EXHIBIT 10.7
NOTE AMENDMENT AND CONVERSION AGREEMENT
---------------------------------------
THIS NOTE AMENDMENT AND CONVERSION AGREEMENT (this "Agreement") is
entered into this __ day of March, 2005, by and among CONTINENTAL BEVERAGE AND
NUTRITION, INC., a Delaware corporation (the "Company"), and XXXX XXXXXXXXXX
(the "Holder").
WITNESSETH:
WHEREAS, the Company has issued to the Holder an aggregate principal
amount of One Hundred Thirty-Nine Thousand Five Hundred ($139,500) Dollars of
promissory notes (the "Notes"); and
WHEREAS, the Company is contemplating a private placement of at least
Four Hundred Thousand Dollars ($400,000) (the "New Placement") through the
issuance of the Company's 8% Senior Secured Convertible Promissory Note(s) (the
"New Note"), to one or more investors (the "New Investors"); and
WHEREAS, it is a condition precedent to the New Placement that the
Holder agrees to amend his Notes and convert his Notes into shares of the
Company's Common Stock (the "Common Stock") upon the occurrence of certain
events and take such other actions as more fully set forth herein; and
WHEREAS, the parties hereto are entering into this Agreement to amend
the Notes and convert the Notes into Common Stock on the terms and conditions
set forth herein.
NOW, THEREFORE, in consideration of the premises and the mutual
promises and covenants contained herein and other good and valuable
consideration, the receipt, adequacy and sufficiency of which are hereby
acknowledged, and in order to induce the New Investors to consummate the New
Placement, the parties do hereby agree as follows:
1. Amendment and Conversion of the Notes.
-------------------------------------
1.1. Amendment of the Notes. The Holder hereby amends the
Notes to provide that the entire unpaid principal amount of the Notes and any
accrued interest thereon shall be convertible into Common Stock at the
conversion price described in Section 1.2 below.
1.2. Automatic Conversion. Concurrent with the closing of
any Acquisition Transaction, as defined herein, the entire outstanding principal
balance and all accrued interest of Holder's Notes as of the closing date of the
Acquisition Transaction (the "Acquisition Closing") shall automatically convert
into that number of shares of Common Stock (such shares, hereinafter the
"Conversion Shares") determined by dividing the entire outstanding principal
balance of, and all accrued interest on, Holder's Note as of the date of the
Acquisition Closing by a share price equal to the average closing price of the
Common Stock for the ten (10) day period immediately preceding the Acquisition
Closing; provided in no event shall such price be less than $0.10 per share
(such per share price hereinafter the "Conversion Price"). As used herein,
"Acquisition Transaction" shall mean: (i) any merger, share exchange,
consolidation, reorganization or other business combination pursuant to which
the businesses of a target is combined with that of the Company; (ii) the
acquisition, directly or indirectly, by the Company of all or a substantial
portion of the assets or common equity of a target by way of negotiated purchase
or otherwise; or (iii) the acquisition, directly or indirectly, by Target of all
or a substantial portion of the assets or common equity of the Company by way of
negotiated purchase or otherwise. The term Acquisition Transaction shall include
any reverse merger transaction the Company undertakes.
1.3. Surrender of Notes; Issuance of New Certificates.
Promptly following a Holder's receipt of notice that the Acquisition Closing has
occurred, the Holder shall deliver his original Note(s) to the Company for
cancellation in exchange for his Conversion Shares. Promptly following the
Company's receipt of the original Notes from the Holder, the Company, at its
expense, shall deliver to the Holder, in the Holder's name, a certificate
representing the number of fully paid and non-assessable Conversion Shares into
which the Note has been converted in accordance with the provisions of Section
1.2 above. Subject to the foregoing provisions hereof, such conversion shall be
deemed to have occurred on the date of the Acquisition Closing so that Holder
shall be treated for all purposes as having become the record holder of the
Conversion Shares at such time.
1.4. Acknowledgement, Waiver of Rights. Upon the
Acquisition Closing, the Holder acknowledges that upon the conversion of the
Notes, as provided herein, the Notes will be fully satisfied as to all amounts
due thereunder and the Holder shall have no claims against the Company arising
from the Notes. To the extent any of the Notes are secured, any security
agreements or financing statements relating to the obligations secured by the
Notes shall terminate and the Holder or his agent shall promptly thereafter
affect all filings necessary to terminate the security interests created
thereunder and to return any collateral to the Company. The Holder further
acknowledges that any agent appointed under any agreement shall have no further
responsibilities or obligations pursuant thereto in connection with the Notes.
2. Miscellaneous.
-------------
2.1. Entire Agreement. This Agreement constitutes the
entire agreement of the parties with respect to the subject matter hereof and
supersedes any prior oral or written agreements between the parties hereto, and
this Agreement may not be modified, amended or terminated except by a written
agreement specifically referring to this Agreement signed by each party hereto.
2.2. Successors and Assigns; Third Party Beneficiaries.
This Agreement shall be binding upon and shall inure to the benefit of each
party hereto and their respective successors, assigns, heirs and administrators.
Neither party hereto may assign its rights or obligations hereunder without the
express written consent of the other party hereto. The New Investors shall be
express third-party beneficiaries of this Agreement and shall have the right to
enforce this Agreement against the Company and the Holder in their own right.
2
2.3. Additional Documents. Each party hereto shall
cooperate, shall take such further action and shall execute and deliver such
further documents as may be reasonably requested by the other party in order to
carry out the provisions and purposes of this Agreement.
2.4. Specific Performance. Each party hereto hereby
acknowledges that the obligations created herein are unique and that the other
parties hereto and the New Investors would suffer irreparable harm in the event
of any breach of this Agreement by any party hereto for which money damages
would not be an adequate remedy. Accordingly, each party hereto and the New
Investors shall have the right to specific performance of this Agreement and to
obtain injunctive relief in the event of any breach or threatened breach of the
terms hereof by any party hereto in addition to any other remedies available at
law or in equity. No one shall be obligated to post any bond or other security
in connection with any action seeking specific performance of this Agreement or
any other equitable remedy.
2.5. Governing Law. This Agreement and all amendments
thereof shall be governed by and construed in accordance with the laws of the
State of New York, without reference to its conflicts of laws principles.
2.6. Counterparts. This Agreement may be executed in two
or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
[signature pages follow]
3
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the date and year first above written.
COMPANY:
CONTINENTAL BEVERAGE AND
NUTRITIION, INC.
By:
-----------------------------
Name:
---------------------------
Title:
--------------------------
HOLDER:
---------------------------------
(Signature)
---------------------------------
(Print Name)
---------------------------------
Principal Amount of Notes
4
NOTE AMENDMENT AND CONVERSION AGREEMENT
---------------------------------------
THIS NOTE AMENDMENT AND CONVERSION AGREEMENT (this "Agreement") is
entered into this __ day of March, 2005, by and among CONTINENTAL BEVERAGE AND
NUTRITION, INC., a Delaware corporation (the "Company"), and XXXXX XXXXXXX (the
"Holder").
WITNESSETH:
WHEREAS, the Company has issued to the Holder an aggregate principal
amount of Two Hundred Forty-Six Thousand Eight Hundred Eighty-Four ($246,384)
Dollars of promissory notes (the "Notes"); and
WHEREAS, the Company is contemplating a private placement of at least
Four Hundred Thousand Dollars ($400,000) (the "New Placement") through the
issuance of the Company's 8% Senior Secured Convertible Promissory Note(s) (the
"New Note") to one or more investors (the "New Investors"); and
WHEREAS, it is a condition precedent to the New Placement that the
Holder agrees to amend his Notes and convert his Notes into shares of the
Company's Common Stock (the "Common Stock") upon the occurrence of certain
events and take such other actions as more fully set forth herein; and
WHEREAS, the parties hereto are entering into this Agreement to amend
the Notes and convert the Notes into Common Stock on the terms and conditions
set forth herein.
NOW, THEREFORE, in consideration of the premises and the mutual
promises and covenants contained herein and other good and valuable
consideration, the receipt, adequacy and sufficiency of which are hereby
acknowledged, and in order to induce the New Investors to consummate the New
Placement, the parties do hereby agree as follows:
1. Amendment and Conversion of the Notes.
-------------------------------------
1.1. Amendment of the Notes. The Holder hereby amends the
Notes to provide that the entire unpaid principal amount of the Notes and any
accrued interest thereon shall be convertible into Common Stock at the
conversion price described in Section 1.2 below.
1.2. Automatic Conversion. Concurrent with the closing of
any Acquisition Transaction, as defined herein, the entire outstanding principal
balance and all accrued interest of Holder's Notes as of the closing date of the
Acquisition Transaction (the "Acquisition Closing") shall automatically convert
into that number of shares of Common Stock (such shares, hereinafter the
"Conversion Shares") determined by dividing the entire outstanding principal
balance of, and all accrued interest on, Holder's Note as of the date of the
Acquisition Closing by a share price equal to the average closing price of the
Common Stock for the ten (10) day period immediately preceding the Acquisition
Closing; provided in no event shall such price be less than $0.10 per share
(such per share price hereinafter the "Conversion Price"). As used herein,
5
"Acquisition Transaction" shall mean: (i) any merger, share exchange,
consolidation, reorganization or other business combination pursuant to which
the businesses of a target is combined with that of the Company; (ii) the
acquisition, directly or indirectly, by the Company of all or a substantial
portion of the assets or common equity of a target by way of negotiated purchase
or otherwise; or (iii) the acquisition, directly or indirectly, by Target of all
or a substantial portion of the assets or common equity of the Company by way of
negotiated purchase or otherwise. The term Acquisition Transaction shall include
any reverse merger transaction the Company undertakes.
1.3. Surrender of Notes; Issuance of New Certificates.
Promptly following a Holder's receipt of notice that the Acquisition Closing has
occurred, the Holder shall deliver his original Note(s) to the Company for
cancellation in exchange for his Conversion Shares. Promptly following the
Company's receipt of the original Notes from the Holder, the Company, at its
expense, shall deliver to the Holder, in the Holder's name, a certificate
representing the number of fully paid and non-assessable Conversion Shares into
which the Note has been converted in accordance with the provisions of Section
1.2 above. Subject to the foregoing provisions hereof, such conversion shall be
deemed to have occurred on the date of the Acquisition Closing so that Holder
shall be treated for all purposes as having become the record holder of the
Conversion Shares at such time.
1.4. Acknowledgement, Waiver of Rights. Upon the
Acquisition Closing, the Holder acknowledges that upon the conversion of the
Notes, as provided herein, the Notes will be fully satisfied as to all amounts
due thereunder and the Holder shall have no claims against the Company arising
from the Notes. To the extent any of the Notes are secured, any security
agreements or financing statements relating to the obligations secured by the
Notes shall terminate and the Holder or his agent shall promptly thereafter
affect all filings necessary to terminate the security interests created
thereunder and to return any collateral to the Company. The Holder further
acknowledges that any agent appointed under any agreement shall have no further
responsibilities or obligations pursuant thereto in connection with the Notes.
2. Miscellaneous.
-------------
2.1. Entire Agreement. This Agreement constitutes the
entire agreement of the parties with respect to the subject matter hereof and
supersedes any prior oral or written agreements between the parties hereto, and
this Agreement may not be modified, amended or terminated except by a written
agreement specifically referring to this Agreement signed by each party hereto.
2.2. Successors and Assigns; Third Party Beneficiaries.
This Agreement shall be binding upon and shall inure to the benefit of each
party hereto and their respective successors, assigns, heirs and administrators.
Neither party hereto may assign its rights or obligations hereunder without the
express written consent of the other party hereto. The New Investors shall be
express third-party beneficiaries of this Agreement and shall have the right to
enforce this Agreement against the Company and the Holder in their own right.
6
2.3. Additional Documents. Each party hereto shall
cooperate, shall take such further action and shall execute and deliver such
further documents as may be reasonably requested by the other party in order to
carry out the provisions and purposes of this Agreement.
2.4. Specific Performance. Each party hereto hereby
acknowledges that the obligations created herein are unique and that the other
parties hereto and the New Investors would suffer irreparable harm in the event
of any breach of this Agreement by any party hereto for which money damages
would not be an adequate remedy. Accordingly, each party hereto and the New
Investors shall have the right to specific performance of this Agreement and to
obtain injunctive relief in the event of any breach or threatened breach of the
terms hereof by any party hereto in addition to any other remedies available at
law or in equity. No one shall be obligated to post any bond or other security
in connection with any action seeking specific performance of this Agreement or
any other equitable remedy.
2.5. Governing Law. This Agreement and all amendments
thereof shall be governed by and construed in accordance with the laws of the
State of New York, without reference to its conflicts of laws principles.
2.6. Counterparts. This Agreement may be executed in two
or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
[signature pages follow]
7
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the date and year first above written.
COMPANY:
CONTINENTAL BEVERAGE AND
NUTRITIION, INC.
By:
-----------------------------
Name:
---------------------------
Title:
--------------------------
HOLDER:
---------------------------------
(Signature)
---------------------------------
(Print Name)
---------------------------------
Principal Amount of Notes
8
