MODIFICATION AND RELEASE AGREEMENT
THIS AGREEMENT (this "Agreement"), dated as of the __ day of _____,
2001, between Cheshire Distributors, Inc., a Delaware corporation, having an
address at 0000 Xxxx Xxxx Xxxx, Xxxxxxxx, Xxxxxxxxxxx 00000 (the "Company"), and
_______ (the "Creditor").
W I T N E S S E T H:
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WHEREAS, the Company, as maker, executed and delivered to the Creditor,
as payee thereof, that certain _____ Note (Debenture), dated _______ in the
original principal amount of _______ as the same may have been modified or
amended to the date hereof (the "Note"); and
WHEREAS, the Company has requested, among other things, that upon a
cash payment of _______ (the "Cash Payment") , the Creditor modify the Note,
including the outstanding principal balance owed by the Company under the Note,
and the total outstanding interest and penalties owed by the Company under the
Note, plus any all amounts, fees or penalties due under the Purchase Agreement
and the exhibits thereto (collectively, the "Outstanding Amount") by agreeing to
accept this payment from the Company in full satisfaction of the Note and the
Outstanding Amount; and
WHEREAS, the Creditor is willing upon the cash payment to so modify the
Note ;and
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which the parties hereto hereby acknowledge, the parties hereto
hereby agree as follows:
1. Amendment to Note. Provided that the Company makes the Cash
Payment to Creditor, the Note is hereby amended to allow the total Outstanding
Amount to be paid by the issuance of the Shares to Creditor.
2. Simultaneous Cash Payment. As a condition of the foregoing
modifications, simultaneously with the execution of this Agreement, the Company
shall make the Cash Payment to Creditor in the amount of _______, representing a
reduction of the amounts due to Creditor by Company under the Note.
3. Additional compensation. In addition to the cash payment, the
company will issue shares to the creditor. The number of shares issued to the
creditor will be equal to his proportion in the total debt of the company times
the total number of shares issued to all the creditors. The expected number of
shares to be issued to the creditor is ________.
4. Satisfaction and Release. Upon the payment of ________ to
Creditor, the Company shall have no further obligation or liability to Creditor,
and the Company and its Chairman, officers, directors, employees, affiliates,
entities which contracted with the company and its officers and agents and their
heirs, successors and assigns shall therewith be released by
Modification and Release Agreement
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Creditor of any and all liability or obligations of any nature and from any and
all claims, demands complaints and accusations and causes of action which
Creditor ever had, now has, or hereafter can, shall or may have by reason of any
matter, cause or thing whatsoever, including without limitation under the Note,
Warrants, Conversion Shares or any applicable securities laws.
5. Consequences of Bankruptcy. In the event that the Company is
placed into an involuntary or voluntary bankruptcy proceeding, the Creditor
agrees hereby that it votes in favor of a plan of reorganization or liquidation
of the Company (the Plan") which provides for the same percentage and prorata
amount of cash payment and common stock issuance as provided in this Agreement
to be paid to all creditors in the same class as the Creditor. Notwithstanding
the foregoing, this Section 6 shall only be operative in a bankruptcy if
two-thirds in dollar amount and more than one-half in number of the current
outstanding creditors of the Company in the same class and status as the
Creditor have entered into Modification and Release Agreements similar to this
Agreement that provide for a settlement and compromise of their claim in the
same percentage as agreed by the Creditor prior to the filing of any such
bankruptcy petition.
6. Miscellaneous. It is the intent of the parties that this
Agreement is a modification, and not a novation of the Note. This Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors, assigns, heirs and representatives. The recitals in this
Agreement shall form a substantive part of this Agreement. This Agreement may
not be changed or terminated orally nor may any of its provisions be waived
except by an agreement in writing signed by the party to be charged. If any term
or provision of this Agreement shall be held to be invalid, illegal or
unenforceable in any respect or under any circumstances, the remainder of this
Agreement and the application thereof to other circumstances shall not be
affected and shall be enforceable to the fullest extent permitted by law.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the day and year first written above.
CHESHIRE DISTRIBUTORS, INC. CREDITOR:
By:____________________________ ____________________________
Name: Gilad Gat Name:
Title: Vice President Title:
