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Exhibit 4.14
NOTE EXCHANGE AGREEMENT
THIS NOTE EXCHANGE AGREEMENT is made as of December 19, 1996, by and
among Beverage Works, Inc. (the "Company") and Xxxxxxxxx Xxxxxxxx ("Investor").
RECITALS
WHEREAS, the Company entered into a Note Agreement, as amended, and
Promissory Note dated April 20, 1996, copies of which are annexed hereto as
Exhibit "A", providing for repayment by the Company of a loan provided by
Investor; and
WHEREAS, as an inducement to enter into the Note Agreement, the Company
issued 35,000 Class B Warrants to Investor, a copy of the Class B Warrant
Agreement is annexed hereto as Exhibit "B"; and
WHEREAS, the parties hereto desire to extend the maturity date of the
Promissory Note as provided in the Revised Promissory Note, a copy of which is
annexed hereto as Exhibit "C"; and
WHEREAS, as an inducement to grant the extension of the maturity date,
the Company desires to issue twenty thousand (20,000) shares of its Common
Stock, no par value, to Investor.
NOW THEREFORE, the Parties hereby agree as follows:
1. CONSIDERATION.
1.1 Subject to the terms and conditions of this Agreement and as and
for consideration for Investor executing this Agreement, the Company agrees as
follows:
1.1.1 Shares. The Company agrees to issue at the Closing Twenty
Thousand (20,000) shares of Common Stock, no par value, of the Company
("Shares").
1.1.2 Class B Warrants. The Company agrees to issue at the
Closing thirty-five thousand (35,000) Class B Warrants in addition to the 35,000
Class B Warrants previously issued to Investor.
1.1.3 Registration Rights. The Company agrees to execute at the
Closing the Registration Rights Agreements copies of which are annexed hereto as
Exhibit "D".
1.1.4 Revised Promissory Note. The Company agrees to execute at
the Closing the Revised Promissory Note, a copy of which is annexed hereto as
Exhibit "C". The Revised Promissory Note is to be dated the date of Closing,
with the principal amount equal to $500,000 plus accrued but unpaid interest on
the Original Note at the Closing, to bear interest from such date at the rate of
18% per annum, simple interest, payable on the fifteenth day of each month
(commencing January 15, 1997) and at
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maturity until paid to mature on the earlier of (i) closing of a public offering
by the Company with aggregate gross proceeds of no less than $6,000,000 (the
"IPO"), the occurrence of which there is no guarantee, or (ii) April 15, 1997,
whichever shall occur earlier. The Revised Promissory Note shall be secured by
all equipment, inventory and accounts receivable of the Company. The Company
shall execute and file with the California Secretary of State a Form UCC-1
containing such appropriate information as reasonably requested by Investor.
1.2 Subject to the terms and conditions of this Agreement and as and
for consideration for the Company executing this Agreement, Investor agrees as
follows:
1.2.1 Registration Rights. Investor agrees to execute the
Registration Rights Agreements, copies of which are annexed hereto as Exhibit
"D".
1.2.2 Terminate April 20, 1996 Note. Investor agrees to
surrender to the Company the Note Agreement and Promissory Note dated April 20,
1996, copies of which are annexed hereto as Exhibit "A", at the Closing.
1.2.3 Issue Revised Note. Investor agrees to accept the Revised
Promissory Note, a copy of which is annexed hereto as Exhibit "C", as
satisfaction in full for the Note Agreement and Promissory Note dated April 20,
1996.
1.3 Closing. The transactions contemplated hereby shall take place
at Xxxxx & Xxxxxxxx, P.C., 00 Xxxx 00xx Xx., Xxxxx 0000, Xxx Xxxx, XX 00000, at
10:00 a.m., December 18, 1996, or at such other time and place as the Company
and Investor mutually agree upon in writing (which time and place are designated
as the "Closing"). At the Closing the Company shall deliver to Investor (i) a
certificate representing the Shares, (ii) a certificate representing the
additional 35,000 Class B Warrants, (iii) the Revised Promissory Note, and (iv)
the Registration Rights Agreement. At the Closing, Investor shall deliver to the
Company (i) the original Promissory Note dated April 20, 1996, and (ii) the
Registration Rights Agreement.
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby
represents and warrants to Investor that:
2.1 Organization, Good Standing and Qualification. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of California.
2.2 Shares and Class B Warrants. The Shares and Class B Warrants
when issued, sold and delivered in accordance with the terms of this Agreement
for the consideration expressed herein, will be duly and validly issued, fully
paid, and nonassessable, and will be free of restrictions on transfer other than
restrictions on transfer under this Agreement, the Registration Rights
Agreements,
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and under applicable state and federal securities laws.
2.3 Authorization. All corporate action on the part of the Company
necessary for the authorization, execution and delivery of this Agreement, the
performance of all obligations of the Company hereunder and thereunder, and the
authorization, issuance, sale and delivery of the Revised Promissory Note,
Shares and Class B Warrants being issued hereunder has been taken or will be
taken prior to the Closing, and this Agreement constitutes a valid and legally
binding obligation of the Company, enforceable in accordance with its terms,
except as limited by applicable bankruptcy, insolvency, reorganization, and
other laws of general application affecting enforcement of creditors' rights
generally, and as limited by laws relating to the availability of specific
performance, injunctive relief, or other equitable remedies.
3. REPRESENTATIONS AND WARRANTIES OF INVESTOR. Investor hereby
represents and warrants that:
3.1 Authorization. Investor has full power and authority to enter
into this Agreement and the Agreement constitutes his valid and legally binding
obligation, enforceable in accordance with its terms.
3.2 Purchase Entirely for Own Account. This Agreement is made with
Investor in reliance upon Investor's representation to the Company, which by
Investor's execution of this Agreement, Investor hereby confirms, that the
Revised Promissory Note, Shares and Class B Warrants (collectively the
"Securities") to be acquired by Investor will be acquired solely for investment
and for Investor's own account, not as a nominee or agent, and not with a view
to the resale or distribution of any part thereof, and that Investor has no
present intention of selling or otherwise distributing the same. By executing
this Agreement, Investor further represents that Investor does not have any
contract, undertaking, agreement or arrangement with any person or entity to
sell, transfer or grant participations to such person or entity or to any third
person, with respect to any of the Securities.
3.3 Disclosure of Information. Investor represents that he has
received all the information and documentation, financial and otherwise and has
conducted all investigations as to the Company and Securities he considers
necessary or appropriate for deciding whether to execute this Agreement.
Investor acknowledges that the Company has made no other representations except
as provided in Section 2 and that Investor has relied solely on his own
inquiries and investigations with respect to his decision to execute this
Agreement.
3.4 Investment Experience. Investor acknowledges that he is able to
fend for himself, can bear the economic risk of this investment, and has such
knowledge and experience in financial and business matters that he is capable of
evaluating the merits and risks of the investment in the Securities.
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3.5 Accredited Investor. Investor is an "accredited investor" with
respect to the Company within the meaning of Rule 501 of Regulation D,
promulgated under the Securities Act of 1933, as amended (the "Act"), as
presently in effect.
3.6 Restricted Securities. Investor understands that the Securities
he is purchasing are characterized as "restricted securities" under the federal
securities laws and that under such laws and applicable regulations such
securities may be resold without registration under the Act, only in certain
limited circumstances. In this connection, Investor represents that he is
familiar with Rule 144 promulgated under the Act, as presently in effect, and
understands the resale limitations imposed thereby and by the Act.
3.7 Further Limitations on Disposition. Without in any way limiting
the representations set forth above, Investor further agrees not to make any
disposition of all or any portion of the Securities unless and until the
transferee has agreed in writing for the benefit of the Company to be bound by
this Section 3 provided and to the extent this Section is then applicable, and:
3.7.1 There is then in effect a Registration Statement under the
Act covering such proposed disposition and such disposition is made in
accordance with such Registration Statement; or
3.7.2 Investor shall have notified the Company of the proposed
disposition and shall have furnished the Company with a detailed statement of
the circumstances surrounding the proposed disposition, and if requested by the
Company, Investor shall have furnished the Company with an opinion of counsel,
reasonably satisfactory to the Company, that such disposition will not require
registration of such Securities under the Act, or applicable Blue Sky law.
3.7.3 The Company shall have no obligation or responsibility
with regards to any subsequent sale or transfer of any of the Securities by
Investor.
3.8 Legends. It is understood that the certificates evidencing the
Securities will bear a legend in substantially the following form, in addition
to any other legend required by applicable state or federal law:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 ("THE ACT") OR QUALIFIED
OR REGISTERED UNDER ANY STATE SECURITIES OR BLUE SKY LAWS.
NEITHER THE SECURITIES NOR ANY INTEREST THEREIN MAY BE
OFFERED, SOLD, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED
OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE ACT AND SUCH STATE LAWS UNLESS SUCH OFFER, SALE,
TRANSFER, PLEDGE OR OTHER DISPOSITION IS EXEMPT FROM
REGISTRATION OR QUALIFICATION
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UNDER THE ACT AND SUCH STATE LAWS.
4. CONDITIONS OF INVESTOR'S OBLIGATIONS AT CLOSING. The obligations of
Investor under Section 1 of this Agreement are subject to the fulfillment on or
before the Closing of each of the following conditions:
4.1 Representations and Warranties. The representations and
warranties of the Company contained in Section 2 shall be true on and as of the
Closing with the same effect as though such representations and warranties had
been made on and as of the date of such Closing.
4.2 Performance. The Company shall have performed and complied with
all agreements, obligations and conditions contained in this Agreement that are
required to be performed or complied with by him on or before the Closing.
4.3 Additional Agreements. The Company shall have delivered to
Investor (i) a fully executed Revised Promissory Note in substantially the form
annexed hereto as Exhibit "C", (ii) fully executed Registration Rights
Agreements, in substantially the forms annexed hereto as Exhibit "D" and (iii)
the Class B Warrant Certificate in substantially the form annexed hereto as
Exhibit "E".
5. CONDITIONS OF THE COMPANY'S OBLIGATIONS AT CLOSING. The obligations
of the Company under Section 1 of this Agreement are subject to the fulfillment
on or before the Closing of each of the following conditions:
5.1 Representations and Warranties. The representations and
warranties of Investor contained in Section 3 shall be true on and as of the
Closing with the same effect as though such representations and warranties had
been made on and as of the Closing.
5.2 Qualifications. All authorizations, approvals, or permits, if
any, of any governmental authority or regulatory body of the United States or of
any state that are required in connection with the lawful issuance and sale of
the Securities pursuant to this Agreement shall be duly obtained and effective
as of the Closing.
5.3 Additional Agreements. Investor shall have delivered to the
Company (i) fully executed Registration Rights Agreements in substantially the
forms annexed hereto as Exhibit "D", and (ii) the original Promissory Note dated
April 20, 1996.
6. INDEMNIFICATION.
6.1 Indemnity. Investor hereby agrees to hold harmless, indemnify
and defend the Company, from and against any obligation, liability, encumbrance,
loss, damage, cost, expense, cause of
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action, in law or equity, asserted against or incurred by the Company ("Claims")
asserted by any third person, against the Company, resulting from any untrue
statement made in, or breach of, any representation, warranty or covenant by
Investor.
6.2 Prerequisites of Indemnity. This indemnity provision shall cover
the costs and expenses of the Company, including reasonable attorney's fees,
related to claims, actions, suits and/or judgments incident to any matters
covered by such indemnity, except that Investor shall in no event be liable for
costs or expenses incurred by the Company prior to notification as described in
Paragraph 6.3 below, and Investor may, at his option undertake the defense and
indemnification of any Claim by counsel reasonably acceptable to the Company,
following which the Company shall not be entitled to be reimbursed for any costs
or expenses incurred by the Company directly from the defense or settlement of
such Claims.
6.3 Timing of Notice. In connection with a claim by the Company for
indemnification under this Section 6, the Company shall notify, in writing,
Investor, by certified or registered mail or international equivalent, of any
Claim against the Company covered by this Section 6 within a reasonable time
after it has received notice of such Claim so as not to cause Investor to be
prejudiced by a loss of rights. Failure to notify Investor within such period
shall result solely in the Company receiving no indemnity under the terms of
this Agreement only if such failure materially prejudices Investor, and in no
event shall preclude the Company from seeking indemnity without reference to the
terms of this Agreement.
7. MISCELLANEOUS.
7.1 Survival of Warranties. The warranties, representations and
covenants of the Company and Investor contained in or made pursuant to this
Agreement shall survive the execution and delivery of this Agreement and the
Closing.
7.2 Successors and Assigns. Except as otherwise provided herein, the
terms and conditions of this Agreement shall inure to the benefit of and be
binding upon the respective heirs, personal representatives, successors and
assigns of the parties (including any transferee of any Shares or Class B
Warrants). Nothing in this Agreement, express or implied, is intended to confer
upon any party other than the parties hereto or their respective heirs, personal
representatives, successors and assigns any rights, remedies, obligations, or
liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement. This Agreement shall not be assignable by either party
without the consent of the other party.
7.3 Governing Law. This Agreement shall be governed by and construed
under the internal laws of the State of California.
7.4 Counterparts. This Agreement may be executed in two
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or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
7.5 Titles and Subtitles. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
7.6 Notices. Unless otherwise provided, any notice required or
permitted under this Agreement shall be given in writing and shall be deemed
effectively given upon personal delivery to the party to be notified or upon
deposit with the United States Post Office, by registered or certified mail, or
international equivalent, postage prepaid and addressed to the party to be
notified at the address indicated for such party on the signature page hereof,
or at such other address as such party may designate by ten (10) days' advance
written notice to the other party.
7.7 Finder's Fee. Each party represents that it neither is nor will
be obligated for any finders' fee or commission in connection with this
transaction. The Investor agrees to indemnify and to hold harmless the Company
from any liability for any commission or compensation in the nature of a
finders' fee (and the costs and expenses of defending against such liability or
asserted liability) for which the Investor or any of his agents, employees, or
representatives is responsible. The Company agrees to indemnify and hold
harmless the Investor from any liability for any commission or compensation in
the nature of a finders' fee (and the costs and expenses of defending against
such liability or asserted liability) for which the Company or any of its
officers, employees or representatives is responsible.
7.8 Expenses. Except as provided in Section 7.12, whether or not the
Closing is effected, each party shall pay all costs and expenses that they incur
with respect to the negotiation, execution, delivery and performance of this
Agreement.
7.9 Amendments and Waivers. Any term of this Agreement may be
amended and the observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the parties.
7.10 Severability. If one or more provisions of this Agreement are
held to be unenforceable under applicable law, such provision shall be excluded
from this Agreement and the balance of the Agreement shall be interpreted as if
such provision were so excluded and shall be enforceable in accordance with its
terms.
7.11 Entire Agreement. This Agreement and the documents referred to
herein constitute the entire agreement among the parties and no party shall be
liable or bound to any other party in any manner by any warranties,
representations, or covenants except
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as specifically set forth herein or therein.
7.12 Arbitration. Any dispute arising out of this Agreement shall be
submitted to binding arbitration before the American Arbitration Association
located in Los Angeles, California. The prevailing party in any such arbitration
shall be entitled to recover its costs, including reasonable legal fees,
incurred in connection with the arbitration, including confirming any
arbitration award and appeals, if any.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
THE COMPANY: INVESTOR:
/s/ FREDERIK X.X. XXXXXXXXX /s/ XXXXXXXXX XXXXXXXX
--------------------------- ----------------------
Frederik X.X. Xxxxxxxxx, Xxxxxxxxx Xxxxxxxx
President 000 Xxxx Xxx Xxxx Xxxx
Beverage Works, Inc. Xxxxxxxxx, XX 00000
0000 X. Xxxxxxxxx Xxxx.
Xxxxx 000
Xxx Xxxxxxx, XX 00000
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THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933 ("THE ACT") OR QUALIFIED OR REGISTERED UNDER ANY STATE SECURITIES OR
BLUE SKY LAWS. NEITHER THE SECURITIES NOR ANY INTEREST THEREIN MAY BE OFFERED,
SOLD, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND SUCH STATE LAWS UNLESS SUCH
OFFER, SALE, TRANSFER, PLEDGE OR OTHER DISPOSITION IS EXEMPT FROM REGISTRATION
OR QUALIFICATION UNDER THE ACT AND SUCH STATE LAWS.
REVISED PROMISSORY NOTE
$500,000
APRIL 15, 1997
1. Beverage Works, Inc., a California corporation (the "Company"), for
value received, hereby promises to pay to Xxxxxxxxx Xxxxxxxx ("Payee"):
a. the principal amount of $500,000 on (i) the date of a close of a
public offering by the Company with aggregate gross proceeds of at least
$6,000,000, or (ii) April 15, 1997, whichever shall occur earlier (the "Maturity
Date"); and
b. interest on the principal amount from time to time remaining
unpaid hereon at the rate of 18% per annum, simple interest, from the date
hereof until the Maturity Date, payable on the fifteenth day of each month
(commencing on January 15, 1997).
2. Both the principal hereof and interest hereon are payable in United
States currency. If any amount of principal or interest on or in respect of this
Note becomes due and payable on any date which is not a Business Day, such
amount shall be payable on the immediately preceding Business Day. "Business
Day" means any day other than a Saturday, Sunday or other day on which banks in
New York are required by law to close or are customarily closed.
3. Default shall occur (i) in the payment of interest on the Note when
the same shall have become due and such default shall continue for more than
five business days; or (ii) in the payment of principal on the Note when the
same shall have become due and such default shall continue for more than thirty
days.
4. Any term, covenant, agreement or condition herein may be amended or
compliance therewith may be waived, only upon the written consent of the Payee
and the Company. Any such amendment or waiver shall be binding upon each future
holder of the Note and upon the Company, whether or not the Note shall have been
marked to indicate such amendment or waiver. No such amendment or waiver
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shall extend to or affect any obligation not expressly amended or waived or
impair any right consequent thereon.
5. The Company may prepay this Note at any time prior to Maturity
without penalty.
6. The laws of the State of California shall apply.
BEVERAGE WORKS, INC.
Dated: December 19, 1996 /s/ FREDERIK X.X. XXXXXXXXX
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Xxxxxxxx Xxxxxxxxx
Chief Executive Officer
