is based upon a Violation which occurs (A) in reliance upon and
in conformity with written information furnished expressly for use in connection
with such registration by Purchaser, Bernau or any such underwriter or
controlling Person or (B) as a result of the failure of Purchaser, Bernau or any
underwriter or controlling Person to deliver a prospectus in connection with the
offer and sale of Registrable Securities when legally required to do so.
(b) To the extent permitted by law, Purchaser shall indemnify
and hold harmless the Company, each of its directors, each of its officers who
has signed the registration statement, each Person, if any, who controls the
Company within the meaning of the Securities Act, any underwriter, and any
controlling Person of any such underwriter, against any losses, claims, damages,
or liabilities (joint or several) to which any of the foregoing Persons may
become subject under the Securities Act, or the Exchange Act or other federal or
state law, insofar as such losses, claims, damages, or liabilities (or actions
in respect thereof) arise out of or are based upon any Violation, in each case
to the extent (and only to the extent) that such Violation occurs in reliance
upon and in conformity with written information furnished by Purchaser expressly
for use in connection with such registration; and, subject to the provisions of
subsection (d) below, Purchaser shall pay any legal or other expenses reasonably
incurred by any Person intended to be indemnified pursuant to this subsection
(b) in connection with investigating or defending any such loss, claim, damage,
liability, or action; PROVIDED, HOWEVER, that the indemnity agreement contained
in this subsection (b) shall not apply to amounts paid in settlement of any such
loss, claim, damage, liability, or action if such settlement is effected without
the consent of Purchaser, which consent shall not be unreasonably withheld;
PROVIDED, FURTHER, that, in no event shall any indemnity under this subsection
(b) exceed the gross proceeds from the offering received by Purchaser.
(c) To the extent permitted by law, Bernau shall indemnify and
hold harmless the Company, each of its directors, each of its officers who has
signed the registration statement, each Person, if any, who controls the Company
within the meaning of the Securities Act, any underwriter, and any controlling
Person of any such underwriter, against any losses,
12
claims, damages, or liabilities (joint or several) to which any of the foregoing
Persons may become subject under the Securities Act, or the Exchange Act or
other federal or state law, insofar as such losses, claims, damages, or
liabilities (or actions in respect thereof) arise out of or are based upon any
Violation, in each case to the extent (and only to the extent) that such
Violation occurs in reliance upon and in conformity with written information
furnished by Bernau expressly for use in connection with such registration; and,
subject to the provisions of subsection (d) below, Bernau shall pay any legal or
other expenses reasonably incurred by any Person intended to be indemnified
pursuant to this subsection (c) in connection with investigating or defending
any such loss, claim, damage, liability, or action; PROVIDED, HOWEVER, that the
indemnity agreement contained in this subsection (c) shall not apply to amounts
paid in settlement of any such loss, claim, damage, liability, or action if such
settlement is effected without the consent of Bernau, which consent shall not be
unreasonably withheld; PROVIDED, FURTHER, that, in no event shall any indemnity
under this subsection (c) exceed the gross proceeds from the offering received
by Bernau.
(d) Promptly after receipt by an indemnified party under this
Section 12 of notice of the commencement of any action (including any
governmental action), such indemnified party shall, if a claim in respect
thereof is to be made against any indemnifying party under this Section 12,
deliver to the indemnifying party a written notice of the commencement thereof
and the indemnifying party shall have the right to participate in, and, to the
extent the indemnifying party so desires, jointly with any other indemnifying
party similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; PROVIDED, HOWEVER, that an indemnified party
(together, in the case of the Purchaser or Bernau, with all control Persons who
are indemnified parties and, in the case of an underwriter, with all other
underwriters and control Persons who are indemnified parties) shall have the
right to retain separate counsel, with the fees and expenses to be paid by the
indemnifying party, if representation of such indemnified party or parties by
the counsel retained by the indemnifying party would be inappropriate due to
actual or potential differing interests between such indemnified party or
parties and the indemnifying party. The failure to deliver written notice to
the indemnifying party within a reasonable time of the commencement of any such
action shall relieve such indemnifying party of any liability to the indemnified
party under this Section 11 to the extent such failure shall be prejudicial to
its ability to defend such action, but the omission so to deliver written notice
to the indemnifying party shall not relieve it of any liability that it may have
to any indemnified party otherwise than under this Section 12.
(e) The obligations of the Company, Purchaser and Bernau under
this Section 12 shall survive the completion of any offering of Registrable
Securities in a registration statement under this Agreement, and otherwise.
13.1. ASSIGNMENT OF RIGHTS. Subject to Section 13.2 below, the
rights of Purchaser and Bernau under this Agreement with respect to any
Registerable Securities may be assigned to any person who acquires Registrable
Securities from Purchaser and/or Bernau, as the case may be, and thereafter
holds Registrable Securities in an amount equal to seven and one-half percent
(7 1/2%) of the then outstanding shares of Common Stock of the Company,
except that any person who acquires such Registrable Securities (a) pursuant
to a public offering registered under the Securities Act, or (b) pursuant to
a transfer made in accordance with Rule
13
144 under the Securities Act (or any similar successor provision) may not be
assigned rights hereunder with respect to such Registrable Securities.
Notwithstanding the foregoing, rights to cause one or more demand registrations
under Section 3.1 may only be assigned if such rights are expressly assigned in
writing by Purchaser. Any assignment of registration rights pursuant to this
Section 13.1 shall be effective upon receipt by the Company of written notice
from Purchaser or Bernau, as the case may be, (i) stating the name and address
of any assignee, (ii) describing the manner in which the assignee acquired
Registrable Securities, (iii) if from the Purchaser, stating the number of
"requests," as defined in Section 3.2(a) above, being assigned by Purchaser to
any assignee, which, in any event, shall not result in the total number of
requests to which Purchaser and any assignee together are entitled being greater
than three, and (iv) identifying the Registerable Securities with respect to
which the rights under this Agreement are being assigned.
13.2. SCOPE OF ASSIGNMENT. The rights of an assignee under
Section 13.1 shall be the same rights granted to the Purchaser or to Bernau, as
the case may be, under this Agreement, except that in no event shall the
Company's obligations hereunder be increased due to any such assignment. In
connection with any such assignment, the term "Purchaser" as used herein shall,
where appropriate to assign the rights and obligations of Purchaser hereunder to
such assignee, be deemed to refer to the assignee. After any such assignment,
Purchaser shall retain its rights under this Agreement with respect to all other
Registerable Securities owned by Purchaser.
14. MISCELLANEOUS.
14.1. NOTICES. All notices, requests, demands, or other
communications which are required or may be given pursuant to the terms of this
Agreement shall be in writing and shall be deemed to have been duly given upon
receipt, if delivered by hand, by telecopy or telegram, or three days after
deposit in the U.S. mail, postage prepaid, addressed to Purchaser and to the
Company as follows:
Purchaser: United Breweries of America, Inc.
One Harbor Drive, Suite 102
Sausalito, CA 94965
Attn.: Vijay Mallya
Facsimile: (415) 289-1409
Bernau: James W. Bernau
8800 Enchanted Way, S.E.
Turner, OR 97392
Facsimile: (503) 588-8894
Company: United Craft Brewers, Inc.
One Harbor Drive, Suite 102
Sausalito, CA 94965
Attn.: Vijay Mallya
Facsimile: (415) 289-1409
14
Copy to: Orrick, Herrington & Sutcliffe LLP
Old Federal Reserve Bank Building
400 Sansome Street
San Francisco, CA 94111
Attn.: Alan Talkington
Facsimile: (415) 773-5759
or to such other address as any party may designate for itself by notice given
as provided in this Agreement.
14.2. INJUNCTIONS. Irreparable damage would occur in the event
that any of the provisions of this Agreement were not performed in accordance
with its specified terms or were otherwise breached. Therefore, the parties
hereto shall be entitled to an injunction or injunctions to prevent breaches of
the provisions of this Agreement and to enforce specifically the terms of
provisions hereof in any court having jurisdiction, such remedy being in
addition to any other remedy to which they may be entitled at law or in equity.
14.3. SEVERABILITY. If any term or provision of this Agreement is
held by a court of competent jurisdiction to be invalid, void, or unenforceable,
the remainder of the terms and provisions set forth herein shall remain in full
force and effect and shall in no way be affected, impaired or invalidated, and
the parties hereto shall use their best efforts to find and employ an
alternative means to achieve the same or substantially the same result as that
contemplated by such term or provision.
14.4. FURTHER ASSURANCE. Subject to the specific terms of this
Agreement, Purchaser, Bernau and the Company shall make, execute, acknowledge
and deliver such other instruments and documents, and take all such other
actions, as may be reasonably required in order to effectuate the purposes of
this Agreement and to consummate the transactions contemplated hereby.
14.5. ENTIRE AGREEMENT; MODIFICATION. This Agreement contains the
entire understanding of the parties with respect to the transactions
contemplated hereby and supersedes all agreements and understandings entered
into prior to the execution hereof. Any provision of this Agreement may be
amended only with the written consent of the Company and Purchaser. No breach
of any covenant, agreement, warranty or representation shall be deemed waived
unless expressly waived in writing by or on behalf of the party who might assert
such breach.
14.6. COUNTERPARTS. For the convenience of the parties hereto,
any number of counterparts of this Agreement may be executed by the parties
hereto, but all such counterparts shall be deemed one and the same instrument.
14.7. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA
WITHOUT REGARD TO ANY CHOICE OF LAW PRINCIPLES WHICH MIGHT REQUIRE OR PERMIT THE
APPLICATION OF THE LAWS OF ANOTHER JURISDICTION.
15
14.8. SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon and shall inure to the benefit of and be enforceable by and against the
successors and permitted assigns of the parties hereto. Except as provided
herein, the parties may not assign their rights under this Agreement and the
Company may not delegate its obligations under this Agreement. Any attempted
assignment or delegation prohibited hereby shall be void.
14.9. PARTIES IN INTEREST. Except as otherwise specifically
provided herein, nothing in this Agreement expressed or implied is intended or
shall be construed to confer any right or benefit upon any person, firm or
corporation other than Purchaser, Bernau and the Company and their respective
successors and permitted assigns.
14.10. ATTORNEYS' FEES. In the event of any legal action or
proceeding to enforce or interpret the provisions hereof, the prevailing party
shall be entitled to reasonable attorneys' fees, whether or not the proceeding
results in a final judgment.
14.11. EFFECT OF HEADINGS. The section headings herein are for
convenience only and shall not affect the construction or interpretation of this
Agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the day and year first above written.
UNITED CRAFT BREWERS, INC.
By:
-----------------------------
Name:
Title:
UNITED BREWERIES OF AMERICA, INC.
By:
-----------------------------
Name: Vijay Mallya
Title: Chairman
JAMES W. BERNAU
--------------------------------
16