Exhibit 4.3
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated as of April
13, 1999 is made and entered into between THE CHILDREN'S BEVERAGE GROUP, INC., a
Delaware corporation (the "Company"), and CLIFFSTAR CORPORATION, a Delaware
corporation ("Cliffstar").
WHEREAS, the Company and Cliffstar have entered into that certain
Settlement Agreement of even date herewith, pursuant to which the Company, among
other matters, has agreed to issue a warrant (the "Warrant") to Cliffstar to
acquire 413,000 shares of the Company's common stock, par value $.0001 per share
(the "Shares");
WHEREAS, pursuant to the terms of, and in partial consideration for,
Cliffstar's agreement to enter into the Settlement Agreement, the Company has
agreed to provide Cliffstar with certain registration rights with respect to the
Registrable Securities (as defined below).
NOW, THEREFORE, in consideration of the premises, the representations,
warranties, covenants and agreements contained herein and in the Settlement
Agreement, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, intending to be legally bound
hereby, the parties hereto agree as follows:
1. Definitions. As used herein, unless the context otherwise requires,
the following terms have the following respective meanings:
(a) "Business Day" means a day other than a Saturday, Sunday or a
public or national bank holiday or the equivalent for banks generally under the
laws of the State of Delaware.
(b) "Commission" means the Securities and Exchange Commission.
(c) "Common Stock" means the shares of Common Stock of the Company as
constituted on the date hereof, any stock into which such Common Stock shall
have been changed, any stock resulting from any stock split, reverse stock
split, stock dividend or any reclassification of such common stock.
(d) "Exchange Act" means the Securities Exchange Act of 1934, as
amended, or any similar Federal statute, and the rules and regulations of the
Commission promulgated thereunder, in effect from time to time. Reference to a
particular section of the Exchange Act shall include a reference to the
comparable section, if any, of any such similar Federal statute.
(e) "Initial Public Offering" means an initial public offering by the
Company of its equity securities to the public pursuant to an effective
registration statement under the Securities Act (as defined below).
(f) "Registrable Securities" means the Shares issued upon exercise of
the Warrant until (i) a registration statement under the Securities Act covering
the offering of such securities has been declared effective by the Commission
and such securities have been disposed of pursuant to such effective
registration statement, (ii) such securities are sold under circumstances in
which all of the applicable conditions of Rule 144 (or any similar provision
then in force) under the Securities Act ("Rule 144") are met, (iii) such
securities have been otherwise transferred and the Company has delivered a new
certificate or other evidence of ownership for such securities not bearing a
restrictive legend or (iv) such time as, in the opinion of counsel to the
Company, which counsel shall be reasonably acceptable to Cliffstar, such
securities may be sold without any time, volume or manner limitation pursuant to
Rule 144(k) (or any similar provision then in effect) under the Securities Act.
(g) "Registration Expenses" means all expenses incident to the
Company's performance of or compliance with Section 2 of this Agreement,
including, without limitation, all registration, filing and applicable national
securities exchange fees, all fees and expenses of complying with all applicable
securities and blue sky laws (including reasonable fees and disbursements of
counsel in connection with all applicable securities registration and blue sky
qualifications of the Registrable Securities), rating agency fees, all printing
expenses, messenger and delivery expenses, internal expenses (including, without
limitation, all salaries and expenses of its officers and employees performing
legal or accounting duties), the fees and disbursements of counsel for the
Company and of its independent public accountants for the Company, including the
expenses of any special audits and/or "cold comfort" letters required by or
incident to such performance and compliance, and the fees and expenses of
underwriters customarily paid by issuers of securities.
(h) "Securities Act" means the Securities Act of 1933, as amended, or
any similar Federal statute, and the rules and regulations of the Commission
thereunder, in effect from time to time. References to a particular section of
the Securities Act shall include a reference to the comparable section, if any,
of any such similar Federal statute.
2. Registration under Securities Act.
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2.1 "Piggyback" and Incidental Registration.
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(a) Right to Include Registrable Securities. At any time prior
to the closing of an Initial Public Offering and so long thereafter as any
Registrable Securities are outstanding, if the Company at any time proposes to
register any of its securities under the Securities Act, whether or not for sale
for its own account (other than securities to be issued pursuant to an employee
compensation program or dividend reinvestment plan or securities issued in a
merger, recapitalization, consolidation, acquisition or similar transaction), in
a manner which would permit registration of the Registrable Securities for sale
to the public under the
352035-3 2
Securities Act, it will each such time give written notice to Cliffstar, in
accordance with Section 4, of its intention to do so and, upon the written
request of Cliffstar within 15 days after the receipt of any such notice (which
request by Cliffstar must specify the Registrable Securities intended to be
disposed of by Cliffstar and the intended method of disposition thereof), the
Company will use its best efforts to effect the registration of the Registrable
Securities that it has been so requested to register by Cliffstar, to the extent
necessary to permit the disposition (in accordance with the intended methods
thereof as aforesaid) of the Registrable Securities so to be registered;
provided, however, that if, at any time after giving written notice of its
intention to register any securities and prior to the effective date of the
registration statement filed in connection with such registration, the Company
determines for any reason not to register or to delay registration of such
securities, the Company will give written notice of such determination to
Cliffstar and, thereupon, the Company, (i) in the case of a determination not to
register, will be relieved of its obligation to register any Registrable
Securities in connection with only that withdrawn registration (but not from its
obligation to pay the Registration Expenses in connection therewith and its
obligation to register any Registrable Securities in a future registration) and
(ii) in the case of a determination to delay registration, will be permitted to
delay registering any Registrable Securities, for the same period as the delay
in registering the Company's other securities included in this registration. The
Company will pay all Registration Expenses in connection with each registration
of Registrable Securities requested pursuant to this Section 2. 1.
(b) Priority in Company Registrations. If the managing
underwriter of any underwritten offering pursuant to Section 2. 1 (a) shall
advise the Company in writing (with copies to Cliffstar) that, in its opinion,
the number of securities requested to be included in such registration exceeds
the number which can be sold in such offering within a price range acceptable to
the Company (or that inclusion of the securities requested to be included by
Cliffstar in such registration would otherwise adversely affect such offering),
the Company shall register (i) first, the securities the Company proposes to
sell solely on behalf of the Company, and (ii) second, pro rata, the Registrable
Securities requested to be included in such registration and other securities
requested to be included in such registration, on the basis of the number of
shares owned by Cliffstar.
2.2 Registration Procedures. If and whenever the Company is required
to effect the registration of any Registrable Securities under the Securities
Act as provided in Section 2.1 of this Agreement, the Company will as
expeditiously as possible:
(i) prepare and file with the Commission a registration
statement with respect to the Company's securities including the
Registrable Securities and use its best efforts to cause such
registration statement to become effective;
(ii) prepare and file with the Commission such amendments and
supplements to the registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration
statement effective and current and to comply with the provisions of
the Securities Act with respect to the disposition of all securities
covered by such registration, including the Registrable
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Securities, until such time as all of such securities have been
disposed of in accordance with the intended methods of disposition by
Cliffstar set forth in such registration statement, but in no event
for a period of more than two years after such registration statement
becomes effective;
(iii) furnish to Cliffstar and each underwriter, if any, of such
securities such number of conformed copies of such registration
statement and of each such amendment and supplement thereto (in each
case including all exhibits), such number of copies of the prospectus
contained in such registration statement (including each preliminary
prospectus and any summary prospectus) and any other prospectus filed
under Rule 424 under the Securities Act, in conformity with the
requirements of the Securities Act and the Trust Indenture Act (if
applicable), and such other documents, as Cliffstar or such
underwriter may reasonably request in order to facilitate the
disposition of the securities owned by Cliffstar, but only while the
Company is required under the provisions hereof to cause the
registration statement to remain current;
(iv) use its best efforts to register or qualify such
securities covered by such registration statement under such
securities or blue sky laws of such jurisdictions where an exemption
is not available and as Cliffstar shall reasonably request, and to
take any and all other action which may be necessary or advisable to
enable such sellers to consummate the disposition in such
jurisdictions of the securities owned by Cliffstar; provided, however,
that the Company shall not for any such purpose be required (A) to
qualify generally to do business as a foreign corporation in any
jurisdiction wherein it would not but for the requirements of this
clause (iv) be obligated to be so qualified, (B) to conform the
composition of its assets at the time to the securities or blue sky
laws of any jurisdiction, or (C) to subject itself to taxation in any
such jurisdiction;
(v) furnish to Cliffstar a signed counterpart of (x) an
opinion of counsel for the Company to the underwriters, if any, of
such offering, and (y) if a "comfort" letter is otherwise being
provided to any underwriter in connection with the registration, a
counterpart of such "comfort" letter signed by the independent public
accountants who have certified to the Company's financial statements
included or incorporated by reference in such registration statement,
covering substantially the same matters with respect to the
registration statement (and the prospectus included therein) and, in
the case of the accountants' letter, with respect to events subsequent
to the date of such financial statements, as are customarily covered
in opinions of issuer's counsel and in accountants' letters delivered
to the underwriters in underwritten public offerings of securities;
and
(vi) notify Cliffstar at any time when a prospectus relating
thereto is required to be delivered under the Securities Act, of the
happening of any event as a result of which the prospectus included in
such registration statement, as then in effect, includes an untrue
statement of a material fact or omits to state any
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material fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances then
existing (whereupon Cliffstar shall forthwith discontinue use of such
prospectus until receipt of notice from the Company that use of such
prospectus may be resumed or receipt of the prospectus supplement or
amendment hereinafter referred to), and promptly prepare and file with
the Commission and furnish to Cliffstar and each underwriter, if any,
a reasonable number of copies of a supplement to or an amendment of
such prospectus as may be necessary so that, as thereafter delivered
to the purchasers of such securities, such prospectus shall not
include an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances then
existing.
(vii) engage a transfer agent for the Company's securities; and
(viii) obtain a CUSIP number for all Registrable Securities not
later than the effective date of the registration statement, and
provide the Company's transfer agent with printed certificates for
each registered security to be issued for each Registrable Security.
The Company may require Cliffstar to furnish the Company with such information
regarding Cliffstar and the intended method of distribution of such securities
as the Company may from time to time reasonably request and as shall be required
by law in connection therewith, including, without limitation, notice of sales
effected by such seller under such registration statement.
2.3 Underwritten Offerings. Subject to Section 2.1 of this Agreement,
if the Company proposes to register any of its securities under the Securities
Act for sale for its own account and such securities are to be distributed by or
through one or more underwriters, the Company will, subject to Sections 2.1(b)
of this Agreement, if requested by Cliffstar, use its best efforts to arrange
for such underwriters to, and Cliffstar will, if requested by the Company,
include the Registrable Securities to be offered and sold by Cliffstar among
those to be distributed by such underwriters. Cliffstar shall be a party to the
underwriting agreement between the Company and such underwriters and the
representations and warranties by, and the other agreements on the part of, the
Company to and for the benefit of such underwriters shall also be made to and
for the benefit of Cliffstar and Cliffstar may, at its option, require that any
or all of the conditions precedent to the obligations of such underwriters under
such underwriting agreement be conditions precedent to the obligations of
Cliffstar. The Company must provide copies of the underwriting agreement to
Cliffstar a reasonable time prior to the filing of any registration statement
and the Company will use its best efforts to cause to be made any changes in the
underwriting agreement reasonably requested by Cliffstar or its counsel.
2.4 Preparation; Reasonable Investigation. In connection with the
preparation and filing of each registration statement registering Registrable
Securities under the Securities Act pursuant to this Agreement, the Company will
give Cliffstar, its underwriters, if any, and its
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counsel and accountants, the opportunity to participate in the preparation of
such registration statement, each prospectus included therein or filed with the
Commission, and each amendment thereof or supplement thereto, and will give each
of them (provided such Person agrees not to use the information so obtained for
any purpose other than preparation of the registration statement) such access to
its books and records and such opportunities to discuss the business of the
Company with its officers and the independent public accountants who have
certified its financial statements as is determined to be necessary, in the
opinion of Cliffstar's and such underwriters' respective counsel, to conduct a
reasonable investigation within the meaning of the Securities Act.
2.5 Indemnification.
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(a) Indemnification by the Company. In the event of any
registration of any Registrable Securities under the Securities Act pursuant to
Section 2.1 of this Agreement, the Company will, and hereby does, indemnify and
hold harmless Cliffstar, its directors, officers, partners, and agents and each
other Person who participates as an underwriter in the offering or sale of such
securities and each other Person, if any, who controls Cliffstar or any such
underwriter within the meaning of the Securities Act, against any losses,
claims, damages or liabilities, joint or several, to which Cliffstar or any such
director, officer, partner, agent or Affiliate or participating or controlling
person may become subject under the Securities Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions or proceedings in respect
thereof) arise out of or are based upon (i) any untrue statement or alleged
untrue statement of any material fact contained in any registration statement
under which such securities were registered under the Securities Act, any
preliminary prospectus, final prospectus or summary prospectus contained
therein, or any amendment or supplement thereto, including all documents
incorporated by therein by reference (in the case of a shelf registration
statement) or (ii) any omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading; and the Company will reimburse Cliffstar and each such director,
officer, partner, agent, participating person and controlling person for any
legal or any other expenses reasonably incurred by them in connection with
investigating, preparing or defending against any such loss, claim, liability,
action or proceeding, whether commenced or threatened; provided, that the
Company shall not be liable in any such case to the extent that any such loss,
claim, damage or liability (or action or proceeding in respect thereof) or
expense arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission made in such registration statement,
any such preliminary prospectus, final prospectus, summary prospectus, amendment
or supplement in reliance upon and in conformity with written information
furnished to the Company by or on behalf of Cliffstar or such underwriter, as
the case may be; and provided, further, that the Company shall not be liable to
Cliffstar or any Person who participates as an underwriter in the offering or
sale of Registrable Securities or any other Person, if any, who controls
Cliffstar or underwriter within the meaning of the Securities Act, in any such
case to the extent that any such loss, claim, damage, liability (or action or
proceeding in respect thereof) or expense arises out of Cliffstar's or Person's
failure to send or give a copy of the final prospectus, as the same may be then
supplemented or amended, to the Person asserting an untrue statement or alleged
untrue statement or omission or alleged omission at or prior to the written
confirmation of the sale of
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Registrable Securities to such Person if such statement or omission was
corrected in such final prospectus.
(b) Indemnification by Cliffstar. The Company may require, as
a condition to including any Registrable Securities in any registration
statement, that the Company shall have received an undertaking satisfactory to
it from Cliffstar to indemnify and hold harmless (in the same manner and to the
same extent as set forth in Section 2.5(a)) the Company, each director of the
Company, each officer of the Company, each other Person, if any, who controls
the Company within the meaning of the Securities Act and any underwriter of the
Registrable Securities, with respect to any statement or alleged statement in or
omission or alleged omission from such registration statement, any preliminary
prospectus, final prospectus or summary prospectus contained therein, or any
amendment or supplement thereto, if such statement or alleged statement or
omission or alleged omission was made in reliance upon and in conformity with
written information furnished to the Company by or on behalf of Cliffstar or
such underwriter, as the case may be.
(c) Notices of Claims. etc. Promptly after receipt by an
indemnified party of notice of the commencement of any action or proceeding
involving a claim referred to in Section 2.5(a) or (b), such indemnified party
will, if a claim in respect thereof is to be made against an indemnifying party,
give written notice to the latter of the commencement of such action; provided,
however, that the failure of any indemnified party to give notice as provided
herein shall not relieve the indemnifying party of its obligations under Section
2.5(a) or (b), except to the extent that the indemnifying party is actually
prejudiced by such failure to give notice. In case any action is brought against
an indemnified party, the indemnifying party shall be entitled to participate in
and, unless in the reasonable judgment of such indemnified party, and in the
opinion of such indemnified party's counsel, a conflict of interest may exist
between such indemnified party and the indemnifying party with respect to such
claim, each indemnified party agrees to permit the indemnifying party to assume
the defense of such claim with counsel reasonably satisfactory to such
indemnified party, and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party shall not be liable to such indemnified party for any legal
or other expenses subsequently incurred by the latter in connection with the
defense thereof other than reasonable costs of investigation. If the
indemnifying party is not entitled to, or elects not to, assume the defense of a
claim, it will not be obligated to pay the fees and expenses of more than one
counsel for all indemnified parties with respect to such claim, unless in the
reasonable judgment of an indemnified party, and in the opinion of such
indemnified party's counsel, a conflict of interest may exist between such
indemnified party and any other of such indemnified parties with respect to such
claim, in which event the indemnifying party shall be obligated to pay the fees
and expenses of such additional counsel or counsels. No indemnifying party will
consent to entry of any judgment or enter into any settlement which does not
include as an unconditional term thereof the giving by the claimant or plaintiff
to such indemnified party of a release from all liability in respect to such
claim or litigation. No indemnified party will enter into any settlement without
the written consent of the indemnifying party (which consent will not be
unreasonably withheld).
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(d) Contribution. If the indemnification provided for in this
Section 2.5 from the indemnifying party is unavailable to an indemnified party
hereunder in respect of any losses, claims, damages or liabilities referred to
therein, then the indemnifying party, in lieu of indemnifying such indemnified
party, shall contribute to the amount paid or payable by such indemnified party
as a result of such losses, claims, damages or liabilities in such proportion as
is appropriate to reflect the relative fault of such indemnifying party and
indemnified parties in connection with the actions which resulted in such
losses, claims, damages or liabilities, as well as any other relevant equitable
considerations or, if the allocation provided above is not permitted by
applicable law, in such proportion as shall be appropriate to reflect the
relative benefits received by the indemnifying party and the indemnified parties
from the offering of the securities covered by the registration statement that
gave rise to the indemnification claim. The relative fault of such indemnifying
party and indemnified parties shall be determined by reference to, among other
things, whether any action in question, including any untrue or alleged untrue
statement of a material fact or omission or alleged omission to state a material
fact, has been made by, or relates to information supplied by, such indemnifying
party or indemnified parties and the parties' relative intent, knowledge, access
to information and opportunity to correct or prevent such action. The amount
paid or payable by a party as a result of the losses, claims, damages and
liabilities referred to above shall be deemed to include, subject to the
limitations set forth in Section 2.5, any legal or other fees or expenses
reasonably incurred by such party in connection with any investigation or
proceeding. The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 2.5(d) were determined by pro rata
allocation or by any other method of allocation which does not take into account
the equitable considerations referred to in this Section 2.5(d). No Person
guilty of fraudulent misrepresentation (within the meaning of Section 11 (f) of
the Securities Act) shall be entitled to contribution from any Person who was
not guilty of such fraudulent misrepresentation. In addition, no Person shall be
obligated to contribute hereunder any amounts in payment for any settlement of
any action or claim effected without such Person's consent, which consent shall
not be unreasonably withheld.
(e) Other Indemnification. Indemnification similar to that
specified in the preceding paragraphs of this Section 2.5 (with appropriate
modifications) shall be given by the Company and Cliffstar with respect to any
required registration or other qualification of Registrable Securities under any
Federal or state law or regulation of any governmental authority other than the
Securities Act.
(f) Indemnification Payments. The indemnification and
contribution required by this Section 2.5 shall be made by periodic payments of
the amount thereof during the course of the investigation or defense, as and
when bills are received or expense, loss, damage or liability is incurred.
(g) Additional Rights. Any indemnification agreements
contained herein shall be in addition to any other rights to indemnification or
contribution which any indemnified party may have pursuant to law or contract
and shall remain operative and in full force and effect regardless of any
investigation made or omitted by or on behalf of any indemnified party.
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3. Rule 144 and Rule 144A Information. If the Company becomes subject to
the reporting requirements of Section 13 or 15(d) of the Exchange Act, the
Company will not deregister its securities under the Exchange Act and it will
file the reports required to be filed by it under the Securities Act and Section
13(a) or 15(d) of the Exchange Act and the rules and regulations adopted by the
Commission thereunder. If the Company is not subject to the reporting
requirements of Section 13 or 15(d) of the Exchange Act, the Company will
provide the information required pursuant to Rule 144(c)(2) under the Securities
Act upon the request of Cliffstar and any prospective purchaser designated by
Cliffstar. The Company will take such further action as Cliffstar and any
prospective purchaser designated by Cliffstar of such Registrable Securities may
reasonably request, all to the extent required from time to time to enable
Cliffstar to sell its Registrable Securities without registration under the
Securities Act within the limitation of the exemptions provided by Rule 144
under the Securities Act, as such rule may be amended from time to time, or any
similar rule or regulation hereafter adopted by the Commission.
4. Notices. All notices or communications provided for hereunder shall be
in writing (including facsimile transmission) and shall be addressed as follows:
(a) If to the Company:
The Children's Beverage Group, Inc.
000 Xxxxxx Xxxxx
Xxxxx 0
Xxxxxxxxxx, Xxxxxxxx 00000
Attention: Xxx X. Xxxxxxxxxxx, President
(b) If to Cliffstar:
Cliffstar Corporation
0 Xxxxxxxxx Xxxxxx
Xxxxxxx, Xxx Xxxx 00000
Attention: Xxxxxx Xxxxxxx
Notices given by mail shall be deemed to have been given no later than five
Business Days after the date sent, and must be sent by registered or certified
mail, postage prepaid, and addressed to the applicable party at the address
shown above (or such other address designated by such party subsequent to the
date hereof). Any party may, by notice to the other party given in accordance
with this Section 4, designate another address or Person for receipt of notices
or communications hereunder.
5. Entire Agreement. This Agreement constitutes the entire agreement and
understanding between the parties with respect to the matters described herein,
and supersedes all prior discussions, agreements and undertakings, written or
oral, of any and every nature with respect thereto.
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6. Waivers and Amendments. This Agreement may be amended, superseded,
canceled, renewed or extended, and the terms hereof may be waived, only in
writing signed by authorized representatives of the Company and Cliffstar or, in
the case of a waiver, by an authorized representative of the party waiving
compliance. No such writing shall be effective unless it expressly recites that
it is intended to amend, supersede, cancel, renew or extend this Agreement or to
waive compliance with one or more of the terms hereof, as the case may be. No
delay on the part of any party in exercising any right, power or privilege
hereunder shall operate as a waiver thereof, nor shall any waiver on the part of
any party of any such right, power or privilege, or any single or partial
exercise of any such right, power or privilege, preclude any further exercise
thereof or the exercise of any other such right, power or privilege.
7. Governing Law. This Agreement shall be governed in all respects,
including validity, construction, interpretation and effect, by the laws of the
State of Delaware without giving effect to the conflict of laws provisions
thereof
8. Binding Effect; Assignment. This Agreement shall be binding upon and
inure to the benefit of the parties and their respective successors and assigns,
including, without limitation, and without the need for an express assignment,
Cliffstar.
9. Counterparts. This Agreement may be executed by the parties hereto in
separate counterparts which together shall constitute one and the same
instrument.
10. Further Assurances. Each party shall, at the request of any other
party hereto, at any time and from time to time following the date of this
Agreement promptly execute and deliver, or cause to be executed and delivered,
to such requesting party all such further instruments and take all such further
action as may be reasonably necessary or appropriate to confirm or carry out the
provisions and intents of this Agreement.
11. Severability. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable, the validity, legality and enforceability of
any such provision in every other respect and of the remaining provisions
contained herein shall not be affected or impaired thereby.
12. Captions. All section titles or captions contained in this Agreement
are for convenience only, shall not be deemed a part of this Agreement and shall
not affect the meaning or interpretation of this Agreement. All references
herein to sections shall be deemed references to such parts of this Agreement,
unless the context shall otherwise require.
[SIGNATURES ON FOLLOWING PAGE]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by the undersigned, thereunto duly authorized, as of the date first set
forth above.
THE CHILDREN'S BEVERAGE GROUP,
INC.
By : /s/
--------------------------
Name:
--------------------------
Title: President
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CLIFFSTAR CORPORATION
By: /s/
----------------------------
Name:
--------------------------
Title: Vice President
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