OH&S DRAFT
7/21/97
PLEDGE AGREEMENT
THIS PLEDGE AGREEMENT (this "AGREEMENT"), dated as of August __, 1997 is
executed by JAMES W. BERNAU, an individual ("PLEDGOR") in favor of UNITED
BREWERIES OF AMERICA, INC., a Delaware corporation ("UBA").
RECITALS
A. Pledgor and UBA, together with Norwester Brewing company, Inc.
("NORWESTER"), Willamette Valley, Inc. Microbreweries Across America, various
Subsidiaries of Norwester and North Country Joint Venture, LLC are parties to
that certain Investment Agreement, dated as of January 30, 1997 (as amended from
time to time, the "INVESTMENT AGREEMENT").
B. Pursuant to Section 9.1 of the Investment Agreement, Pledgor has
agreed to indemnify and hold harmless UBA, its officers, directors and employees
from and against certain liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, claims, costs, attorneys' fees, expenses and
disbursements of any kind which may be imposed upon, incurred by or asserted
against UBA as more particularly described therein (the "INDEMNITY OBLIGATION").
C. Section 9.1 of the Investment Agreement further provides that
Pledgor's Indemnity Obligation shall be secured by a pledge of the shares of
stock in United Craft Breweries, Inc. ("UCB") held by Pledgor after the
Consolidation, excluding any shares of Common Stock received by Pledgor as a
result of the exercise of options to purchase Common Stock granted pursuant to
Pledgor's Employment Agreement.
AGREEMENT
NOW, THEREFORE, in accordance with Section 9.1 of the Investment Agreement,
and in consideration of the above recitals and for other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged,
Pledgor hereby agrees with UBA as follows:
1. DEFINITIONS AND INTERPRETATION. Unless otherwise defined herein, when
used in this Agreement, the following terms shall have the following respective
meanings:
"COLLATERAL" shall have the meaning given to that term in PARAGRAPH 2
hereof.
"COMMON STOCK" shall initially mean the common stock, $0.001 par value
per share, of UCB and shall thereafter mean any shares of any class or
classes of capital stock resulting from any reclassification or
reclassifications thereof or otherwise
issued, which have no preference in respect of dividends or of amounts
payable in the event of voluntary or involuntary liquidation, dissolution
or winding up of UCB and which are not subject to redemption by UCB.
"CONSOLIDATION" shall mean the transactions whereby each of the
Constituent Corporations becomes a wholly-owned subsidiary of UCB, all as
more fully described in Section 5.9 of the Investment Agreement.
"EMPLOYMENT AGREEMENT" shall have the meaning set forth in Section
6.1(l)(i) of the Investment Agreement.
"INDEMNITY EVENT" shall mean any event or condition that gives rise to
the Indemnity Obligation.
"MARKET PRICE" shall mean, as of any trading day, the closing price,
regular way, of a share or unit of the subject security on the principal
securities exchange on which such security is listed, or if such security
shall not then be listed, the last sales price on the Nasdaq Stock Market,
or if such security shall not be quoted in the Nasdaq Stock Market, the
average of the high and low bid and asked prices in the domestic over-the-
counter market as reported by the National Quotation Bureau, Incorporated,
or any similar successor organization.
"PERSON" shall mean and include an individual, a partnership, a
corporation (including a business trust), a joint stock company, an
unincorporated association, a limited liability company, a joint venture, a
trust or other entity or a governmental authority.
"PLEDGED SHARES" shall have the meaning given to that term in
PARAGRAPH 2 hereof.
"UCC" shall mean the Uniform Commercial Code as in effect in the State
of California from time to time.
"VOLUME WEIGHTED AVERAGE MARKET PRICE" shall mean, as of a specified
date, the volume weighted average of the Market Price of the subject
security for the 20 consecutive trading days immediately preceding such
date, with such volume weighted average calculated by (i) multiplying the
Market Price as of the end of each such trading day by the number of shares
or units of the subject security traded on such day (on the principal
securities exchange on which such security is listed, or if such security
shall not be then listed, on the Nasdaq Stock Market, or if such security
shall not be quoted on the Nasdaq Stock Market, then in the domestic over-
the-counter market), (ii) totaling the sum of such calculations for all 20
such trading days and (iii) then dividing the result by the total number of
shares or units of the subject security traded during such 20 days.
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All other capitalized terms used herein and defined in the Investment Agreement
shall have the respective meanings given to those terms in the Investment
Agreement, and all terms defined in the UCC shall have the respective meanings
given to those terms in the UCC.
2. PLEDGE. As security for the Indemnity Obligation, Pledgor hereby
pledges and assigns to UBA and grants to UBA a security interest in all right,
title and interest of Pledgor in and to the property described in SUBPARAGRAPHS
(a) - (c) below, whether now owned or hereafter acquired (collectively and
severally, the "COLLATERAL"):
(a) The shares of Common Stock issued by UCB and owned by Pledgor as
more particularly described in ATTACHMENT 1 hereto, and any additional
shares of Common Stock that Pledgor is hereafter required to pledge to UCB
pursuant to this Agreement, but specifically excluding any shares of Common
Stock issued by UCB and owned by Pledgor as a result of the exercise of
options to purchase UCB Common Stock granted pursuant to Pledgor's
Employment Agreement (all such shares, whether now owned or hereafter
acquired, whether certificated or uncertificated and whether or not
described in ATTACHMENT 1, to be referred to herein collectively as the
"PLEDGED SHARES");
(b) All dividends, cash, instruments and other property from time to
time received, receivable or otherwise distributed or distributable in
exchange for any of the property described in SUBPARAGRAPH (a) above; and
(c) All proceeds of the foregoing.
3. REPRESENTATIONS AND WARRANTIES. Pledgor represents and warrants to
UBA as follows:
(a) Pledgor is the record legal and beneficial owner of the
Collateral (or, in the case of after-acquired Collateral, at the time
Pledgor acquires rights in the Collateral, will be the record legal and
beneficial owner thereof). No other Person has (or, in the case of
after-acquired Collateral, at the time Pledgor acquires rights therein,
will have) any right, title, claim or interest (by way of lien, security
interest, encumbrance, purchase option or otherwise) in, against or to the
Collateral.
(b) UBA has (or in the case of after-acquired Collateral, at the time
Pledgor acquires rights therein, will have) a first priority perfected
security interest in the Collateral.
(c) Pledgor has delivered to UBA, together with all necessary stock
powers, endorsements, assignments and other necessary instruments of
transfer, the originals of all Pledged Shares and all certificates,
instruments and other writings evidencing the same.
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(d) Set forth in ATTACHMENT 1 hereto is a true, complete and accurate
list of the Pledged Shares issued by UCB and owned by Pledgor. All
information set forth in ATTACHMENT 1 is true, complete and accurate.
4. COVENANTS. Pledgor hereby agrees as follows:
(a) Pledgor, at Pledgor's expense, shall promptly procure, execute
and deliver to UBA all documents, instruments and agreements and perform
all acts which are reasonably necessary or desirable, and which UBA may
request, to establish, maintain, preserve, protect and perfect the
Collateral, the lien granted to UBA therein and the first priority of such
lien or to enable UBA to exercise and enforce its rights and remedies
hereunder with respect to any Collateral. Without limiting the generality
of the two preceding sentences, Pledgor shall (i) procure, execute and
deliver to UBA all stock powers, endorsements, assignments, financing
statements and other instruments of transfer requested by UBA, (ii) deliver
to UBA promptly upon receipt the originals of all Pledged Shares, other
Collateral and all certificates, instruments and other writings evidencing
the same and (iii) cause the lien of UBA to be recorded or registered in
the books of any financial intermediary or clearing corporation reasonably
requested by UBA.
(b) Pledgor shall pay promptly when due all taxes and other
governmental charges, all liens and all other charges now or hereafter
imposed upon, relating to or affecting any Collateral.
(c) Pledgor shall appear in and defend any action or proceeding which
may affect its title to or UBA's interest in the Collateral.
(d) Pledgor shall not surrender or lose possession of (other than to
UBA), sell, encumber, lease, rent, option, or otherwise dispose of or
transfer any Collateral or right or interest therein, and Pledgor shall
keep the Collateral free of all liens, security interests and encumbrances.
5. VOTING RIGHTS AND DIVIDENDS PRIOR TO DEFAULT. Unless an Indemnity
Event has occurred and is continuing, Pledgor may exercise or refrain from
exercising any and all voting and other consensual rights pertaining to the
Pledged Shares or any part thereof; PROVIDED, HOWEVER, that Pledgor shall not
exercise or refrain from exercising any such rights where the consequence of
such action or inaction would be (a) to impair any Collateral, the lien granted
to UBA therein, the first priority of such lien or UBA's rights and remedies
hereunder with respect to any Collateral or (b) otherwise inconsistent with the
terms of this Agreement.
6. AUTHORIZED ACTION BY UBA. Pledgor hereby irrevocably appoints UBA as
its attorney-in-fact and agrees that after and during the continuance of an
Indemnity Event UBA may perform (but UBA shall not be obligated to and shall
incur no liability to Pledgor or any third party for failure so to do) any act
which Pledgor is obligated by this Agreement to perform, and to exercise such
rights and powers as Pledgor might exercise with respect to
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the Collateral, including, without limitation, the right to (a) collect by legal
proceedings or otherwise and endorse, receive and receipt for all dividends,
interest, payments, proceeds and other sums and property now or hereafter
payable on or on account of the Collateral; (b) enter into any extension,
reorganization, deposit, merger, consolidation or other agreement pertaining to,
or deposit, surrender, accept, hold or apply other property in exchange for the
Collateral; (c) insure, process, preserve and enforce the Collateral; (d) make
any compromise or settlement, and take any action it deems advisable, with
respect to the Collateral; (e) pay any indebtedness of Pledgor relating to the
Collateral; and (f) execute UCC financing statements and other documents,
instruments and agreements required hereunder. Pledgor agrees to reimburse UBA
upon demand for all reasonable costs and expenses, including attorneys' fees,
UBA may incur while acting as Pledgor's attorney-in-fact hereunder, all of which
costs and expenses are included in the Indemnity Obligation.
7. INDEMNITY EVENTS.
(a) VOTING RIGHTS AND DIVIDENDS. Upon the occurrence and during the
continuance of an Indemnity Event:
(i) All rights of Pledgor to exercise the voting and other
consensual rights which he would otherwise be entitled to exercise
pursuant to PARAGRAPH 5 hereof shall cease and all such rights shall
thereupon become vested in UBA which shall thereupon have the sole
right, but not the obligation, to exercise such voting and other
consensual rights and to receive and hold as Collateral such dividends
and interest payments.
(ii) Pledgor shall promptly deliver to UBA to hold as Collateral
all dividends and interest received by Pledgor after the occurrence
and during the continuance of any Indemnity Event, in the same form as
so received (with any necessary endorsement), and, until so delivered,
shall hold such dividends and interest in trust for the benefit of
UBA, segregated from the other property or funds of Pledgor.
(b) OTHER RIGHTS AND REMEDIES. In addition to all other rights and
remedies granted to UBA by this Agreement, the Note, the UCC and other
applicable laws, rules or regulations of any governmental authority, UBA
may, upon the occurrence and during the continuance of any Indemnity Event,
exercise any one or more of the following rights and remedies: (i) collect,
receive, appropriate or realize upon the Collateral or otherwise foreclose
or enforce UBA's security interests in any or all Collateral in any manner
permitted by applicable laws, rules or regulations of any governmental
authority or in this Agreement; (ii) notify any or all issuers of or
transfer or paying agents for the Collateral or any applicable clearing
corporation, financial intermediary or other Person to register the
Collateral in the name of UBA or its nominee and/or to pay all dividends,
interest and other amounts payable in respect of the Collateral directly to
UBA; (iii) sell or otherwise dispose of any or all Collateral at one or
more public or private sales, whether or not such Collateral is
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present at the place of sale, for cash or credit or future delivery, on
such terms and in such manner as UBA may determine; and (iv) require
Pledgor to assemble all records and information relating to the Collateral
and make it available to UBA at a place to be designated by UBA. In any
case where notice of any sale or disposition of any Collateral is required,
Pledgor hereby agrees that seven (7) days notice of such sale or
disposition is reasonable.
8. MISCELLANEOUS.
(a) NOTICES. Except as otherwise provided herein, all notices,
requests, demands, consents, instructions or other communications to or
upon Pledgor or UBA under this Agreement shall be given as provided in
Section 10.1 of the Investment Agreement.
(b) EXPENSES. Pledgor shall pay on demand all reasonable fees and
expenses, including reasonable attorneys' fees and expenses, incurred by
UBA in the enforcement or attempted enforcement of this Agreement or in
preserving any of UBA's rights and remedies.
(c) WAIVERS; AMENDMENTS. This Agreement may not be amended or
modified, nor may any of its terms be waived, except by written instruments
signed by Pledgor and UBA. Each waiver or consent under any provision
hereof shall be effective only in the specific instances for the purpose
for which given. No failure or delay on UBA's part in exercising any right
hereunder shall operate as a waiver thereof or of any other right nor shall
any single or partial exercise of any such right preclude any other further
exercise thereof or of any other right.
(d) ASSIGNMENTS. This Agreement shall be binding upon and inure to
the benefit of UBA, Pledgor and their respective successors and assigns;
PROVIDED, HOWEVER, that Pledgor may not assign or transfer any of its
rights and obligations under this Agreement without the prior written
consent of UBA; and PROVIDED, FURTHER, and UBA may only assign or transfer
any of its rights and obligations under this Agreement to the extent
permitted under Section 10.4 of the Investment Agreement.
(e) PARTIAL INVALIDITY. If at any time any provision of this
Agreement is or becomes illegal, invalid or unenforceable in any respect
under the law of any jurisdiction, neither the legality, validity or
enforceability of the remaining provisions of this Agreement nor the
legality, validity or enforceability of such provision under the law of any
other jurisdiction shall in any way be affected or impaired thereby.
(f) CUMULATIVE RIGHTS, ETC. The rights, powers and remedies of UBA
under this Agreement shall be in addition to all rights, powers and
remedies given to UBA by virtue of any applicable law, rule or regulation
of any governmental authority, the Note or any other agreement, all of
which rights, powers, and remedies shall be cumulative and may be exercised
successively or concurrently without
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impairing UBA's rights hereunder. Pledgor waives any right to require UBA
to proceed against any Person or to exhaust any Collateral or to pursue any
remedy in UBA's power.
(g) PLEDGOR'S CONTINUING LIABILITY. Notwithstanding any provision of
this Agreement or any exercise by UBA of any of its rights hereunder
(including, without limitation, any right to collect or enforce any
Collateral), (i) Pledgor shall remain liable to perform its obligations and
duties in connection with the Collateral and (ii) UBA shall not assume or
be considered to have assumed any liability to perform such obligations and
duties or to enforce any of Pledgor's rights in connection with the
Collateral.
(h) TERM. The obligations of Pledgor under this Agreement shall
expire on the date which is one year after the date of this Agreement;
provided, however, that if UBA has brought a claim against Pledgor in
compliance with Subsection 9.1(d) of the Investment Agreement, the
obligations of Pledgor under this Agreement shall be extended and survive
until such time as the claim has thereafter been waived by UBA or finally
adjudicated or settled. UBA shall return the Collateral to Pledgor
promptly upon expiration of this Agreement; provided, however, that if this
Agreement is extended beyond the date which is one year after the date of
this Agreement, UBA shall retain as Collateral shares of Common Stock
issued by UCB and owned by Pledgor having an aggregate value based on the
Volume Weighted Average Market Price as of the date of such extension of
150% of the amount of the claim against Pledgor and shall promptly return
any additional shares of Common Stock of UCB to Pledgor.
(i) GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of California without reference to
conflicts of law rules (except to the extent otherwise provided in the
UCC).
IN WITNESS WHEREOF, Pledgor has caused this Agreement to be executed as of
the day and year first above written.
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JAMES W. BERNAU
CONSENT OF SPOUSE
I hereby consent to, approve of and agree to the terms of the foregoing
Agreement, and the pledge and assignment to UBA, and the grant to UBA of a
security interest, in all right, title and interest in and to the Collateral
(including, without limitation, the Pledged Shares registered in the name of my
spouse, James W. Bernau), and further agree to
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relinquish all of my rights in and to such Collateral vis-a-vis UBA, including
any community property interest therein.
- ---------------------------------
CATHY BERNAU
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ATTACHMENT 1
TO PLEDGE AGREEMENT
SHARES
Class Number
of of Certificate(s)
Issuer Stock Shares No.
------ ----- ------ --------------
United Craft Breweries, Common ______ ______________
Inc.
(1)-1