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                                                                   Exhibit 10.16

                  American Craft Brewing International Limited
                             Unit A1, 1/F Vita Tower
                                29 Wong Chuk Hang
                               Aberdeen, Hong Kong

                                                      May 31, 1996

Long Term Partners, Ltd.

_____________________________
(Address)

_____________________________

_____________________________


Dear Sir:

               American Craft Brewing  International  Limited,  a British Virgin
Islands company (the  "Company"),  or its successor,  hereby agrees to issue and
sell, and Long Term Partners, Ltd. (the "Purchaser"),  hereby agrees to purchase
(the "Issuance and Sale") US$120,000  principal amount (the "Principal  Amount")
of a Redeemable  Convertible  Note.  "Redeemable  Convertible Note" shall mean a
note  issued by the  Company or its  successor  in the form  attached  hereto as
Exhibit A with the following terms: interest on the Redeemable  Convertible Note
shall accrue at the rate of 12% per annum; provided, that if the Company, or its
successor,  does not  consummate  an initial  public  offering  of its shares of
capital stock, par value US$0.01 per share (the "Shares"),  in the United States
(the "IPO") prior to September 1, 1996,  interest on the Redeemable  Convertible
Note shall accrue at the rate of 14% per annum for the period from but excluding
September 1, 1996 to but including  September 1, 1997 (the  "Conversion  Date");
provided  further  that if the IPO is not  consummated  prior to the  Conversion
Date, the Purchaser  shall have the right to convert the Redeemable  Convertible
Note into that number of Shares so that  immediately  after such  conversion the
Purchaser shall hold 3% of the issued and outstanding  Shares.  Upon the date of
the consummation of the IPO (the "Closing  Date"),  the Company or its successor
shall issue that number of Shares equal to the quotient obtained by dividing the
Principal  Amount by the price per Share of the price to the  public in the IPO.
In addition, upon



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the Closing Date,  the Company or its  successor  shall issue to the Purchaser a
redeemable  warrant  (the  "Redeemable  Warrant"),  in the form  attached to the
Convertable  Note as Exhibit A,  entitling  the  Purchaser to purchase up to the
number  of Shares  issued to it in  accordance  with the  immediately  preceding
sentence  at a price per Share  equal to the product of 1.5 and the IPO Price on
one or  more  occasions  during  the  period  commencing  thirteen  months  (the
"Commencement  Date") from the date of the  prospectus  relating to the IPO (the
"Effective  Date") and terminating on the fifth  anniversary of the Commencement
Date.  Commencing  18 months  after  the  Effective  Date,  the  Company  or its
successor shall be entitled to redeem the Redeemable Warrant at a price equal to
the  product  of the  number of Shares  into  which the  Redeemable  Warrant  is
convertable  and  US$0.10 on 30 days prior  written  notice to the holder of the
Redeemable Warrant if the per Share closing bid quotation on the Nasdaq SmallCap
Market  equals or exceeds 160% of the IPO Price for any 20 trading days within a
period of 30 consecutive  trading days, ending on the fifth trading day prior to
the notice of redemption.  The Redeemable  Convertible  Note shall mature on the
earlier of the Closing Date and the  Conversion  Date and shall be redeemable by
the Company or its successor at any time.

               2. Lock-Up Agreement.  The Purchaser agrees that, for a period of
six months  following  the effective  date of the  Company's or its  successor's
registration statement on Form S-1 relating to the IPO, he will not, without the
prior written consent of the Company,  or its successor,  and the representative
of the underwriter(s) of the IPO, directly or indirectly, issue, offer, agree to
offer to sell,  sell,  grant an option for the  purchase  or sale of,  transfer,
pledge, assign, hypothecate,  distribute or otherwise encumber or dispose of the
Redeemable Convertible Note, the Shares or the Redeemable Warrant (or the Shares
underlying  the  Redeemable  Warrant)  or  options,  rights,  warrants  or other
securities  convertible  into  exchangeable or exercisable for or evidencing any
right to purchase or subscribe for the Redeemable  Convertible  Note, the Shares
or the Redeemable  Warrant (or the Shares  underlying  the  Redeemable  Warrant)
(whether or not beneficially  owned), or any beneficial interest therein,  other
than (i) Shares  transferred  pursuant to bona fide gifts  where the  transferee
agrees in writing to be similarly bound or (ii) Shares  transferred  through the
laws of descent.

               3. Registration and Transfer of the Redeemable  Convertible Note,
the Shares or the  Redeemable  Warrant (or the Shares  underlying the Redeemable
Warrant).  The  Company  shall  not  register  any  transfer  of the  Redeemable
Convertible Note, the Shares or the Redeemable Warrant (or the Shares underlying
the  Redeemable  Warrant)  unless there are  effective  registrations  under the
Securities Act of 1933 (the "Act"),  pursuant to Regulation S promulgated  under
the Act ("Regulation S") or pursuant to another exemption under the Act.

               4. Resale of the Redeemable  Convertible  Note, the Shares or the
Redeemable  Warrant  (or the Shares  underlying  the  Redeemable  Warrant).  The
Purchaser  shall  not  resell  or  otherwise   transfer  either  the  Redeemable
Convertible Note, the Shares or the Redeemable Warrant (or the Shares underlying
the Redeemable  Warrant) unless (i) there are effective  registrations under the
Act, pursuant to Regulation S or pursuant to another exemption under the Act and
(ii) if requested by the Company,  or its successor,  the Purchaser  delivers to
the Company an opinion of counsel, in form and substance satisfactory to counsel
for the Company,



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to  the  effect  that  such  sale  is  in  conformance   with  the  registration
requirements  of the Act,  pursuant  to  Regulation  S or  pursuant  to  another
exemption under the Act.

               5.     Legend on Share Certificates.  The certificates evidencing
the Shares shall bear the following legend:

               "THE SHARES  REPRESENTED BY THIS  CERTIFICATE  ARE SUBJECT TO THE
               PROVISIONS  OF A  LETTER  AGREEMENT,  DATED  AS OF MAY  31,  1996
               BETWEEN  AMERICAN  CRAFT BREWING  INTERNATIONAL  LIMITED AND LONG
               TERM PARTNERS, LTD., AND MAY NOT BE SOLD OR TRANSFERRED EXCEPT IN
               ACCORDANCE THEREWITH.  A COPY OF SUCH AGREEMENT IS ON FILE AT THE
               OFFICE OF THE EXECUTIVE  VICE PRESIDENT AND SECRETARY OF AMERICAN
               CRAFT BREWING INTERNATIONAL LIMITED.

               "THE  SHARES  REPRESENTED  BY  THIS  CERTIFICATE  HAVE  NOT  BEEN
               REGISTERED  UNDER THE SECURITIES  ACT OF 1933 (THE "ACT").  THESE
               SHARES MAY NOT BE OFFERED FOR SALE, SOLD OR OTHERWISE TRANSFERRED
               EXCEPT PURSUANT TO AN EFFECTIVE  REGISTRATION STATEMENT UNDER THE
               ACT, PURSUANT TO REGULATION S PROMULGATED  THEREUNDER OR PURSUANT
               TO ANOTHER EXEMPTION FROM REGISTRATION UNDER THE ACT."

               6.   Representations   and  Warranties.   The  Purchaser   hereby
represents and warrants to, and expressly agrees with, the Company that:

               (a) he is not a U.S.  person (as defined in  Regulation S) and is
        not  acquiring  the  Redeemable  Convertible  Note,  the  Shares  or the
        Redeemable Warrant (or the Shares underlying the Redeemable Warrant) for
        the account or benefit of any U.S. person;

               (b)  the  Redeemable   Convertible   Note,  the  Shares  and  the
        Redeemable  Warrant (and the Shares  underlying the Redeemable  Warrant)
        will be acquired by him for his own  account,  for  investment  purposes
        only, and not with a view to the resale or distribution thereof,  unless
        there are effective  registrations under the Act, pursuant to Regulation
        S or pursuant to another exemption under the Act;

               (c) he is not, and does not intend to become, a "distributor" (as
        defined in Regulation S) of the Redeemable  Convertible Note, the Shares
        or the  Redeemable  Warrant  (or the Shares  underlying  the  Redeemable
        Warrant)  provided  that if he  does  become  a  distributor,  he  shall
        promptly notify the Company, or its successor,  and he shall comply with
        all applicable requirements of Regulation S;

               (d) he is an  "accredited  investor"  (as defined in Regulation D
        promulgated under the Act);



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               (e)  he is a  sophisticated  investor  with  such  knowledge  and
        experience  in  business  and  financial  matters as will  enable him to
        evaluate the merits and risks of an investment in the Company; and

               (f) he  understands  that the  Redeemable  Convertible  Note, the
        Shares  and the  Redeemable  Warrant  (and  the  Shares  underlying  the
        Redeemable  Warrant),  have not been, and will not be,  registered under
        the Act or any U.S.  state  securities  laws,  and are being offered and
        sold  in  reliance  upon  U.S.  federal  and  state  exemptions  and the
        Purchaser recognizes that reliance upon such exemptions is based in part
        upon his representations contained herein.

               7.  Understanding  Among the Parties.  The  determination  of the
Purchaser  to  enter  into  this   Agreement  and  to  purchase  the  Redeemable
Convertible  Note,  the  Shares  and the  Redeemable  Warrant  (and  the  Shares
underlying the Redeemable Warrant) has been made by the Purchaser  independently
of the Company and its subsidiaries and their respective representatives, agents
and  employees  and  independently  of  any  statement  or  opinion  as  to  the
advisability  of executing  this  Agreement or as to the  properties,  business,
prospects or conditions (financial or otherwise) of the Company,  which may have
been made or given by the Company or any of its subsidiaries or their respective
representatives,  agents or employees.  The Purchaser  further  acknowledges and
agrees that he will acquire the Redeemable  Convertible Note, the Shares and the
Redeemable  Warrant (and the Shares underlying the Redeemable  Warrant) "as is,"
without any express or implied representations or warranties.

               8. Modification or Waiver in Writing. This Agreement shall not be
modified or amended except by a writing signed by both of the parties hereto. No
waiver of this Agreement or of any promises, obligations or conditions contained
herein  shall be valid  unless in writing and signed by the party  against  whom
said  waiver is to be  enforced  and any party  hereto  that shall be  adversely
affected by said waiver.  No delay on the part of any person in  exercising  any
right,  remedy or power hereunder  shall operate as a waiver thereof,  nor shall
any waiver on the part of any  person of such  right,  remedy or power,  nor any
single or partial  exercise of any such  right,  remedy or power,  preclude  any
further exercise thereof or the exercise of any other right, remedy or power.

               9.  Survival.  All  representations,  warranties,  covenants  and
agreements  shall  survive the  execution  and delivery of this  Agreement,  the
Redeemable  Convertible Note and the Redeemable  Warrant and the consummation of
the   transactions   contemplated   hereby  and  thereby,   regardless   of  any
investigation made by any party hereto or on behalf of such party.

               10. Successors and Assigns.  This Agreement shall be binding upon
and inure to the  benefit of the  parties  hereto,  their  affiliates  and their
respective predecessors,  successors, assigns, heirs, executives, administrators
and  personal  representatives,  and each of them,  whether so expressed or not.
This Agreement is not assignable by the Purchaser,  and any attempted assignment
of this  Agreement  without the prior  written  consent of the  Company,  or its
successor,  and any attempted  assignment of this Agreement,  without such prior
written consent, shall be void. This Agreement shall inure to the benefit of and
constitute an obligation of any successor to the Company's business.



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               11.  Severability.  Whenever  possible,  each  provision  of this
Agreement  shall be  interpreted  in such a manner as to be effective  and valid
under  applicable  law,  but if any  provision  of this  Agreement is held to be
invalid,  illegal or unenforceable  under any applicable law, rule or regulation
in any  jurisdiction,  such provision will be ineffective  only to the extent of
such invalidity,  illegality or unenforceability  in such jurisdiction,  without
invalidating  the  remainder  of  this  Agreement  in such  jurisdiction  or any
provision hereof in any other jurisdiction.

               12.  Entire  Agreement.  This  Agreement  embodies  the  complete
agreement and understanding among the parties with respect to the subject matter
hereof and supersedes any prior  understandings,  agreements or representations,
written or oral, which may have related to the subject matter hereof in any way.

               13.   Counterparts.   This  Agreement  may  be  executed  in  two
counterparts,  each of which  shall  be an  original  and  both of  which  shall
constitute one and the same instrument when a counterpart hereof has been signed
by both parties hereto.

               14.  Governing Law. This  Agreement,  the Redeemable  Convertible
Note and the  Redeemable  Warrant shall be governed by the laws of New York, but
without giving effect to applicable principles of conflicts of law to the extent
that the  application  of the laws of  another  jurisdiction  would be  required
thereby.

               15.  Headings.  The section  headings in this  Agreement  are for
convenience  of  reference  only and shall in no event  affect  the  meaning  or
interpretation of this Agreement.

               If the  terms of this  Agreement  have been  correctly  set forth
herein,  please confirm this by signing and returning to us the enclosed copy of
this Agreement.

                                       Very truly yours,

                                       AMERICAN CRAFT BREWING
                                       HOLDINGS LIMITED

                                       by /s/ Davis K. Haines
                                         _________________________________
                                         David K. Haines
                                         Managing Director for Hong Kong

Agreed to and accepted this
28 day of May 1996.

/s/ James Craig Chapman
_____________________________
Long Term Partners




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