FIRST AMENDMENT
Exhibit
10.6
FIRST
AMENDMENT
TO
AMENDED
AND RESTATED STOCK SUBSCRIPTION
This
First Amendment (this “First Amendment”) to Amended and Restated Stock
Subscription and Share Transfer Agreement (the “Restated Original
Subscription Agreement”), dated as of May 31, 2007, is by and between New
World Brands, Inc., a Delaware corporation (the “Company”), and P&S
Spirit, LLC, a Nevada limited liability company (the
“Subscriber”). All capitalized terms not otherwise defined
herein shall have the meanings ascribed to them in the Restated Original
Subscription Agreement.
RECITALS:
WHEREAS,
on December 29, 2006, the Company and the Subscriber entered into a Stock
Subscription and Share Transfer Agreement, which the parties subsequently
amended and restated in its entirety effective December 29, 2006 in the form
of
the Restated Original Subscription Agreement, providing for the purchase by
the
Subscriber of certain capital stock of the Company as more fully set forth
therein; and
WHEREAS,
the Restated Original Subscription Agreement provides that upon the satisfaction
of the Tranche B-1 Closing Condition and the Tranche B-2 Closing Condition,
the
Company will cause to be issued to the Subscriber the Tranche B-1 Shares and
the
Tranche B-2 Shares in consideration of the Tranche B-1 Purchase Price and the
Tranche B-2 Purchase Price, as the case may be; and
WHEREAS,
Company management has determined that (i) based on current and projected sales,
there is no reasonable expectation that the Company will meet the Tranche B-1
Closing Condition or the Tranche B-2 Closing Condition, and (ii) it is very
likely that due to reduced cash flow resulting from lower sales and continued
investment in sales growth and product development, the Company’s cash position
will reach critically low levels before the third quarter unless additional
capital is made available to the Company; and
WHEREAS,
even though there is no reasonable expectation that the Tranche B-1 Closing
Condition and the Tranche B-2 Closing Condition will be satisfied, and therefore
the Subscriber will have no obligation to purchase the Aggregate Tranche B
Shares, the Subscriber is willing to purchase the Aggregate Tranche B Shares
in
consideration for the agreement of the Company that (a) the total purchase
price
for the Aggregate Tranche B Shares shall be equal to the Tranche B-1 Purchase
Price, and (b) any obligation of the Subscriber to pay the Tranche B-2 Purchase
Price is hereby extinguished; and
WHEREAS,
the Company has requested the Subscriber to provide the Company with a line
of
credit of up to One Million Fifty Thousand Dollars ($1,050,000) for operating
capital purposes (the “Credit Line Facility”), and the Subscriber is
prepared to extend the Credit Line Facility to the Company under and in
accordance with the terms and conditions set forth in that certain Credit Line
and Security Agreement (the “Credit Agreement”) and that certain Credit
Line Note (the “Note”), copies of which have been delivered to the
Company and approved by unanimous consent of the Directors of the
Company.
NOW,
THEREFORE, in consideration of the premises and the mutual agreements herein
set
forth, the parties hereto desire to amend the Restated Original Subscription
Agreement to reflect the aforementioned and certain other changes thereto as
set
forth herein:
1. As
of the Closing Date (as defined below), the Company irrevocably agrees to issue
and sell to the Subscriber, and the Subscriber irrevocably agrees to purchase,
a
total of 22,222,222 shares of Common Stock (the “Shares”), for a total
purchase price of One Million Dollars ($1,000,000) (the “Purchase
Price”), and the Company shall deliver, or cause to be delivered, to the
Subscriber, in accordance with the terms of the Escrow Agreement, stock
certificates representing the Shares.
2. The
obligation of the Subscriber to pay the Tranche B-2 Purchase Price is hereby
extinguished, and the obligations of the Subscriber to consummate the Tranche
B-1 and Tranche B-2 Closings, as described in the Restated Original Subscription
Agreement, are hereby extinguished and such closings shall not
occur.
3. The
payment of the Purchase Price and the delivery of the Shares, shall occur and
be
effective simultaneously with the execution of this First Amendment, remotely
at
the offices of the Company, 000 X. 0xx Xxxxxx,
Xxxxxx,
Xxxxxx (the “Closing Date” and the closing the
“Closing”). At the Closing:
(a) the
Subscriber shall deliver, or cause to be delivered, to the Company:
(i)
the Purchase Price, in immediately available funds by wire transfer to an
account designated by the Company in writing to the Subscriber;
(ii)
an executed copy of the Credit Agreement and all related documents, and shall
have made the Credit Line Facility available pursuant to the terms
thereof;
(iii) an
executed copy of the First Amendment to Amended and Restated Voting Agreement
in
the form attached hereto as Annex 2;
(iv) an
executed copy of the First Amendment to Amended and Restated Lock-Up Agreement
in the form attached hereto as Annex 3; and
(v)
a certificate executed by a duly authorized officer of the Subscriber certifying
that the representations and warranties made by the Subscriber in Section
4 of the Restated Original Subscription Agreement are true and correct in
all material respects as of the Closing Date (except to the extent a
representation or warranty is expressly limited by its terms to another date);
and
(b) the
Company shall deliver, or cause to be delivered, to the Subscriber:
(i)
in accordance with the terms of the Escrow Agreement, stock certificates
representing the Shares;
(ii)
an executed copy of the Credit Agreement, the Note and all related
documents;
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(iii) an
executed copy of the First Amendment to Amended and Restated Voting Agreement
in
the form attached hereto as Annex 2;
(iv) an
executed copy of the First Amendment to Amended and Restated Lock-Up Agreement
in the form attached hereto as Annex 3; and
(v)
a certificate executed by a duly authorized officer of the Company certifying
that (A) the representations and warranties made by the Company in
Section 5 of the Restated Original Subscription Agreement are true and
correct in all material respects as of the Closing Date (except to the extent
a
representation or warranty is expressly limited by its terms to another date),
and (B) there shall have been no material adverse change in the business,
condition (financial or otherwise), assets, liabilities (contingent or
otherwise), operations or results of operations of the Company since the date
of
the Restated Original Subscription Agreement.
4. By
execution of this First Amendment, the Company, M. Xxxxx Xxxxxx and Xxxx Xxxxxx,
all acknowledge that the Subscriber is contemplating transferring a portion
of
the membership interests of the Subscriber to Xxxx X. Xxxxx and agree that
the
transfer of such interests, if it occurs, shall be permitted notwithstanding
anything to the contrary in the Restated Original Subscription Agreement as
amended by this First Amendment, and the Company, M. Xxxxx Xxxxxx and Xxxx
Xxxxxx all waive any right that any of them may have to object to such
transfer.
5. Except
as specifically amended hereby, the Restated Original Subscription Agreement
is
hereby ratified and confirmed in all respects and shall remain in full force
and
effect.
6. To
the extent of any inconsistency between the terms of the Restated Original
Subscription Agreement and this First Amendment, the terms of this First
Amendment will control. Each reference in the Restated Original
Subscription Agreement to “this Agreement,” “herein,” “hereunder” or words of
similar import shall be deemed to be a reference to the Restated Original
Subscription Agreement as amended by this First Amendment, and the Restated
Original Subscription Agreement as so amended shall be read as a single,
integrated document.
7. This
First Amendment may be executed in two or more counterparts, and by the
different parties hereto in separate counterparts, each of which when executed
shall be deemed to be an original but all of which taken together shall
constitute one and the same agreement. Facsimile transmission of any
signed original counterpart and/or retransmission of any signed facsimile
transmission shall be deemed the same as the delivery of an
original. The introductory Recitals are incorporated into and made a
substantive part of this First Amendment.
[Signature
page follows]
IN
WITNESS WHEREOF, the parties hereto have executed this First Amendment as of
the
day and year first above written.
NEW
WORLD BRANDS,
INC.
By: /s/
M. Xxxxx Xxxxxx
Name:
M.
Xxxxx
Xxxxxx
Title:
CEO
P&S
SPIRIT,
LLC
By: /s/
Xxxxxx Xxxxxx, M.D.
Name: Xxxxxx
Xxxxxx, M.D.
Title: Manager
Acknowledged
and
agreed by M. Xxxxx Xxxxxx and Xxxx Xxxxxx:
/s/
M. Xxxxx
Xxxxxx
M. Xxxxx Xxxxxx
/s/ Xxxx Xxxxxx
Xxxx Xxxxxx
Xxxx Xxxxxx
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