UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549-1004
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): December 10, 2015
EVANS BREWING COMPANY INC
(Exact name of registrant as specified in its charter)
DELAWARE | 000-54995 | 46-3031328 | ||
(State
or other jurisdiction
of Incorporation) |
(Commission File No.) |
(IRS
Employer
Identification No.) |
3815 S. Main Street, Santa Ana, CA 92707
(Address of principal executive offices) (zip code)
(714)708-0082
(Registrant's telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 1.01 | Entry into a Material Definitive Agreement. |
Item 2.01 | Completion of Acquisition or Disposition of Assets. |
Item 5.06 | Change in Shell Company Status. |
On December 10, 2015, Evans Brewing Company Inc., a Delaware corporation (“EBC”) completed the previously announced acquisition of the assets and liabilities of Bayhawk Ales, Inc., (“Bayhawk”), pursuant to an Asset Purchase and Share Exchange Agreement between EBC and Bayhawk, dated October 15, 2014 (subsequently amended and restated on August 6, 2015 (as amended, the “Agreement”)).
Pursuant to the Agreement, Bayhawk had agreed to sell, and EBC had agreed to purchase, substantially all of Bayhawk’s assets, as well as its liabilities (collectively, the “Asset Purchase Transaction”). The assets and liabilities of Bayhawk include personal property, intellectual property, inventory, selected distribution contracts, websites, documents, and all other assets however delineated relating to the Bayhawk Ales labels; and (B) all assets, including personal property, intellectual property, inventory, contracts, websites, documents, and all other assets however delineated relating to the Evans Brands (collectively, the “Transferred Assets”), and the assumption by EBC, pursuant to the terms and conditions set forth in the Agreement, of all of the liabilities of Bayhawk (the “Assumed Liabilities”). (The “Evans Brands” include the former assets of Pig’s Eye Brewing Company, including its original beers, lagers and ales (“Pig’s Eye Brands”), as well as Evans Lager Original, Evans Lager Black, Evans Lager Light, Bad Kat Ice, and Dead Presidents.) Pursuant to the Agreement, EBC has the right to purchase from Bayhawk 100% ownership in Evans Brewing Company, Inc., a California corporation (“Evans Brewing California”). EBC has not yet exercised this right, and as of the date of this Report, Bayhawk remained the owner and parent company of Evans Brewing California.
Pursuant to the Agreement, EBC and Bayhawk agreed to seek approval of the shareholders of Bayhawk relating to the Asset Purchase Transaction. Because the principal majority stockholders of Bayhawk are also significant stockholders of EBC, Bayhawk and EBC agreed to proceed with the Asset Purchase Transaction if it was approved by the holders of at least a majority of the Independent Shares (i.e. shares not held by Bayhawk’s majority shareholder, The Michael J. Rapport Trust, or by Evan Rapport, who is an officer of EBC and the son of Michael Rapport) that actually vote on the Asset Purchase Transaction proposal.
EBC and Bayhawk filed a registration statement on Form S-4 with the U.S. Securities and Exchange Commission (the “Registration Statement”), which went effective on August 10, 2015. The Registration Statement included a proxy statement seeking the votes of the Bayhawk shareholders on the Asset Purchase Transaction by written consent. On September 17, 2015, the voting period closed, and EBC announced that approximately 99% of the shares that were voted had voted in favor of the Asset Purchase Transaction.
In connection with the Asset Purchase Transaction, EBC and Bayhawk entered into a General Assignment and Bill of Sale agreement (the “Bill of Sale”) which outlined the specific assets purchased, as well as an Assignment and Assumption of Liabilities agreement (the “Assumption Agreement) which outlined the specific liabilities of Bayhawk assumed by EBC.
Equipment Lease to Bayhawk
Following the closing of the Asset Purchase Transaction, EBC entered into an equipment lease (the “Equipment Lease”) with Bayhawk pursuant to which EBC leased the brewing equipment to Bayhawk. The Equipment Lease was effective as of December 1, 2015, and continues month to month. Bayhawk agreed to pay a minimum of $15,000 per month or net profits from operations, whichever is greater. The title to the leased equipment will remain with EBC, and EBC has the right to inspect the equipment and its usage.
The foregoing summaries of the terms and conditions of the Bill of Sale, the Assumption Agreement, and the Equipment Lease (collectively, the “Ancillary Agreements”) do not purport to be complete, and are qualified in their entirety by reference to the full text of the specific Ancillary Agreement, each of which is attached as an exhibit hereto.
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Change in Shell Company Status
In connection with the closing of the Asset Purchase Transaction and the entry into the Bill of Sale and the Assumption Agreement, EBC acquired the assets (other than the ownership of Evans Brewing California), the liabilities, and the operations of Bayhawk. As such, on December 10, 2015, in connection with this acquisition, EBC ceased to be a shell company as defined in Rule 12b-2, in that it has assets consisting of more than cash and cash equivalents, and has a business plan and operations.
Share Exchange
As discussed in more detail in the Registration Statement, as partial consideration for the purchase of the Transferred Assets and the assumption of the Assumed Liabilities, EBC agreed to offer to exchange shares of EBC common stock for all shares of Bayhawk common stock that were tendered in connection with such offer, the transaction being referred to as the “Share Exchange.” The ratio of the share exchange is one (1) share of EBC common stock for each one (1) share of Bayhawk common stock.
Pursuant to the terms of the Agreement, the Share Exchange offer will be open for a period (the “Exchange Period”) of seventy-five (75) calendar days following the closing of the voting for the Asset Purchase Transaction. Bayhawk stockholders may tender shares of Bayhawk common stock for participation in the Share Exchange during the Exchange Period. Any Bayhawk stockholder who tenders Bayhawk shares in the Share Exchange shall have the right to withdraw any such shares tendered at any time until the closing of the Exchange Period. EBC agreed to use its best efforts to issue the EBC Exchange Shares within three (3) Business Days following the Close of the Exchange Period. EBC and Bayhawk agreed that upon the expiration of the Exchange Period, the Share Exchange offer would be terminated, and any Bayhawk shareholders who have not tendered their shares of Bayhawk’s common stock may not participate in the Share Exchange. Additionally, any Bayhawk stockholders who elect to not participate in the Share Exchange will remain stockholders of Bayhawk.
Prior to the closing of the Share Exchange, there is no way to determine how many shares of Bayhawk common stock will be exchanged for shares of EBC common stock. The officers and directors of EBC, who are also significant shareholders of Bayhawk, collectively own 3,424,648 shares of Bayhawk common stock (approximately 77% of the total outstanding shares of Bayhawk), and have expressed their intention to exchange their Bayhawk shares for shares of EBC common stock. As such, even if no other Bayhawk stockholders participate in the Share Exchange, Bayhawk will become a majority owned subsidiary of EBC. Following the closing of the Share Exchange, and because EBC has purchased all of Bayhawk’s assets, liabilities, and operations, EBC management anticipates that Bayhawk would have no ongoing business operations, and that EBC would be the operating entity going forward. As such, EBC plans to take steps to dissolve and wind up Bayhawk before the end of the fiscal year.
No Change of Control
In connection with the Asset Purchase Transaction, there was no change in control of EBC. The officers and directors of EBC did not change, and the majority ownership of EBC did not change.
As noted, prior to the closing of the Share Exchange, there is no way to determine how many shares of Bayhawk common stock will be exchanged for shares of EBC common stock. Nevertheless, Michael J. Rapport owns, through The Michael J. Rapport Trust, a majority of the outstanding common stock of both EBC and Bayhawk. As such, following the closing of the Share Exchange, irrespective of how many other Bayhawk stockholders exchange their shares for shares of EBC common stock, Mr. Rapport will continue to own a majority of the common stock of EBC, and as such, there will be no change in control of EBC.
Form 10 Information
In connection with EBC’s ceasing to be a “shell company” and exiting shell company status, EBC is required to provide certain information relating to its operations, business, and financial information, typically included in a Form 10 registration statement. The following information about EBC and its plans and operations going forward are incorporated by reference to the Registration Statement on Form S-4 filed with the SEC by EBC and Bayhawk, and specifically to the Prospectus, filed with the SEC on August 25, 2015, together with all supplements thereto filed after that filing (collectively, the “Prospectus”).
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Item 1. Business.
Information about the business of EBC prior to and the anticipated business of EBC following the Asset Purchase Agreement is incorporated by reference to the Prospectus.
Item 1A. Risk Factors.
Risk factors describing risks relating to EBC and its operations following the closing of the Asset Purchase Agreement are incorporated by reference to the Prospectus.
Item 2. Financial Information.
Financial information about EBC, Bayhawk, and pro forma financial information relating to EBC following the closing of the Asset Purchase Agreement is incorporated by reference to the Prospectus.
Item 3. Properties.
Information about the properties owned and leased by EBC following the closing of the Asset Purchase Agreement is incorporated by reference to the Prospectus.
Item 4. Security Ownership of Certain Beneficial Owners and Management.
Information reflecting the beneficial ownership of the officers, directors, and significant shareholders of EBC following the closing of the Asset Purchase Agreement and the proposed Share Exchange is incorporated by reference to the Prospectus. As noted, prior to the closing of the Share Exchange, there is no way to determine how many shares of Bayhawk common stock will be exchanged for shares of EBC common stock. The information relating to the beneficial ownership of the officers, directors, and significant shareholders of EBC is given assuming a full exchange of all of the outstanding shares of Bayhawk. If fewer than all of the outstanding Bayhawk shares are exchanged, the reported ownership may change.
Item 5. Directors and Executive Officers.
Information about the directors and executive officers of EBC following the closing of the Asset Purchase Agreement is incorporated by reference to the Prospectus.
Item 6. Executive Compensation.
Information about the compensation of the executives of EBC following the closing of the Asset Purchase Agreement is incorporated by reference to the Prospectus.
Item 7. Certain Relationships and Related Transactions, and Director Independence.
Information about related party transactions of EBC and its officers and directors relating to the Asset Purchase Agreement is incorporated by reference to the Prospectus.
Item 8. Legal Proceedings.
Information about the legal proceedings of EBC, if any, following the closing of the Asset Purchase Agreement is incorporated by reference to the Prospectus.
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Item 9. Market Price of and Dividends on the Registrant’s Common Equity and Related Stockholder Matters.
EBC’s common stock is not yet traded on any exchange or trading facility. Information relating to other matters regarding EBC’s stock, including dividends and a description of the differences between the rights of EBC and Bayhawk common stockholders, following the closing of the Asset Purchase Agreement is incorporated by reference to the Prospectus.
Item 10. Recent Sales of Unregistered Securities.
Information about recent sales of equity securities by EBC is incorporated by reference to the Prospectus.
Item 11. Description of Registrant’s Securities to be Registered.
A description of EBC’s common and preferred stock is incorporated by reference to the Prospectus. Only EBC’s Common Stock is involved in the Share Exchange.
Item 12. Indemnification of Directors and Officers.
Information required to be provided by this item is incorporated by reference to the Prospectus.
Item 13. Financial Statements and Supplementary Data.
Financial statements for EBC and Bayhawk, together with pro forma financial statements required by SEC regulations, are incorporated by reference to the Prospectus.
Item 14. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
Resignation of Anton & Chia, LLP
As previously reported, on September 4, 2015, the Board of Directors of EBC accepted the resignation of Anton & Chia, LLP (“Anton”), dated the same date, from their engagement to be the independent certifying accountant for EBC. Other than an explanatory paragraph included in Anton’s audit report for EBC’s fiscal year ended December 31, 2014, relating to the uncertainty of EBC’s ability to continue as a going concern, the audit report for fiscal year ended December 31, 2014, did not contain an adverse opinion or a disclaimer of opinion, nor was it qualified or modified as to uncertainty, audit scope or accounting principles. As described below, the change in independent public accounting firms is not the result of any disagreement with Anton. The Board of Directors approved the acceptance of Anton’s resignation.
Anton was appointed by the Board of Directors to be the auditor on January 21, 2015. There were no disagreements with Anton on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which, if not resolved to the satisfaction of Anton, would have caused Anton to make reference to the subject matter of the disagreements in connection with their report, and (2) there were no “reportable events” as that term is defined in Item 304(a)(1)(v) of Regulation S-K.
Appointment of Kenne Ruan, CPA, PC
As previously reported, on September 4, 2015, EBC’s Board of Directors approved the engagement of Kenne Ruan, CPA, PC (“Ruan”), as EBC's independent registered public accounting firm.
By way of background, Ruan was the independent certifying accountant for the Registration from its inception in June 2013, and provided an audit report dated July 3, 2013, with respect to EBC’s financial statements as of June 30, 2013; and an audit report dated February 7, 2014, for EBC’s financial statements as of December 31, 2013. Additionally, Ruan reviewed EBC’s financial statements provided in EBC’s quarterly reports for the quarters ended March 31, June 30, and September 30, 2014 (collectively, the “Prior Services”). EBC previously dismissed Ruan on January 21, 2015, in connection with the appointment of Anton noted above.
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Other than with respect to the Prior Services outlined above, EBC has not consulted with Ruan during its two most recent fiscal years or during any subsequent interim period prior to its re-appointment as Registrant's auditor with respect to the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on Registrant's consolidated financial statements, or any other matters or reportable events as defined in Items 304(a)(2)(i) and (ii) of Regulation S-K.
Item 15. Financial Statements and Exhibits.
As noted above, financial statements for EBC and Bayhawk, together with pro forma financial statements required by SEC regulations, are incorporated by reference to the Prospectus.
Exhibits that would be required by this item are incorporated by reference to the Prospectus.
Item 1.01 | Entry into a Material Definitive Agreement. |
Item 5.03 | Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year. |
Public House Stock Purchase Agreement
Additionally on December 10, 2015, EBC entered into a Stock Purchase Agreement (the “Public House SPA”) with Michael J. Rapport, as the sole shareholder of EBC Public House, Inc., a California corporation (“Public House”), for the purchase by EBC of 100% of the outstanding shares of Public House from Mr. Rapport, with the transaction to be closed following completion of due diligence and certain other conditions outlined below.
By way of Bbackground, Mr. Rapport formed Public House to purchase a restaurant business located in Fullerton, California (previously operated as Steamers Jazz Club). Public House is working to renovate and remodel the restaurant, with plans to open in the first half of 2016. Mr. Rapport was the sole shareholder of Public House.
Pursuant to the Public House SPA, EBC agreed to issue 1,000,000 shares of its Series A Preferred Stock (see description below) in exchange for 100% of the outstanding stock of Public House (the “Public House Shares”). The parties anticipate the closing of the transaction once the following conditions, among others, have been met:
- | Public House shall have received all food and beverage licenses, including California Alcoholic Beverage Control licenses, required for the operation of the business; |
- | The renovations and remodeling of the restaurant shall have been completed and the restaurant shall be open for business; and |
- | Other standard closing conditions. |
The foregoing summary of the terms and conditions of the Public House SPA does not purport to be complete, and is qualified in its entirety by reference to the full text of the Public House SPA, which is attached as an exhibit hereto.
The Company will provide additional information relating to EBC Public House and the restaurant business, including disclosures required by SEC rules and regulations, upon the closing of the purchase of the Public House Shares.
Certificate of Designation – Series A Convertible Preferred Stock
In connection with the Public House SPA, on December 10, 2015, the Company’s Board of Directors approved and adopted a Certificate of Designation of Rights and Preferences for Series A Convertible Preferred Stock (the “Certificate of Designation”). On December 11, 2015, the Company filed with the State of Delaware the Certificate of Designation, which became part of the Company’s Certificate of Incorporation, as amended to date.
Pursuant to the Certificate of Designation, the Company is authorized to issue up to 2,000,000 shares of the Company’s Series A Convertible Preferred Stock (the “Preferred Stock”). As noted above, the Company agreed to issue 1,000,000 shares of the Preferred Stock to Mr. Rapport upon the closing of the purchase of the Public House Shares. The rights and preferences of the Preferred Stock include the following:
- | Stated Value: The Preferred Stock has a stated value (the “Stated Value”) of $1.00 per share. |
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- | Dividends: Holders of the Preferred Stock are entitled to receive dividends equal to five percent (5%) per annum, payable quarterly in arrears. The dividends may be paid in cash or shares of the Company’s common stock, at the option of the holder. |
- | Voting Rights: The holder of the Preferred Stock has the right to one vote for each share of common stock into which the Preferred Stock could be converted. |
- | Conversion: The Preferred Stock is convertible at the option of the holder into shares of the Company’s common stock. The number of shares of common stock issuable upon conversion shall be determined by dividing the number of shares of Preferred Stock by the applicable Conversion Price, which is defined as follows: |
o | If the Common Stock of the Company has been listed for trading on a public exchange or trading facility, the conversion price for each share of Preferred Stock on any conversion date shall be the lower of (I) seventy percent (70%) of the two (2) lowest closing bid prices over the sixty trading days prior to the conversion date, or (II) the Stated Value of the Preferred Stock. |
o | If the Common Stock of the Company is not trading on the conversion date, the conversion price shall be the Stated Value of the Preferred Stock. |
- | Redemption: The Company has the obligation to redeem the unconverted shares of Preferred Stock from the holder as follows: |
o | The Company shall have the obligation, as set forth herein, to redeem the unconverted shares of the Preferred Stock at a price equal to the Redemption Price (defined below) as follows: |
● | The Company shall pay to the holder of the Preferred Stock, on a quarterly basis, within thirty (30) days of the end of each fiscal quarter, an amount equal to twenty percent (20%) of the excess revenues, as determined by the Board of Directors on a quarterly basis, to redeem shares of Preferred Stock. |
● | The Company shall also pay to the holder of the Preferred Stock, an amount equal to 20% of any capital raised by the Company in connection with offerings of the Company’s securities (whether private offerings or public offerings), within ten (10) days of the closing of each such offering, to redeem shares of Preferred Stock. |
o | The “Redemption Price” shall be equal to the Stated Value of such shares of Preferred Stock, plus all accrued and unpaid dividends on the shares to be redeemed. |
- | Liquidation: Upon any liquidation, dissolution or winding-up of the Company, whether voluntary or involuntary (a “Liquidation”), the holders of the Preferred Stock shall be entitled to receive out of the assets of the Company, whether such assets are capital or surplus, for each share of Preferred Stock an amount equal to the Stated Value plus all accrued but unpaid dividends per share, and all other amounts in respect thereof then due and payable before any distribution or payment shall be made to the holders of any Junior Securities. |
The Company anticipates that its issuances of shares of Preferred Stock in connection with the purchase of the Public House Shares, which will occur upon closing of that transaction, will be made without registration under the securities Act of 1933 (the “1933 Act”) in reliance on Section 4(a)(2) of the 1933 Act and the rules and regulations promulgated thereunder.
The foregoing summary of the terms and conditions of the Certificate of Designation does not purport to be complete, and is qualified in its entirety by reference to the full text of the Certificate of Designation, which is attached as an exhibit hereto.
Item 9.01 | Financial Statements and Exhibits. |
(d) | Exhibits |
3.1 | Certificate of Designation of Rights and Preferences for Series A Convertible Preferred Stock |
99.1 | Asset Purchase and Share Exchange Agreement (filed as Annex A to the Company’s Registration Statement on Form S-4, Amendment No. 4, filed with the SEC on July 14, 2015, and incorporated herein by reference) |
99.2 | Bill of Sale |
99.3 | Assignment and Assumption Agreement |
99.4 | Equipment Lease |
99.5 | Public House Stock Purchase Agreement |
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Company has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Evans Brewing Company Inc. | |
Date: December 14, 2015 | /s/ Michael J Rapport |
Michael J. Rapport, Chief Executive Officer | |
Evans Brewing Company Inc. |
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Exhibit 3.1
CERTIFICATE OF DESIGNATION OF RIGHTS AND PREFERENCES
FOR SERIES A CONVERTIBLE PREFERRED STOCK
OF
EVANS BREWING COMPANY INC.
Pursuant to Section 151 of the General Corporation Law of the State of Delaware, Evans Brewing Company Inc., a Delaware corporation (the "Company"), does hereby certify:
FIRST: That pursuant to authority expressly vested in it by the Certificate of Incorporation of the Company, the Board of Directors of the Company has adopted the following unanimous consent resolutions establishing a new series of Preferred Stock of the Company, consisting of 2,000,000 shares designated “Series A Convertible Preferred Stock,” with such powers, designations, preferences and relative participating, optional or other rights, if any, and the qualifications, limitations or restrictions thereof, as are set forth in the resolutions, and in the form of Certificate of Designation set forth in Appendix A hereto:
RESOLVED, that in the judgment of the Board of Directors of the Company, it is deemed advisable and in the best interests of the Company, and pursuant to the authority granted to the Board of Directors in the Company’s Certificate of Incorporation, to amend the Company's Certificate of Incorporation to authorize and provide for the issuance of a preferred class of stock of the Company, including the creation and designation of a new series of preferred stock to be known as Series A Convertible Preferred Stock, par value $.0001 per share (the "Series A Stock"), which Series A Stock may be issued in the discretion of the Management of the Company.
FURTHER RESOLVED, that the directors hereby create and establish a new series of preferred stock designated “Series A Convertible Preferred Stock,” which series shall have the relative rights and preferences set forth in that certain Certificate of Designation of Rights and Preferences for Series A Convertible Preferred Stock (the “Certificate of Designation”) attached hereto as Appendix A and by this reference incorporated herein.
FURTHER RESOLVED, that upon filing of the Amendment and the Certificate of Designation with the Secretary of State of Delaware, the officers of the Company are hereby authorized and directed to issue shares of the Series A Stock.
FURTHER RESOLVED, that the forms of Amendment and Certificate of Designation be, and the same hereby are, adopted and approved in all respects, and that each of the executive officers of the Company be, and they hereby are, authorized and directed to execute and deliver said documents in substantially the forms attached hereto, with such changes therein as such officers shall, upon advice of counsel, approve, which approval shall be conclusively evidenced by such officers' execution thereof. . . . .
FURTHER RESOLVED, that the Chairman, the President, any Vice- President, and the Secretary of the Company be, and they hereby are, and each of them hereby is, authorized and directed: (i) to execute, deliver and file, on behalf of the Company, the Amendment and the Certificate of Designation; (ii) upon filing of the Amendment and the Certificate of Designation with the Secretary of State of Delaware, to issue stock certificates representing shares of Series A Stock; (iii) to execute, deliver and file any and all additional certificates, documents or other papers, and to do any and all things which they may deem necessary or appropriate in order to authorize the new class of Preferred Stock, to authorize and issue the new Series A Preferred Stock of such class, as originally contemplated in the Debenture, and to implement and carry out all matters herein authorized pursuant to the intent and purpose of the foregoing resolutions.
FURTHER RESOLVED, that the actions of the officers and directors of the Company heretofore taken in connection with the authorization of the new class of Preferred Stock be, and that same hereby are, ratified and approved in all respects.
SECOND: That said resolutions of the directors of the Company were duly adopted in accordance with the provisions of Section 151(g) of the General Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, the undersigned hereby affirms, under penalties of perjury, that the foregoing instrument is the act and deed of the Company and that the facts stated therein are true.
Dated this 11 th day of December, 2015.
EVANS BREWING COMPANY INC. | ||
By: | /s/ Michael J. Rapport | |
Name: | Michael J. Rapport | |
Title: | Chief Executive Officer |
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Appendix A
SERIES A CONVERTIBLE PREFERRED STOCK TERMS
1. Designation, Amount and Par Value . The series of preferred stock shall be designated as the Series A Convertible Preferred Stock (the “ Preferred Stock ”), and the number of shares so designated and authorized shall be Two Million (2,000,000). Each share of Preferred Stock shall have a par value of $0.0001 per share and a stated value of $1.00 per share (the “ Stated Value ”).
2. Dividends .
(a) Holders of Preferred Stock shall be entitled to receive, when and as declared by the Board of Directors either out of funds legally available therefor or through the issuance of shares of the Company’s common stock, and the Company shall accrue, quarterly in arrears on March 31, June 30, September 30, and December 31 of each year, commencing on January 1, 2016, cumulative dividends on the Preferred Stock at the rate per share (as a percentage of the Stated Value per share) equal to five percent (5%) per annum, payable in cash or shares of Common Stock (as defined in Section 7) at the option of Holder of the Preferred Stock. Subject to the preceding sentence, the Company may pay, at its option, accrued dividends at any time while the Preferred Stock remains outstanding. The Company shall pay all accrued and unpaid dividends within thirty (30) days following either (a) the conversion of all of the Preferred Stock or (b) the redemption by the Company of all of the remaining outstanding shares of Preferred Stock. The number of shares of Common Stock issuable as payment of dividends hereunder shall equal the aggregate dollar amount of dividends then being paid, divided by the Conversion Price (as defined in Section 5(c)(i)) then in effect. Dividends on the Preferred Stock shall be calculated on the basis of a 360-day year, shall accrue daily commencing the Issuance Date (as defined in Section 7), and shall be deemed to accrue on such date whether or not earned or declared and whether or not there are profits, surplus or other funds of the Company legally available for the payment of dividends. The party that holds the Preferred Stock on an applicable record date for any dividend payment will be entitled to receive such dividend payment and any other accrued and unpaid dividends which accrued prior to such dividend payment date, without regard to any sale or disposition of such Preferred Stock subsequent to the applicable record date but prior to the applicable dividend payment date. Except as otherwise provided herein, if at any time the Company pays less than the total amount of dividends then accrued on account of the Preferred Stock, such payment shall be distributed ratably among the Holders of the Preferred Stock based upon the number of shares then held by each Holder in proportion to the total number of shares of Preferred Stock then outstanding.
(b) Notwithstanding anything to the contrary contained herein, the Company may not issue shares of Common Stock in payment of dividends on the Preferred Stock (and must deliver cash in respect thereof) if: (i) the number of shares of Common Stock at the time authorized, unissued and unreserved for all purposes, or held as treasury stock, is either insufficient to issue such dividends in shares of Common Stock or the Company has not duly reserved for issuance in respect of such dividends a sufficient number of shares of Common Stock, or (ii) the Company shall have failed to satisfy its obligations in a timely manner pursuant to any Conversion Notice.
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(c) So long as any shares of Preferred Stock remain outstanding, neither the Company nor any subsidiary thereof shall, without the consent of the holders of one hundred percent (100%) of the shares of Preferred Stock then outstanding, redeem, repurchase or otherwise acquire directly or indirectly any Junior Securities (as defined in Section 7), nor shall the Company directly or indirectly pay or declare any dividend or make any distribution (other than a dividend or distribution described in Section 5) upon, nor shall any distribution be made in respect of, any Junior Securities, nor shall any monies be set aside for or applied to the purchase or redemption (through a sinking fund or otherwise) of any Junior Securities.
3. Voting Rights; Protective Provisions . The holder of each share of Series A Preferred Stock shall have the right to one vote for each share of common stock into which such Series A Preferred Stock could then be converted, and with respect to such vote, such holder shall have full voting rights and powers equal to the voting rights and powers of the holders of Common Stock, and shall be entitled, notwithstanding any provision hereof, to notice of any stockholders’ meeting in accordance with the Bylaws of this Corporation, and shall be entitled to vote, together with holders of Common Stock, with respect to any question upon which holders of Common Stock have the right to vote. Fractional votes shall not, however, be permitted and any fractional voting rights available on an as-converted basis (after aggregating all shares into which shares of Series A Preferred Stock held by each holder could be converted) shall be rounded to the nearest whole number (with one-half being rounded upward). Additionally, so long as any shares of Preferred Stock are outstanding, the Company shall not without the affirmative vote of each of the holders of the Preferred Stock then outstanding, (i) alter or change adversely the powers, preferences or rights given to the preferred stock, (ii) alter or amend this Certificate of Designation, (iii) amend its certificate of incorporation, bylaws or other charter documents so as to affect adversely any rights of any holders of the Preferred Stock, (iv) increase the authorized or designated number of shares of Preferred Stock, or (v) enter into any agreement with respect to the foregoing.
4. Conversion .
(a) Conversions at Option of Holder . Each share of Preferred Stock shall be convertible into shares of Common Stock at the Conversion Ratio (as defined in Section 7) at the option of a Holder, at any time and from time to time, from and after the issuance of the Preferred Stock (the “ Initial Conversion Date ”), provided, however, that any shares of Common Stock issued upon conversion while a registration statement covering the resale of such shares is not effective shall be deemed to be Restricted Securities as defined under Rule 144.
(i) Conversion Procedures . A Holder shall effect conversions by surrendering to the Company the certificate or certificates representing the shares of Preferred Stock to be converted to the Company, together with a completed form of conversion notice attached hereto as Exhibit A (the “ Conversion Notice ”). Each Conversion Notice shall specify the number of shares of Preferred Stock to be converted, the date on which such conversion is to be effected, which date may not be prior to the date the holder delivers such Conversion Notice by facsimile (the “Conversion Date”) and the Conversion Price determined as specified in Section 5(c)(i) hereof. If no Conversion Date is specified in a Conversion Notice, the Conversion Date shall be the date that the Conversion Notice is deemed delivered pursuant to Section 5(a). Subject to Sections 5(b) hereof, each Conversion Notice, once given, shall be irrevocable.
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(b) Company’s Obligations upon Conversion . Not later than three (3) Trading Days after a Conversion Date, the Company will deliver to the holder (i) a certificate or certificates representing the number of shares of restricted Common Stock being issued upon the conversion of shares of Preferred Stock, and (ii) one or more certificates representing the number of shares of Preferred Stock not converted. Notwithstanding the foregoing, the Company shall not be obligated to issue certificates evidencing the shares of restricted Common Stock issuable upon conversion of any shares of Preferred Stock until certificates evidencing such shares of Preferred Stock together with a related Conversion Notice are either delivered for conversion to the Company or any transfer agent for the Preferred Stock or Common Stock, or the holder of such Preferred Stock notifies the Company that such certificates have been lost, stolen or destroyed and provides a bond (or other adequate security) reasonably satisfactory to the Company to indemnify the Company from any loss incurred by it in connection therewith.
(c) Conversion Price .
(i) The conversion price for each share of Preferred Stock (the “ Conversion Price ”) on any Conversion Date shall be determined as follows:
(A) If the Common Stock of the Company has been listed for trading on a public exchange or trading facility, the conversion price for each share of Preferred Stock on any Conversion Date shall be the lower of (I) seventy percent (70%) of the two (2) lowest Closing Bid Prices over the sixty trading days prior to the Conversion Date, or (II) the Stated Value of the Preferred Stock.
(B) If the Common Stock of the Company is not trading on any Conversion Date, the conversion price shall be the Stated Value of the Preferred Stock.
(ii) All calculations under this Section 4 shall be made to the nearest whole share of Common Stock.
(d) Company’s Covenants . The Company covenants that it will at all times reserve and keep available out of its authorized and unissued Common Stock solely for the purpose of issuance upon conversion of Preferred Stock and payment of dividends on Preferred Stock, each as herein provided, free from preemptive rights or any other actual or contingent purchase rights of persons other than the holders of Preferred Stock, not less than 100% of such number of shares of Common Stock as shall be issuable upon the conversion of all outstanding shares of Preferred Stock and payment of dividends hereunder. The Company covenants that all shares of Common Stock that shall be so issuable shall, upon issue, be duly and validly authorized, issued and fully paid and nonassessable.
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(e) Cancellation . Shares of Preferred Stock converted into Common Stock shall be canceled and shall have the status of authorized but unissued shares of undesignated preferred stock.
(f) Notices . Any and all notices or other communications or deliveries to be provided by the holders of the Preferred Stock hereunder, including, without limitation, any Conversion Notice, shall be in writing and delivered personally, by facsimile, sent by a nationally recognized overnight courier service or sent by certified or registered mail, postage prepaid, addressed to the attention of the President of the Company at the facsimile telephone number or address of the principal place of business of the Company as set forth in the Exchange Agreement. Any and all notices or other communications or deliveries to be provided by the Company hereunder shall be in writing and delivered personally, by facsimile, sent by a nationally recognized overnight courier service or sent by certified or registered mail, postage prepaid, addressed to each holder of Preferred Stock at the facsimile telephone number or address of such holder appearing on the books of the Company, or if no such facsimile telephone number or address appears, at the principal place of business of the holder. Any notice or other communication or deliveries hereunder shall be deemed given and effective on the earliest of (i) the date of transmission, if such notice or communication is delivered via facsimile at the facsimile telephone number specified in this Section prior to 5:00 p.m. (Phoenix, Arizona time), (ii) the date after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile telephone number specified in this Section later than 5:00 p.m. (Phoenix, Arizona time) on any date and earlier than 11:59 p.m. (Phoenix, Arizona time) on such date, (iii) four days after deposit in the United States mails, (iv) the Business Day following the date of mailing, if send by nationally recognized overnight courier service, or (v) upon actual receipt by the party to whom such notice is required to be given. For purposes of Section 5(c)(i) , if a Conversion Notice is delivered by facsimile prior to 5:00 p.m. (Phoenix, Arizona time) on any date, then the day prior to such date shall be the last Trading Day calculated to determine the Conversion Price applicable to such Conversion Notice, and the date of such delivery shall commence the counting of days for purposes of Section 5(b) .
5. Redemption by Company .
(a) Obligation to Redeem .
(i) The Company shall have the obligation, as set forth herein, to redeem the unconverted shares of the Preferred Stock at a price equal to the Redemption Price (defined below) as follows:
(A) The Company shall pay to the Holder of the Preferred Stock, on a quarterly basis, within thirty (30) days of the end of each fiscal quarter, an amount equal to twenty percent (20%) of the excess revenues, as determined by the Board of Directors on a quarterly basis, to redeem shares of Preferred Stock as set forth in subsection 5(a)(iii) below.
(B) The Company shall also pay to the Holder of the Preferred Stock, an amount equal to 20% of any capital raised by the Company in connection with offerings of the Company’s securities (whether private offerings or public offerings), within ten (10) days of the closing of each such offering, to redeem shares of Preferred Stock as set forth in subsection 5(a)(iii) below.
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(ii) The “Redemption Price” shall be equal to the Stated Value of such shares of Preferred Stock, plus all accrued and unpaid dividends on the shares to be redeemed.
(iii) Any redemptions pursuant to this Section 5(a) shall be effected by the delivery of a notice to the holder of Preferred Stock to be redeemed, which notice shall indicate the number of shares of Preferred Stock of each holder to be redeemed and the date that such redemption is to be effected, which shall be within thirty (30) days of the end of each fiscal quarter for redemptions made pursuant to Subsection 5(a)(i)(A) above, and within ten (10) days of the closing of any private placement offering for redemptions made pursuant to Subsection 5(a)(i)(B) above, (as applicable, the “ Redemption Date ”). All redeemed shares of Preferred Stock shall cease to be outstanding and shall have the status of authorized but unissued and undesignated preferred stock. The Redemption Price under this Section shall be paid in cash within five business days of the Redemption Date.
(iv) If the Holder of the Preferred Stock elects to convert any shares of the Preferred Stock, the Holder irrevocably waives any right of redemption by the Company with respect to such shares of Preferred Stock.
6. Liquidation . Upon any liquidation, dissolution or winding-up of the Company, whether voluntary or involuntary (a “Liquidation”), the holders of the Preferred Stock shall be entitled to receive out of the assets of the Company, whether such assets are capital or surplus, for each share of Preferred Stock an amount equal to the Stated Value plus all accrued but unpaid dividends per share, whether declared or not, and all other amounts in respect thereof (including liquidated damages, if any) then due and payable before any distribution or payment shall be made to the holders of any Junior Securities, and if the assets of the Company shall be insufficient to pay in full such amounts, then the entire assets to be distributed to the holders of Preferred Stock shall be distributed among the holders of Preferred Stock ratably in accordance with the respective amounts that would be payable on such shares if all amounts payable thereon were paid in full. The Company shall mail written notice of any such Liquidation, not less than 45 days prior to the payment date stated therein, to each record holder of Preferred Stock.
7. Definitions . For the purposes hereof, the following terms shall have the following meanings:
“ Business Day ” means any day except Saturday, Sunday and any day which shall be a legal holiday or a day on which banking institutions in the State of Delaware are authorized or required by law or other government action to close.
“ Closing Bid Price ” shall mean the closing bid price (as reported by Bloomberg L.P.) of the Common Stock on the OTC Markets or such other exchange or trading facility on which the Common Stock is traded.
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“ Common Stock ” means the common stock, $.0001 par value per share, of the Company, and stock of any other class into which such shares may hereafter have been reclassified or changed.
“ Conversion Ratio ” means, at any time, a fraction, the numerator of which is Stated Value plus accrued but unpaid dividends to the extent to be paid in shares of Common Stock and the denominator of which is the Conversion Price at such time.
“ Issuance Date ” means the earliest date on which the Purchasers receive shares of the Preferred Stock, regardless of the number of certificates which may be issued to evidence such Preferred Stock.
“ Person ” means an individual or a corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or political subdivision thereof) or other entity of any kind.
“ Underlying Shares ” means the number of shares of Common Stock into which the Shares are convertible in accordance with the terms hereof and the Securities Purchase Agreement and shares of Common Stock issuable on account of dividends on or with respect to the Preferred Stock.
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EXHIBIT A
NOTICE OF CONVERSION
(To be executed by the registered holder
to convert shares of Preferred Stock)
The undersigned hereby elects to convert the number of shares of Series A Convertible Preferred Stock of Evans Brewing Company Inc. (the “ Company ”) indicated below, into shares of restricted Common Stock, par value $.0001 per share (the “ Common Stock ”), of the Company according to the conditions hereof, as of the date written below. If shares are to be issued in the name of a person other than undersigned, the undersigned will pay all transfer taxes payable with respect thereto and is delivering herewith such certificates and opinions as reasonably requested by the Company in accordance therewith. No fee will be charged to the holder for any conversion, except for such transfer taxes, if any.
Conversion calculations:
Date to effect conversion | |
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Number of shares of Preferred Stock to be converted | |
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Number of shares of Common Stock to be issued | |
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Applicable conversion price | |
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Name of Holder | |
Address of Holder |
Authorized Signature |
9
Exhibit 99.2
GENERAL ASSIGNMENT AND BILL OF SALE
THIS GENERAL ASSIGNMENT AND BILL OF SALE (this “ Assignment ”) is made as of the 10th day of December, 2015, by and between Evans Brewing Company Inc., a Delaware corporation (“ Assignee ”), and Bayhawk Ales Inc., a Delaware corporation (“ Assignor ”). The Assignor and Assignee may each be referred to herein as a “ Party ” and collectively as the “ Parties .”
R E C I T A L S
A. Assignor presently owns the assets described in Exhibit A to this Assignment and any and all improvements thereon.
B. Pursuant to that certain Asset Purchase and Share Exchange Agreement, with an Effective Date of October 15, 2014, between Assignor and Assignee (as may have been amended from time to time, the “ Agreement ”), Assignor is, simultaneously with the execution of this Assignment, transferring to Assignee all of its right, title and interest in the Property (defined below) (the “ Property Transfer ”) under the terms and conditions more fully set forth in the Agreement.
C. In connection with the Property Transfer, Assignor desires to assign, transfer, give and convey to Assignee, and Assignee desires to acquire from Assignor, all of Assignor’s interest, in and to the following described rights, interests and property relating to the Property.
T E R M S A N D C O N D I T I O N S
NOW THEREFORE, for and in consideration of the mutual promises and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Assignee and Assignor hereby agree as follows:
1. Bill of Sale . Assignor hereby transfers, grants, assigns, and conveys to Assignee all of Assignor’s right, title and interest in and to those assets described on Exhibit A attached hereto and incorporated herein by this reference (the “ Property ”). The Parties specifically understand, acknowledge, and agree that the Property assigned by Assignor to Assignee does not include the shares of Evans Brewing Company Inc., a California corporation (“Evans California”), and that the Assignor shall retain ownership of the shares of Evans California at this time. Assignor hereby warrants full and complete ownership of and good title to the Property transferred herein, the right to sell the same, and that there are no liens, encumbrances or charges thereon or against the same, and to defend the title and possession transferred to the Assignee against all claims.
2. Assignment . Assignor assigns, transfers, sets over, and conveys to Assignee, to the fullest extent the same are assignable, all of Assignor’s right, title, and interest, in and to (i) any and all warranties and/or guaranties of any kind, express or implied, written or oral, relating to the Property, (ii) any and all licenses, contracts, benefits from development agreements, consents, approvals or permits relating to the Property (collectively, the “ Entitlements ”), (iii) any applications, reports, drawings, studies, plans, assessments, and all other documents, information and materials in any way related to the Property and/or the Entitlements (including without limitation all feasibility materials related to the Property in Seller’s possession or control), and (iv) any and all benefits, rights and intangible property, intellectual property or assets in any way related to the Property and/or the Entitlements.
3. Binding Effect . This Assignment shall inure to the benefit of and be binding upon the parties hereto and their respective successors and assigns.
4. Construction; Definitions . This Assignment shall be construed according to Florida law. Capitalized terms used and not otherwise defined herein shall have the meanings given to such terms in the Agreement.
5. Counterparts . This Assignment may be executed in any number of counterparts, each of which when executed and delivered shall be deemed to be an original, and all of which shall together constitute one and the same instrument.
IN WITNESS WHEREOF, the parties, intending to be legally bound, have caused this Agreement to be executed as of the day and year first written.
ASSIGNOR: | Bayhawk Ales, Inc. | |
a Delaware corporation | ||
By: | /s/ Evan M. Rapport | |
Name: | (print): Evan M Rapport | |
Its: | President | |
ASSIGNEE: | Evans Brewing Company Inc., | |
a Delaware corporation | ||
By: | /s/ Michael J. Rapport | |
Name | (print): Michael J Rapport | |
Its | (title): President |
EXHIBIT A
(To General Assignment and Bill of Sale)
All assets of Bayhawk Ales, including (A) personal property, intellectual property, inventory, selected distribution contracts, websites, documents, and all other assets however delineated relating to the Bayhawk Ales labels; and (B) all assets, including personal property, intellectual property, inventory, contracts, websites, documents, and all other assets however delineated relating to the Evans Brands (collectively, the “Transferred Assets”), and the assumption by EBC, pursuant to the terms and conditions set forth in the Agreement and the Assignment and Assumption Agreement of even or near date herewith, of all of the liabilities of Bayhawk (the “Assumed Liabilities”). (The “Evans Brands” include the former assets of Pig’s Eye Brewing Company, including its original beers, lagers and ales (“Pig’s Eye Brands”), as well as Evans Lager Original, Evans Lager Black, Evans Lager Light, Bad Kat Ice, and Dead Presidents.)
Expressly Excluded: Any shares of stock or other ownership of Evans Brewing Company, a California corporation, which will be retained by Bayhawk Ales.
Exhibit 99.3
EXHIBIT C
GENERAL ASSIGNMENT AND ASSUMPTION OF LIABILITIES AND CONTRACTS
THIS GENERAL ASSIGNMENT AND ASSUMPTION OF LIABILITIES AND CONTRACTS ("Assignment") is made as of December 10 th , 2015 (the “Effective Date”), by and between BAYHAWK ALES, INC., a Delaware corporation ("Assignor") and EVANS BREWING COMPANY, INC., a Delaware corporation or its assignee ("Assignee"). The Assignor and the Assignee may each be referred to herein as a “ Party ” and collectively as the “ Parties .”
RECITALS
A. Assignor, as Seller, and Assignee, as Buyer, entered into that certain Asset Purchase and Share Exchange Agreement dated of even or near date herewith ("Agreement"), with respect to the certain Transferred Assets (as identified in Section 2.01 of the Agreement and as set forth on Exhibit A to the Agreement) and Assumed Liabilities (as defined herein) owned and operated by Seller (the "Business"). Unless otherwise defined herein, all capitalized terms used herein shall have the same meanings as set forth in the Agreement.
B. Concurrently herewith, Assignor has executed and delivered that certain Bill of Sale of even or near date herewith for the conveyance of certain Transferred Assets.
C. In connection with said conveyance, Assignor desires to assign to Assignee certain of Assignor's rights relating to the Business and Assignee desires to accept such assignment and to assume contracts and liabilities set forth hereafter.
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Assignor and Assignee hereby agree as follows:
1. Definitions. For purposes of this Assignment, the following definitions shall apply:
(a) "Assumed Liabilities" shall include:
(i) | that certain promissory note in favor of City Brewing Company in the amount of $200,692 as of September 30, 2015; | |
(ii) | Auto loan in the amount of $11,559 as of September 30, 2015; and | |
(iii) | Refundable deposits due to customers (constituting funds on deposit) in the amount of $133,011 as of September 30, 2015. | |
(iv) | Assignee and Assignor understand, acknowledge, and agree that Assignee will assume the Assumed Liabilities described above with the actual amounts owing as of the Effective Date, and that Assignor shall have no further obligation in connection with the Assumed Liabilities. |
(b) "Claims" shall mean all claims and causes of action arising out of or in connection with the operation or maintenance of the Business, but Claims shall not include accounts receivable and other charges and any monetary claims for overpayment of tax, or refunds for which Assignor has received no credit unless otherwise specifically agreed to in writing.
(c) "Contracts" shall mean all contracts, undertakings, commitments, guarantees and warranties relating to the ownership, operation or maintenance of the Business to which. Assignor is a party or is bound. The term "Contracts" includes, but are not limited to, those contracts described on Schedule 1; and as used herein, " Assumed Contracts " shall be limited to those set forth on Schedule 1. Except for the Assumed. Contracts, Assignor has cancelled or will cancel or otherwise terminate all executory Contracts and shall continue to be responsible for all obligations thereunder, if any. Pursuant to the Agreement, the Buyer shall have the ability and right to selectively assume contracts in Buyer’s full discretion.
(d) "Documents" shall mean all documents prepared in connection with the ownership, construction , operation, or maintenance of, the Business, or pertaining thereto, including without limitation (1) all marketing plans, software, studies, and reports and customer and supplier lists, and (2) all other books, ledgers, files, reports, plans, drawings and operating records of every kind maintained by or on behalf of Assignor.
(e) “Evans Brands” shall mean the former assets of Pig’s Eye Brewing Company, including its original beers, lagers and ales (“Pig’s Eye Brands”), as well as original beers, lagers and ales known as Evans Lager Original, Evans Lager Black, Evans Lager Light, Bad Kat Ice, Dead Presidents and BAD DAWG (collectively with Pig’s Eye Brands).
(f) "Intangible Assets" shall mean all other transferable intellectual or intangible property used by Assignor in connection with the Business, including all goodwill associated with the Business.
(g) "Permits" shall mean all licenses, permits, franchises, approvals, authorizations, consents, or orders of or filings with, any governmental body or agency having jurisdiction over the Business and necessary for the past, present, or anticipated ownership or operation of the Business.
(h) "Trade Names" shall mean names associated with the Evans Brands and all trade names relating to Pig's Eye Assets acquired from CBC, including trademarks, "Evans Brewing Company," and similar names used by Assignor in the conduct of the Business and all goodwill associated therewith. After conveyance of the Trade Names, Assignor shall not have the right to use said Trade Names. Notwithstanding the foregoing, Seller shall retain the name "Evans Brewing Company, Inc." as its corporate name.
(i) “Landry’s Lease” shall mean that original lease between Southern California Plan II, Inc., and Willamette Valley, Inc. Microbreweries Across America, dated January 25, 1994, as assigned on May 25, 1994 to Orange County Brewing Company, and as extended to date.
2. Assignment. Effective as of the Effective Date, Assignor hereby assigns and transfers to Assignee and Assignee's successors and assigns to the extent Assignor has a transferable interest therein, all of Assignor's right, title and interest in and to the Transferred Assets (with the exception of the ownership of Evans Brewing Company, Inc., a California corporation, described more fully below), and to the Permits, the Assumed Contracts, the Documents, the Trade Names, the Intangible Assets and the Claims, and Assignee shall be entitled to all rights and benefits accruing thereunder. The Parties specifically understand, acknowledge, and agree that the Property assigned by Assignor to Assignee does not include the shares of Evans Brewing Company Inc., a California corporation (“Evans California”), and that the Assignor shall retain ownership of the shares of Evans California at this time. Assignee hereby accepts the foregoing assignment, To the extent the Assumed Contracts are not formally assigned, Assignor shall act as Assignee's nominee and follow Assignee's directions in dealing with the other contract parties.
3. Assumption. Effective as of the Effective Date, Assignee assumes: (a) all obligations arising under the Assumed Contracts after the Effective Date and agrees to be bound by the terns thereof from and after the Effective Date; and (b) all Assumed Liabilities and agrees to pay or perform such liabilities according to the nature and terms thereof.
IN WITNESS WHEREOF, the parties have executed this Assignment as of the date first named above.
ASSIGNOR | ASSIGNEE | |||
BAYHAWK ALES, INC.,
a Delaware corporation |
EVANS BREWING COMPANY, INC.
a Delaware corporation |
|||
By: | /s/ Evan M Rapport | By: | /s/ Michael J Rapport | |
Name: | Evan M Rapport | Name: | Michael J Rapport | |
Title: | President | Title: | President |
Schedule
1 to General Assignment
Contracts
ASSUMED CONTRACTS
1. Hosting contract for all websites including www.evanslager.com and the Pigs Eye brands.
2. All rights and obligations under that certain Voluntary Surrender and Assignment Agreement dated August 26, 2013, by which City Brewing Company, LLC, acquired substantially all the assets of Pig's Eye Brewing Company, LLC, including its intellectual property and trademarks related to original beers, lagers and ales, and that Asset Purchase Agreement dated. August 30, 2013, by which Seller purchased all rights and obligations of City Brewing Company, LLC, under the Voluntary Surrender and Assignment Agreement dated August 26, 2013.
3. All rights and obligations under that certain Distribution Agreement with G&F Distributing, Inc. dated December 4, 2013
4. All rights and obligations under that certain Distribution Agreement with C Bay Beverage, LLC December 3, 2013
5. The Landry’s Lease
6. Distribution contracts as assumed by Buyer. Bayhawk and the Evans and Pigs Eye brands will be treated separately with respect to assumption.
Exhibit 99.5
STOCK PURCHASE AGREEMENT
among
EVANS BREWING COMPANY INC.,
a Delaware corporation,
and
Michael J. Rapport,
Shareholder of
EBC PUBLIC HOUSE, INC.,
a California corporation
Dated as of December 10 th , 2015
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (this “ Agreement ”) is entered into as of December 10 th , 2015, by and among Evans Brewing Company Inc., a Delaware corporation (the “ Buyer ”), EBC Public House Inc., a California corporation (“ EBC Public House ”), and Michael J. Rapport (the “ Seller ”). The Buyer, the Seller, and EBC Public House may each be referred to herein as a “ Party ” and collectively as the “ Parties .”
STATEMENT OF PURPOSE
The Seller owns 100% of the outstanding shares of capital stock of EBC Public House, a restaurant business located in Santa Ana, California (such business operations as conducted on the Closing Date, consistent with past practice, are hereinafter referred to as the “ Business ”). Pursuant to this Agreement, the Buyer hereby agrees to purchase from the Seller, and the Seller hereby agrees to sell to the Buyer, all of the outstanding capital stock of EBC Public House for the consideration and on the terms and subject to the conditions set forth in this Agreement.
Article
I
DEFINITIONS
“ SEC ” means the United States Securities and Exchange Commission.
“ Securities Act ” means the Securities Act of 1933, as amended.
“ Transactions ” means the transactions contemplated by the Transaction Documents.
“ Transaction Documents ” means this Agreement and all other written agreements, documents and certificates contemplated by or necessary to accomplish the purpose of any of the foregoing document.
Article
II
SALE AND PURCHASE OF SHARES
2.1 Sale and Purchase of Shares . Subject to the terms and conditions of this Agreement, the Buyer will purchase from the Seller, and Seller will sell and deliver to the Buyer, all of the shares of common stock of EBC Public House (the “ Public House Shares ”) owned by Seller, which Public House Shares equal one hundred percent (100%) of the issued and outstanding Shares of EBC Public House.
2.2 Purchase Price .
(a) The total consideration for the Public House Shares (the “ Purchase Price ”) shall be paid by the Buyer’s issuance of 1,000,000 shares of the Buyer’s Series A Preferred Stock (the “ Preferred Stock ”). The Preferred Stock has the rights, preferences, and designations as set forth in the Certificate of Designation, attached hereto as Appendix A.
(b) The shares of Preferred Stock will bear restrictive legends that reference the applicable securities laws as well as this Agreement.
(c) At the Closing, subject to the terms and conditions of this Agreement,
(i) The Seller shall transfer all of the Public House Shares owned by the Seller to the Buyer by delivering to the Buyer the certificates therefor, with all necessary endorsements and assurances in order to permit immediate registration of the transfer thereof on the books of EBC Public House, free and clear of any encumbrances (other than restrictions on transfer imposed by applicable securities Law), accompanied by duly executed stock powers, in form and substance reasonably satisfactory to the Buyer, and
(ii) against receipt of the Public House Shares, the Buyer shall issue and deliver certificates representing the shares of Preferred Stock.
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2.3 Closing. Buyer has had until and through the Closing Date (defined below), in which to conduct due diligence (the "Due Diligence Period"). Seller has provided Buyer with all documents and information concerning the Business and the assets of EBC Public House as Buyer has requested, including without limitation all ledgers and financial statements, income documentation, sales history, sales tax records, client records, client and prospective client lists, employee salaries and benefits, and all other pertinent documents, in each case, to the extent requested throughout the Due Diligence Period by Buyer to objectively evaluate the Business. Following such Due Diligence Period, the closing of the Transactions (the “Closing”) to be performed on the Closing Date will take place at the offices of the Buyer via the exchange of documents and signatures of the Buyer and the Seller (the “Closing Date”). The sale, assignment, transfer and conveyance to the Buyer of the shares of Preferred Stock will be deemed effective as 12:01 a.m. on the Closing Date.
2.4 Tax Withholding . Notwithstanding anything to the contrary in this Article II, to the extent required by the Code or applicable Law, the Buyer shall be permitted to deduct and withhold for taxes any required amounts from the Purchase Price (or any portion thereof), as reasonably determined by the Buyer . Any tax amounts so deducted or withheld shall be treated as if paid to the Party for whom the tax deduction or withholding was required; provided, however, that the withholding Party shall have properly remitted such tax amounts withheld to the appropriate authorities.
Article
III
REPRESENTATIONS AND WARRANTIES OF THE SELLER
The Seller represents and warrants to the Buyer that the following representations are true and complete as of the Closing Date:
3.1 Authority . Seller has full power, authority and legal capacity to execute and deliver the Transaction Documents to which Seller is a party and to perform the Seller’s obligations thereunder. This Agreement constitutes the valid and legally binding obligation of the Seller, enforceable against Seller in accordance with the terms of this Agreement. Upon the execution and delivery by Seller of each Transaction Document to which Seller is a party, such Transaction Document will constitute the valid and legally binding obligation of Seller enforceable against Seller in accordance with the terms of such Transaction Document.
3.2 Share Ownership . The Seller owns of record and beneficially the number of Public House Shares set forth next to Seller’s name on the Signature Page hereto, free and clear of any Encumbrance or restriction on transfer (other than any restriction under any securities Law). The Seller is not a party to any option, warrant, purchase right, right of first refusal, call, put or other Contract (other than this Agreement) that could require Seller to sell, transfer or otherwise dispose of any of the Public House Shares. At the Closing, Seller will have duly transferred to the Buyer all of Seller’s Public House Shares, free and clear of any encumbrance, and such shares constitute 100% of the issued and outstanding stock of EBC Public House.
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3.3 No Conflicts . Neither the execution and delivery of this Agreement nor the performance of the Transactions will, directly or indirectly, with or without notice or lapse of time: (a) violate any Law to which Seller, or any of Seller’s Shares, is subject; (b) violate, conflict with, result in a breach of, constitute a default under, result in the acceleration of or give any Person the right to accelerate the maturity or performance of, or to cancel, terminate, modify or exercise any remedy under, any Contract to which Seller is a party or by which Seller is bound or to which any of Seller’s Shares is subject or the performance of which is guaranteed by Seller; or (c) result in the imposition of any Encumbrance on any of Seller’s Shares. Seller need not notify, make any filing with, or obtain any Consent of, any Person in order to perform the Transactions.
3.4 Litigation . There is no proceeding pending or, to Seller’s knowledge, threatened or anticipated against Seller relating to or affecting the transactions contemplated by this Agreement.
3.5 Securities Law .
(a) Seller acknowledges that the offer and sale of the Preferred Stock is intended to be exempt from registration under the Securities Act and all applicable state securities Law.
(b) Seller: (i) has been furnished with a copy of Buyer’s SEC filings filed with the SEC and all reports or documents required to be filed thereafter with the SEC pursuant to the Securities Exchange Act of 1934, as amended; (ii) has been provided copies of all other reasonably requested material information regarding Buyer; and (iii) has been afforded an opportunity to ask questions of, and receive answers from, management of Buyer in connection with the Preferred Stock. Seller has not been furnished with any oral or written representation in connection with the purchase of the Preferred Stock by or on behalf of Buyer that Seller has relied on that is not contained in this Agreement.
(c) Seller: (i) is an “accredited investor” as defined in Rule 501 of Regulation D under the Securities Act; (ii) has obtained, in its judgment, sufficient information to evaluate the merits and risks of the purchase of the Preferred Stock; (iii) has sufficient knowledge and experience in financial and business matters to evaluate the merits and risks associated with such purchase of the Preferred Stock and to make an informed investment decision with respect thereto; and (iv) has consulted with its own advisors with respect to the purchase of the Preferred Stock.
(d) The Preferred Stock is being acquired for Seller’s own account for investment and not for the benefit or account of any other Person and not with a view to, or in connection with, any resale or distribution thereof unless the shares of such Preferred Stock are subsequently registered under the Securities Act and under the applicable securities Law of such states or an exemption from such registration is otherwise available. Seller fully understands and agrees that it may have to bear the economic risk of the investment in the Preferred Stock for an indefinite period of time because, among other reasons, such Preferred Stock has not been registered under the Securities Act or under the securities Law of any states, and, therefore, the shares of such Preferred Stock are “restricted securities” and cannot be resold, pledged, assigned or otherwise disposed of unless they are subsequently registered under the Securities Act and under the applicable securities Law of such states or an exemption from such registration is otherwise available. Seller understands that Buyer is not under any obligation to register such Preferred Stock on Seller’s behalf or to assist Seller in complying with any exemption from registration under the Securities Act or applicable state securities Law, except as set forth in the Transactional Documents. Seller understands that unless the shares of such Preferred Stock are eligible for sale pursuant to Rule 144(d), Buyer may require, as a condition to registering the transfer of such Preferred Stock, an opinion of counsel satisfactory to Buyer to the effect that such transfer does not violate such registration requirements
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Article
IV
REPRESENTATIONS AND WARRANTIES
OF EBC PUBLIC HOUSE
The Seller and EBC Public House, jointly and severally, represent and warrant to the Buyer as follows:
4.1 Organization, Qualification and Corporate Power . EBC Public House is a corporation duly organized, validly existing and in good standing under the laws of its jurisdiction of incorporation. EBC Public House is duly qualified to do business and is in good standing under the laws of its jurisdiction of organization and the laws of each jurisdiction where such qualification is required. EBC Public House has full corporate power and authority to conduct the businesses in which it is engaged, to own and use the properties and assets that it purports to own or use and to perform its obligations. EBC Public House does not currently maintain, nor has at any time in the past maintained, employees or assets of any kind in any jurisdiction outside of the United States. EBC Public House has delivered to the Buyer correct and complete copies of the organizational documents of EBC Public House. EBC Public House is not in violation of any of its organizational documents. The minute books, the stock certificate books and the stock ledger of EBC Public House, in each case as delivered or made available to the Buyer, are correct and complete.
4.2 Capitalization . The entire authorized capital stock of EBC Public House is as follows: EBC Public House is authorized to issue 1000 shares of common stock, no par value, of which 1000 shares are issued and outstanding. All such outstanding shares are owned of record and beneficially by the Seller, and there are no other owners or holders of shares of EBC Public House. All of the outstanding capital stock of EBC Public House has been duly authorized and is validly issued, fully paid and nonassessable. There are no outstanding securities convertible or exchangeable into capital stock of EBC Public House or any options, warrants, purchase rights, subscription rights, preemptive rights, conversion rights, exchange rights, calls, puts, rights of first refusal or other Contracts that could require EBC Public House to issue, sell or otherwise cause to become outstanding or to acquire, repurchase or redeem capital stock of EBC Public House. There are no outstanding stock appreciation, phantom stock, profit participation or similar rights with respect to EBC Public House. EBC Public House has not violated any securities Law in connection with the offer, sale or issuance of any of its capital stock or other equity or debt securities. There are no voting trusts, proxies or other Contracts relating to the voting of the capital stock of EBC Public House. EBC Public House does not control or own, directly or indirectly, any equity or profits interests in any Person or have the power, directly or indirectly, to elect any Persons to the board of directors or comparable governing body of any other Person.
4.3 Authority . EBC Public House has full corporate power and authority to execute and deliver this Agreement and each Transaction Document to which EBC Public House is a party, and to perform its obligations hereunder and thereunder. The execution, delivery and performance by EBC Public House of this Agreement and each Transaction Document to which EBC Public House is a party have been duly authorized by the board of directors of EBC Public House. This Agreement and each Transaction Document to which EBC Public House is a party constitutes the valid and legally binding obligation of EBC Public House, enforceable against EBC Public House in accordance with the terms thereof. Upon the execution and delivery by EBC Public House of each Transaction Document to which it is a party, such Transaction Document will constitute the valid and legally binding obligation of EBC Public House enforceable against it in accordance with the terms of such Transaction Document.
4.4 Title to and Sufficiency of Assets . EBC Public House has good and marketable title to, or a valid leasehold interest in, the location where the Business is operated, free and clear of any encumbrances except for valid leasehold interests. The assets owned by EBC Public House include (a) all tangible and intangible property and assets necessary for the continued conduct of the Business and the provision of services therewith as of the Closing in the same manner as conducted prior to the Closing and in compliance in all material respects with all applicable laws, material contracts and permits as of the Closing and (b) all property and assets necessary to have generated the results of operations for the Business to perform under the material contracts. EBC Public House further represents and warrants that EBC Public House will retain title to the assets, following the Closing.
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Article
V
REPRESENTATIONS AND WARRANTIES REGARDING THE BUYER
The Buyer represents and warrants to the Seller as follows:
5.1 Organization and Authority . The Buyer is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation. The Buyer has full corporate power and authority to execute and deliver the Transaction Documents to which it is a party and to perform its obligations thereunder. The execution and delivery by the Buyer of each Transaction Document to which the Buyer is a party and the performance by the Buyer of the Transactions have been duly approved by all requisite corporate action of the Buyer. This Agreement constitutes the valid and legally binding obligation of the Buyer, enforceable against the Buyer in accordance with the terms of this Agreement. Upon the execution and delivery by the Buyer of each Transaction Document to which the Buyer is a party, such Transaction Document will constitute the valid and legally binding obligation of the Buyer, enforceable against the Buyer in accordance with the terms of such Transaction Document.
5.2 No Conflicts . Neither the execution and delivery of this Agreement nor the performance of the Transactions will, directly or indirectly, with or without notice or lapse of time: (a) violate any Law to which the Buyer is subject; (b) violate any Organizational Document of the Buyer; or (c) violate, conflict with, result in a breach of, constitute a default under, result in the acceleration of or give any Person the right to accelerate the maturity or performance of, or to cancel, terminate, modify or exercise any remedy under, any Contract to which the Buyer is a party or by which the Buyer is bound or the performance of which is guaranteed by the Buyer. The Buyer is not required to notify, make any filing with, or obtain any Consent of any Person in order to perform the Transactions.
5.3 Preferred Stock . The Preferred Stock will be duly authorized and validly issued and, upon the issuance of the Preferred Stock as set forth in Section 2.2(a), will be fully paid, nonassessable and free of any restrictions, subject to the provisions of the Certificate of Designation. Buyer has filed in a timely manner all forms, reports and documents required to be filed by it with the SEC, all of which have complied as of their respective filing dates or, if amended or superseded by a subsequent filing prior to the date hereof, the date of the last such amendment or superseding filing, in all material respects with all applicable requirements of the Securities Act and the Exchange Act. None of the forms, reports or documents filed by the Buyer with the SEC, including any financial statements or schedules included or incorporated by reference therein, at the time filed (and, in the case of a registration statement, as of its effective date) or, if amended or superseded by a subsequent filing prior to the date hereof, as of the date of the last such amendment or superseding filing, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. The financial statements filed in connection with reports and documents required to be filed by Buyer with the SEC present fairly the financial condition and results of operations of Buyer and Buyer is not aware of any shortcomings in any forms, reports or documents filed by the Buyer with the SEC, including any financial statements or schedules included or incorporated by reference therein.
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5.4 No Undisclosed Liabilities . The Buyer has not incurred any Liability (and no basis exists for any Liability), except for (a) Liabilities to the extent reflected or reserved against on Buyer's last balance sheet filed with the SEC and publicly available, and (b) current Liabilities incurred in the Ordinary Course of Business since the Buyer's last financial statements filed with the SEC and publicly available (none of which results from, arises out of, relates to, is in the nature of, or was caused by any breach of Contract, breach of warranty, tort, infringement or violation of Law).
5.5 Legal Compliance . The Buyer is, and since Buyer's last financial statements filed with the SEC and publicly available has been, in compliance in all material respects with all applicable Laws and Permits. No Proceeding is pending, nor since such time of Buyer's last financial statements filed and publicly available, has been filed or commenced, against the Buyer alleging any failure to comply with any applicable Law or Permit. No event has occurred or circumstance exists that (with or without notice or lapse of time) may constitute or result in a violation by the Buyer of any Law or Permit. The Buyer has not received any notice or other communication from any Person regarding any actual, alleged or potential violation by the Buyer of any Law or Permit or any cancellation, termination or failure to renew any Permit held by the Buyer.
5.6 Litigation . There is no Proceeding pending or, to the Knowledge of the Buyer, threatened or anticipated against the Buyer relating to, affecting, or otherwise delaying, interfering or preventing the Transactions or materially impacting the Buyer or the Buyer's financial condition or operations. To the Buyer's Knowledge, no event has occurred or circumstance exists that would reasonably be expected to give rise to or serve as a basis for the commencement of any such Proceeding in which the anticipated liability exposure would be expected to exceed $100,000. There is no outstanding Order to which the Buyer is subject.
5.7 Absence of Certain Changes . Since September 30, 2015, there has not been any Buyer Material Adverse Effect and no event has occurred or circumstance exists that reasonably could result in any such Material Adverse Effect.
5.8 No Brokers’ or Finders’ Fees . The Buyer has no Liability for any fee, commission or payment to any broker, finder or agent with respect to the Transactions for which the Seller could be liable. The Buyer has not retained, employed or used any broker or finder in connection with purchase of the shares from the Seller.
5.9 Investment Intent . The Buyer is acquiring the Public House Shares purchased hereunder for its own account and not with a view to distribution of such Public House Shares in violation of the Securities Act.
Article
VI
CLOSING CONDITIONS
6.1 Conditions to the Buyer’s Obligations . The Buyer’s obligation to perform the Transactions contemplated to be performed on or before the Closing Date is subject to satisfaction, or written waiver by the Buyer, of each of the following conditions:
(a) (i) all of the representations and warranties of EBC Public House and the Seller in this Agreement must have been accurate in all material respects as of the date hereof and must be accurate in all material respects as if made on the Closing Date, except in each case to the extent any such representation or warranty is made as of an earlier specific date, in which case such representation or warranty must have been and must be accurate in all respects as of such date, and (ii) EBC Public House and the Seller must have performed and complied with all of their respective covenants and agreements in this Agreement to be performed prior to or at the Closing.
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(b) each of the following documents must have been delivered to the Buyer and dated as of the Closing Date (unless otherwise indicated):
(i) Certificates representing all of the Public House Shares, free and clear of any encumbrances, accompanied by duly executed stock powers, in form and substance reasonably satisfactory to the Buyer;
(ii) The minute books, the stock certificate books and the stock ledger of EBC Public House;
(iii) such other documents as the Buyer and Seller reasonably agree are necessary for the purpose of (A) evidencing the accuracy of Seller’s and EBC Public House’s representations and warranties, (B) evidencing Seller’s and EBC Public House’s performance of, and compliance with, any covenant or agreement required to be performed or complied with by Seller and EBC Public House, or (C) evidencing the satisfaction of any condition referred to in this Section 6.1.
(c) the Board of Directors of the Buyer shall have approved the Transactions;
(d) each of EBC Public House and Seller shall have used commercially reasonable efforts to preserve intact the Business and their relationships with the employees, customers, agents of EBC Public House and all other persons reasonably related to the Business in a manner consistent with past practices or in the ordinary course of business;
(e) the performance of the Transactions must not, directly or indirectly, with or without notice or lapse of time, violate any law that has been adopted or issued, or has otherwise become effective, since the date hereof;
(f) EBC Public House shall have received all required food and beverage licenses, includjng all licenses required by the California Department of Alcoholic Beverage Control (“ABC”), or other entity or department, together with any other required licenses and permits for operation; and
(g) The renovations and work on the restaurant shall have been completed, and the restaurant shall be open for business
6.2 Conditions to the Seller’s Obligations . The Seller’s obligations to perform the Transactions contemplated to be performed on or before the Closing Date are subject to satisfaction, or written waiver by the Seller, of the following conditions:
(a) all of the representations and warranties of the Buyer in this Agreement must have been accurate in all material respects as of the date hereof and must be accurate in all material respects as if made on the Closing Date, and (ii) the Buyer must have performed and complied with all of its covenants and agreements in this Agreement to be performed prior to or at the Closing.
(b) each of the following documents must have been delivered to the Seller:
(i) One or more certificates representing the Preferred Stock (subject to Section 7.6 below).
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(c) the sale of the Public House Shares by the Seller to the Buyer will not violate any Law that has been adopted or issued, or has otherwise become effective, since the date hereof;
(d) Any required documents for exemption for registration of the Preferred Stock;
(e) EBC Public House shall have received all required food and beverage licenses, including all licenses required by the ABC, or other entity or department, together with any other required licenses and permits for operation; and
(f) The renovations and work on the restaurant shall have been completed, and the restaurant shall be open for business.
Article
VII
MISCELLANEOUS
7.1 No Third-Party Beneficiaries . This Agreement does not confer any rights or remedies upon any Person (including any employee of EBC Public House) other than the Parties, their respective successors and permitted assigns and, as expressly set forth in this Agreement, any Indemnified Party.
7.2 Entire Agreement . The Transaction Documents constitute the entire agreement among the Parties with respect to the subject matter of the Transaction Documents and supersede all prior agreements (whether written or oral and whether express or implied) among any Parties to the extent related to the subject matter of the Transaction Documents (including any letter of intent or confidentiality agreement).
7.3 Successors and Assigns . This Agreement will be binding upon and inure to the benefit of the Parties and their respective successors and permitted assigns. Seller may not assign, delegate or otherwise transfer (whether by operation of law or otherwise) any of Seller’s rights, interests or obligations in this Agreement without the prior written approval of the Buyer. The Buyer may assign any or all of its rights or interests, or delegate any or all of its obligations, in this Agreement to (a) any successor to the Buyer, any successor to EBC Public House, or any acquirer of a material portion of the businesses or assets of the Buyer or EBC Public House, (b) one or more of the Buyer’s Affiliates, or (c) any lender to the Buyer or EBC Public House as security for obligations to such lender.
7.4 Counterparts . This Agreement may be executed by the Parties in multiple counterparts and shall be effective as of the date set forth above when each Party shall have executed and delivered a counterpart hereof, whether or not the same counterpart is executed and delivered by each Party. When so executed and delivered, each such counterpart shall be deemed an original and all such counterparts shall be deemed one and the same document. Transmission of images of signed signature pages by facsimile, e-mail or other electronic means shall have the same effect as the delivery of manually signed documents in person.
7.5 Notices . Any notice pursuant to this Agreement must be in writing and will be deemed effectively given to another Party on the earliest of the date (a) three Business Days after such notice is sent by registered U.S. mail, return receipt requested, (b) one Business Day after receipt of confirmation if such notice is sent by facsimile, (c) one Business Day after delivery of such notice into the custody and control of an overnight courier service for next day delivery, (d) one Business Day after delivery of such notice in person and (e) such notice is received by that Party; in each case to the appropriate address below (or to such other address as a Party may designate by notice to the other Parties):
If to the Seller (or to EBC Public House prior to the Closing):
EBC Public House Inc.
3815 S. Main Street
Santa Ana, CA 92707
ATTN: Michael J. Rapport
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If to the Buyer:
Evans Brewing Company Inc.
3815 S. Main Street
Santa Ana, CA 92707
ATTN: Board of Directors
with a copy (which shall not constitute notice) to:
Kirton McConkie PC
50 E. South Temple, Suite 400
Salt Lake City, Utah 84111
Fax: (801) 212-2187
Phone: (801) 328-3600
Attn: C. Parkinson Lloyd, Esq.
7.6 Jurisdiction; Service of Process . EACH PARTY (A) CONSENTS TO THE PERSONAL JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED IN ORANGE COUNTY, CALIFORNIA (AND ANY CORRESPONDING APPELLATE COURT) IN ANY PROCEEDING ARISING OUT OF OR RELATING TO ANY TRANSACTION DOCUMENT (UNLESS OTHERWISE STATED TO THE CONTRARY IN ANY TRANSACTION DOCUMENT), (B) WAIVES ANY VENUE OR INCONVENIENT FORUM DEFENSE TO ANY PROCEEDING MAINTAINED IN SUCH COURTS AND (C) EXCEPT AS OTHERWISE PROVIDED IN THIS AGREEMENT, AGREES NOT TO INITIATE ANY PROCEEDING ARISING OUT OF OR RELATING TO ANY TRANSACTION DOCUMENT (UNLESS OTHERWISE STATED TO THE CONTRARY IN ANY TRANSACTION DOCUMENT) IN ANY OTHER COURT OR FORUM. PROCESS IN ANY SUCH PROCEEDING MAY BE SERVED ON ANY PARTY ANYWHERE IN THE WORLD.
7.7 Venue .
ANY LEGAL SUIT, ACTION OR PROCEEDING ARISING OUT OF OR BASED UPON THIS AGREEMENT, THE OTHER TRANSACTION DOCUMENTS, OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY MAY BE INSTITUTED IN THE FEDERAL COURTS OF THE UNITED STATES OF AMERICA OR THE COURTS OF THE STATE OF CALIFORNIA IN EACH CASE LOCATED IN THE COUNTY OF ORANGE COUNTY, CALIFORNIA, AND EACH PARTY IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF SUCH COURTS IN ANY SUCH SUIT, ACTION OR PROCEEDING. SERVICE OF PROCESS, SUMMONS, NOTICE OR OTHER DOCUMENT BY MAIL TO SUCH PARTY'S ADDRESS SET FORTH HEREIN SHALL BE EFFECTIVE SERVICE OF PROCESS FOR ANY SUIT, ACTION OR OTHER PROCEEDING BROUGHT IN ANY SUCH COURT. THE PARTIES IRREVOCABLY AND UNCONDITIONALLY WAIVE ANY OBJECTION TO THE LAYING OF VENUE OF ANY SUIT, ACTION OR ANY PROCEEDING IN SUCH COURTS AND IRREVOCABLY WAIVE AND AGREE NOT TO PLEAD OR CLAIM IN ANY SUCH COURT THAT ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
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7.8 Governing Law . This Agreement and all other Transaction Documents (unless otherwise stated therein) will be governed by the laws of the State of California without giving effect to any choice or conflict of law principles of any jurisdiction.
7.9 Amendments and Waivers . No amendment of any provision of this Agreement will be valid unless the amendment is in writing and signed by the Buyer and the Seller. No waiver of any provision of this Agreement will be valid unless the waiver is in writing and signed by the waiving Party. The failure of a Party at any time to require performance of any provision of this Agreement will not affect such Party’s rights at a later time to enforce such provision. No waiver by any Party of any breach of this Agreement will be deemed to extend to any other breach hereunder or affect in any way any rights arising by virtue of any other breach.
7.10 Severability . Any provision of this Agreement that is determined by any court of competent jurisdiction to be invalid or unenforceable will not affect the validity or enforceability of any other provision hereof or the invalid or unenforceable provision in any other situation or in any other jurisdiction. Any provision of this Agreement held invalid or unenforceable only in part or degree will remain in full force and effect to the extent not held invalid or unenforceable.
7.11 Expenses . EBC Public House will bear all expenses incurred by it or any of its Representatives in connection with the Transactions contemplated to be performed before or on the Closing Date and such expenses will have been paid by EBC Public House prior to the Closing Date. The Seller will bear all expenses incurred by the Seller or any of his in connection with the Transactions contemplated to be performed before or on the Closing Date. Except as otherwise expressly provided in this Agreement, the Buyer will bear all expenses incurred by the Buyer or any of its Representatives in connection with the Transactions contemplated to be performed on or before the Closing Date. In the event of termination of this Agreement, the obligation of each Party to pay its own expenses will be subject to any rights of such Party arising from a breach of this Agreement by another Party.
7.12 Construction . The article and section headings in this Agreement are inserted for convenience only and are not intended to affect the interpretation of this Agreement. Any reference in this Agreement to any Article or Section refers to the corresponding Article or Section of this Agreement. Any reference in this Agreement to any Schedule or Exhibit refers to the corresponding Schedule or Exhibit attached to this Agreement and all such Schedules and Exhibits are incorporated herein by reference. The word “including” in this Agreement means “including without limitation.” This Agreement will be construed as if drafted jointly by the Parties and no presumption or burden of proof will arise favoring or disfavoring any Party by virtue of the authorship of any provision in this Agreement. Unless the context requires otherwise, any reference to any Law will be deemed also to refer to all amendments and successor provisions thereto and all rules and regulations promulgated thereunder, in each case as in effect as of the date hereof and the Closing Date. All accounting terms not specifically defined in this Agreement will be construed in accordance with GAAP as in effect on the date hereof (unless another effective date is specified herein). The word “or” in this Agreement is disjunctive but not necessarily exclusive. All words in this Agreement will be construed to be of such gender or number as the circumstances require. References in this Agreement to time periods in terms of a certain number of days mean calendar days unless expressly stated herein to be Business Days. In interpreting and enforcing this Agreement, each representation and warranty will be given independent significance of fact and will not be deemed superseded or modified by any other such representation or warranty.
7.13 Specific Performance . Each Party acknowledges that the other Parties would be damaged irreparably and would have no adequate remedy of law if any provision of this Agreement is not performed in accordance with its specific terms or otherwise is breached. Accordingly, each Party agrees that the other Parties will be entitled to an injunction to prevent any breach of any provision of this Agreement and to enforce specifically any provision of this Agreement, in addition to any other remedy to which they may be entitled and without having to prove the inadequacy of any other remedy they may have at law or in equity and without being required to post bond or other security.
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7.14 Further Assurances . Each Party agrees to furnish upon request to any other Party such further information, to execute and deliver to any other Party such other documents, and to do such other acts and things, all as any other Party may reasonably request for the purpose of carrying out the intent of the Transaction Documents.
7.15 Public Announcement . Because the Buyer is a publicly reporting company, Seller agrees that upon closing, Buyer shall have the right to make such announcement, and provide such details about the purchase of the Public House Shares by the Buyer from the Seller as Buyer deems appropriate, provided that Buyer show Seller such announcement prior to making such. Seller further agrees that it shall not make any other announcement of this Agreement or the transaction contemplated hereby or by the Transaction Documents without the prior approval of the Buyer.
10.16 Attorneys’ Fees. The prevailing party(ies) in any litigation, arbitration, bankruptcy, insolvency or other proceeding (“Proceeding”) relating to the enforcement or interpretation of this Agreement may recover from the unsuccessful party(ies) all costs, expenses, and actual attorney's fees (including expert witness and other consultants' fees and costs) relating to or arising out of (a) the Proceeding (whether or not the Proceeding proceeds to judgment), and (b) any post-judgment or post-award proceeding including one to enforce or collect any judgment or award resulting from the Proceeding. All such judgments and awards shall contain a specific provision for the recovery of all such subsequently incurred costs, expenses, and actual attorney's fees.
[Signature page follows.]
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The Parties have executed and delivered this Stock Purchase Agreement as of the date first written above.
“Buyer”: | ||
EVANS BREWING COMPANY INC. | ||
By: | /s/ Evan M. Rapport | |
Name: |
Evan M Rapport |
|
Title: | Vice President |
“Seller”:
Prior to the Closing, Mr. Rapport was the | /s/ Michael J. Rapport |
owner of record of the following number | Michael J. Rapport |
of Shares of EBC Public House: |
1,000 shares
EBC PUBLIC HOUSE INC. | ||
By: | /s/ Michael J. Rapport | |
Name: | Michael J. Rapport | |
Title: | President |
[Signature Page to Stock Purchase Agreement]
EXHIBIT A
CERTIFICATE OF DESIGNATION