Exhibit 10.16
THIS FOURTH AMENDED AND RESTATED 10% SECURED CONVERTIBLE NOTE, AND THE
SECURITIES INTO WHICH IT IS CONVERTIBLE (COLLECTIVELY, THE "SECURITIES"), HAS
NOT BEEN REGISTERED WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES COMMISSION OF
ANY STATE UNDER APPLICABLE STATE SECURITIES LAWS. THE SECURITIES HAVE BEEN
ACQUIRED PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT
OF 1933, AS AMENDED. THE SECURITIES ARE "RESTRICTED" AND MAY NOT BE OFFERED
OR SOLD UNLESS THE SECURITIES ARE REGISTERED UNDER THE ACT, OR PURSUANT TO
AVAILABLE EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND THE
ISSUER WILL BE PROVIDED WITH OPINION OF COUNSEL OR OTHER SUCH INFORMATION AS
IT MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH EXEMPTIONS ARE AVAILABLE.
HAWAIIAN NATURAL WATER COMPANY, INC.
FOURTH AMENDED AND RESTATED 10% SECURED CONVERTIBLE NOTE
DUE DECEMBER 31, 2001
$400,000.00 September 27, 2001
FOR VALUE RECEIVED, Hawaiian Natural Water Company, Inc., a Hawaiian
corporation (the "Corporation"), promises to pay to the order of AMCON
Distributing Company, a Delaware corporation (the "Holder"), the principal
sum of Four Hundred Thousand and NO/100 Dollars ($400,000.00), on December
31, 2001 (the "Maturity Date"), together with interest in the amount and
manner hereafter provided.
IT IS FURTHER AGREED THAT:
1. Interest. The Corporation promises to pay interest on the
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principal amount of this Fourth Amended and Restated 10% Secured Convertible
Note (the "Note") at the rate per annum of ten percent (10%), compounded
quarterly. Interest will be computed on the basis of a three hundred sixty
(360) day year of twelve (12), thirty (30) day months. Interest will be paid
quarterly on January 1, April 1, July 1, and October 1 of each year and at
maturity, with the first such interest payment to be made on January 1, 2001.
2. Method of Payment. Except with respect to the rights of
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conversion provided herein, and subject to Section 3 hereof, the Corporation
will pay principal and interest by wire transfer of immediately-available
money of the United States, or other form of payment of immediately available
money of the United States as the Holder may direct the Corporation, that at
the time of payment is legal tender for payment of public and private debts.
Information for
making the wire transfers will be provided in writing by the Holder to the
Corporation. If any payment hereunder becomes due and payable on a day other
than a business day, the due date thereof shall be extended to the next
business day and, with respect to payments of principal, interest thereon
shall be payable at the applicable rate during such extension.
3. Right to Prepay. The Corporation shall have the right to
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prepay all or any part of the Note.
4. Right to Convert.
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(a) At any time before the close of business on the
Maturity Date but after the earlier of (A) termination of the Fifth
Amended and Restated Agreement and Plan of Merger (the "Merger
Agreement"), dated as of September 27, 2001, among the Corporation,
the Holder and AMCON Merger Sub, Inc. ("Merger Sub") or (B) the
occurrence of an Event of Default, the Holder may convert the
outstanding principal balance and unpaid accrued interest of this
Note into fully paid and non-assessable shares of Series C
Convertible Preferred Stock, par value $1.00 per share, of the
Corporation (the "Preferred Stock"). The price at which shares of
Preferred Stock shall be delivered upon conversion (herein called
the "Preferred Conversion Price") shall be $1.00 per share of
Preferred Stock.
(b) At any time following 61 days advance notice to the
Corporation given before the Maturity Date, the Holder may convert
the outstanding principal balance and unpaid accrued interest of
this Note into fully paid and non-assessable shares of common stock
of the Corporation (the "Common Stock"). The price at which shares
of Common Stock shall be delivered upon conversion (herein called
the "Common Conversion Price") shall be equal to the quotient of
$2,865,348, divided by the number of shares of Common Stock that are
outstanding on the date of conversion (excluding for this purpose
shares of Common Stock issued upon conversion of this Note, the
Preferred Stock, and the Fourth Amended and Restated 10% Secured
Convertible Note in the principal sum of $350,000 payable by the
Corporation to the Holder due on December 31, 2001).
(c) This Note may be converted in whole, but not in part,
into Preferred Stock or Common Stock or a combination thereof
(referred to collectively as the "Conversion Shares") based on the
terms set forth in subsections (a) and (b) of this Section 4, as the
case may be.
5. Mechanics of Conversion. If the Holder desires to exercise
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such right of conversion, such Holder shall give written notice to the
Corporation in the form attached to this Note as Exhibit A (the "Conversion
Notice") of that Holder's election to convert a stated whole dollar amount of
outstanding principal balance and unpaid accrued interest of the Note into
shares of Preferred Stock, and/or Common Stock, as the case may be, and
surrender to the Corporation, at its principal office or at such other office
or agency maintained by the Corporation for such purpose, this Note. The
Conversion Notice shall also contain a statement of the name or names (with
addresses) in which the certificate or certificates for Preferred Stock
and/or Common Stock, as the case may be, shall be issued. Notwithstanding the
foregoing, the Corporation shall not be required to issue any certificates to
any person other than the Holder
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thereof unless the Corporation has obtained reasonable assurance that such
transaction is exempt from the registration requirements of, or is covered by
an effective registration statement under, the Securities Act of 1933, as
amended (the "Act"), and all applicable state securities laws, including, if
necessary in the reasonable judgment of the Corporation or its legal counsel,
receipt of an opinion to such effect from counsel reasonably satisfactory to
the Corporation. In no event would such opinion be required if the shares of
Preferred Stock and/or Common Stock, as the case may be, could, upon
conversion, be resold pursuant to Rule 144 or Rule 144A under the Act. As
promptly as practicable, and in any event within five business days, after
the receipt of the Conversion Notice (the "Date of Conversion") and the
surrender of the certificate or certificates representing the Conversion
Shares, the Corporation shall issue and deliver, or cause to be delivered, to
the Holder or his nominee or nominees, (i) a certificate or certificates for
the number of shares of Preferred Stock and/or Common Stock, as the case may
be, issuable upon the conversion of this Note, and (ii) if less than the full
dollar amount of the outstanding principal balance and unpaid accrued
interest of this Note is being converted, a new Note, of like tenor,
evidencing the outstanding principal balance and unpaid accrued interest of
the Note after taking into account such conversion, provided that all unpaid
accrued interest shall be applied to such partial conversion before any of
the outstanding principal balance shall be applied. Such conversion shall be
deemed to have been effected as of the close of business on the Date of
Conversion and the replacement Note, and the person or persons entitled to
receive the shares of Preferred Stock and/or Common Stock, as the case may
be, issuable upon conversion shall be treated for all purposes as the holder
or holders of record of such shares of Preferred Stock and/or Common Stock,
as the case may be, as of the close of business on such date.
6. Fractions of Share. The Corporation shall not be required to
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issue fractions of a share or scrip representing fractional shares of
Preferred Stock and/or Common Stock, as the case may be, upon the exercise of
any conversion right hereunder. If any fraction of a share of Preferred Stock
and/or Common Stock, as the case may be, would, except for the provisions of
this Section 6, be issuable upon any conversion exercise, the Corporation
shall pay a cash adjustment in respect of such fraction, equal to the value
of such fraction based on the Conversion Price per share of Preferred Stock.
7. Security. The obligations herein are secured by the security
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interest granted pursuant to that certain Fourth Amended and Restated 10%
Secured Convertible Note in the principal sum of $350,000.00 payable by the
Corporation to Holder due on December 31, 2001.
8. Corporation Covenants. The Corporation represents, warrants,
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covenants and agrees that:
(a) Any shares of Preferred Stock and/or Common Stock, as
the case may be, delivered upon conversion of this Note shall, at
the time of delivery of the certificates for such shares of
Preferred Stock or Common Stock, be validly issued and outstanding
and fully-paid and non-assessable shares of Preferred Stock or
Common Stock free from taxes, liens and charges with respect to
their purchase. Without limiting the generality of the foregoing,
the Corporation covenants and agrees to take any necessary actions
to assure that the par value per share of the Preferred Stock is at
all times equal to or less than the then current Conversion Price
per share for the Preferred Stock issuable pursuant to this Note.
The Corporation further covenants and agrees that it will pay when
due and
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payable any and all federal and state original issue stock taxes, if
any, which may be payable in respect of the issue of the shares of
Preferred Stock or Common Stock upon the conversion of this Note or
a part hereof. Except for an amendment required pursuant to the
foregoing sentence, the Certificate of Designation, Preferences and
Rights of the Preferred Stock shall not be amended without the prior
written consent of the Holder.
(b) The Corporation shall at all times reserve and keep
available a number of its authorized but unissued shares of
Preferred Stock and Common Stock which will be sufficient to permit
the full exercise of this Note. If at any time the number of
authorized but unissued shares of Preferred Stock or Common Stock is
not sufficient for this purpose, the Corporation shall take such
corporate actions as may be necessary to increase its authorized but
unissued shares of Preferred Stock and/or Common Stock, as the case
may be, to a number of shares sufficient for such purpose.
(c) (i) The Corporation is duly organized as a
corporation under the laws of the State of Hawaii, it is authorized
to transact business in all jurisdictions where the conduct of its
business requires it to be qualified, and it is duly authorized to
execute, deliver and perform under this Note without the necessity
of obtaining any consents or approvals of, or the taking of any
other action with respect to, any governmental agency or third
party; and
(ii) The financial statements submitted to Holder
fairly present the financial condition of the Corporation as of the
date of this Note knowing that Holder has relied thereon in granting
the Loan, there have been no material adverse changes in the
financial condition of the Corporation since the date of said
financial statements, the Corporation has no material obligations,
financial or otherwise, not disclosed to Holder, and at the present
time there are no material, unrealized or anticipated losses from
any present commitment of the Corporation.
9. Rights of Holder. The Holder of this Note shall not be
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entitled to vote or receive dividends or be deemed the Holder of Preferred
Stock or Common Stock of the Corporation for any purpose, nor shall anything
contained in this Note be construed to confer upon the Holder, as such, any
of the rights of a stockholder of the Corporation or any right to vote for
the election of directors or upon any matter submitted to stockholders at any
meeting thereof, or to give or withhold consent to any corporate action
(whether upon a merger, conveyance or otherwise) or to receive notice of
meetings, or to receive dividends or subscription rights or otherwise until
this Note shall have been exercised and the Preferred Stock or Common Stock
purchasable upon the exercise hereof shall have become deliverable.
10. Rights Upon Exercise. Irrespective of the date Preferred Stock
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or Common Stock is issued and of delivery of certificates for any shares
issuable upon the exercise of the conversion privilege under this Note, each
person in whose name any such certificate is issued shall for all purposes be
deemed to have become the holder of record of the shares represented thereby
on the Date of Conversion.
11. Investment Representation; Transfer. The Holder hereby
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represents and warrants to the Corporation that it has purchased this Note
and will purchase shares of the Preferred Stock
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and/or Common Stock, as the case may be, of the Corporation issuable upon
conversion hereof for investment purposes only and not with a view to the
distribution thereof. The Holder acknowledges that it has been advised by the
Corporation that neither this Note nor the Conversion Shares has been
registered under the Securities Act of 1933 or any state securities law for
the reason that no distribution or public offering of this Note or the
Conversion Shares is to be effected.
12. Dissolution. In case any voluntary or involuntary dissolution,
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liquidation or winding up of the Corporation shall at any time be proposed,
the Corporation shall give at least sixty-two (62) days' prior written notice
thereof to the Holder stating the date on which such event is to take place
and the date (which shall be at least sixty-two (62) days after the giving of
such notice) as of which the holders of Preferred Stock or Common Stock of
record shall be entitled to exchange their Preferred Stock or Common Stock
for securities or other property deliverable upon such dissolution,
liquidation or winding up.
13. Default. Any one or more of the following shall be events of
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default under this Note ("Events of Default"):
(a) Default shall be made: (i) in the payment of the
principal or interest under this Note when due; or (ii) in due
observance or performance of any other agreement contained in this
Note, which is not remedied within fifteen (15) days after notice to
the Corporation;
(b) Any warranty, representation or agreement made or
furnished to the Holder by or on behalf of the Corporation in the
Merger Agreement proves to have been false in any material respect
when made or furnished; or
(c) The insolvency of the Corporation, the making of a
general assignment for the benefit of creditors, or the filing of
any voluntary or involuntary petition or commencement of any
proceeding by or against the Corporation under any bankruptcy or
insolvency laws.
Upon the occurrence of one or more Events of Default and at any time
thereafter, the Holder may, by notice in writing to the Corporation, declare
the entire outstanding principal amount of the Note to be, and such entire
principal amount of the Note shall thereupon become forthwith, due and
payable in full together with interest accrued thereon, anything in this Note
to the contrary notwithstanding. Upon the occurrence of one or more Events of
Default, the Corporation agrees to pay out-of-pocket expenses, including
reasonable attorneys' fees and legal expenses, whether or not suit is
commenced, incurred by the Holder. If an Event of Default shall have occurred
and has not been cured by the Corporation within 90 days after the occurrence
thereof, then thereafter this Note shall accrue interest at the rate per
annum of eighteen percent (18%), compounded quarterly and computed in
accordance with Section 1 of this Note.
14. Notice. All notices and other communications from the
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Corporation to the Holder shall be mailed by first class registered mail,
postage prepaid, to the principal business address of the Holder or other
address furnished to the Corporation in writing by the Holder. All notices
and other communications from the Holder to the Corporation shall be mailed
by first class
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registered mail, postage prepaid, to the principal business address of the
Corporation or other address furnished to the Holder in writing by the
Corporation. All notices and other communications delivered in the manner set
forth above shall be deemed delivered two (2) days after the date mailed.
15. Governing Law; Certain Waivers. This Note, without regard to
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the place of execution, delivery or payment, shall be construed and enforced
according to and governed by the laws of the State of Delaware. The
Corporation waives presentment and demand for payment, notice of dishonor,
protest and notice of protest.
16. Severability. Whenever possible, each provision of this Note
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shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Note 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 Note.
17. Amendment and Restatement of Original Note. This Note (i)
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further amends and restates the Third Amended and Restated 10% Secured
Convertible Note in the principal sum of $400,000 payable to the Corporation
due on September 30, 2001, which, in turn, (ii) further amended and restated
the Second Amended and Restated 10% Secured Convertible Note in the principal
sum of $400,000 payable by the Corporation to the Holder due on May 31, 2001
which, in turn, (iii) amended and restated the Amended and Restated 10%
Secured Convertible Note in the principal sum of $400,000 payable by the
Corporation to the Holder due on March 31, 2001 which, in turn, (iv) amended
and restated the 10% Secured Convertible Note in the principal sum of
$400,000 payable by the Corporation to the Holder due on February 28, 2001
("Original Note"), but the date of grant of the security interest, mortgage,
deeds of trust and other documents contemplated by Section 7 hereof shall
continue to be the date of the Original Note.
HAWAIIAN NATURAL WATER COMPANY, INC.
By: /s/ Marcus Bender
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Name: Marcus Bender
Title: President
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EXHIBIT A
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CONVERSION NOTICE
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(To be executed by the Holder in order to Convert the Note)
TO: HAWAIIAN NATURAL WATER COMPANY, INC.
The undersigned hereby irrevocably elects to convert
$________________ of the principal amount of, and $____________ of any
accrued but unpaid interest on, the above Fourth Amended and Restated 10%
Secured Convertible Note into (i) ____________ shares of Series C Preferred
Stock, par value $1.00 per share, of Hawaiian Natural Water Company, Inc.
(the "Company"), and (ii) ____________ shares of Common Stock of the Company,
in each case according to the conditions stated in such Note, as of the
Conversion Date written below.
Conversion Date:
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Applicable Conversion Price:
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Signature:
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Name:
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Address:
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