PLEDGE AGREEMENT
This Pledge Agreement (the "Agreement") dated as of the 11 day of
November, 1997, is made by and between AMERICAN CRAFT BREWING INTERNATIONAL
LIMITED, a Bermuda corporation (the "Debtor") and ENTREPRENEURIAL INVESTORS,
LTD., a Bahamas company (the "Secured Party").
INTRODUCTORY PROVISIONS:
A. The Debtor has this day executed a Senior Note (the "Note"),
payable to the order of the Secured Party, which Note evidences a loan from
Secured Party to the Debtor in the original principal amount thereof (the
"Loan").
B. As a condition to the making of the Loan to the Debtor, the
Secured Party requires that the Debtor pledge to and grant a security interest
in certain shares and interests to secure the payment and performance of the
Loan.
NOW, THEREFORE, in consideration of the premises and for other good
and valuable consideration the receipt and sufficiency of which are hereby
acknowledged and confessed, the parties hereto agree as follows:
1. The Pledge and Security Interest. The Debtor hereby grants to the
Secured Party security interests in and to any and all present or future rights
of the Debtor in and to all of the following rights, interests, and property
(all of the following being herein sometimes called the "Collateral"): (a) Nine
Hundred Fifty (950) shares of the common stock, no par value per share, of
AmBrew USA, Inc. represented by Certificate No. 2 registered in the name of
Debtor; (b) Nine Hundred Ninety Nine (999) shares of the capital stock of
Cerveceria Rio Bravo, S.A. de C.V. represented by Certificate No. 1 registered
in the name of Debtor; (c) the sixty percent (60%) percentage interest of Debtor
in Celtic Brew LLC (as evidenced by certified copies of (i) the Articles of
Organization of Celtic Brew LLC, and (ii) the Operating Agreement of Celtic Brew
LLC, such certified copies to be delivered to Secured Party on or prior to the
date hereof), and (d) Four Thousand Seven Hundred and Forty Nine (4,749) shares
of South China Brewing Company Limited represented by Certificate No. 17
registered in the name of Debtor and any and all substitutes, replacements,
accessions, attachments, increase, profits, revisions, or additions thereto; and
(e) any and all proceeds arising from or by virtue of the sale or other
disposition of, or from the collection of, the Collateral described in (a), (b),
(c), and (d) preceding.
2. The Indebtedness. This Agreement is being executed and delivered
to secure, and the security interests herein granted (the "Security Interests")
shall secure, (a) full payment and performance of all of the indebtedness and
obligations owing to the Secured Party by the Debtor under the Note, together
with any and all renewals and extensions of the same, or any part thereof; (b)
all indebtedness and liabilities of the Debtor to the Secured Party at any time
arising under the terms of any other agreement securing the Note; and (c) all
future advances or other value at any time hereafter made or given by the
Secured Party to the Debtor, whether or not the advance or value is given
pursuant to the Note (all of such debts, indebtedness, liabilities and duties
referred to in (a) through (c) of this paragraph are hereinafter collectively
referred to as the "Indebtedness").
3. Representations and Warranties of the Debtor. The Debtor
represents and warrants to the Secured Party that: (a) the Security Interests
are first and prior security interests in and to all of the Collateral; (b) the
Debtor is the owner of the Collateral; (c) no dispute, right of set off,
counterclaim, or defenses exist with respect to all or any part of the
Collateral; and (d) the shares and interests represented by the Certificates are
duly authorized shares and interests and are fully paid and non-assessable. The
delivery at any time by the Debtor to the Secured Party of Collateral shall
constitute a representation and warranty by the Debtor under this Agreement that
the matters heretofore warranted in clause (a) of this paragraph remain true and
correct.
4. Negative Covenants of the Debtor. The Debtor further covenants
and agrees that, without the prior written consent of the Secured Party, the
Debtor will not (a) sell, assign or transfer any of the Debtor's rights in the
Collateral, or (b) create any other security interest in, mortgage or otherwise
encumber the Collateral, or any part thereof, or permit the same to be or become
subject to any lien, attachment, execution, sequestration, other legal or
equitable process or any encumbrance of any kind or character, except the
security interest herein created.
5. Delivery of Collateral to the Escrow Agent. The Debtor,
simultaneously with the execution of this Agreement, is delivering to Cardinal
International Bank & Trust Co., Ltd. (the "Escrow Agent") at their offices
located at Norfolk House, 3rd Floor, ▇▇▇▇▇▇▇▇▇ Street, Nassau, Bahamas, or to
such other escrow agent chosen by Secured Party and reasonably acceptable to
Debtor, stock certificates, endorsed in blank for transfer or accompanied by
stock powers appropriate for transfer, representing the portion of the
Collateral described in Sections 1(a) and 1(b) above to be held by Escrow Agent
in accordance with the terms and provisions of an Escrow Agreement (herein so
called) between Debtor, Secured Party and Escrow Agent. The portion of the
Collateral described in Section 1(d) above, along with executed stock powers in
blank, will be deposited by Debtor with Locke, Purnell, Rain, ▇▇▇▇▇▇▇, P.C. (New
Orleans office), as escrow agent for Secured Party, prior to the funding of the
Note.
6. Default. As used herein, the term "Default" or "Event of Default"
means the occurrence of one or more of the following: (a) the failure to timely
pay or perform any obligations or covenants contained herein, or in the Note or
in any other
document evidencing, governing or securing the Note (after any applicable notice
or grace period); (b) any warranty, representation or statement made or
furnished to the Secured Party by or in behalf of the Debtor is incorrect in any
material respect (which remains incorrect after any applicable cure period); (c)
the sale, loss, theft, destruction, encumbrance or transfer of any of the
Collateral in violation hereof, or substantial damage to any of the Collateral;
(d) the dissolution, merger or consolidation, termination of existence, or
business failure of the Debtor; (e) appointment of a receiver for any part of
the Collateral; (f) assignment for the benefit of creditors or the commencement
of any proceeding under any bankruptcy or insolvency law by or against the
Debtor or any partnership of which the Debtor is a partner or by or against any
maker, or upon the Collateral; (g) the levy on, seizure or attachment of the
Collateral, or any part thereof; (h) the filing of any financing statement with
regard to the Collateral, other than relating to the security interest herein
created; or (i) attachment of any lien or security interest to any portion of
the Collateral except the security interests hereunder.
7. Remedies. Upon the occurrence of any Default, in addition to any
and all other rights and remedies which the Secured Party may then have
hereunder, under the Uniform Commercial Code of the State of Delaware or of any
other pertinent jurisdiction (the "Code"), or otherwise, the Secured Party may,
at its option: (a) reduce its claim to judgment or foreclose or otherwise
enforce the Security Interests, in whole or in part, by any available judicial
procedure; (b) after notification provided for herein, sell, lease, or otherwise
dispose of, at the office of the Secured Party, on the premises of the Debtor,
or elsewhere, all or any part of the Collateral, in its then condition or
following any commercially reasonable preparation or processing, and any such
sale or other disposition may be as a unit or in parcels, by public or private
proceedings, and by way of one or more contracts (it being agreed that the sale
of any part of the Collateral shall not exhaust the Secured Party's power of
sale, but sales may be made from time to time, and at any time, until all of the
Collateral has been sold or until the Indebtedness has been paid and performed
in full), and at any such sale it shall not be necessary to exhibit any of the
Collateral; (c) at its discretion, vote the shares of stock included in the
Collateral pursuant to the provisions of Paragraph 8 hereof; and (d) exercise
any and all other rights, remedies, and privileges it may have under any
document which secures the Indebtedness.
In the event any consent, approval or authorization of any
governmental agency (other than an agency regulating the sale of securities
under applicable securities laws) shall be necessary to enforce the Security
Interests or sell, lease or otherwise dispose of or retain the Collateral, the
Debtor shall execute and file all such applications or other instruments as may
be reasonably required. In the event of a sale of all or part of the
Collateral, public or private, the Debtor shall pay all costs and expenses of
every kind of sale or delivery, including brokers' and attorneys' fees and all
expenses incurred by Secured Party in protecting and enforcing its rights under
this Agreement or the Note.
Any and all proceeds ever received by any Secured Party from any sale
or other disposition of the Collateral, or any part thereof, or the exercise of
any other remedy pursuant hereto shall be applied by the Secured Party to the
Indebtedness in such order and manner as the Secured Party, in its sole
discretion, may deem appropriate, notwithstanding any directions or instructions
to the contrary by the Debtor.
With respect to any part of the Collateral which is stock
certificates, bonds, or other securities, the Secured Party shall have
authority, upon the occurrence of any Default, without notice to the Debtor,
either to have them registered in the Secured Party's name, or in the name of a
nominee, and, with or without such registration, to demand of the corporation or
association issuing the same, and to receive and receipt for, any and all
dividends and other distributions payable in respect thereof, regardless of the
medium in which paid and whether they be ordinary or extraordinary. Any entity
making payment to the Secured Party hereunder shall be fully protected in
relying upon the written statement of the Secured Party that the Secured Party
then holds the Security Interests which entitles it to receive such payment, and
the receipt of the Secured Party for such payment shall be full acquittance
therefor to the person making such payment.
8. Proxy. The Debtor hereby irrevocably names, constitutes and
appoints the Secured Party as the Debtor's true and lawful attorney, in the
Debtor's name, place and stead and with full power of substitution, upon and
after the occurrence of any Default hereunder, to vote, as proxy and in the
Secured Party's sole discretion, all shares of stock included in the Collateral
at any and all meetings of the stockholders of the issuer of such stock (whether
annual, regular or special or any adjournments thereof), and to execute any and
all written consents, directions or other instruments with respect to such stock
and to otherwise exercise all of the rights and powers which the Debtor would
possess if personally present. The Debtor hereby revokes any and all proxies
heretofore granted to any person with respect to any shares of stock included in
the Collateral. The proxy granted hereby shall be valid until the Indebtedness
shall have been paid in full by extinguishment thereof but not by renewal,
modification or extension thereof. THE PROXY GRANTED HEREBY IS COUPLED WITH AN
INTEREST AND IS IRREVOCABLE.
9. Notice of Sale. Notice of the time and place of any sale of the
Collateral, or reasonable notification of the time after which any private sale
or other intended disposition of the Collateral is to be made (including
retention thereof in satisfaction of the Indebtedness), shall be sent to the
Debtor, and to any other person entitled to notice, as set forth in Section 21
below. It is agreed that notice sent or given at least ten (10) calendar days
prior to the taking of the action to which the notice relates is reasonable
notification and notice for the purposes of this paragraph.
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10. Securities Acts. Because of the Securities Act of 1933, as
amended, or any other laws or regulations, there may be legal restrictions or
limitations affecting the Secured Party in any attempts to dispose of the
Collateral, or certain portions thereof, in the enforcement of its rights and
remedies hereunder. For these reasons the Secured Party is hereby authorized by
the Debtor, but not obligated, in the event of any Default hereunder giving rise
to the Secured Party's rights to sell or otherwise dispose of the Collateral, to
sell all or any part of the Collateral at private sale, subject to investment
letter or in any other manner which will not require the Collateral, or any part
thereof, to be registered in accordance with the Securities Act of 1933, as
amended, or the rules and regulations promulgated thereunder, or any other law
or regulation, at the best price reasonably obtainable by the Secured Party at
any such private sale or other disposition in the manner mentioned above. The
Secured Party is also hereby authorized by the Debtor, but not obligated, to
take such actions, give such notices, obtain such consents, and do such other
things as the Secured Party may deem required or appropriate in the event of a
sale or disposition of any of the Collateral. The Debtor clearly understands
that the Secured Party may in its discretion approach a restricted number of
potential purchasers and that a sale under such circumstances may yield a lower
price for the Collateral, or any part or parts thereof, than would otherwise be
obtainable if the Collateral were registered and sold in the open market. The
Debtor agrees (i) that in the event the Secured Party shall, upon any Default
hereunder, sell the Collateral, or any portion thereof, at such private sale or
sales, the Secured Party shall have the right to rely upon the advice and
opinion of any member firm of a national securities exchange as to the best
price reasonably obtainable upon such a private sale thereof, and (ii) that such
reliance shall be conclusive evidence that the Secured Party handled such matter
in a commercially reasonable manner under the Code.
11. Limitations on Interest. It being the intention of the parties
hereto to strictly conform to the applicable usury laws, all agreements between
the Debtor and the Secured Party, whether now existing or hereafter arising and
whether written or oral, are hereby expressly limited so that in no event,
whether by reason of acceleration of the maturity of the Note or otherwise,
shall the amount paid, or agreed to be paid to the Secured Party for the use,
forbearance or detention of money hereunder or otherwise exceed the maximum rate
permitted by applicable law. If due to any circumstance or reason whatsoever,
fulfillment of any provision hereof or of the Note or of any mortgage, loan
agreement, or other document evidencing or securing the indebtedness evidenced
by the Note, at the time performance of such provision shall be due, shall
involve transcending the limit of validity prescribed by law, then, ipso facto,
the obligation to be fulfilled shall be reduced to the limit of such validity,
and if the Secured Party shall ever receive anything of value deemed interest
under the applicable law which would exceed interest at the maximum rate
permitted by applicable law, such amount which would have been excessive
interest shall instead automatically be applied to the reduction of the
principal amount owing under the Note in the inverse order of its maturity and
not to the payment of interest, and if such amount which would have been
excessive interest exceeds the unpaid balance of principal of the Note, such
excess shall be refunded to the Debtor. All sums paid or agreed to be paid to
the Secured Party for the use, forbearance or detention of the indebtedness of
the Debtor to the Secured Party shall, to the extent permitted by applicable
law, be amortized, prorated, allocated and spread throughout the full stated
term of such indebtedness so that the rate of interest on such indebtedness does
not exceed the maximum permitted by applicable law. The provisions of this
paragraph shall control all agreements between the Debtor and the Secured Party.
12. Rights Cumulative. All rights and remedies of the Secured Party
hereunder are cumulative of each other and of every other right or remedy which
the Secured Party may otherwise have at law or in equity or under any other
contract or other writing for the enforcement of the security interest herein or
in the collection of the Note or the Indebtedness, and the exercise of one or
more rights or remedies shall not prejudice or impair the concurrent or
subsequent exercise of other rights or remedies.
13. Assignment. The rights, powers and interests held by the Secured
Party hereunder, together with the Collateral, may be transferred and assigned
by the Secured Party, in whole or in part, at such time and upon such terms as
the Secured Party may deem advisable.
14. Power of Attorney. The Secured Party is hereby appointed the
attorney-in-fact of the Debtor for the purpose of carrying out the provisions of
this Agreement and taking any action and executing any instruments which the
Secured Party may deem necessary or advisable to accomplish the purposes hereof,
which appointment as attorney-in-fact is irrevocable and coupled with an
interest.
15. No Waivers. No failure on the part of the Secured Party to
exercise, and no delay in exercising, any right, power or remedy hereunder shall
operate as a waiver thereof; nor shall any single or partial exercise by the
Secured Party of any right, power or remedy hereunder preclude any other or
further exercise thereof or the exercise of any other right, power or remedy.
16. Binding Effect. This Agreement shall be binding on the Debtor
and the Debtor's successors and assigns and shall inure to the benefit of the
Secured Party, and the Secured Party's successors and assigns.
17. Termination. This Agreement and the security interest in the
Collateral will terminate when the Indebtedness secured hereby has been paid in
full by extinguishment thereof but not by renewal, modification or extension
thereof.
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18. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, and all of which shall
constitute one and the same instrument, but in making proof of this Agreement,
only one counterpart must be accounted for or produced.
19. Facsimile Signature. Each party to this Agreement is entitled to
rely on a facsimile signature of any other party to this Agreement upon receipt
of facsimile transmission via telecopier. Any party initially providing his or
her signature via telecopier will deliver an original signature page to the
other party promptly after transmission of the facsimile.
20. Governing Law. The law governing this Agreement will be that of
the State of Delaware in force on the date of execution of this Agreement. All
obligations of the Debtor under the terms of this Agreement shall be performable
in Louisiana.
21. Notice. Any notice, request, instruction or other document
required or permitted to be delivered hereunder by either party hereto to the
other will be made in writing by express overnight courier or registered first
class mail, and telecopied, initially to the address set forth below, and
thereafter at such other address, notice of which is given in accordance with
the provisions of this Section 21:
IF TO DEBTOR:
American Craft Brewing International Limited
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇. ▇▇▇▇▇▇▇▇, Chairman or
▇▇▇▇▇ ▇▇▇, Executive Vice-President
Telephone: (▇▇▇)▇▇▇-▇▇▇▇
Telecopier: (▇▇▇)▇▇▇-▇▇▇▇
IF TO SECURED PARTY:
Entrepreneurial Investors, Ltd.
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇▇
Freeport, Bahamas
Attn: ▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Director
Telephone: (▇▇▇)▇▇▇-▇▇▇▇
Telecopier: (▇▇▇)▇▇▇-▇▇▇▇
All such notices and communications shall be deemed to have been duly given: (i)
when delivered by hand, if personally delivered; (ii) three (3) business days
after being deposited in the mail, postage prepaid, if mailed; (iii) the next
business day after being deposited with an overnight courier, if deposited with
a nationally recognized, overnight courier service; or (iv) upon receipt, if
telecopied.
22. Agreement as Financing Statement. The Secured Party shall have
the right at any time to execute and file this Agreement as a financing
statement, but the failure of the Secured Party to do so shall not impair the
validity or enforceability of this Agreement. Additionally, Debtor agrees to
perform or cause to be performed any and all further acts as may be reasonably
necessary to perfect the security interests in and to the Collateral.
23. Release of Portion of Collateral. It is contemplated that the
Four Thousand Seven Hundred Forty Nine (4,749) shares of South China Brewing
Company Limited will be sold by Debtor to a third party during the term of the
Loan. If the sale of such shares is consummated, Debtor will certify this fact
in writing to Secured Party. Upon receipt of such written certification from
Debtor, Secured Party will release its security interest in and to the Four
Thousand Seven Hundred Forty Nine (4,749) shares of South China Brewing Company
Limited by written notice to Locke, Purnell, Rain, ▇▇▇▇▇▇▇, P.C. authorizing the
release of the Four Thousand Seven Hundred Forty Nine (4,749) shares of South
China Brewing Company Limited. Any such release is a partial release and will
not release, affect or impair the rights of Secured Party in and against the
remaining Collateral.
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DEBTOR:
AMERICAN CRAFT BREWING
INTERNATIONAL LIMITED
By: /s/ ▇▇▇▇▇ ▇. ▇. ▇▇▇▇▇▇▇▇
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▇▇▇▇▇ ▇. ▇. ▇▇▇▇▇▇▇▇, Chairman
SECURED PARTY:
ENTREPRENEURIAL INVESTORS, LTD.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Director
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