SECURITIES EXCHANGE AGREEMENT
THIS
SECURITIES EXCHANGE AGREEMENT (the “Agreement”), dated as
of August 30, 2010, is entered into by and among Drinks Americas Holdings, Ltd.,
a Delaware corporation (the “Company”), and the
persons identified as “Holder” on the signature pages hereto (the “Holder”).
WHEREAS,
the Company has issued the Holder a Warrant to purchase 971,746 shares of the
Company’s Common Stock at $0.051454 per share; (the “Warrant”); and
WHEREAS,
the Company and the Holder have agreed to exchange the Warrants for
a newly created series of preferred stock of the Company, Series C
Convertible Preferred Stock (“Series C Preferred Stock”).
NOW
THEREFORE, for good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, each Holder hereby agrees as follows:
1. Definitions.
“Commission” means the
United States Securities and Exchange Commission.
“Common Stock” means
the Company’s common stock, par value $0.001 per share, and any other class of
securities into which such securities may hereafter be reclassified or
changed.
“Person” means an
individual or corporation, partnership, trust, incorporated or unincorporated
association, joint venture, limited liability company, joint stock company,
government (or an agency or subdivision thereof) or other entity of any
kind.
“Series C Certificate of
Designation” means the Drinks Americas Holdings, LTD. Certificate of
Designation of Preferences, Rights and Limitations of Series C Convertible
Preferred Stock.
“Series C Preferred
Stock” means up to 5,901 shares of the Company’s Series C Convertible
Preferred Stock issued hereunder having the rights, preferences and privileges
set forth in the Series C Certificate of Designation, in the form of Exhibit A
hereto.
2. Exchange of
Warrants. The Holder shall deliver the original
Warrants concurrently with the execution of this Agreement by the
Holder. Within fifteen business days of the receipt of the Warrant,
the Company hereby agrees to issue to the Holder 5,901 shares of Series C
Preferred Stock. The exchange ratio shall be equal to 1.0 share of Series C
Preferred Stock in exchange for each Black-Scholes dollar value at a
Black-Scholes value of $5,131 plus a 15% premium or [$5,901]. Holder
hereby instructs the Company to Cancel the Warrant. Holder
acknowledges and agrees that as of the date hereof the Warrant is deemed
cancelled.
3. Holder’s Representations and
Warranties and Covenants. Holder hereby represents, warrants
and covenants to the Company as follows:
a. No Registration.
Holder understands that the Series C Preferred Stock and the Series C
Conversion Shares (collectively the “Securities”), have not and will
not be, registered under the Securities Act of 1933, as amended (the “Securities Act”) by
reason of a specific exemption from the registration provisions of the
Securities Act, the availability of which depends upon, among other things, the
bona fide nature of the investment intent and the accuracy of such Holder’s
representations as expressed herein or otherwise made pursuant
hereto.
b. Investment
Intent. Holder is acquiring the Securities for investment for
Holder’s own account, not as a nominee or agent, and not with the view to, or
for resale in connection with,
any distribution thereof, and Holder has no present intention of selling,
granting any participation in, or otherwise distributing the
same. Such Holder further represents that Holder will not violate the
Securities Act and does not have any contract, undertaking, agreement or
arrangement with any person or entity to sell, transfer or grant participation
to such person or entity or to any third person or entity with respect to the
Securities.
c.
Investment
Experience. Holder has substantial experience in evaluating and investing
in private placement transactions of securities in companies similar to the
Company and acknowledges that such Holder can protect his own
interests. Holder has such knowledge and experience in financial and
business matters so that such Holder is capable of evaluating the merits and
risks of its investment in the Company.
d. Access to
Data. Holder and its advisors, if any, have been
furnished with or have been given access to all materials relating to the
business, finances and operations of the Company and any reasonably requested
materials requested by the Holder. Such Holder and his advisors, if
any, have been afforded the opportunity to ask questions of the Company and its
management and have received complete and satisfactory answers to any such
inquiries.
e.
Accredited
Investor. Such Holder is an “accredited investor’ within the
meaning of Regulation D, Rule 501(a), promulgated by the Securities and Exchange
Commission under the Securities Act and shall submit to the Company such further
assurances of such status as may be reasonably requested by the
Company.
f.
Authorization.
i. Such
Holder has all requisite power and authority to execute and deliver this
Agreement, and to carry out and perform its obligations under the terms
hereof. All action on the part of the Holder necessary for the
authorization, execution, delivery and performance of this Agreement, and the
performance of all of the Holder’s obligations herein, has been
taken.
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ii. This
Agreement, when executed and delivered Holder, will constitute valid
and legally binding obligations of the Holder, enforceable in accordance with
its terms except: (i) as limited by applicable bankruptcy, insolvency,
reorganization, moratorium and other laws of general application affecting
enforcement of creditors’ rights generally, and (ii) as limited by laws relating
to the availability of specific performance, injunctive relief or other
equitable remedies or by general principles of equity.
iii. No
consent, approval, authorization, order, filing, registration or qualification
of or with any court, governmental authority or third person is required to be
obtained by the Holder in connection with the execution and delivery of this
Agreement by the Holder or the performance of the Holder’s obligations
hereunder. No brokerage or finder’s fees or commissions are or will
be payable by the Company to any broker, financial advisor or consultant,
finder, placement agent, investment banker, bank or other Person with respect to
the transactions contemplated by this Agreement.
4. Miscellaneous.
(a) This
Agreement may be executed in two or more counterparts and by facsimile signature
or otherwise, and each of such counterparts shall be deemed an original and all
of such counterparts together shall constitute one and the same
agreement.
(b) If
any provision of this Agreement is prohibited by law or otherwise determined to
be invalid or unenforceable by a court of competent jurisdiction, the provision
that would otherwise be prohibited, invalid or unenforceable shall be deemed
amended to apply to the broadest extent that it would be valid and enforceable,
and the invalidity or unenforceability of such provision shall not affect the
validity of the remaining provisions of this Agreement so long as this Agreement
as so modified continues to express, without material change, the original
intentions of the parties as to the subject matter hereof and the prohibited
nature, invalidity or unenforceability of the provision(s) in question does not
substantially impair the respective expectations or reciprocal obligations of
the parties or the practical realization of the benefits that would otherwise be
conferred upon the parties. The parties will endeavor in good faith
negotiations to replace the prohibited, invalid or unenforceable provision(s)
with a valid provision(s), the effect of which comes as close as possible to
that of the prohibited, invalid or unenforceable provision(s).
(c) This
Agreement shall be governed by and interpreted in accordance with laws of the
State of New York, excluding its choice of law rules. The parties
hereto hereby waive the right to a jury trial in any litigation resulting from
or related to this Agreement. The parties hereto consent to exclusive
jurisdiction and venue in the federal courts sitting in the southern district of
New York, unless no federal subject matter jurisdiction exists, in which case
the parties hereto consent to exclusive jurisdiction and venue in the New York
state courts in the borough of Manhattan, New York. Each party waives
all defenses of lack of personal jurisdiction and forum non
conveniens. Process may be served on any party hereto in the manner
authorized by applicable law or court rule.
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IN
WITNESS WHEREOF, this Agreement is executed as of the date first set forth
above.
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By:
/s/ J. Xxxxxxx Xxxxx
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Name:
J. Xxxxxxx Xxxxx
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Title:
Chief Executive Officer
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[signature
page(s) of Holders to follow]
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COUNTERPART
SIGNATURE PAGE OF HOLDER TO
AMONG
DRINKS AMERICAS HOLDINGS, LTD. AND
THE
HOLDERS THEREUNDER
Name of
Holder: Xxxx Xxxxxxxx
By: /s/
Xxxx Xxxxxxxx
Name:
Xxxx Xxxxxxxx
Title:
Director
