Exhibit 10.11
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE 'ACT')
OR QUALIFIED UNDER THE TRUST INDENTURE ACT OF 1939. THIS NOTE MAY NOT BE SOLD OR
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER
THE ACT.
THIS NOTE IS SUBJECT TO THE PROVISIONS OF A PURCHASE AGREEMENT, DATED AS OF MAY
__, 1996 BETWEEN AMERICAN CRAFT BREWING INTERNATIONAL LIMITED AND MARK JOHN
GALLAGHER, AND MAY NOT BE SOLD OR TRANSFERRED EXCEPT IN ACCORDANCE THEREWITH. A
COPY OF SUCH AGREEMENT IS ON FILE AT THE OFFICE OF THE EXECUTIVE VICE PRESIDENT
OF AMERICAN CRAFT BREWING INTERNATIONAL LIMITED.
Redeemable Convertible Note, Series A
May , 1996
AMERICAN CRAFT BREWING INTERNATIONAL LIMITED, a British Virgin Islands
company (the 'Company') or its successor for value received, hereby promises to
pay to the order of
Mark John Gallagher
or registered assigns, the sum of (i) the principal amount of
US$30,000
(the 'Principal Amount') plus (ii) accrued interest thereon, on September 1,
1997 (or, if such day is not a Business Day (as hereinafter defined), the next
succeeding Business Day) (the 'Maturity Date'). The outstanding principal amount
of this Note shall bear interest from and including the date hereof to but
excluding the Maturity Date (or, if a Conversion Notice has been delivered
pursuant to Section 3(a), the Conversion Date (as hereinafter defined)), at a
rate per annum (calculated on the basis of the actual number of days elapsed
over a year of 360 days) of 12% provided that if the Company or its successor
has not consummated an initial public offering of its shares of US$0.01 in the
capital of the Company (the 'Shares') in the United States (the 'IPO') prior to
September 1, 1996, this Note shall bear interest from and including September 1,
1996 to but excluding the Maturity Date (or, if a Conversion Notice has been
filed pursuant to Section 3(a), the Conversion Date) at a rate per annum of 14%
(calculated on the basis of the actual number of days elapsed over a year of 360
days.
Except to the extent otherwise provided herein, the outstanding
principal amount of this Note (together with accrued interest thereon) shall be
payable to the holder of this Note (the 'Holder') on the Maturity Date in lawful
money of the United States by wire transfer of immediately available funds to
such account as the Holder shall specify in writing to the Company.
SECTION 1. The Notes. This Note is one of a duly authorized issue of
Notes
of the Company which are being issued in the aggregate principal amount of
US$250,000 and are designated as its 'Redeemable Convertible Notes, Series A'
(the 'Notes'). This Note was issued pursuant to the terms of a Purchase
Agreement, dated as of May __, 1996 (the 'Purchase Agreement') between the
Company and Mark John Gallagher (the 'Purchaser'), pursuant to which the Holder
is subject to restrictions on transferability of this Note.
SECTION 2. Redemption. (a) This Note may be redeemed at the option of
the Company or its successor in whole (but not in part), at any time prior to
the Maturity Date. The redemption price ('Redemption Price') shall be equal to
100% percent of the principal amount, together with accrued interest to the
Redemption Date (as hereinafter defined).
(b) Notice to redeem this Note shall be given to Holder in writing
mailed by overnight courier to the Holder at his address as it appears in the
register maintained by the Company or its successor, such mailing to be not more
than 60 days nor less than 30 days prior to the date fixed for redemption.
Neither the failure to give notice nor any defect in any notice given to any
particular holder of a Note shall affect the sufficiency of any notice with
respect to other Notes. Notices to redeem this Note shall specify the date fixed
for redemption (the 'Redemption Date'), the Redemption Price, the place or
places of payment, that payment will be made upon presentation and surrender of
the Note, that interest accrued to the date fixed for redemption will be paid as
specified in said notice and that on and after said date interest thereon will
cease to accrue.
(c) If notice of redemption has been given in the manner set forth in
this Section, upon presentation and surrender of this Note at the place or
places specified in such notice, this Note shall be paid and redeemed by the
Company or its successor by payment of the Redemption Price therefor together
with accrued interest thereon in lawful money of the United States. Such payment
shall be made to the Holder by wire transfer of immediately available funds to
such account as the Holder shall specify in writing to the Company or its
successor. If monies for the redemption of this Note shall have been available
for redemption on the Redemption Date, this Note shall cease to bear interest,
and the only right of the Holder shall be to receive payment of the Redemption
Price together with accrued interest to the Redemption Date.
SECTION 3. Conversion. (a) Subject to and upon compliance with the
provisions of this Section, at the option of the Holder, this Note, in whole but
not in part, may be converted:
(i) on the date that the Company or its successor consummates the
IPO (the 'Closing Date') into that number of Shares equal to the quotient
obtained by dividing the Principal Amount by the product of 0.5 and the
price per Share of the price to public in the IPO by giving notice to the
Company by facsimile and by overnight courier (a 'Conversion Notice') no
less than two Business Days prior to the Closing Date; and
(ii) on the Maturity Date into that number of Shares so that
immediately after such conversion the Holder shall hold 0.75% of the issued
and outstanding Shares by giving a Conversion Notice to the Company no less
than five Business Days prior to the Maturity Date; provided that the
Holder's conversion rights pursuant to this Section 3(a)(ii) shall
terminate upon the consummation of the IPO.
For purposes of this Note, the term Business Day shall mean any day
that is not a Saturday, Sunday or holiday in Hong Kong or the State of New York.
(b) The number of Shares into which this Note may be converted
pursuant to Section 3(a) shall be subject to the following adjustments:
(i) In case the Company shall pay or make a dividend or other
distribution on any class of capital stock of the Company in Shares, the
number of Shares into which this Note may be converted pursuant to Section
3(a) shall be increased by multiplying such number by the quotient obtained
by dividing the number of Shares outstanding at the close of business on
the date fixed for the determination of members entitled to receive such
dividend or other distribution plus the total number of Shares constituting
such dividend or other distribution by the number of Shares outstanding at
the close of business on the date fixed for such determination, such
increase to become effective immediately after the opening of business on
the day following the date fixed for such determination;
(ii) In case outstanding Shares shall be subdivided into a
greater number of Shares the number of Shares into which this Note may be
converted pursuant to Section 3(a) shall be proportionately increased, and,
conversely, in case outstanding Shares shall be combined into a smaller
number of Shares, the number of Shares into which this Note may be
converted pursuant to Section 3(a) shall be proportionately reduced, such
reduction or increase, as the case may be, to become effective immediately
after the opening of business on the day following the day upon which such
subdivision or combination becomes effective;
(iii) In case the Company or its successor shall issue rights or
warrants to all holders of its Shares entitling them to subscribe for or
purchase shares at a price per Share less than the book value price per
Share (determined as provided in clause (vi) of this Section), the number
of Shares into which this Note may be converted pursuant to Section 3(a)
shall be increased by multiplying such number by the quotient obtained by
dividing the number of Shares outstanding at the close of business on the
date fixed for the determination of members entitled to receive such rights
or warrants plus the number of Shares so offered for subscription or
purchase by the number of Shares outstanding at the close of business on
the date fixed for such determination, such increase to become effective
immediately after the opening of business on the Business Day following the
date fixed for the determination of members entitled to receive such rights
or warrants;
(iv) In case the Company or its successor shall, by dividend or
otherwise, distribute to all holders of its Shares evidences of its
indebtedness or assets (including securities, but excluding any rights or
warrants referred to in clause (iii) of this Section or any dividend or
distribution paid in cash out of the retained earnings of the Company) the
number of Shares into which this Note may be converted pursuant to Section
3(a) shall be multiplied by the quotient obtained by dividing the book
value price per Share (determined as provided in clause (vi) of this
Section) of the Shares on the date fixed for the determination of members
entitled to receive such distribution plus the then fair market value of
the portion of the assets or evidences of indebtedness so distributed
applicable to one Share by such book value price per Share, such adjustment
to become effective immediately prior to the opening of business on the
Business Day following the date fixed for the determination of members
entitled to
receive such distribution;
(v) The reclassification of Shares into other securities shall be
deemed to involve a distribution of such securities other than Shares to
all holders of Shares (and the effective date of such reclassification
shall be deemed to be 'the date fixed for the determination of members
entitled to receive such distribution' within the meaning of clause (iv) of
this Section); and
(vi) For the purpose of any computation under clauses (iii) and
(iv) of this Section, the book value price per Share on any date shall be
deemed to be the quotient obtained by dividing the members' equity
(calculated in accordance with United States generally accepted accounting
principles) of the Company or its successor as of the end of the most
recent fiscal quarter by the number of Shares issued and outstanding on the
date in question.
(c) Whenever an adjustment is made pursuant to Section 3(b):
(i) the Company shall compute the number of Shares into which
this Note may be converted in accordance with Section 3(b) and shall
prepare a certificate signed by the Executive Vice President of the Company
or its successor setting forth the new number of Shares into which this
Note may be converted and showing in reasonable detail the facts upon which
such adjustment is based; and
(ii) a notice stating that the number of Shares into which this
Note may be converted has been adjusted and setting forth the new number of
Shares into which this Note may be converted shall forthwith be required,
and as soon as practicable after it is required, such notice (together with
a copy of the certificate referred to in clause (i) above) shall be mailed
by the Company to the Holders.
(d) No fractional Shares shall be issued upon conversion of this Note.
If more than one Note shall be surrendered for conversion at one time by the
same holder thereof, the number of full Shares which shall be issuable upon
conversion thereof shall be computed on the basis of the aggregate principal
amount of the Notes so surrendered. Instead of any fractional Share which would
otherwise be issuable upon conversion of this Note, the Company or its
successors shall pay a cash adjustment in respect of such fraction in an amount
equal to the same fraction of the book value price per Share at the close of
business on the day of conversion.
(e) If the Holder shall have exercised his conversion right in
accordance with Section 3(a), this Note shall be deemed to have been converted
immediately prior to the close of business on the Closing Date or the Maturity
Date, as the case may be, and at such time the rights of the Holder of this Note
as a Holder shall cease, and the person or persons entitled to receive the
Shares issuable upon conversion shall be treated for all purposes as the record
holder or holders of such Shares at such time. As promptly as practicable on or
after the Closing Date or the Maturity Date, as the case may be, the Company or
its successor shall issue and shall deliver at the office or agency of the
Company or its successor maintained pursuant to Section 7(a) a certificate or
certificates for the number of full Shares issuable upon conversion, together
with payment in lieu of any fraction of a share.
(f) The Company shall at all times reserve and keep available, free
from pre-emptive rights, out of its authorized but unissued Shares, for the
purpose of effecting the
conversion of Notes, the full number of Shares then issuable upon the conversion
of all outstanding Notes.
(g) The Company will pay any and all transfer, documentary and similar
taxes or charges that may be payable in respect of the issue or delivery of
Shares on conversion of this Note pursuant hereto. The Company shall not,
however, be required to pay any tax which may be payable in respect of any
transfer involved in the issue and delivery of Shares in a name other than that
of the Holder, and no such issue or delivery shall be made unless and until the
person requesting such issue has paid to the Company the amount of any such tax,
or has established to the satisfaction of the Company that such tax has been
paid.
(h) The Company covenants that all Shares which may be issued upon
conversion of Notes will upon issue be fully paid and nonassessable and, except
as provided in Section 3(g), the Company will pay all taxes, liens and charges
with respect to the issue thereof.
(i) All Notes that have been converted shall be promptly delivered to
the Company to be canceled by the Company.
SECTION 4. Redeemable Warrant. Upon the Holder's exercise of his
conversion right pursuant to Section 3(a)(i), the Company or its successor shall
issue to the Holder a redeemable warrant in the form attached hereto as Exhibit
A entitling the holder thereof to purchase the same number of Shares as may be
issued to the Holder pursuant to Section 3(a)(i).
SECTION 5. Exchange or Replacement of Notes. (a) The Holder, at his
option may in person or by duly authorized attorney surrender this Note for
exchange, at the office or agency of the Company maintained pursuant to Section
7(a), and receive in exchange therefor a new Note in the same principal amount
as the outstanding principal amount of this Note and bearing interest at the
same annual rate as the Note so surrendered each such new Note to be in such
outstanding principal amount and payable to such person or persons, or order, as
the Holder may designate in writing; provided, however, that the Company and its
successor shall not be required to pay any tax which may be payable in respect
of any transfer involved in the issuance and delivery of any new Note in a name
other than that of the Holder; provided, further, however, that the Company and
its successor shall not be required to so register the transfer unless (i) the
conditions for transfer in the Purchase Agreement have been satisfied and (ii)
the transferee agrees to be bound by the terms of the Purchase Agreement. The
Holder shall give to the Company or its successor 10 days' prior written notice
of his intention to make such exchange.
(b) Upon receipt by the Company of evidence satisfactory to it of the
loss, theft, destruction or mutilation of this Note and (in case of loss, theft
or destruction) of indemnity satisfactory to it, and upon surrender and
cancellation of such Note, if mutilated, the Company or its successor will
execute and deliver in lieu of such Note a new Note of like tenor. The term
'outstanding' when used in this Note with reference to the Notes as of any
particular time shall not include (i) any Note in lieu of which a new Note has
been executed and delivered by the Company in accordance with the provisions of
this Section and (ii) any Note held or beneficially owned by the Company or any
of their respective subsidiaries or affiliates.
SECTION 6. Amendments and Waivers. With the written consent of the
holders of 51% of the aggregate outstanding principal amount of the Notes at the
time outstanding, any covenant, agreement or condition contained in the Notes
may be waived (either generally or in a particular instance and either
retroactively or prospectively), and such Holders and the Company may from time
to time enter into agreements for the purpose of amending any covenant,
agreement or condition of the Notes or changing in any manner the rights of the
holders of the Notes or the Company; provided, however, that:
(i) no such amendment or waiver shall change the Maturity Date of this
Note or reduce the rate or extend the time of payment of interest hereon,
or reduce the amount of the payment of interest hereon, or reduce the
Principal Amount, or modify any of the provisions of this Note with respect
to the payment hereof, without in any such case the consent of the Holder
of this Note; and
(ii) no such waiver shall extend or affect any obligation not
expressly waived or impair any right consequent thereon.
Any such amendment or waiver shall be binding upon each future holder of
this Note and upon the Company or its successor, whether or not such Note shall
have been marked to indicate such amendment or waiver, but any Note issued
thereafter shall bear a notation referring to any such amendment or continuing
waiver.
SECTION 7. Covenants. (a) So long as any Note remains outstanding, the
Company or its successor shall maintain an office or agency (which shall
initially be the principal place of business of the Company located at Unit A1,
1/F Vita Tower, 29 Wong Chuk Hang, Aberdeen, HONG KONG) where notices,
presentations and demands to or upon the Company or its successor in respect of
Notes, including those relative to conversion of the Notes, may be given.
(b) The Company shall keep at such office or agency a register which,
subject to such reasonable regulations as it may prescribe, but at its expense,
the Company shall provide for the registration and transfer of Notes. The
Company and any agent of the Company may treat the person in whose name any Note
is registered as the Holder of such Note for the purpose of receiving payment of
the principal and interest on such Note and for all other purposes, whether or
not such Note be overdue, and neither the Company nor any such agent shall be
affected by notice to the contrary.
SECTION 8. Extension of Maturity. Should the principal and interest on
this Note become due and payable on other than a Business Day, the maturity
thereof shall be extended to the next succeeding Business Day, and interest
shall be payable thereon at the rate per annum (calculated on the basis of the
actual number of days elapsed over a year of 360 days) herein specified during
such extension.
SECTION 9. GOVERNING LAW. THIS NOTE SHALL BE GOVERNED BY THE LAWS OF
THE STATE OF NEW YORK.
SECTION 10. CONSENT TO JURISDICTION. EACH OF THE HOLDER AND THE
COMPANY HEREBY SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE UNITED STATES
DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND OF ANY NEW YORK STATE
COURT SITTING IN NEW YORK CITY FOR PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT
OF OR RELATING TO THE NOTES OR THE TRANSACTIONS
CONTEMPLATED HEREBY. EACH OF THE HOLDER AND THE COMPANY IRREVOCABLY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER
HAVE TO THE LAYING OF THE VENUE OF ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT
AND ANY CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN BROUGHT
IN AN INCONVENIENT FORUM. EACH OF THE HOLDER AND THE COMPANY CONSENT TO THE
SERVICE OF PROCESS IN ANY SUCH PROCEEDING BY THE DELIVERY (BY OVERNIGHT COURIER)
TO IT, IN THE CASE OF THE HOLDER, AT HIS ADDRESS AS IT APPEARS IN THE REGISTER
MAINTAINED BY THE COMPANY OR ITS SUCCESSOR, AND IN THE CASE OF THE COMPANY, AT
ITS ADDRESS SPECIFIED IN SECTION 7(a). EACH OF THE HOLDER AND THE COMPANY
FURTHER AGREES THAT A FINAL JUDGMENT IN ANY SUCH PROCEEDING SHALL BE CONCLUSIVE
AND BINDING AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT
OR IN ANY OTHER MANNER PROVIDED BY LAW.
SECTION 11. WAIVER OF JURY TRIAL. EACH OF THE HOLDER AND THE COMPANY
HEREBY IRREVOCABLY WAIVE ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL
PROCEEDING ARISING OUT OF OR RELATING TO THIS NOTE OR THE TRANSACTIONS
CONTEMPLATED HEREBY.
AMERICAN CRAFT BREWING
INTERNATIONAL LIMITED
By: ________________________________________
Name:
Title:
Agreed and accepted by:
___________________
Mark John Gallagher
[FORM OF TRANSFER NOTICE]
For value received ________________hereby sells, assigns and transfers
unto ___________________, whose social security or other identifying number is
_________________ and whose address (including postal zip code) is _________
________________________ and does hereby irrevocably constitute and appoint_____
attorney to transfer the said Note of the within named Company with full power
of substitution in the premises.
Dated:____________
__________________
Transferor
NOTICE: The Signature to this Notice must correspond with the name as written
upon the face of this Note and every particular, without alteration or
enlargement or any change whatever.
WARRANT SHARES
--------------------------- ---------------------------
No. WA-3
--------------------------- ---------------------------
THIS WARRANT AND THE WARRANT SHARES ARE SUBJECT TO THE PROVISIONS OF A PURCHASE
AGREEMENT, DATED AS OF MAY __, 1996 BETWEEN AMERICAN CRAFT BREWING INTERNATIONAL
AND MARK JOHN GALLAGHER, AND MAY NOT BE OFFERED FOR SALE, SOLD OR TRANSFERRED
EXCEPT IN ACCORDANCE THEREWITH. A COPY OF SUCH AGREEMENT IS ON FILE AT THE
OFFICE OF THE EXECUTIVE VICE PRESIDENT OF AMERICAN CRAFT BREWING INTERNATIONAL
LIMITED.
THIS WARRANT AND THE SHARES OF US$0.01 EACH IN THE CAPITAL OF AMERICAN CRAFT
BREWING INTERNATIONAL LIMITED PURCHASABLE HEREUNDER (THE 'WARRANT SHARES') HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE 'ACT'). THIS WARRANT
AND THE WARRANT SHARES MAY NOT BE OFFERED FOR SALE OR OTHERWISE TRANSFERRED
OTHER THAN PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT,
PURSUANT TO REGULATION S PROMULGATED THEREUNDER OR PURSUANT TO ANOTHER EXEMPTION
FROM REGISTRATION UNDER THE ACT.
AMERICAN CRAFT BREWING INTERNATIONAL LIMITED
CLASS A WARRANT
For value received, American Craft Brewing International Limited,
a Bermuda company, (the 'Company'), hereby grants to Mark John
Gallagher, or its registered assigns in accordance with Section 6 hereof
(collectively, the 'Holder') the right to purchase from the Company
__________________ shares of US $0.01 each in the capital of the Company
(collectively referred to as 'Warrant Shares' and individually as a
'Warrant Share' as the same may be adjusted from time to time in
accordance with Sections 2 and 3 hereof), at a price per share of $_____
(the 'Initial Exercise Price'), subject to adjustment as provided
herein. Capitalized terms used herein are defined in Section 4 hereof.
The amount and kind of securities purchasable pursuant to the rights
granted hereunder and the purchase price for such securities are subject
to adjustment pursuant to the provisions contained in this Class A
Warrant (this 'Warrant'). Reference is hereby made to the further
provisions of this Warrant set forth below, and such further provisions
shall for all purposes have the same effect as though fully set forth
herein.