DEBT CONVERSION AGREEMENT
THIS DEBT CONVERSION AGREEMENT is entered into as of the 1Oth day of May,
1999, between THE CHILDREN'S BEVERAGE GROUP, INC., a Delaware corporation (the
"Company") and RANGER ENTERPRISES, INC., a corporation organized under the laws
of the Turks and Caicos Islands ("Investor").
RECITALS:
A. The Company is indebted to Investor in the aggregate principal amount
of $565,000, plus all interest accrued through the date hereof (the "Investor
Debt"), pursuant to unsecured promissory notes dated November 10, 1998 (in the
principal amount of $150,000), December 20, 1998 (in the principal amount of
$165,000) and February 2, 1999 (in the principal amount of $200,000)
(collectively, the "Notes").
B. The Company and Investor desire, upon the terms and subject to the
conditions set forth in this Agreement, that the Investor Debt be converted into
shares of the Company's common stock, par value $.0001 per share (the "Common
Stock"), at the conversion price of $.60 per share.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, and for other good and valuable consideration the receipt and
adequacy of which are hereby acknowledged, the parties hereto agree as follows:
1. Cancellation of Investor Debt; Issuance of Conversion Shares. The
Company hereby agrees to issue to Investor that number of shares of Common Stock
determined by dividing (a) the aggregate Investor Debt as of the date hereof by
(b) $.60 (the "Conversion Shares") in consideration for the cancellation by
Investor of all Investor Debt. Investor hereby agrees, against delivery of
certificates representing the Conversion Shares, to cancel the Investor Debt and
to forever release and discharge the Company and all of its officers, directors,
agents, attorneys, employees, representatives, successors and assigns, from the
Investor Debt and any and all causes of action, judgments, liens, damages,
losses, claims, liabilities and demands related thereto. Certificates
representing the Conversion Shares shall promptly be delivered to Investor
following execution of this Agreement.
2. Piggyback Registration Rights. At any time that the Company shall
propose to register any of its securities under the Securities Act of 1933, as
amended (the "Securities Act"), for sale to the public, whether for its own
account or for the account of other security holders or both (except with
respect to registration statements on Forms X-0, X-0 or another form not
available for the registering the Conversions Shares to the public), it will
give written notice to such effect to Investor at least 30 days prior to such
filing. Upon the written request (the "Registration Request") of Investor
received by the Company within 20 days after the giving of such notice by the
Company to register any or all of the issued and outstanding Conversion Shares,
the Company will cause the Conversion Shares as to which registration shall have
been so requested to be included in
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the securities to be covered by the registration statement proposed to be filed
by the Company.
Notwithstanding the foregoing, in the event that any registration pursuant
to this Section 2 shall be, in whole or in part, an underwritten public offering
of Common Stock, the number of Conversion Shares to be included in such an
underwriting may be reduced if and to the extent that such inclusion would
reduce the number of shares to be offered by the Company.
3. Investor Representations and Warranties. Investor hereby represents
and warrants to the Company as follows:
(a) Investor is acquiring the Conversion Shares for its own account,
for investment purposes only and not with a view towards the distribution
thereof, provided, however, that by making such representation, Investor
does not agree to hold the Conversion Shares for any minimum or other
specific term and reserves the right to dispose of the Conversion Shares at
any time in accordance with federal and state securities laws applicable to
such disposition;
(b) Investor has such knowledge and experience in financial and
business matters as to be capable of evaluating the merits and risks of its
acquisition of Conversion Shares and Investor can afford to lose the entire
value of such investment;
(c) all documents, books and records pertaining to any investment of
the Company have been made available for inspection by Investor; and
(d) Investor has had both the opportunity to ask questions of and
receive answers from the officers and directors of the company and all
persons acting on its behalf concerning the terms and conditions of the
issuance of the Conversion Shares hereunder and to obtain any additional
information with respect thereto.
4. Company Representations and Warranties. The Company hereby represents
and warrants to Investor as follows:
(a) the execution, delivery and performance by the Company of this
Agreement and the transactions contemplated hereby have been duly
authorized by all necessary corporate action; this Agreement has been duly
executed and delivered by the Company and constitutes the legal, valid and
binding obligation of the Company, enforceable against the Company in
accordance with its terms; and
(b) the Conversion Shares, when delivered by the Company to Investor
in accordance with the terms and conditions of this Agreement, will be duly
and validly issued and fully paid and nonassessable,
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5. Restriction on Transfer. Investor acknowledges that the Conversion
Shares have not been registered under the Securities Act and that, subject to
Section 2 hereof, the Company is not obligated to register any of the Conversion
Shares under the Securities Act. Anything in this Agreement to the contrary
notwithstanding, Investor hereby agrees that he shall not sell, transfer by any
means or otherwise dispose of the Conversion Shares acquired by him without
registration under the Securities Act, or in the event that they are not so
registered, unless (i) an exemption from registration under the Securities Act
is available thereunder and (ii) Investor has furnished the Company with notice
of such proposed transfer and the Company's legal counsel, in its reasonable
opinion, shall deem such proposed transfer to be so exempt. Investor further
acknowledges that in the event the Conversion Shares are not registered under
the Securities Act, the certificates evidencing such Shares shall bear the
following legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, OR UNDER ANY STATE SECURITIES OR BLUE SKY LAWS. THE SHARES MAY
NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR ANY
APPLICABLE EXEMPTION THEREFROM UNDER SAID ACT OR LAWS.
6. Miscellaneous.
(a) Notices. All notices, requests, deliveries, demands and
other communications which are required or permitted to be given under this
Agreement shall be in writing and shall be either delivered personally or
by private courier, or sent by registered or certified mail, return receipt
requested, postage prepaid, properly addressed to the parties at the
following addresses:
If to the Investor: Ranger Enterprises, Inc.
c/o Temple Trust Company Ltd.
Tropicana Plaza
Leeward Highway
Providenciales, Turks and Caicos Islands
Attention: Xx. Xxxxxx Xxxxxx
If to the Company: The Children's Beverage Group, Inc.
000 Xxxxxx Xxxxx, Xxxxx X
Xxxxxxxxxx, Xxxxxxxx 00000
Attention: President
or to such other address as any party shall have specified by notice in
writing to the other parties. Notice shall be deemed duly given when
delivered or three days after the date sent if mailed as provided herein.
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(b) Waiver. The waiver by any party hereto of a breach of any
provision of this Agreement shall not operate or be construed as a waiver
of any other or subsequent breach.
(c) Entire Agreement. This Agreement constitutes the entire
agreement between the parties hereto with respect to the subject matter
hereof. This Agreement may not be amended or modified except by a writing
executed by each of the parties hereto.
(d) Binding Effect; Successors. This Agreement shall inure to the
benefit of and be binding upon the parties hereto and their heirs,
successors and permitted assigns. Nothing in this Agreement, expressed or
implied, is intended to confer on any other person any rights, remedies,
obligations or liabilities.
(e) Governing Law. This Agreement shall be governed by and construed
in accordance with the internal laws of the State of Illinois without
regard to conflict of law principles.
(f) Headings. The headings contained in this Agreement are for the
sole purpose of convenience of reference, and shall not in any way limit
or affect the meaning or interpretation of any of the terms or provisions
of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
RANGER ENTERPRISES, INC.
BY: /s/ XXXXXX XXXXXX AUTHORIZED SIGNATORY
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Its: DIRECTOR - TEMPLE DIRECTORS LTD.
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THE CHILDREN'S BEVERAGE GROUP, INC.
BY: /s/ XXX XXXXXXXXXXX
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Its: President
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