EXHIBIT 10.1
NOTE PURCHASE AGREEMENT
THIS NOTE PURCHASE AGREEMENT (this "Agreement") is made and entered into
as of the 6th day of July 6, 2007, by and between GLOBAL BEVERAGE SOLUTIONS,
INC., a Nevada corporation with headquarters located at 2 S. University Drive,
Suite 220, Plantation, Florida 33324 (the "Company"), and the purchaser
identified on the signature page to this Agreement (the "Purchaser"), located at
the address set forth on the signature page to this Agreement.
ARTICLE 1
AUTHORIZATION AND SALE OF SECURITIES
1.1 AUTHORIZATION. The Company has authorized the sale and issuance to
the Purchaser of a convertible promissory note in the form attached hereto as
EXHIBIT A (the "Convertible Note"), convertible into common stock, par value
$.001 per share, of the Company (the "Common Stock"). The shares of Common Stock
issuable upon conversion of the Convertible Note are referred to herein as the
"Conversion Shares." The Convertible Note and the Conversion Shares are
collectively referred to herein as the "Securities."
1.2 AGREEMENT TO PURCHASE AND SELL THE CONVERTIBLE NOTE. The Company
agrees to issue and sell to the Purchaser, and the Purchaser agrees to purchase
from the Company, the Convertible Note in the principal amount of $259,202 for a
purchase price of $223,450 (the "Purchase Price") on the terms and conditions
set forth herein.
1.3 CLOSINGS AND DELIVERY. The purchase and sale of the Convertible Note
shall occur at 10:00 a.m., New York City time, on Friday, July 6, 2007. Such
purchase and sale is referred to herein as the "Closing," and the date of the
Closing is referred to herein as the "Closing Date." The Closing shall be held
at the offices of the Company first set forth above. At the Closing, the Company
will deliver to the Purchaser the Convertible Note being purchased at such
Closing and the Purchaser shall deliver to the Company by check or wire the
Purchase Price in full payment of the Convertible Note.
1.4 NATURE OF OFFERING. The investment in the Convertible Note and the
Conversion Shares is being made in reliance upon the provisions of Section 4(2)
("Section 4(2)") of the United States Securities Act of 1933, as amended (the
"Securities Act"), and Rule 506 of Regulation D ("Regulation D") promulgated
under the Securities Act.
ARTICLE 2
CONVERSION
2.1 OPTIONAL CONVERSION. From and after the date that the Company files
a Form N-54C (the "De-Election Notice") with the United States Securities and
Exchange Commission (the "SEC") to withdraw its election to be regulated as a
business development company under the Investment Company Act of 1940 (the "1940
Act"), the Purchaser shall have the right, at its option, by giving written
notice to the Company at its principal office at any time prior to the full
repayment of the Convertible Note by the Company, to convert in whole or in part
the principal amount of the Convertible Note and any accrued interest thereon
into Conversion Shares, at the Conversion Rate (as hereinafter defined). The
number of Conversion Shares issuable upon conversion of any Conversion Amount
(as hereinafter defined) shall be determined by dividing (x) such Conversion
Amount by (y) the Conversion Price (as hereinafter defined) (such formula being
referred to herein as the "Conversion Rate"). The "Conversion Amount" means the
portion of the principal amount of the Convertible Note and any accrued interest
thereon to be converted with respect to which this determination is being made.
The "Conversion Price" means, as of any date on which the Purchaser elects to
convert the Convertible Note into Conversion Shares, 75% of the average of the
lowest trade price of the Common Stock, as reported on the over-the-counter
market or if the Common Stock is listed on a stock exchange, the lowest trade
price of the Common Stock on such exchange, during any three business days for
the ten business days prior to such conversion election, as reported by
Bloomberg L.P.
2.2 ISSUANCE OF SHARES ON CONVERSION. The date on which notice of
conversion is given (the "Conversion Date") shall be deemed to be the date on
which the Purchaser faxes or otherwise delivers the conversion notice ("Notice
of Conversion") to the Company so that it is received by the Company on or
before such specified date, provided that, if such conversion would convert the
entire remaining principal of the Convertible Note, the Purchaser shall deliver
to the Company the original Convertible Note being converted no later than five
(5) business days thereafter. Facsimile delivery of the Notice of Conversion
shall be accepted by the Company at facsimile number (954) 337-0522; Attn: Jerry
Pearring. As soon as practicable after any Conversion Date, but in any event
within 3 business days thereafter (the "Delivery Date"), the Company, at its
expense, will cause to be issued in the name of and delivered to the Purchaser
of the Convertible Note, a certificate or certificates for the number of fully
paid and non-assessable Conversion Shares to which the Purchaser shall be
entitled on such conversion. No fractional shares of Common Stock will be issued
on conversion of the Convertible Note. If on conversion of the Convertible Note
a fraction of a share results, the Company will round such fraction of a share
of Common Stock up to the nearest whole share.
2.3 LIMITATIONS ON CONVERSION. (a) Notwithstanding anything to the
contrary contained in this Agreement and the Convertible Note, the Convertible
Note may not be converted, in whole or in part, into Conversion Shares unless
and until any then-applicable requirements of all federal and state securities
laws and regulatory agencies charged with enforcing securities laws shall have
been fully complied with to the satisfaction of the Company and its counsel;
PROVIDED, HOWEVER, that the Company shall at all times use its best efforts to
comply with such requirements. The Company may, in its reasonable discretion,
condition any conversion of the Convertible Note upon the Purchaser's delivery
to the Company of a written agreement, in form and substance satisfactory to the
Company, whereby the Purchaser makes, at the time of conversion, such
representations and warranties to and for the benefit of the Company as are
comparable to the representations and warranties of the Purchaser set forth in
Section 3.2(d) below as and to the extent applicable to the issuance of the
Conversion Shares upon conversion of the Convertible Note.
2
(b) Notwithstanding any other provision hereof or of any of the other
Transaction Documents, in no event (except (i) as specifically provided herein
as an exception to this provision, or (ii) while there is outstanding a tender
offer for any or all of the shares of the Company's Common Stock) shall the
Purchaser be entitled to convert any portion of this Convertible Note, or shall
the Company have the obligation to convert such Convertible Note to the extent
that, after such conversion, the sum of (1) the number of shares of Common Stock
beneficially owned by the Purchaser and its affiliates (other than shares of
Common Stock which may be deemed beneficially owned through the ownership of the
unconverted portion of the Convertible Note or other convertible securities or
of the unexercised portion of warrants or other rights to purchase Common
Stock), and (2) the number of shares of Common Stock issuable upon the
conversion of the Convertible Note with respect to which the determination of
this proviso is being made, would result in beneficial ownership by the
Purchaser and its affiliates of more than 4.99% of the outstanding shares of
Common Stock (after taking into account the shares to be issued to the Purchaser
upon such conversion). For purposes of the proviso to the immediately preceding
sentence, beneficial ownership shall be determined in accordance with Section
13(d) of the Securities Exchange Act of 1934, as amended, except as otherwise
provided in clause (1) of such sentence. The Purchaser, by its acceptance of
this Convertible Note, further agrees that if the Purchaser transfers or assigns
any of the Convertible Note to a party who or which would not be considered such
an affiliate, such assignment shall be made subject to the transferee's or
assignee's specific agreement to be bound by the provisions of this Section as
if such transferee or assignee were the original Purchaser hereof. Nothing
herein shall preclude the Purchaser from disposing of a sufficient number of
other shares of Common Stock beneficially owned by the Purchaser so as to
thereafter permit the continued conversion of this Convertible Note.
2.4 DELIVERY OF STOCK. The Company understands that a delay in the
issuance of the shares of Common Stock beyond the Delivery Date could result in
economic loss to the Purchaser. As compensation to the Purchaser for such loss,
the Company agrees to pay late payments to the Purchaser for late issuance of
Shares upon Conversion in accordance with the following schedule (where "No.
Business Days Late" refers to the number of business days which is beyond two
(2) business days after the Delivery Date):(1)
Late Payment For Each $10,000
of Principal or Interest Being Converted
No. Business Days Late Amount Being Converted
---------------------- ----------------------
1 $100
2 $200
3 $300
4 $400
5 $500
6 $600
7 $700
8 $800
9 $900
10 $1,000
>10 $1,000 + $200 for each Business
Day Late beyond 10 days
- ---------------------
(1) Example: Notice of Conversion is delivered on Monday, December 3, 2007.
The Delivery Date would be Thursday, December 6 (the third business day
after such delivery). If the certificate is delivered by Monday December
10 (2 business days after the Delivery Date), no payment under this
provision is due. If the certificates are delivered on December 11, that
is 1 "Business Day Late" in the table below; if delivered on December 18,
that 6 "Business Days Late" in the table.
3
The Company shall pay any payments incurred under this Section in immediately
available funds upon demand as the Purchaser's exclusive remedy (other than the
following provisions of this Section) for such delay. Furthermore, in addition
to any other remedies which may be available to the Purchaser, in the event that
the Company fails for any reason to effect delivery of such shares of Common
Stock by close of business on the Delivery Date, the Purchaser will be entitled
to revoke the relevant Notice of Conversion by delivering a notice to such
effect to the Company, whereupon the Company and the Purchaser shall each be
restored to their respective positions immediately prior to delivery of such
Notice of Conversion; provided, however, that an amount equal to any payments
contemplated by this Section which have accrued through the date of such
revocation notice shall remain due and owing to the converting Purchaser
notwithstanding such revocation.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
3.1 BY THE COMPANY. The Company hereby represents and warrants to the
Purchaser as follows:
(a) STATUS. The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Nevada, and has the
corporate power to own and operate its properties and assets, to carry on its
business as now conducted and to enter into and to perform its obligations under
this Agreement, the Convertible Note and that certain Registration Rights
Agreement, dated even date herewith (the "Registration Rights Agreement"), by
and between the Company and the Purchaser (collectively, the "Transaction
Documents").
(b) AUTHORIZATION. The Company has the corporate power and authority to
enter into and perform its obligations under the Transaction Documents. The
execution and delivery of this Agreement, the execution and delivery of each
Transaction Document and the performance by the Company of its obligations
hereunder and thereunder have been duly authorized by all necessary action
properly taken and the Company has received all necessary governmental
approvals, if any, that are required.
(c) VALIDITY AND BINDING EFFECT. The Transaction Documents are the
legal, valid and binding obligations of the Company, enforceable in accordance
with their respective terms, subject to limitations imposed by bankruptcy,
insolvency, moratorium or other similar laws affecting the rights of creditors
generally or the application of general equitable principles.
4
(d) NO CONFLICTS. Consummation of the transactions contemplated hereby
and the performance of the obligations of the Company under and by virtue of the
Transaction Documents do not conflict with, and will not result in any breach
of, or constitute a default under, (i) the charter or bylaws of the Company or
(ii) any mortgage, deed of trust, lease, bank loan or credit agreement, license,
franchise or any other instrument or agreement to which the Company is a party
or by which the Company or its respective properties may be bound or affected,
except, in the case of clause (ii), to the extent that such conflict, breach or
default would not reasonably be expected to have a Material Adverse Effect (as
hereinafter defined).
(e) EXEMPTION FROM REGISTRATION; VALID ISSUANCES. Subject to the
accuracy of the Purchaser's representations in Section 3.2 hereof, the sale of
the Convertible Note and the Conversion Shares will not require registration
under the Securities Act and/or any applicable state securities law. The
Conversion Shares issuable by the Company upon conversion of the Convertible
Note shall, if and when the Convertible Note is converted in accordance with its
terms, be duly and validly issued, fully-paid and non-assessable shares of
Common Stock.
(f) SEC DOCUMENTS. The Company has made available to the Purchaser true
and complete copies of the Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 2006 (the "Form 10-K") and each report filed by the
Company with the SEC pursuant to the Securities Exchange Act of 1934, as amended
(the "Exchange Act") since the filing of the Form 10-K through the date hereof
(collectively such documents are referred to herein as the "SEC Documents"). As
of their respective dates, the SEC Documents complied in all material respects
with the requirements of the Exchange Act, and rules and regulations of the SEC
promulgated thereunder and the SEC Documents did not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. The financial
statements of the Company included in the SEC Documents complied in all material
respects with applicable accounting requirements and the published rules and
regulations of the SEC or other applicable rules and regulations with respect
thereto at the time of such inclusion. Such financial statements have been
prepared in accordance with generally accepted accounting principles ("GAAP")
applied on a consistent basis during the periods involved (except (i) as may be
otherwise indicated in such financial statements or the notes thereto or (ii) in
the case of unaudited interim statements, to the extent they exclude footnotes
or may be condensed or summary statements) and fairly present in all material
respects the financial position of the Company as of the dates thereof and the
results of operations and cash flows for the periods then ended (subject, in the
case of unaudited interim statements, to normal year-end audit adjustments).
(g) NO GENERAL SOLICITATION OR ADVERTISING IN REGARD TO THIS
TRANSACTION. Neither the Company nor any of its affiliates nor any person acting
on its or their behalf has conducted or will conduct any general solicitation
(as that term is used in Rule 502(c) of Regulation D) or general advertising
with respect to the Securities.
5
(h) NO MATERIAL ADVERSE EFFECT. Since March 31, 2007, no Material
Adverse Effect (as hereinafter defined) has occurred or exists with respect to
the Company, except as disclosed in the SEC Documents. For purposes of this
Agreement, "Material Adverse Effect" shall mean any effect on the business,
operations, properties, prospects, or financial condition of the Company that is
material and adverse to the Company, and/or any condition, circumstance, or
situation that would prohibit or otherwise interfere with the ability of the
Company to enter into and perform any of its obligations under the Transaction
Documents in any material respect.
(i) NO INTEGRATED OFFERING. Neither the Company, nor any of its
affiliates, nor any person acting on its or their behalf has, directly or
indirectly, made any offers or sales of any security or solicited any offers to
buy any security, under circumstances that would require registration of the
Securities under the Securities Act or cause this offering of the Securities to
be integrated with prior offerings by the Company for purposes of the Securities
Act.
(j) LITIGATION AND OTHER PROCEEDINGS. Except as disclosed in the SEC
Documents, there are no lawsuits or proceedings pending or, to the knowledge of
the Company, threatened, against the Company, nor has the Company received any
written or oral notice of any such action, suit, proceeding or investigation,
which could reasonably be expected to have a Material Adverse Effect. Except as
set forth in the SEC Documents, no judgment, order, writ, injunction or decree
or award has been issued by or, to the knowledge of the Company, requested of
any court, arbitrator or governmental agency which could result in a Material
Adverse Effect.
3.2 BY THE PURCHASER. The Purchaser hereby represents and warrants to
the Company as follows:
(a) STATUS. If Purchaser is a corporation, partnership, trust or limited
liability company, Purchaser is duly organized, validly existing and in good
standing (to the extent applicable) under the laws of the jurisdiction of its
formation, and has the power to own and operate its properties, to carry on its
business as now conducted and to enter into and to perform its obligations under
this Agreement and the other Transaction Documents.
(b) AUTHORIZATION. Purchaser has the power and authority to enter into
and perform its obligations under the Transaction Documents. The execution and
delivery of this Agreement, the execution and delivery of each Transaction
Document and the performance by the Purchaser of its obligations hereunder and
thereunder have been duly authorized by all necessary action properly taken and
the Purchaser has received all necessary governmental approvals, if any, that
are required. The person executing this Agreement and all of the other
Transaction Documents to which the Purchaser is a party is duly authorized to
act on behalf of the Purchaser.
(c) VALIDITY AND BINDING EFFECT. The Transaction Documents are the
legal, valid and binding obligations of the Purchaser, enforceable in accordance
with their respective terms, subject to limitations imposed by bankruptcy,
insolvency, moratorium or other similar laws affecting the rights of creditors
generally or the application of general equitable principles.
6
(d) INVESTMENT REPRESENTATIONS.
(i) Purchaser has such knowledge and experience in financial and
business matters, including investments of the type represented by the
Securities, is capable of evaluating the merits of investment in the Company and
can bear the economic risk of an investment in the Securities;
(ii) Purchaser is an "accredited investor" as such term is defined in
Rule 501 of Regulation D; and
(iii) Purchaser is acquiring the Securities for investment purposes only,
for its own account and not with a view to, or for resale in connection with,
the distribution or other disposition thereof in contravention of the Securities
Act or any state securities law, without prejudice, however, to Purchaser's
right at all times to sell or otherwise dispose of all or any part of the
Securities pursuant to an effective registration statement under the Securities
Act and applicable state securities laws, or under an exemption from such
registration available under the Securities Act and other applicable state
securities laws.
(e) TRANSFER RESTRICTIONS. Purchaser acknowledges and agrees that the
Convertible Note and the Conversion Shares issuable upon conversion of the
Convertible Note are subject to, and that Purchaser will be bound by, the
additional transfer restrictions set forth in Section 6 of the Convertible Note.
(f) ABSENCE OF CONFLICTS. The execution and delivery of the Transaction
Documents, and the consummation of the transactions contemplated thereby, and
compliance with the requirements thereof, will not violate any law, rule,
regulation, order, writ, judgment, injunction, decree or award binding on
Purchaser or (a) violate any provision of any indenture, instrument or agreement
to which Purchaser is a party or is subject, or by which Purchaser or any of its
assets is bound; (b) conflict with or constitute a material default thereunder;
(c) result in the creation or imposition of any lien pursuant to the terms of
any such indenture, instrument or agreement, or constitute a breach of any
fiduciary duty owed by Purchaser to any third party; or (d) require the approval
of any third-party (which has not been obtained) pursuant to any material
contract, agreement, instrument, relationship or legal obligation to which
Purchaser is subject or to which any of its assets, operations or management may
be subject.
(g) DISCLOSURE; ACCESS TO INFORMATION. The Purchaser has received all
documents, records, books and other publicly available information pertaining to
Purchaser's investment in the Company that have been requested by the Purchaser.
The Company is subject to the periodic reporting requirements of the Exchange
Act, and the Purchaser has reviewed or received copies of all SEC Documents that
have been requested by it.
(h) MANNER OF SALE. At no time was Purchaser presented with or solicited
by or through any leaflet, public promotional meeting, television advertisement
or any other form of general solicitation or advertising.
7
(i) PLACEMENT FEE. The Purchaser acknowledges that Palladium Capital
Advisors, LLC (the "Placement Agent") will be paid a placement fee of $50,000 by
the Company in connection with the sale of the Convertible Note (in such form
and manner as mutually agreed upon by and between the Company and the Placement
Agreement).
(j) TRANSFER OR RESALE. The Purchaser understands that except as
provided in the Registration Rights Agreement: (i) the Securities have not been
and are not being registered under the Securities Act or any state securities
laws, and may not be offered for sale, sold, assigned or transferred unless (A)
subsequently registered thereunder, (B) the Purchaser shall have delivered to
the Company an opinion of counsel, in a generally acceptable form, to the effect
that such Securities to be sold, assigned or transferred may be sold, assigned
or transferred pursuant to an exemption from such registration requirements, or
(C) the Purchaser provides the Company with reasonable assurances (in the form
of seller and broker representation letters) that such Securities can be sold,
assigned or transferred pursuant to Rule 144 or Rule 144(k) promulgated under
the Securities Act, as amended (or a successor rule thereto) (collectively,
"RULE 144"), in each case following the applicable holding period set forth
therein; (ii) any sale of the Securities made in reliance on Rule 144 may be
made only in accordance with the terms of Rule 144 and further, if Rule 144 is
not applicable, any resale of the Securities under circumstances in which the
seller (or the person through whom the sale is made) may be deemed to be an
underwriter (as that term is defined in the Securities Act) may require
compliance with some other exemption under the Securities Act or the rules and
regulations of the SEC thereunder; and (iii) neither the Company nor any other
person is under any obligation to register the Securities under the Securities
Act or any state securities laws or to comply with the terms and conditions of
any exemption thereunder.
ARTICLE 4
COVENANTS AND AGREEMENTS
4.1 ISSUANCE OF CONVERTIBLE NOTE AND WARRANT. The sale of the
Convertible Note and the issuance of the Conversion Shares upon conversion of
the Convertible Note shall be made in accordance with the provisions and
requirements of Section 4(2) and Regulation D under the Securities Act (with
respect to the issuance of the Convertible Note), Section 3(a)(9) of the
Securities Act (with respect to the issuance of the Conversion Shares) and any
applicable state securities law. The Company shall make all necessary SEC and
"blue sky" filings required to be made by the Company in connection with the
sale of the Securities to the Purchaser as required by all applicable laws.
4.2 AUTHORIZED SHARES. At all times from and after the Closing Date and
until the maturity date of the Convertible Note, the Company shall maintain a
sufficient number of authorized shares of Common Stock to be available for
issuance in a timely manner upon conversion of the Convertible Note in
accordance with the terms hereof and thereof.
4.3 MATTERS RELATING TO DE-ELECTION NOTICE. The Company covenants and
agrees (i) to file, within five (5) business days of the Closing Date, a
preliminary information statement on Schedule 14C with the SEC relating to the
approval by the written consent of the Company's stockholders of the withdrawal
of its election to be regulated as a business development company under the 1940
Act, and promptly respond to any SEC comments thereon and (ii) to file, within
thirty (30) days after the SEC clears the filing by the Company of a definitive
information statement on Schedule 14C with the SEC relating to the approval by
the written consent of the Company's stockholders of the withdrawal of its
election to be regulated as a business development company under the 1940 Act, a
De-Election Notice.
8
ARTICLE 5
LEGEND
Each certificate representing the Conversion Shares will bear a legend in
substantially the following form:
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
OR ANY OTHER APPLICABLE SECURITIES LAWS AND HAVE BEEN ISSUED IN RELIANCE
UPON AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT
AND SUCH OTHER SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR
PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED,
PLEDGED, ENCUMBERED, HYPOTHECATED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR
PURSUANT TO A TRANSACTION THAT IS EXEMPT FROM, OR NOT SUBJECT TO, SUCH
REGISTRATION.
ARTICLE 6
DEFAULT AND REMEDIES
6.1 EVENTS OF DEFAULT. The occurrence of any of the following shall
constitute an "Event of Default" hereunder:
(a) Default in the payment of the principal of the indebtedness
evidenced by the Convertible Note in accordance with the terms of the
Convertible Note;
(b) A default or event of default shall occur in respect of any other
indebtedness of the Company that exceeds, in the aggregate, $100,000 and, if
subject to a cure right, such default or event of default shall not be cured
within the applicable cure period;
(c) The Company shall be liquidated, dissolved, partitioned or
terminated, or the charter thereof shall expire or be revoked;
(d) The Company (i) shall generally not pay or shall be unable to pay
its debts as such debts become due, or (ii) shall make an assignment for the
benefit of creditors or petition or apply to any tribunal for the appointment of
a custodian, receiver or trustee for it or a substantial part of its assets, or
(iii) shall commence any proceeding under any bankruptcy, reorganization,
arrangement, readjustment of debt, dissolution or liquidation law or statute of
any jurisdiction, whether now or hereafter in effect, or (iv) shall have had any
such petition or application filed or any such proceeding commenced against it
that is not dismissed within sixty (60) days, or (v) shall indicate, by any act
or intentional and purposeful omission, its consent to, approval of or
acquiescence in any such petition, application, proceeding or order for relief
or the appointment of a custodian, receiver or trustee for it or a substantial
part of its assets, or (vi) shall suffer any such custodianship, receivership or
trusteeship to continue undischarged for a period of sixty (60) days or more;
9
(e) Failure of the Company to perform any of its obligations, covenants
or agreements under this Agreement or any of the other Transaction Documents
(other than the payment of the principal of the indebtedness evidenced by the
Convertible Note, which shall be subject to Section 6.1(a) above and not this
Section 6(e));
(f) A default or event of default shall occur under any of the other
Transaction Documents and, if subject to a cure right, such default or event of
default shall not be cured within the applicable cure period;
(g) The Purchaser's inability to convert the Convertible Note into
Conversion Shares upon written notice to the Company as provided for herein due
to the Company's failure to comply with (and not due to the Purchaser's failure
to meet all applicable investor suitability requirements of) the then-applicable
requirements of all federal and state securities laws and regulatory agencies
charged with enforcing securities laws as provided for in Section 2.3 of this
Agreement; or
(h) A default or event of default shall occur in respect of any
agreement of the Company that requires the payment by the Company of an amount
in excess of $250,000.
With respect to any Event of Default described above in Sections 6.1(e),
(f) and (h) that is capable of being cured and that does not already provide its
own cure procedure (a "Curable Default"), the occurrence of such Curable Default
shall not constitute an Event of Default hereunder if the Company provides
notice to the Purchaser of such Curable Default in accordance with the
provisions hereof within five (5) business days of the Company learning of such
default and such Curable Default is fully cured and/or corrected within thirty
(30) days of the Company's notice thereof to Purchaser.
6.2 ACCELERATION OF MATURITY; REMEDIES. Upon the occurrence of any Event
of Default described in Section 6.1(d), the indebtedness evidenced by the
Convertible Note shall be immediately due and payable in full; and upon the
occurrence of any other Event of Default described above, the Purchaser at any
time thereafter may at its option accelerate the maturity of the indebtedness
evidenced by the Convertible Note without notice of any kind. Upon the
occurrence of any such Event of Default and the acceleration of the maturity of
the indebtedness evidenced by the Convertible Note:
(a) The Purchaser shall be immediately entitled to exercise any and all
rights and remedies possessed by the Purchaser pursuant to the terms of the
Convertible Note and all of the other Transaction Documents; and
10
(b) The Purchaser shall have any and all other rights and remedies that
the Purchaser may now or hereafter possess at law, in equity or by statute.
6.3 REMEDIES CUMULATIVE; NO WAIVER. No right, power or remedy conferred
upon or reserved to the Purchaser by this Agreement or any of the other
Transaction Documents is intended to be exclusive of any other right, power or
remedy, but each and every such right, power and remedy shall be cumulative and
concurrent and shall be in addition to any other right, power and remedy given
hereunder, under any of the other Transaction Documents or now or hereafter
existing at law, in equity or by statute. No delay or omission by the Purchaser
to exercise any right, power or remedy accruing upon the occurrence of any Event
of Default shall exhaust or impair any such right, power or remedy or shall be
construed to be a waiver of any such Event of Default or an acquiescence
therein, and every right, power and remedy given by this Agreement and the other
Transaction Documents to the Purchaser may be exercised from time to time and as
often as may be deemed expedient by the Purchaser.
ARTICLE 7
SURVIVAL; INDEMNIFICATION
7.1 SURVIVAL. The representations, warranties and covenants made by each
of the Company and the Purchaser in this Agreement, the schedules and exhibits
hereto and in each instrument, agreement and certificate entered into and
delivered by them pursuant to this Agreement, shall survive the Closing and the
consummation of the transactions contemplated hereby. In the event of a breach
or violation of any of such representations, warranties or covenants, the party
to whom such representations, warranties or covenants have been made shall have
all rights and remedies for such breach or violation available to it under the
provisions of this Agreement or otherwise, whether at law or in equity,
irrespective of any investigation made by or on behalf of such party on or prior
to the Closing Date.
7.2 INDEMNITY.
(a) BY THE COMPANY. The Company hereby agrees to indemnify and hold
harmless the Purchaser, its affiliates and their respective officers, directors,
partners and members (collectively, the "Purchaser Indemnitees"), from and
against any and all losses, claims, damages, costs, expenses (including, without
limitation, reasonable attorney's fees and disbursements and reasonable costs
and expenses of expert witnesses and investigation), judgments, penalties,
liabilities and deficiencies (collectively, "Losses"), and agrees to reimburse
the Purchaser Indemnitees for all reasonable out-of-pocket expenses (including
the reasonable fees and expenses of legal counsel), in each case promptly as
incurred by the Purchaser Indemnitees and to the extent arising out of or in
connection with:
(i) any misrepresentation, omission of fact or breach of any of the
Company's representations or warranties contained in this Agreement, the
schedules or exhibits hereto or any instrument, agreement or certificate entered
into or delivered by the Company pursuant to this Agreement; or
11
(ii) any failure by the Company to perform in any material respect any of
its covenants, agreements, undertakings or obligations set forth in this
Agreement, the schedules or exhibits hereto or any instrument, agreement or
certificate entered into or delivered by the Company pursuant to this Agreement.
(b) BY THE PURCHASER. The Purchaser hereby agrees to indemnify and hold
harmless the Company, its affiliates and their respective officers, directors,
partners and members (collectively, the "Company Indemnitees"), from and against
any and all Losses, and agrees to reimburse the Company Indemnitees for
reasonable all out-of-pocket expenses (including the reasonable fees and
expenses of legal counsel), in each case promptly as incurred by the Company
Indemnitees and to the extent arising out of or in connection with:
(i) any misrepresentation, omission of fact, or breach of any of the
Purchaser's representations or warranties contained in this Agreement, the
schedules or exhibits hereto or any instrument, agreement or certificate entered
into or delivered by the Purchaser pursuant to this Agreement; or
(ii) any failure by the Purchaser to perform in any material respect any
of its covenants, agreements, undertakings or obligations set forth in this
Agreement or any instrument, certificate or agreement entered into or delivered
by the Purchaser pursuant to this Agreement.
7.3 NOTICE. Promptly after receipt by either party hereto seeking
indemnification pursuant to Section 7.2 (an "Indemnified Party") of written
notice of any investigation, claim, proceeding or other action in respect of
which indemnification is being sought (each, a "Claim"), the Indemnified Party
promptly shall notify the party against whom indemnification pursuant to Section
7.2 is being sought (the "Indemnifying Party") of the commencement thereof; but
the omission to so notify the Indemnifying Party shall not relieve it from any
liability that it otherwise may have to the Indemnified Party, except to the
extent that the Indemnifying Party is materially prejudiced and forfeits
substantive rights and defenses by reason of such failure. In connection with
any Claim as to which both the Indemnifying Party and the Indemnified Party are
parties, the Indemnifying Party shall be entitled to assume the defense thereof.
Notwithstanding the assumption of the defense of any Claim by the Indemnifying
Party, the Indemnified Party shall have the right to employ separate legal
counsel and to participate in the defense of such Claim, and the Indemnifying
Party shall bear the reasonable fees, out-of-pocket costs and expenses of such
separate legal counsel to the Indemnified Party if (and only if): (x) the
Indemnifying Party shall have agreed to pay such fees, out-of-pocket costs and
expenses, (y) the Indemnified Party and the Indemnifying Party reasonably shall
have concluded that representation of the Indemnified Party and the Indemnifying
Party by the same legal counsel would not be appropriate due to actual or, as
reasonably determined by legal counsel to the Indemnified Party, potentially
differing interests between such parties in the conduct of the defense of such
Claim, or if there may be legal defenses available to the Indemnified Party that
are in addition to or disparate from those available to the Indemnifying Party,
or (z) the Indemnifying Party shall have failed to employ legal counsel
reasonably satisfactory to the Indemnified Party within a reasonable period of
time after notice of the commencement of such Claim. If the Indemnified Party
employs separate legal counsel in circumstances other than as described in
12
clauses (x), (y) or (z) above, the fees, costs and expenses of such legal
counsel shall be borne exclusively by the Indemnified Party. Except as provided
above, the Indemnifying Party shall not, in connection with any Claim in the
same jurisdiction, be liable for the fees and expenses of more than one firm of
legal counsel for the Indemnified Party (together with appropriate local
counsel). The Indemnifying Party shall not, without the prior written consent of
the Indemnified Party (which consent shall not unreasonably be withheld), settle
or compromise any Claim or consent to the entry of any judgment that does not
include an unconditional release of the Indemnified Party from all liabilities
with respect to such Claim or judgment.
ARTICLE 8
MISCELLANEOUS
8.1 SUCCESSORS AND ASSIGNS INCLUDED IN PARTIES. Whenever in this
Agreement one of the parties hereto is named or referred to, the heirs, legal
representatives, successors, successors-in-title and assigns of such parties
shall be included, and all covenants and agreements contained in this Agreement
by or on behalf of the Company or by or on behalf of the Purchaser shall bind
and inure to the benefit of their respective heirs, legal representatives,
successors-in-title and assigns, whether so expressed or not.
8.2 SEVERABILITY. Wherever possible each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by or
invalid under such law, such provision shall be ineffective to the extent of
such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Agreement and shall be interpreted
so as to be effective and valid.
8.3 ARTICLE AND SECTION HEADINGS, DEFINED TERMS. Numbered and titled
article and section headings and defined terms are for convenience only and
shall not be construed as amplifying or limiting any of the provisions of this
Agreement.
8.4 NOTICES. Any and all notices, elections or demands permitted or
required to be made under this Agreement shall be in writing, signed by the
party giving such notice, election or demand and shall be delivered personally,
telecopied, or sent by certified mail or overnight via nationally recognized
courier service (such as Federal Express), to the other party at the address set
forth in the introductory paragraph to this Agreement, or at such other address
as may be supplied in writing and of which receipt has been acknowledged in
writing. The date of personal delivery or telecopy or two (2) business days
after the date of mailing (or the next business day after delivery to such
courier service), as the case may be, shall be the date of such notice, election
or demand, with copies as follows:
if to the Company:
Mr. Jerry Pearring
Chief Executive Officer
Global Beverage Solutions, Inc.
2 S. University Drive
Suite 220
Plantation, Florida 33324
13
if to the Purchaser:
Krieger & Prager, LLP, Esqs.
39 Broadway
Suite 920
New York, NY 10006
Attn: Samuel M. Krieger, Esq.
Telephone No.: (212) 363-2900
Telecopier No.: (212) 363-2999
8.5 ENTIRE AGREEMENT. This Agreement and the other written agreements
between the Company and the Purchaser represent the entire agreement between the
parties concerning the subject matter hereof, and all oral discussions and prior
agreements are merged herein; PROVIDED, if there is a conflict between this
Agreement and any other document executed contemporaneously herewith with
respect to the obligations described herein, the provision of this Agreement
shall control.
8.6 GOVERNING LAW. THIS AGREEMENT SHALL BE ENFORCED, GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY WITH SUCH STATE, WITHOUT REGARD TO
THE PRINCIPLES OF CONFLICT OF LAWS. THE PARTIES HERETO HEREBY SUBMIT TO THE
EXCLUSIVE JURISDICTION OF THE UNITED STATES FEDERAL COURTS LOCATED IN THE CITY
OF NEW YORK, NEW YORK WITH RESPECT TO ANY DISPUTE ARISING UNDER THIS AGREEMENT,
THE AGREEMENTS ENTERED INTO IN CONNECTION HEREWITH OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY. BOTH PARTIES IRREVOCABLY WAIVE THE DEFENSE OF AN
INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH SUIT OR PROCEEDING. BOTH PARTIES
FURTHER AGREE THAT SERVICE OF PROCESS UPON A PARTY MAILED BY FIRST CLASS MAIL
SHALL BE DEEMED IN EVERY RESPECT EFFECTIVE SERVICE OF PROCESS UPON THE PARTY IN
ANY SUCH SUIT OR PROCEEDING. NOTHING HEREIN SHALL AFFECT ANY PARTY'S RIGHT TO
SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW. THE PARTIES AGREE THAT A
FINAL NON-APPEALABLE JUDGMENT IN ANY SUCH SUIT OR PROCEEDING SHALL BE CONCLUSIVE
AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON SUCH JUDGMENT OR IN ANY
OTHER LAWFUL MANNER. THE PARTIES HEREBY WAIVE A TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM BROUGHT BY EITHER OF THE PARTIES HERETO AGAINST THE
OTHER IN RESPECT OF ANY MATTER ARISING OUT OF OR IN CONNECTION WITH THIS
AGREEMENT.
8.7 AMENDMENT. Neither this Agreement nor any term hereof may be
amended, waived, discharged or terminated other than by a written instrument
signed by the party against whom enforcement of any such amendment, waiver,
discharge or termination is sought.
14
8.8 COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by different parties to this Agreement in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same Agreement.
8.9 CONSTRUCTION AND INTERPRETATION. Should any provision of this
Agreement require judicial interpretation, the parties hereto agree that the
court interpreting or construing the same shall not apply a presumption that the
terms hereof shall be more strictly construed against one party by reason of the
rule of construction that a document is to be more strictly construed against
the party that itself or through its agent prepared the same, it being agreed
that the Company, the Purchaser and their respective agents have participated in
the preparation hereof.
8.9 COSTS AND ATTORNEYS' FEES. If any action, suit, arbitration or other
proceeding is instituted to remedy, prevent or obtain relief from a default in
the performance by any party to this Agreement of its obligations under this
Agreement, the prevailing party (as determined by the court or other
fact-finder) will be entitled to recover from the losing party all actual costs
incurred in each and every such action, suit, arbitration or other proceeding,
including any and all appeals or petitions therefrom, including, without
limitation, reasonable attorneys' fees and disbursements.
15
IN WITNESS WHEREOF, the parties hereto have executed this Agreement, or
have caused this Agreement to be executed by their duly authorized officers, as
of the day and year first above written.
COMPANY:
GLOBAL BEVERAGE SOLUTIONS, INC.,
a Nevada corporation
By: /s/ Jerry Pearring
------------------
Name: Jerry Pearring
Title: Chief Executive Officer
PURCHASER:
MELTON MANAGEMENT LTD.
By: /s/ Yehuda Breitkope
--------------------
Its: President
26 Agassi Street
Jerusalem, Israel
16