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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) October 25, 1996
BEV-TYME, INC.
(Exact name of registrant as specified in its charter)
Delaware 0-21166 36-37639323
(State or other (Commission (IRS Employer
Jurisdiction of Formation) File Number) Identification No.)
134 Morgan Avenue. Brooklyn, New York 11237
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (718) 894-4300
(Former name or former address, if changes since last report)
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Item 5. Other Events
On October 25, 1996, Bev-Tyme, Inc., a Delaware corporation
(the "Registrant"), entered into a Loan and Warrant Purchase Agreement (the
"Agreement") with Ulster Investments Limited, a corporation organized under the
laws of Antigua, West Indies("Ulster"), pursuant to which the Registrant
borrowed from Ulster the aggregate principal sum of $248,000 (the "Loan"). The
Loan is secured by all of the assets of the Company pursuant to the terms of a
security agreement (the "Security Agreement") by and between the Registrant and
Ulster. The Company has agreed to pay interest on the unpaid principal balance
of the note at a rate of ten percent (10%) per annum. The note is due on
October 25, 1997 and any overdue amount of principal and/or interest shall be
payable at a rate equal to fifteen percent (15%) per annum.
In connection with the Loan, the Registrant issued (i) a warrant to
purchase 100,000 shares of the Registrant's common stock, par value $.0001
("Common Stock"), during a five (5) year period commencing on October 25, 1996
at an exercise price of $.10 per share and (ii) a warrant to purchase 100,000
shares of the Registrant's preferred stock, par value $.0001 ("Preferred
Stock"), during a five (5) year period commencing on October 25, 1996 at an
exercise price of $.50 per share. The aggregate consideration paid for the
warrants was $2,000. The warrants were sold to Ulster under an exemption from
the registration requirements of Section 5 of the Securities Act of 1933 (the
"Act"), specifically, Regulation S.
In connection with the issuance of the warrants, the Registrant and
Ulster entered into a registration rights agreement (the "Rights Agreement"),
which grants Ulster certain piggyback registration rights and demand
registration rights in the event that Ulster is unable to sell the shares of
Common Stock and Preferred Stock issuable upon exercise of the warrants to the
public in accordance with the terms of Regulation S.
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Item 7 Financial Statements and Exhibits
(c) Exhibits
Exhibit
No. Document
(a) Loan and Warrant Purchase Agreement dated October 25,
1996 by and between Bev-Tyme, Inc. and Ulster
Investments Limited.
(b) Promissory Note dated October 25, 1996.
(c) Warrant to purchase shares of Common Stock of Bev-Tyme,
Inc.
(d) Warrant to purchase shares of Class C Preferred Stock
of Bev-Tyme, Inc.
(e) Registration Rights Agreement dated October 25, 1996
by and between Bev-Tyme, Inc. and Ulster Investments
Limited.
(f) Security Agreement dated October 25, 1996 by and
between Bev-Tyme, Inc. And Ulster Investments Limited.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the Registrant has duly authorized and caused the undersigned to sign
this Report on the Registrant's behalf.
BEV TYME, INC.
By: /s/ Robert Sipper
Robert Sipper
President
Dated: November 8, 1995
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EXHIBIT A
LOAN AND WARRANT PURCHASE AGREEMENT
DATED OCTOBER 25, 1996
BY AND BETWEEN
BEV-TYME, INC.
AND
ULSTER INVESTMENTS LIMITED
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TABLE OF CONTENTS
PAGE
ARTICLE I. TERMS OF CREDIT AND PURCHASE OF SECURITIES.. 1
1.1 The Loan.................................... 1
1.2 The Note.................................... 1
1.3 Interest on the Note........................ 1
1.4 Payment Schedule............................ 2
1.5 Prepayments................................. 2
1.6 Warrant Issuances........................... 2
ARTICLE II. SECURITY................................... 3
2.1 Security Documents.......................... 3
ARTICLE III. CONDITIONS TO THE LOAN.................... 3
3.1 Receipt of Documents........................ 3
3.2 Representations and Warranties.............. 4
3.3 No Default.................................. 4
3.4 No Litigation............................... 4
ARTICLE IV. LENDER REPRESENTATIONS AND WARRANTIES....... 4
4.1 Organization................................ 4
4.2 Due Authorization........................... 4
4.3 Validity of this Agreement.................. 5
4.4 Regulation S Aspects........................ 5
4.5 Survival of Representations................. 6
ARTICLE V. COMPANY REPRESENTATIONS AND WARRANTIES....... 6
5.1 Organization................................ 6
5.2 Due Authorization........................... 6
5.3 Validity of this Agreement; Reservation
of Securities............................... 6
5.4 Litigation.................................. 7
5.5 Title to Assets............................. 7
5.6 Guarantees and Indebtedness................. 7
5.7 Taxes....................................... 7
5.8 Accuracy of Information..................... 7
5.9 Material Agreements......................... 8
5.10 Defaults.................................... 8
5.11 Regulation S Aspects........................ 8
5.12 Survival of Representation.................. 9
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ARTICLE VI. AFFIRMATIVE COVENANTS...................... 9
6.1 Financial Statements and Reports............ 9
6.2 Maintenance of Corporate Existence.......... 9
6.3 Taxes....................................... 9
6.4 Notices..................................... 10
6.5 Compliance with Laws........................ 10
6.6 Books and Record............................ 10
6.7 Insurance................................... 10
6.8 Maintain Property........................... 11
6.9 Prompt Performance.......................... 11
ARTICLE VII. NEGATIVE COVENANTS......................... 11
7.1 Consolidation, Merger, Sale of Assets....... 11
7.2 Liens....................................... 11
7.3 Additional Indebtedness..................... 11
7.4 Guaranties.................................. 11
7.5 Loan; Investments........................... 11
7.6 Dividends................................... 11
7.7 Payment of Other Indebtedness............... 11
7.8 Stock Split or Combination; Par Value....... 12
ARTICLE VIII. EVENTS OF DEFAULT AND REMEDIES............ 12
8.1 Events of Default........................... 12
8.2 Remedies.................................... 13
ARTICLE IX. MISCELLANEOUS............................... 13
9.1 Amendment and Waiver........................ 13
9.2 Severability................................ 13
9.3 Headings.................................... 13
9.4 No Waivers. ................................ 14
9.5 Notices..................................... 14
9.6 Governing Law............................... 14
9.7 Successors and Assigns. .................... 15
9.8 Recitals Incorporated....................... 15
9.9 Expenses.................................... 15
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LOAN AND SECURITIES PURCHASE AGREEMENT
THIS LOAN AND SECURITIES PURCHASE AGREEMENT is made this 25th day of
October, 1996 by and between Bev-Tyme, Inc., a Delaware corporation (the
"Company"), and Ulster Investments Limited, a corporation organized under the
laws of Antigua, West Indies ("Lender").
RECITALS
A. The Company desires to borrow from the Lender the aggregate
principal sum of $248,000.00, which loan shall be secured by a lien on all of
the assets of the Company.
B. The Lender desires to make a loan in the aggregate principal amount
of $248,000.00 to the Company and to acquire certain warrants to purchase
securities of the Company for an aggregate purchase price of $2,000.00.
In consideration of the foregoing, the mutual promises and covenants
set forth herein, and other good and valuable consideration, the sufficiency
and receipt of which are hereby acknowledged, the parties hereto agree as
follows:
ARTICLE I. TERMS OF CREDIT AND PURCHASE OF SECURITIES
1.1 The Loan. Upon and subject to the conditions of this Agreement,
the Lender agrees to make a loan to the Company (the "Loan") on or before
October 25, 1996 (the "Closing") in the principal amount of Two Hundred Forty
Eight Thousand and No/100 Dollars ($248,000.00).
1.2 The Note. The Loan shall be evidenced by a promissory note (the
"Note") of even date herewith or such date as same shall have been funded, if
later, without modification of the maturity date, in the amount of such Loan,
payable to the order of the Lender in accordance with Section 1.4 below and
maturing on October 25, 1997 (the "Maturity Date"). The Note will be in the
form attached hereto as Exhibit A.
1.3 Interest on the Note. The Company agrees to pay interest on the
unpaid principal balance of the Note outstanding from time to time at a rate
equal to ten percent (10%) per annum (the "Interest Rate") (calculated on the
basis of the actual number of days elapsed and a 360 day year) and overdue
amounts under the Note shall bear interest at a rate equal to fifteen percent
(15%).
Notwithstanding anything to the contrary contained herein, in no event shall
interest be payable at a rate higher than that permitted by any applicable
laws. Should Lender receive any payment that is or would be in excess of that
permitted to be charged under then applicable law, the
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amount in excess of the applicable rate shall automatically be applied to reduce
the principal sum outstanding under the Note.
1.4 Payment Schedule.
(a) Principal Payment. The Company shall pay to the holder of
the Note the entire principal amount of the Note on the Maturity Date,
subject to earlier payment in accordance with Section 1.5 or Article
VIII below.
(b) Interest Payment. Interest shall be due and payable on
the Maturity Date.
1.5 Prepayments.
The Note may be prepaid in whole or in part, at any time,
without premium or penalty. All prepayments shall be applied first to
the payment of any costs of collection, then to the payment of accrued
interest and thereafter to principal. Any prepayment of the Note by
the Company shall have no effect on the rights of the Lender with
respect to the Warrants and the underlying Securities, as each term is
defined in Section 1.6 below.
1.6 Warrant Issuances.
Concurrent with the closing of the Loan, the Lender shall
purchase and the Company shall issue a warrant to purchase 100,000
shares of the Company's Common Stock, $.0001 par value per share and a
warrant to purchase 100,000 shares of the Company's Preferred Stock,
$.0001 par value per share (hereinafter the "Warrants" and the shares
of Common Stock and Preferred Stock underlying the Warrants, including
any adjusted number, are hereinafter referred to as the "Securities").
The Warrants will be purchased for an aggregate purchase price of
$2,000.00. The Warrants to purchase the Company's Common Stock will
have an exercise price of $0.10 per share and the Warrants to purchase
the Company's Preferred Stock will have an exercise price of $0.50 per
share, subject to adjustment as provided in the Warrants. Upon
exercise of the Warrants, the underlying Securities shall be fully
paid and non-assessable. The Warrants will be in the forms attached
hereto as Exhibits B-1 and B-2. In the event the Lender is unable to
sell the Securities to the public in an open market transaction at any
time after a 40-day restricted period immediately following the
Closing due to any statute, administrative order, rule, regulation,
court decision or regulatory interpretation which amends or repeals
Regulation S as promulgated by the Securities and Exchange Commission
or otherwise makes it unavailable to the Lender or due to any breach
of warranty, representation or covenant by the Company, the Lender
shall be entitled to the rights contained in a Registration Rights
Agreement in the form attached hereto as Exhibit C.
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ARTICLE II. SECURITY
2.1 Security Documents. Payment of the Loan shall be secured by the
following described instruments and documents:
(a) Security Agreement. The form of Security Agreement
attached hereto as Exhibit D (the "Security Agreement"), pursuant to
which the Company will grant to the Lender a security interest in all
of the Company's assets and property (the "Collateral") including, but
not limited to, its present and after acquired inventory; accounts
receivable; contract rights; chattel paper; instruments evidencing any
obligation to the Company for payment for goods sold or leased or
services rendered; interests of the Company in any goods sold or
leased; all guaranties and other property securing the payment of or
performance under any accounts receivable, contract rights, or any
such chattel paper or instruments; mailing and customer lists; and all
proceeds of any of the foregoing, all in accordance with the terms and
conditions of the Security Agreement.
(b) Financing Statements. Uniform Commercial Code financing
statements (the "UCC Financing Statements") and any other instruments
or documents deemed advisable by the Lender to perfect and continue
its security interest in the Collateral (subject only to such other
security interests as are allowed under the Security Agreement).
ARTICLE III. CONDITIONS TO THE LOAN
The obligation of the Lender to make its Loan hereunder is subject to
the satisfaction of each of the following conditions, unless waived in writing
by the Lender:
3.1 Receipt of Documents. The receipt by the Lender of all of the
following:
(a) This Agreement, the Note, the Warrants, the Registration
Rights Agreement and the Security Agreement, all appropriately
completed and duly executed by the Company;
(b) UCC Financing Statements, or any assignments or
terminations thereof, deemed necessary and proper by the Lender to
perfect its security interest in the Collateral (subject only to such
other security interests as are allowed under the Security Agreement),
all appropriately completed and duly executed by the Company and any
other necessary parties thereof;
(c) A Certificate of Good Standing dated within seven days of
the date of this Agreement from the Secretary of State of Delaware;
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(d) A copy of the Company's Bylaws certified as of a recent
date by the Secretary of the Company;
(e) A copy of the Company's Certificate of Incorporation
certified as of a recent date by the Secretary of State of Delaware;
(f) A copy of resolutions of the Company's Board of Directors
approving this transaction, certified as of the date hereof by the
Secretary of the Company, such resolutions to be in form and substance
satisfactory to the Lender;
(g) A Certificate of Good Standing dated within seven days of
the date of this Agreement from the Secretary of State of New York
authorizing the Company to transact business in New York;
(h) Such other instruments and documents as may be reasonably
requested by the Lender.
3.2 Representations and Warranties. The representations and warranties
of the Company set forth in Article V are true and correct in all material
respects on the date hereof.
3.3 No Default. No Event of Default shall have occurred and be
continuing.
3.4 No Litigation. No litigation, arbitration or governmental
investigation or proceeding shall be pending, or, to the knowledge of the
Company, threatened, against the Company or affecting the business or
operations of the Company which, if determined adversely to the Company, would
have a material adverse effect on the operation or financial condition of the
Company.
ARTICLE IV. LENDER REPRESENTATIONS AND WARRANTIES
The Lender represents and warrants to the Company as follows:
4.1 Organization. The Lender is a corporation validly organized and
existing and in good standing under the laws of Antigua, West Indies and has
full power and authority to own its property and conduct its business as
presently conducted by it.
4.2 Due Authorization. The execution, deliver and performance by the
Lender of this Agreement have been duly authorized by all necessary corporate
action, do not require any approval or consent of, or any registration,
qualification or filing with, any governmental agent or authority or any
approval or consent of any other person (including, without limitation, any
stockholder), and do not and will not conflict with, result in any violation of
or constitute any default under, any provision of the Lender's Charter or
Bylaws, any agreement binding on or
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applicable to the Lender or any of its property, or any law or governmental
regulations or court decree or order, binding upon or applicable to the Lender,
or any of its property.
4.3 Validity of this Agreement. The Lender has full power and
authority to enter into and perform its obligations under this Agreement, and
to otherwise carry out the transactions contemplated by this Agreement. This
Agreement is the legal, valid and binding obligation of the Lender, enforceable
in accordance with its terms, subject only to bankruptcy, insolvency,
reorganization, moratorium or similar laws, rulings or decisions at the time in
effect affecting the enforceability of rights of creditors generally and to
general equitable principles which may limit the right to obtain equity
remedies.
4.4 Regulation S Aspects.
(a) The Lender is not a "U.S. Person" as defined by Rule 902
of Regulation S as promulgated by the U.S. Securities and Exchange
Commission under the Securities Act of 1933, as amended (the
"Securities Act"), was not organized under the laws of any U.S.
jurisdiction, and was not formed for the purpose of purchasing the
Warrants or the underlying Securities;
(b) At the time the buy order for the Warrants was
originated, the Lender was outside the United States;
(c) No offer to purchase the Warrants or the underlying
Securities was made in the United States;
(d) The Lender is purchasing the Warrants for its own account
for investment purposes and not with a view towards distribution and
certifies that the distribution of the Warrants has been completed;
(e) All subsequent offers and sales of the Warrants or the
underlying Securities will be made (i) outside the United States in
compliance with Rule 903 or Rule 904 of Regulation S, (ii) pursuant to
registration of the Warrants or the Securities, as applicable, under
the Securities Act, or (iii) pursuant to an exemption from such
registration. The Lender understands the conditions of the exemption
from registration afforded by Section 4(1) of the Securities Act and
acknowledges that there can be no assurance that it will be able to
rely on such exemption. In any case, the Lender will not resell the
Warrants or the Securities to U.S. Persons or within the United States
until after the end of a forty (40) day period commencing on the date
of purchase of the Warrants (the "Restricted Period");
(f) Upon exercise of either of the Warrants, the person
exercising the Warrant will give: (i) written certification that it is
not a U.S. person and the Warrant is not being exercised on behalf of
a U.S. person or (ii) a written opinion of counsel to the
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effect that the Warrants and the Securities delivered upon exercise
thereof have been registered under the Securities Act or are exempt
from registration thereunder; and
(g) The Lender represents that it has not entered into any
short sales with respect to the Common Stock of the Company and agrees
that it will not enter into any such short sales or comparable
transactions at any time after the execution of this Agreement by the
Lender and prior to the expiration of the Restricted Period.
4.5 Survival of Representations. All representations and warranties
contained in this Article IV shall survive the closing and any investigation at
any time made by or on behalf of the Company shall not diminish its rights to
rely thereon.
ARTICLE V. COMPANY REPRESENTATIONS AND WARRANTIES.
5.1 Organization. The Company is a corporation validly organized and
existing and in good standing under the laws of the State of Delaware, has full
power and authority to own its property and conduct its business as presently
conducted by it and is duly qualified to do business and is in good standing as
a foreign corporation in the State of New York and each other jurisdiction
where the nature of its business or ownership of property makes such
qualification necessary.
5.2 Due Authorization. The execution, delivery and performance by the
Company of this Agreement have been duly authorized by all necessary corporate
action, do not require any approval or consent of, or any registration,
qualification or filing with, any governmental agency or authority or any
approval or consent of any other person (including, without limitation, any
stockholder), do not and will not conflict with, result in any violation of or
constitute any default under, any provision of the Company's Certificate of
Incorporation or Bylaws, any agreement binding on or applicable to the Company
or any of its property, or any law or governmental regulations or court decree
or order, binding upon or applicable to the Company or any of its property, and
will not result in the creation or imposition of any lien on any of its
property pursuant to the provisions of any agreement binding on or applicable
to the Company or any of its property except pursuant to this Agreement.
5.3 Validity of this Agreement; Reservation of Securities. The Company
has full power and authority to enter into and perform its obligations under
this Agreement, to borrow the funds herein provided for, to grant a security
interest in its property pursuant to the Security Agreement, to issue the
Warrants and, upon exercise thereof, the Securities and to otherwise carry out
the transactions contemplated by this Agreement. The Company has reserved, and
shall keep reserved at all times during the term of the Warrants, such number
of shares of Common Stock and Preferred Stock as shall be required to be issued
upon exercise of the Warrants and, in the case of the Warrant to purchase
Preferred Stock, upon conversion of the Preferred Stock into Common Stock. This
Agreement, the Security Agreement, the Registration Rights Agreement, the
Warrants and the Note are legal, valid and binding obligations of the
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Company, enforceable in accordance with their terms, subject only to bankruptcy,
insolvency, reorganization, moratorium or similar laws, rulings or decisions at
the time in effect affecting the enforceability of rights of creditors generally
and to general equitable principles which may limit the right to obtain
equitable remedies.
5.4 Litigation. There is no action, suit or proceeding at law or
equity, or before or by any federal, state, local or other governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign, pending, or to the knowledge of the Company threatened, against the
Company or any of its property, which if determined adversely would have a
material adverse effect on the business, operations or condition (financial or
otherwise) of the business or properties of the Company or would otherwise
affect the ability of the Company to perform its obligations under this
Agreement or the documents delivered in connection herewith; and the Company is
not in default with respect to any judgment, writ, injunction, decree, rule or
regulation of any court or federal, state, local or other governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign, where such default would have a material adverse effect on the
business, operations and condition (financial or otherwise) of the Company.
5.5 Title to Assets. Except for liens set forth in Exhibit E hereto,
the Company has good and marketable title to all of its assets, real and
personal. All the Collateral (as that term is defined in the Security
Agreement) and other property of the Company is located at the offices of the
Company set forth in Exhibit F hereto, and at no other location.
5.6 Guarantees and Indebtedness. Except as disclosed in Exhibit G, the
Company is not a party to any contract of guaranty or suretyship and none of
its assets is subject to any contract of that nature. The Company is not
indebted to any other party, except to the parties and in the amounts set forth
in Exhibit H, and current liabilities incurred in the ordinary course of
business.
5.7 Taxes. The Company has filed all federal, state and other tax
returns which are required to be filed through September 30, 1996, and has paid
all taxes as shown on said returns, and all taxes due or payable through that
date, and all assessments received to the extent such taxes and assessments
have become due. All tax liabilities of the Company are adequately provided for
on its books, including interest and penalties. No tax liability of a material
nature has been asserted by taxing authorities for taxes in excess of those
already paid. The Company had made all required withholding deposits.
5.8 Accuracy of Information. All factual information heretofore or
herewith furnished by or on behalf of the Company to the Lender for purposes
of, or in connection with this Agreement or any transaction contemplated
hereby, is, and all other such factual information hereafter furnished by or on
behalf of the Company to the Lender will be, true and accurate in every
material respect on the date as of which such information is dated or
certified, and no such information contains any material misstatement of fact
or omits to state a material fact or any fact necessary to make the statements
contained therein not misleading.
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5.9 Material Agreements. The Company is not a party to any agreement
or instrument or subject to any restriction that materially and adversely
affects its business, property or assets, operations or condition (financial or
otherwise).
5.10 Defaults. The Company is not in default in the performance,
observance or fulfillment of any of the obligations, covenants, or conditions
contained in any: (a) agreement to which it is a party, which default might
have a material adverse effect on the business, properties or assets,
operations, or condition (financial or otherwise) of the Company; or (b)
instrument evidencing any indebtedness or under any agreement relating thereto.
5.11 Regulation S Aspects.
(a) The Company is a "Domestic Issuer" and a "Reporting
Issuer," as such terms are as defined by Rule 902 of Regulation S. The
Company has registered its Common Stock pursuant to Section 12(g) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
has filed all the material required to be filed by it pursuant to
Section 13(a) or Section 15(d) of the Exchange Act for a period of at
least 12 months immediately prior to the offer or sale of the Warrants
in reliance upon Regulation S and is otherwise in full compliance with
all reporting requirements of either Section 13(a) or 15(d) of the
Exchange Act. The Company's Common Stock trades on the Nasdaq Small
Cap Market;
(b) The Company has not offered the Warrants or the
underlying Securities to any person in the United States, any
identifiable group of U.S. citizens abroad, or to any U.S. person, as
defined in Regulation S and hereby certifies that the distribution of
the Warrants will be complete upon the issuance of the Warrants to the
Lender;
(c) At the time the buy order for the Warrants was
originated, the Company and/or its agents reasonably believed the
Lender was outside the United States and was not a U.S. Person;
(d) Neither the Company, any distributor, any of their
respective affiliates nor any person acting on behalf of any of the
foregoing has conducted any "directed selling efforts" with respect to
the Warrants or the underlying Securities within the meaning of
Regulation S nor has the Company conducted any general solicitation
(as that term is used in Regulation D under the Securities Act) with
respect to the Warrants or the underlying Securities;
(e) The Company will implement procedures to ensure that the
Warrants will not be exercised within the United States and that the
Securities will not be delivered within the United States upon
exercise other than as permitted in Regulation S unless registered
under the Securities Act or unless an exemption from such registration
is available; and
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(f) Based upon the representations and warranties of the
Lender and the status of the Company as a "Reporting Issuer," the
Company shall, upon exercise of a Warrant, instruct the transfer agent
for the Company's Common Stock to issue the certificate(s) of Common
Stock or the certificate(s) of Preferred Stock, as applicable,
representing the underlying Securities with no restrictive legends of
any sort.
5.12 Survival of Representation. All representations and warranties
contained in this Article V shall survive the delivery of the Note and the
Warrants and any investigation at any time made by or on behalf of the Lender
shall not diminish its rights to rely thereon.
ARTICLE VI. AFFIRMATIVE COVENANTS
As long as there remains any amount outstanding under the Note, the
Company shall, unless waived in writing by the Lender:
6.1 Financial Statements and Reports. Furnish to the Lender, at the
times set forth below, the following financial statements and reports:
(a) At the beginning of every fiscal quarter commencing with
the first full fiscal quarter after the Closing, the Company at its
own expense shall conduct a search of any tax liens which may have
been filed by any governmental authority against the Company and shall
deliver to the Lender within five (5) days after completion of such
search a copy of the results of such search;
(b) All reports or other filings filed with the Securities
and Exchange Commission and all other regulatory agencies
simultaneously with the filing of such reports or filings with the
applicable agency or commission;
(c) Within forty-eight (48) hours after the due date of any
federal, state or local withholding taxes, evidence satisfactory to
the Lender of payment of such taxes; and
(d) Such other information concerning the business,
operations and condition (financial or otherwise) of the Company as
the Lender may from time to time reasonably request.
6.2 Maintenance of Corporate Existence. Conduct the same general type
of business as that now being carried on by the Company and maintain its
separate corporate existence in good standing under the laws of the States of
Delaware and New York and in such other states as the Company may now be
qualified to conduct business or may later have to be qualified.
all taxes, assessments and other governmental charges and levies
against or on any of its property, as well
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as claims of any kind which, if unpaid, might become a lien upon any of its
properties, unless such tax, levy, charge, assessment or lien is being contested
in good faith by the Company and is supported by an adequate book reserve. The
Company shall make or cause to be made all required withholding deposits.
6.4 Notices. As soon as possible, but in no event later than 5 days
after obtaining knowledge thereof, give notice to the Lender of:
(a) The commencement of any litigation relating to the
Company involving claimed damages in excess of $25,000.00;
(b) The commencement of any material arbitration or
governmental proceeding or investigation not previously disclosed to
the Lender which has been instituted or, to the knowledge of the
Company, is threatened against the Company or its property which, if
determined adversely to the Company, would have a material adverse
effect on the business, operations or condition (financial or
otherwise) of the Company; and
(c) Any actual or threatened Event of Default under this
Agreement (provided, however, that such notice shall in no event be
construed as delaying the occurrence of any Event of Default or
changing the rights and remedies of the Lender with respect thereto).
6.5 Compliance with Laws. Carry on its business activities in
substantial compliance with all applicable federal or state laws and all
applicable rules, regulations and orders of all governmental bodies and offices
having power to regulate or supervise its business activities. The Company
shall maintain all material rights, liens, franchises, permits, certificates of
compliance or grants of authority required in the conduct of its business and
will file on a timely basis and before any penalty, interest or other late
filing charge is incurred all notifications, reports, filings and other
information which may be required by the Securities Act or any other act, law,
order or regulation to which the Company is subject.
6.6 Books and Record. Keep books and records reflecting all of its
business affairs and transactions in accordance with generally accepted
accounting principles consistently applied and permit the Lender, and its
representatives, at reasonable times and intervals, to visit all of its
offices, discuss its financial matters with officers of the Company and its
independent public accountants (and by this provision the Company authorizes
its independent public accountants to participate in such discussions) and
examine and make copies of any of its books and other corporate records.
6.7 Insurance. Insure and keep insured all of its property of an
insurable value under all-risk policies issued by insurance companies
authorized to do business in the relevant states in an amount and with such
deductibles as are consistent with past practices.
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6.8 Maintain Property. Maintain and keep its assets, property and
equipment in good repair, working order and condition and from time to time
make or cause to be made all needed renewals, replacements and repairs.
6.9 Prompt Performance. Promptly perform in all material respects each
and every term and condition of this Agreement and of each document delivered
in connection herewith, time being of the essence.
ARTICLE VII. NEGATIVE COVENANTS
As long as there remains any amount outstanding under the Note, the
Company shall not, unless waived in writing by the Lender:
7.1 Consolidation, Merger, Sale of Assets. Consolidate with or merge
into or with any other entity, or sell (other than sales of inventory in the
ordinary course of business), transfer, lease or otherwise dispose of all or a
substantial part of its assets.
7.2 Liens. Create, incur, assume or suffer to exist any lien on any of
its property, real or personal, except liens in existence at the date of the
Closing as set forth on Exhibit E hereto or in favor of the Lender or liens
disclosed to, and consented to in writing by the Lender.
7.3 Additional Indebtedness. Create, incur, assume or suffer to exist
any indebtedness except (a) indebtedness incurred under this Agreement, (b)
current liabilities incurred in the ordinary course of business, or (c)
indebtedness existing on the date of this Agreement and disclosed to and
approved by the Lender in writing, or (d) indebtedness in a principal amount
not to exceed $100,000.00 and on terms no more favorable than those extended
herein to the Lender (except that any security interests granted shall be
expressly subordinate to the security interest of Lender).
7.4 Guaranties. Assume, guarantee, endorse or otherwise become liable
in connection with the indebtedness of any other person or entity except
endorsements of negotiable instruments for deposit or collection in the
ordinary course of business.
7.5 Loan; Investments. Make or permit to exist any loans or advances
to or investments in any person, firm, corporation or other entity.
7.6 Dividends. Declare or pay any cash dividend or make any
distribution on any class of its stock or purchase or redeem or otherwise
acquire or retire for value any of its stock or securities of any class now or
hereafter outstanding.
7.7 Payment of Other Indebtedness. Default upon or fail to pay any of
its other debts or obligations as the same mature.
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7.8 Stock Split or Combination; Par Value. Effect any stock split or
combination whatsoever or change the par value of its Common Stock or Preferred
Stock.
ARTICLE VIII. EVENTS OF DEFAULT AND REMEDIES
8.1 Events of Default. The term "Event of Default" shall mean any of
the following events:
(a) The Company shall default in the payment when due of any
principal or interest on the Note;
(b) The Company shall default in the due performance and
observance of any of the obligations or covenants contained in Article
VII of this Agreement;
(c) The Company shall default (other than a default under
subsections (a) or (b) above) in the due performance and observance of
any of the obligations or covenants contained in this Agreement, the
Security Agreement, the Registration Rights Agreement, the Warrants or
the Note and such default shall continue unremedied for a period of
five (5) days from the occurrence of such default;
(d) The Company shall become insolvent or generally fail to
pay or admit in writing its inability to pay its debts as they become
due; the Company shall apply for, consent to, or acquiesce in the
appointment of a trustee, receiver or other custodian for itself or
any of its property, or make a general assignment for the benefit of
its creditors; a trustee, receiver or other custodian shall otherwise
be appointed for the Company or any of its assets and not be
discharged within sixty (60) days; any bankruptcy, reorganization,
debt arrangement, or other case or proceeding under any bankruptcy or
insolvency law, or any dissolution or liquidation proceeding shall be
commenced by or against the Company and be consented to or acquiesced
in by the company or remain undismissed for sixty (60) days; or the
Company shall take any corporate action to authorize, or act in
furtherance of, any of the foregoing;
(e) Any final judgments, writs, warrants of attachment,
executions or similar process (not covered by insurance) in an
aggregate amount in excess of $25,000.00 shall be issued or levied
against the Company or any of its assets and shall not be released,
vacated or fully bonded within sixty (60) days after its issue or
levy;
(f) Any representation or warranty set forth in this
Agreement, the Registration Rights Agreement or the Security Agreement
shall be untrue in any material respect on the date as of which the
facts set forth therein are stated or certified; or
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(g) There is a change in the business, operation or condition
(financial or otherwise) of the Company such that the Lender shall
reasonably believe that the prospect of payment under the Note is
impaired.
8.2 Remedies. Upon the occurrence of an Event of Default:
(a) All principal, interest and other charges and amounts
under the Note (or renewals or extensions thereof) and this Agreement
shall become immediately due and payable, without presentment, demand,
protest or notice of any kind, all of which are hereby expressly
waived by the Company.
(b) Lender may exercise and enforce any and all rights and
remedies available under the Security Agreement, the Note and any
other document executed in connection with this Agreement, the Uniform
Commercial Code or any other applicable remedy (including specific
performance and injunctive relief), at law or in equity.
(c) In the event that, pursuant to the enforcement of any of
the Lender's rights and remedies, the Lender receives proceeds from
the disposition of any Collateral (as that term is defined in the
Security Agreement) or otherwise receive payments of any kind or in
any form, such proceeds or payments shall be applied first to the
payment of any costs of collection and then to the payment of accrued
interest and then to the payment of the principal amount of the Note.
In the event of any litigation with respect to this Agreement or any
of the documents entered into in connection herewith, the Company
waives all rights to a jury trial and agrees not to assert any
counterclaim, defense, offset or abatement of any nature.
ARTICLE IX. MISCELLANEOUS
9.1 Amendment and Waiver. Neither this Agreement nor any provision
hereof may be amended, modified, waived, discharged, or terminated orally, but
only by an instrument in writing signed by the party against whom enforcement
of the amendment, modification, waiver, discharge or termination is sought.
9.2 Severability. Whenever possible, each provision of this Agreement
shall be interpreted in such a manner as to be effective and valid under
applicable law. If, however, any provision of this Agreement shall be
determined by a court of competent jurisdiction to be invalid or unenforceable,
such provisions shall be ineffective to the extent of such invalidity or
unenforceability, without invalidating the remainder of such provision or the
remaining provisions of this Agreement.
9.3 Headings. The headings of various sections of this Agreement have
been inserted for reference only and shall not be a part of this Agreement.
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9.4 No Waivers. No failure or delay on the part of the Lender in
exercising any right, power or privilege hereunder and no course of dealing
between the Company and the Lender shall operate as a waiver thereof; nor shall
any single or partial exercise of any right, power or privilege hereunder
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege.
9.5 Notices. Any notices required or contemplated hereunder shall be
effective upon the placing thereof in the United States mail, certified mail
and with return receipt requested, postage prepaid and addressed as set forth
below or to such other address as may be designated by such party in a notice
to the other parties in the manner provided herein:
To the Company: Bev-Tyme, Inc.
[address to come]
With a copy to: Hartley Bernstein, Esq.
Bernstein & Wasserman
950 Third Avenue
New York, New York 10022
To the Lender: Mr. Brian Stuart-Young
President
Ulster Investments Limited
c/o Antigua International Trust Limited
High Street - P.O.Box 1302
St. John's, Antigua, West Indies
With a copy to: Barack, Ferrazzano, Kirschbaum & Perlman
333 West Wacker Drive - Suite 2700
Chicago, Illinois 60606
Attn: Joshua S. Kanter, Esq.
9.6 Governing Law. The parties hereto acknowledge that the principal
place of business of the Lender is Antigua, West Indies and this Agreement, the
Note, the Warrants, the Security Agreement, the Registration Rights Agreement,
and each other document executed pursuant hereto shall be deemed to have been
delivered, are to be performed within and shall each be deemed to be a contract
made under, construed and interpreted in accordance with and governed by the
internal laws of the Antigua, West Indies (without reference to (i) its
judicially or statutorily pronounced rules regarding conflict of law or choice
of law; (ii) where any instrument is executed or delivered; (iii) where
performance required by any instrument is made or required to be made; (iv)
where any breach of any provision of any instrument occurs or any cause of
action otherwise accrues; (v) where any action or other proceeding is
instituted or pending; (vi) the nationality, citizenship, domicile, principal
place of business, or jurisdiction, organization or domestication of any party;
(vii) whether the laws of the forum jurisdiction
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would otherwise apply the laws of a jurisdiction other than Antigua, West
Indies; or (viii) any combination of the foregoing.
9.7 Successors and Assigns. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective
successors and assigns, except that the Company may not assign or transfer its
rights hereunder without the prior written consent of the Lender.
9.8 Recitals Incorporated. The recitals to this Agreement are
incorporated into and constitute an integral part of this Agreement.
9.9 Expenses. The Company agrees to promptly pay, and hold the Lender
harmless against liability for the payment of, the out-of-pocket expenses
incurred by the Lender and the fees and out-of-pocket expenses of Barack,
Ferrazzano, Kirschbaum & Perlman, as counsel to the Lender, arising in
connection with the preparation, negotiation, execution and consummation of the
transactions contemplated by this Agreement. The Lender can withhold from the
closing proceeds funds sufficient to satisfy the aforementioned fees and
out-of-pocket expenses or require that the Company provide a check in such
amount at the Closing. Furthermore, in the event the Company and the Lender
propose or agree to any modification, amendment or supplement to this Agreement
or to the documents delivered in connection herewith, the Company agrees to
promptly pay, and hold the Lender harmless against liability for the payment
of, the out-of-pocket expenses incurred by the Lender and the fees and
out-of-pocket expenses of Barack, Ferrazzano, Kirschbaum & Perlman, as counsel
to the Lender, arising in connection with the preparation, negotiation and
execution of such modification, amendment or supplement and the consummation of
the transaction(s) contemplated thereby.
[The remainder of this page is intentionally left blank]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective officers duly authorized as of the day and year
first above written.
THE COMPANY:
BEV-TYME, INC.,
a Delaware corporation
By: /s/ Robert Sipper
----------------------------
Its: President
THE LENDER
ULSTER INVESTMENTS LIMITED
an Antigua, West Indies corporation
By: /s/ Roslyn Yearwood
----------------------------
Its: Secretary
For and on behalf of:
ANTIGUA INTERNATIONAL TRUST LTD.
Director
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EXHIBIT B
PROMISSORY NOTE
$248,000.00 October 25, 1996
Due: October 25, 1997
FOR VALUE RECEIVED, the undersigned ("Maker") promises to pay to the
order of Ulster Investments Limited ("Lender"), its successors and assigns, at
its principal office c/o Antigua International Trust Limited at High Street -
P.O. Box 1302, St. John's, Antigua, West Indies, or such other place as the
holder may designate in writing from time to time, the principal sum of Two
Hundred Forty Eight Thousand and no/100 Dollars ($248,000.00), in lawful money
of the United States, together with interest from the date hereof on the unpaid
principal balance outstanding from time to time at an annual rate equal to ten
percent (10%) per annum (the "Interest Rate").
Interest payable on this Note will be calculated on the basis of the
actual number of calendar days elapsed but computed as if each year consisted
of three hundred and sixty (360) days. Interest shall be payable on any overdue
amount of principal and/or interest at a rate per annum equal to fifteen
percent (15%). In no event shall interest be payable at a rate higher than that
permitted by any applicable law. Should Lender receive any payment that is or
would be in excess of that permitted to be charged under then applicable law,
then such payment shall automatically be applied to reduce the principal sum
outstanding under this Note.
This Note is subject to the terms and provisions of that certain Loan
and Warrant Purchase Agreement (the "Loan Agreement"), dated of even date
herewith, between Maker and Lender, and this Note and the holder hereof are
entitled to all the benefits provided for in the Loan Agreement, or which are
referred to therein, to which Loan Agreement reference is made for a statement
of the terms and conditions under which this indebtedness was incurred and is
to be repaid and under which the due date of this Note may be accelerated. The
provisions of the Loan Agreement are hereby incorporated herein by reference
with the same force and effect as if fully set forth herein. This Note is
secured by a Security Agreement (the "Security Agreement") dated of even date
herewith, between Maker and Lender, and the rights granted Lender thereunder
and under the Loan Agreement are cumulative and in addition to any rights
Lender may have hereunder.
All outstanding principal and accrued and unpaid interest shall be due
and payable on October 25, 1997, unless due earlier in accordance with the
terms of the Loan Agreement. All payments on this Note shall be applied first
to the payment of any costs of collection that may be due hereunder and to any
costs or advances to which Lender is entitled to reimbursement under the
Security Agreement, then to the payment of accrued interest, and the balance
shall be applied to principal.
<PAGE>
This Note may be prepaid in full or in part at any time without
premium or penalty. All prepayments shall be applied first to the payment of
any costs of collection that may be due hereunder, then to the payment of
unpaid interest, if any, and the balance shall be applied to principal.
If all or any portion of the indebtedness evidenced hereby is not paid
when due, or in the event of the occurrence of any Event of Default (as defined
in the Loan Agreement), Lender or any other holder, without notice or demand,
may declare the indebtedness evidenced hereby immediately due and payable and
may immediately exercise any right of setoff and enforce any lien or security
interest securing payment hereof.
Time is of the essence. No delay or omission on the part of the holder
in exercising any right hereunder shall operate as a waiver of such right or of
any other remedy under this Note. A waiver on any occasion shall not be
construed as a bar to or waiver of any such right or remedy on a future
occasion.
Maker and any endorsers, sureties, guarantors and all other persons
liable for all or any part of the indebtedness evidenced by this Note, jointly
and severally, waive valuation and appraisement, presentment for payment,
protest, notice of protest, dishonor, notice of dishonor, demand, notice of
nonpayment and the benefit of all laws now or hereafter enacted affording any
right to a stay of execution or extension of time for payment or exempting any
property of such person from levy and sale upon execution of any judgment
obtained by the holder under this Note. Such parties hereby consent, without
affecting their liability, to extension or alteration of the time or terms of
payment hereof, any renewal, any release of any or all part of the security
given for the payment hereof, any acceptance of additional security of any
kind, and any release of, or resort to, any party liable for payment hereof,
and such parties shall remain bound in the same capacities as prior thereto
upon each such event.
This Note represents a loan delivered and to be performed in Antigua,
West Indies and shall be construed, interpreted and governed by the internal
laws of Antigua, West Indies without reference to (i) its judicially or
statutorily pronounced rules regarding conflict of law or choice of law; (ii)
where any instrument is executed or delivered; (iii) where performance required
by any instrument is made or required to be made; (iv) where any breach of any
provision of any instrument occurs or any cause of action otherwise accrues;
(v) where any action or other proceeding is instituted or pending; (vi) the
nationality, citizenship, domicile, principal place of business, or
jurisdiction, organization or domestication of any party; (vii) whether the
laws of the forum jurisdiction would otherwise apply the laws of a jurisdiction
other than Antigua, West Indies; or (viii) any combination of the foregoing.
Maker agrees that the obligation to pay all principal, interest and
other amounts owing hereunder is absolute and unconditional under all
circumstances. In the event of any litigation in connection with this Note,
Maker waives all rights to a trial by jury and agrees not to assert any
counterclaim, defense, offset or abatement of any nature.
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<PAGE>
Maker agrees to pay the holder hereof all out-of-pocket expenses and
costs of collection, including, but not limited to, reasonable attorneys' fees,
incurred by the holder hereof in enforcing or attempting to enforce this Note
whether or not a suit is commenced; and such costs, fees and expenses shall be
deemed to be added to the principal amount due under this Note.
This Note may not be changed or modified in any way, nor may any
provision hereof be waived, except by a written instrument duly executed by the
holder hereof.
This Note will inure to the benefit of Lender, its legal
representatives, successors, transferees and assigns.
In addition to the principal, interest and other amounts set forth
herein, this Note also evidences all indebtedness due under the terms of the
Loan Agreement and the Security Agreement.
IN WITNESS WHEREOF, Maker has caused this Note to be executed on its
behalf by its duly authorized officer on the day and year first above written.
BEV-TYME, INC.,
a Delaware corporation
By: /s/ Robert Sipper
Its: President
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EXHIBIT C
THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE
HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "ACT"), OR THE SECURITIES LAWS OF ANY STATE. THIS WARRANT MAY NOT BE
EXERCISED BY OR ON BEHALF OF ANY U.S. PERSON (AS DEFINED IN REGULATION S OF THE
SECURITIES AND EXCHANGE COMMISSION PROMULGATED UNDER THE ACT), AND THIS WARRANT
AND THE UNDERLYING SECURITIES MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED,
HYPOTHECATED, OR OTHERWISE TRANSFERRED IN THE ABSENCE OF REGISTRATION UNDER
SAID ACT AND ALL OTHER APPLICABLE SECURITIES LAWS, UNLESS AN EXEMPTION FROM THE
REGISTRATION PROVISIONS OF SAID ACT AND ALL OTHER APPLICABLE SECURITIES LAWS IS
AVAILABLE.
WARRANT
WARRANT TO PURCHASE SHARES OF COMMON STOCK
OF BEV-TYME, INC.
Date of Issuance: As of October 25, 1996
THIS CERTIFIES that, for value received, Ulster Investments Limited,
or registered assigns (the "Holder") is entitled to purchase, subject to the
provisions of this Warrant, from BEV-TYME, INC., a Delaware corporation (the
"Company"), at the price hereinafter set forth in Section 7, the number of
shares hereinafter set forth in Section 8, of the Company's $.0001 par value
common stock (all of the Company's shares of Common Stock being hereafter
referred to as "Common Stock"). This Warrant is hereinafter referred to as the
"Warrant" and the shares of Common Stock issued or then issuable pursuant to
the terms hereof are hereinafter sometimes referred to as "Warrant Shares".
Section 1. Exercise of Warrant. This Warrant may be exercised in whole
or in part at any time and from time to time on or after its date of issuance
but prior to the Expiration Date defined in Section 11 by presentation of the
Purchase Form annexed hereto duly executed and accompanied by payment of the
Exercise Price set forth in Section 7 hereof and/or election of the "net
issuance" method of exercise set forth on said Purchase Form, for the number of
shares specified in such form. Upon receipt by the Company of the said Purchase
Form executed as aforesaid, at the office of the Company, accompanied by
payment of the Exercise Price (which can be paid in whole or in part (a)
through application of any outstanding obligation of the Company to Holder, (b)
by delivery to the Company of certificate(s) representing shares of the
Company's common stock together with executed stock powers wherein the shares
represented by such certificates will be valued based upon the average of the
closing bid and ask prices for the stock over the five trading days immediately
preceding such delivery) and/or (c) through designation of the "net issuance"
method of exercise set forth on said Purchase Form, the Company shall issue and
deliver to the Holder within a reasonable period of time not to exceed 10 days
a certificate or certificates of the shares of Common Stock then being issued
upon such exercise. Based upon representations, warranties and covenants of the
Company contained in the Loan and Warrant Purchase Agreement of even date
herewith by and between the Company and the Holder, such certificates shall not
bear any restricted legends. If this Warrant shall be exercised with respect to
only a part of the shares of Common Stock covered hereby, the Holder shall be
entitled to receive a similar warrant of like tenor and date covering the
number of shares in respect of which this Warrant shall not have been
exercised.
Section 2. Reservation of Shares. The Company hereby covenants that at
all times during the term of this Warrant there shall be reserved for issuance
such number of shares of its Common Stock as shall be required to be issued
upon exercise of this Warrant.
Section 3. Shares to be Fully Paid and Nonassessable. All shares of
Common Stock issued upon the exercise of this Warrant shall be validly issued,
fully paid and nonassessable.
<PAGE>
Section 4. Assignment of Warrant. This Warrant is not transferable
except pursuant to an effective registration statement under the Securities Act
of 1933, as amended, and other applicable securities laws, or unless an
exemption from the registration provisions of such Act and other applicable
securities laws is applicable. All subsequent offers and sales of this Warrant
will be made: (a) outside the United States in compliance with Rule 903 or Rule
904 of Regulation S, (b) pursuant to registration of the Warrant under the Act,
or (c) pursuant to an exemption from such registration. In the event of such
transfer or assignment, the Holder shall surrender this Warrant to the Company
with the Assignment Form in the form annexed hereto duly executed and with
funds sufficient to pay any transfer taxes, and the Company shall cancel this
Warrant and, without charge, shall execute and deliver a new Warrant of like
tenor in the name of the assignee which enables the assignee to succeed to all
rights and interest of its assignor at the time of assignment of this Warrant.
Section 5. Loss of Warrant. Upon receipt by the Company of evidence
satisfactory to it of the loss, theft or destruction of this Warrant, and of
indemnification satisfactory to it, or upon surrender and cancellation of this
Warrant, if mutilated, the Company will execute and deliver a new Warrant of
like tenor and date.
Section 6. Rights of the Holder. No provision of this Warrant shall be
construed as conferring upon the Holder hereof the right to vote, consent,
receive dividends or receive notice other than as herein expressly provided. No
provision hereof, in the absence of affirmative action by the Holder hereof to
purchase Warrant Shares, and no enumeration herein of the rights or privileges
of the Holder hereof shall give rise to any liability of such Holder for the
purchase price of any Warrant Shares or as a stockholder of the Company,
whether such liability is asserted by the Company or by creditors of the
Company.
This Warrant and the shares issuable hereunder shall not be sold,
offered for sale, pledged, hypothecated, or otherwise transferred in the
absence of registration under the Act and other applicable securities laws or
an exemption from the registration provisions of such Act and other applicable
securities laws is available.
Section 7. Exercise Price.
7(a). Initial Exercise Price. The purchase price for each share of
Common Stock purchased under this Warrant (the "Exercise Price") shall
initially be $0.10.
7(b). Adjustment of Exercise Price. The Exercise Price, determined
pursuant to Subsection 7(a) hereof, shall, in addition to any adjustments
pursuant to Section 10 hereof, be adjusted from time to time pursuant to this
Subsection 7(b).
7(b)(1). Adjustment of Exercise Price upon Issuance of Common Stock.
If and whenever after the date hereof the Company shall issue or sell, or is,
in accordance with the provisions of this Subsection 7(b), deemed to have
issued or sold, any shares of its Common Stock for a consideration per share
less than the Exercise Price in effect immediately prior to the time of such
issue or sale, then, forthwith upon such issue or sale, the Exercise Price
shall be reduced to the price per share of Common Stock at which such shares
are deemed to have been issued or sold.
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7(b)(2). Issuance of Rights or Options. In case at any time the
Company shall in any manner grant (whether directly or by assumption in a
merger or otherwise) any rights to subscribe for or to purchase, or any options
for the purchase of, Common Stock or any stock or securities convertible into
or exchangeable for Common Stock (such rights or options being herein called
"Options" and such convertible or exchangeable stock or securities being herein
called "Convertible Securities"), whether or not such Options or the right to
convert or exchange any such Convertible Securities are immediately
exercisable, and the price per share for which Common Stock is issuable upon
the exercise of such Options or upon conversion or exchange of such Convertible
Securities (determined as provided in the following sentence) shall be less
than the Exercise Price in effect immediately prior to the time of the granting
of such Options, then the total maximum number of shares of Common Stock
issuable upon the exercise of all such Options or upon conversion or exchange
of the total maximum amount of such Convertible Securities issuable upon the
exercise of such Options shall, for purposes of this Subsection 7(b), be deemed
to have been issued for such price per share as of the date of granting of such
Options and thereafter shall be deemed to be outstanding. The price per share
for which Common Stock is issuable, as referred to in the preceding sentence,
shall be determined by dividing (a) the sum of (l) the total amount, if any,
received or receivable by the Company as consideration for the granting of such
Options, plus (2) the minimum aggregate amount of additional consideration
payable to the Company upon the exercise of all such Options, plus (3) in the
case of all such Options that relate to Convertible Securities, the minimum
aggregate amount of additional consideration, if any, payable upon the issue or
sale of all such Convertible Securities (to the extent not counted in clause
(2)) and upon the conversion or exchange of all such Convertible Securities
into Common Stock, by (b) the total maximum number of shares of Common Stock
issuable upon the exercise of such Options or upon the conversion or exchange
of all such Convertible Securities issuable upon the exercise of such Options;
the consideration received or receivable by the Company shall in each case be
determined in accordance with Paragraph (5) of Subsection 7(b) hereof. Except
as otherwise provided in Paragraph (4) of Subsection 7(b) hereof, no adjustment
of the Exercise Price shall be made upon the actual issue of such Common Stock
or of such Convertible Securities upon exercise of such Options or upon the
actual issue of such Common Stock upon conversion or exchange of such
Convertible Securities.
7(b)(3). Issuance of Convertible Securities. In case the Company shall
in any manner issue (whether directly or by assumption in a merger or
otherwise) or sell any Convertible Securities, whether or not the rights to
exchange or convert thereunder are immediately exercisable, and the price per
share for which Common Stock is issuable upon such conversion or exchange
(determined as provided in the following sentence) shall be less than the
Exercise Price in effect immediately prior to the time of such issue or sale,
then the total maximum number of shares of Common Stock convertible or issuable
upon conversion or exchange of all such Convertible Securities shall, for
purposes of this Subsection 7(b), be deemed to have been issued for such price
per share as of the date of the issue of such Convertible Securities and
thereafter shall be deemed to be outstanding, provided that (a) except as
otherwise provided in Paragraph (4) of Subsection 7(b) below, no adjustment of
the Exercise Price shall be made upon the actual issue of such Common Stock
upon conversion or exchange of such Convertible Securities, and (b) if any such
issue or sale of such Convertible Securities is made upon exercise of any
Options for which adjustments of the Exercise Price have been or are to be made
pursuant to other provisions of this Subsection 7(b), no further adjustment of
the Exercise Price shall be made by reason of such issue or sale. The price per
share for which Common Stock is
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issuable, as referred to in the preceding sentence, shall be determined by
dividing (x) the sum of (1) the total amount received or receivable by the
Company as consideration for the issue or sale of such Convertible Securities,
plus (2) the minimum aggregate amount of additional consideration, if any,
payable upon the conversion or exchange of such Convertible Securities into
Common Stock; by (y) the total maximum number of shares of Common Stock
issuable upon the conversion or exchange of such Convertible Securities; the
consideration received or receivable by the Company shall in each case be
determined in accordance with Paragraph (5) of Subsection 7(b).
7(b)(4). Change in Option Price or Conversion Rate. Upon the happening
of any of the following events, namely, if (a) the purchase price provided for
in any Option which is referred to in Paragraph (2) of Subsection 7(b) and is
still outstanding, (b) the additional consideration, if any, payable upon the
conversion or exchange of any Convertible Securities which are referred to in
Paragraphs (2) or (3) of Subsection 7(b) and are still outstanding, or (c) the
rate at which any such Convertible Securities are convertible into or
exchangeable for Common Stock shall change at any time (other than under or by
reason of provisions designed to protect against dilution), the Exercise Price
in effect at the time of such event shall forthwith be readjusted to the
Exercise Price which would have been in effect at such time had such Options or
Convertible Securities provided for such changed purchase price, additional
consideration or conversion rate, as the case may be, at the time initially
granted, issued or sold. On the expiration of any Option referred to in
Paragraph (2) of Subsection 7(b) prior to the exercise thereof or the
termination of any right to convert or exchange any Convertible Securities
referred to in Paragraphs (2) or (3) of Subsection 7(b) prior to the exercise
of such rights, the Exercise Price then in effect hereunder shall forthwith be
increased to the Exercise Price which would have been in effect at the time of
such expiration or termination had such Option or Convertible Securities, to
the extent outstanding immediately prior to such expiration or termination,
never been issued, and the Common Stock issuable thereunder shall no longer be
deemed to be outstanding for the purposes of any calculation under Paragraphs
(2) or (3) of Subsection 7(b). If the purchase price provided for in any Option
referred to in Paragraph (2) of Subsection 7(b) or the consideration, if any,
payable upon the conversion or exchange of any Convertible Securities referred
to in Paragraphs (2) or (3) of Subsection 7(b) and still outstanding shall
decrease, or the number of shares of Common Stock issuable upon conversion or
exchange of any such Convertible Securities shall increase, at any time under
or by reason of provisions with respect thereto designed to protect against
dilution, then in case of the delivery of Common Stock, the Exercise Price then
in effect hereunder shall forthwith be adjusted to the Exercise Price which
would have obtained had Paragraphs (2) and (3) of Subsection 7(b) and the
provisions of this Paragraph (4) of Subsection 7(b) never been given effect in
relation to such Option or Convertible Securities and had the Exercise Price
been adjusted pursuant to Subsection 7(b) at the time of delivery of such
shares of Common Stock based on the consideration received (or deemed received
under Paragraph (5) of Subsection 7(b)) for such Common Stock, determined as of
the date of such delivery, provided that such adjustment of the Exercise Price
shall be made only if as a result thereof the Exercise Price then in effect
hereunder is thereby reduced.
7(b)(5). Consideration for Securities. In case any shares of Common
Stock, Options or Convertible Securities shall be issued or sold for cash, the
consideration received therefor shall be deemed to be the amount received by
the Company thereof, without deduction therefrom of any expenses incurred or
any underwriting commissions or concessions paid or allowed by the Company in
connection therewith. In case any shares of Common Stock, Options or
Convertible Securities shall be issued or sold for a consideration other than
cash, the amount of the consideration other than cash received by the Company
shall be
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deemed to be the fair value of such consideration as determined in good faith
by the Board of Directors of the Company, without deduction of any expenses
incurred or any underwriting commissions or concessions paid or allowed by the
Company in connection therewith. In case any Options shall be issued in
connection with the issue and sale of other securities of the Corporation,
together comprising one integral transaction in which no specific consideration
is allocated to such Options by the parties thereto, such Options shall be
deemed to have been issued for such consideration as determined in good faith
by the Board of Directors of the Corporation.
7(b)(6). Record Date. In case the Company shall declare a record date
of the holders of its Common Stock for the purpose of entitling them (a) to
receive a dividend or other distribution payable in Common Stock, Options or
Convertible Securities, or (b) to subscribe for or purchase Common Stock,
Options, or Convertible Securities, then such record date shall be deemed to be
the date of the issue or sale of the shares of Common Stock deemed to have been
issued or sold upon the declaration of such dividend or the making of such
other distribution or the date of the granting of such right of subscription or
purchase, as the case may be.
7(b)(7). Treasury Shares. The number of shares of Common Stock
outstanding at any given time shall not include shares owned or held by or for
the account of the Company, and the disposition of any such shares shall be
considered an issue or sale of Common Stock for the purposes of this Subsection
7(b).
7(b)(8). Subdivision or Combination of Stock. In case the Company
shall at any time subdivide (by any stock split, stock dividend, or otherwise)
its outstanding shares of Common Stock into a greater number of shares, the
Exercise Price in effect immediately prior to such subdivision shall be
proportionately reduced, and conversely, in case the outstanding shares of
Common Stock of the Company shall be combined into a smaller number of shares,
the Exercise Price in effect immediately prior to such combination shall be
proportionately increased.
7(b)(9). Certain Issues of Common Stock Excepted. Anything herein to
the contrary notwithstanding, the Company shall not be required to make any
adjustment of the Exercise Price in the case of up to a total of Ten Thousand
(10,000) shares (appropriately adjusted for any stock splits, stock dividends
or stock combinations) issued or issuable to employees pursuant to the exercise
of stock options granted either by the Board of Directors of the Company or
pursuant to stock option plans approved by the Board of Directors of the
Company.
7(b)(10). Duty to Make Fair Adjustments In Certain Cases. If any event
occurs as to which the other provisions of this Subsection 7(b) or the
provisions of Section 10 hereof are not strictly applicable or if strictly
applicable would not fairly protect the purchase rights of the Warrants in
accordance with the essential intent and principles of such provisions, then
the Board of Directors shall make an adjustment in the application of such
provisions, in accordance with such essential intent and principles, so as to
protect such purchase rights as aforesaid.
Section 8. Number of Warrant Shares.
Initial Number of Warrant Shares. This Warrant shall upon its issuance
be exercisable in accordance with the terms hereof for 100,000 shares of Common
Stock (the "Initial Number") subject to adjustment pursuant to Section 10
hereof.
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The number of shares of Common Stock actually issued will be subject to further
adjustment in the event and to the extent the Holder designates the "net
issuance" method of exercise set forth on the Purchase Form.
Section 9. Notices to Warrant Holder. So long as this Warrant shall be
outstanding, the Company shall cause to be delivered to the Holder at least 15
days prior written notice of the time, place and agenda of any meeting of its
stockholders or the Board of Directors at which it is proposed to authorize the
issuance of any shares of Common Stock or any securities, options, warrants or
rights of conversion the exercise of which would entitle the holder thereof to
receive shares of Common Stock. In addition, (i) if the Company shall pay any
dividend or make any distribution upon the shares of its Common Stock, or (ii)
if the Company shall offer to the holders of Common Stock for subscription or
purchase by them any shares of stock of any classes or any other rights, or
(iii) if any capital reorganization of the Company, reclassification of the
Common Stock of the Company, consolidation or merger of the Company with or
into another corporation, or voluntary or involuntary dissolution, liquidation
or winding up of the Company shall be effected, then, in any such case, the
Company shall cause to be delivered to the Holder, at least 30 days prior to
the date specified in (a) or (b) below, as the case may be, a notice containing
a brief description of the proposed action and stating the date on which (a) a
record is to be taken or the stock transfer books of the Company are to be
closed for the purpose of determining the stockholders entitled to receive such
dividend, distribution or rights, or (b) a record is to be taken or the stock
transfer books of the Company are to be closed for the purpose of determining
the stockholders entitled to exchange their shares of Common Stock for
securities or other property deliverable upon such reclassification,
reorganization, consolidation, merger, dissolution, liquidation or winding up.
Section 10. Reclassification, Reorganization or Merger. In case of any
reclassification, capital reorganization or other change of outstanding shares
of Common Stock of the Company (other than a change in par value, or from par
value to no par value, or from no par value to par value, or as a result of an
issuance of Common Stock except by way of dividend or other distribution or
except by way of a subdivision, split or combination), or in case of any
consolidation or merger of the Company with or into another corporation (other
than a merger with a subsidiary in which merger the Company is the continuing
corporation or which does not result in any reclassification, capital
reorganization or other change of outstanding shares of Common Stock of the
class issuable upon exercise of this Warrant), the Company shall cause
effective provision to be made so that the Holder shall have the right
thereafter, by exercising this Warrant, to purchase the kind and amount of
shares of stock and other securities and property receivable upon such
reclassification, capital reorganization or other change, consolidation or
merger, by a holder of the number of shares of Common Stock which might have
been purchased upon exercise of this Warrant immediately prior to such
reclassification, change, consolidation or merger. Any such provision shall
include provision for adjustments which shall be as nearly equivalent as may be
practicable to the adjustments provided for in this Warrant. The foregoing
provisions of this Section 10 shall similarly apply to successive
reclassifications, capital reorganizations and changes of shares of Common
Stock and to successive consolidations and mergers. In the event that in any
such capital reorganization or reclassification, consolidation or merger,
additional shares of Common Stock shall be issued in exchange, conversion,
substitution or payment, in whole or in part, for or of a security of the
Company other than Common Stock, any amount of the consideration received
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<PAGE>
upon the issue thereof being determined by the Board of Directors of the
Company in good faith shall be final and binding on the Holder.
Section 11. Expiration Date. The Warrant shall terminate on the
Expiration Date and may not be exercised on or after such date. The Expiration
Date shall be October __, 2001.
Section 12. Applicable Law. The parties hereto acknowledge that the
principal place of business of the Holder is Antigua, West Indies and this
Warrant shall be deemed to have been delivered, is to be performed within and
shall be deemed to be a contract made under, construed and interpreted in
accordance with and governed by the internal laws of the Antigua, West Indies
(without reference to (i) its judicially or statutorily pronounced rules
regarding conflict of law or choice of law; (ii) where any instrument is
executed or delivered; (iii) where performance required by any instrument is
made or required to be made; (iv) where any breach of any provision of any
instrument occurs or any cause of action otherwise accrues; (v) where any
action or other proceeding is instituted or pending; (vi) the nationality,
citizenship, domicile, principal place of business, or jurisdiction,
organization or domestication of any party; (vii) whether the laws of the forum
jurisdiction would otherwise apply the laws of a jurisdiction other than
Antigua, West Indies; or (viii) any combination of the foregoing.
Section 13. Registration. The Holder and the Company hereby agree that
the Registration Rights Agreement, dated as of October __, 1996, between the
Company and the Holder ("Registration Rights Agreement") shall apply to Warrant
Shares acquired by the Holder upon exercise of this Warrant from time to time.
BEV-TYME, INC.
By: /s/ Robert Sipper
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ASSIGNMENT FORM
Dated:
-----------------
For value received, ____________________________________ hereby sells,
assigns and transfers a Warrant dated ____________ unto:
Name ___________________________________________________________
(Please typewrite or print in block letters)
Address_________________________________________________________
and appoints ___________________________________________________
________________________________________________________________
Attorney to transfer the said Warrant on the books of the within named Company
with full power of substitution in the premises.
The undersigned hereby certifies, as a condition to Bev-Tyme, Inc.
honoring the assignment of the Warrant, that: (a) it is not a U.S. person
(within the meaning of Securities and Exchange Commission Regulation S) and all
offers and sales of the Warrant were made outside the United States in
compliance with Rule 903 or Rule 904 of Regulation S to persons who were not
U.S. persons; or (b) a written opinion of counsel satisfactory to the within
named Company will be delivered to the within named Company to the effect that
the Warrant and the securities delivered upon exercise thereof have been
registered under the Securities Act of 1933, as amended, or are exempt from
registration thereunder.
Signature_________________________
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PURCHASE FORM
Dated:____________
The undersigned hereby irrevocably elects to exercise his or
its right to purchase __________ shares of the _____ par value Common Stock of
Bev- Tyme, Inc. (the "Company"), such right being pursuant to a Warrant dated
October__, 1996, and as issued to the undersigned by the Company, and hereby:
(i) [ ] remits herewith the sum of $__________ in payment for same in
accordance with the Exercise Price specified in Section 7 of said
Warrant, or
(ii) [ ] directs that the amount of $_________ owed to the undersigned by
Company be applied as payment for same in accordance with the Exercise
Price specified in Section 7 of said Warrant, or
(iii) [ ] delivers certificate(s) representing shares of the Company's
Common Stock together with executed stock powers wherein shares with a
value of $__________________ are being surrendered to the Company in
payment for same in accordance with the Exercise Price specified in
Section 7 of said Warrant (such value being calculated as provided in
Section 1 of said Warrant), or
(iv) [ ] directs that the purchase be without cash payment and on a "net
issuance" basis whereby the shares of Common Stock actually issued to
the undersigned will be that number of shares of Common Stock equal to
the number of shares for which the Warrant is being exercised less the
number of shares having a value (calculated as provided in Section 1
of the Warrant) equal to the aggregate exercise price of that number
of shares for which the Warrant is being exercised. For example, if
the Warrant is being exercised with respect to 15,000 shares and the
value of the Company's common stock is $0.30 per share at the time of
exercise, the number of shares issued to the Holder will be 10,000
[15,000-5,000 which is derived by multiplying 15,000 (the number of
shares being exercised) by $0.10 (the exercise price) and dividing the
result by $0.30 (the value per share)], or
(v) [ ] elects the following combination of (i) through (iv), inclusive,
to the extent of $_______________ in payment for same in accordance
with the Exercise Price specified in Section 7 of said Warrant or
through "net issuance" as provided in (iv) above:
The undersigned hereby certifies, as a condition to the Company
honoring the exercise of the Warrant, that: (a) it is not a U.S. person (within
the meaning of Securities and Exchange Commission Regulation S) and the Warrant
is not being exercised on behalf of a U.S. person; or (b) a written opinion of
counsel will be delivered to the Company to the effect that the Warrant and the
securities delivered upon exercise thereof have been registered under the
Securities Act of 1933, as amended, or are exempt from registration thereunder.
-------------------------------------------------------.
INSTRUCTIONS FOR REGISTRATION OF STOCK
Name
---------------------------------------------------------
(Please typewrite or print in block letters)
Address
-------------------------------------------------------
Signature:
---------------------------------------
Shares Heretofore Purchased
---------------------------------------
( ) .
- -------------------------------------
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EXHIBIT D
THIS WARRANT AND THE SHARES OF CLASS C PREFERRED STOCK ISSUABLE UPON
EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), OR THE SECURITIES LAWS OF ANY STATE. THIS WARRANT MAY NOT
BE EXERCISED BY OR ON BEHALF OF ANY U.S. PERSON (AS DEFINED IN REGULATION S OF
THE SECURITIES AND EXCHANGE COMMISSION PROMULGATED UNDER THE ACT), AND THIS
WARRANT AND THE UNDERLYING SECURITIES MAY NOT BE SOLD, OFFERED FOR SALE,
PLEDGED, HYPOTHECATED, OR OTHERWISE TRANSFERRED IN THE ABSENCE OF REGISTRATION
UNDER SAID ACT AND ALL OTHER APPLICABLE SECURITIES LAWS, UNLESS AN EXEMPTION
FROM THE REGISTRATION PROVISIONS OF SAID ACT AND ALL OTHER APPLICABLE
SECURITIES LAWS IS AVAILABLE.
WARRANT
WARRANT TO PURCHASE SHARES OF CLASS C PREFERRED STOCK
OF BEV-TYME, INC.
Date of Issuance: As of October 25, 1996
THIS CERTIFIES that, for value received, Ulster Investments Limited,
or registered assigns (the "Holder") is entitled to purchase, subject to the
provisions of this Warrant, from BEV-TYME, INC., a Delaware corporation (the
"Company"), at the price hereinafter set forth in Section 7, the number of
shares hereinafter set forth in Section 8, of the Company's $0.0001 par value
Class C Preferred Stock (all of the Company's shares of Class C Preferred Stock
being hereafter referred to as "Preferred Stock"). This Warrant is hereinafter
referred to as the "Warrant" and the shares of Preferred Stock issued or then
issuable pursuant to the terms hereof are hereinafter sometimes referred to as
"Warrant Shares".
Section 1. Exercise of Warrant. This Warrant may be exercised in whole
or in part at any time and from time to time on or after its date of issuance
but prior to the Expiration Date defined in Section 11 by presentation of the
Purchase Form annexed hereto duly executed and accompanied by payment of the
Exercise Price set forth in Section 7 hereof and/or election of the "net
issuance" method of exercise set forth on said Purchase Form, for the number of
shares specified in such form. Upon receipt by the Company of the said Purchase
Form executed as aforesaid, at the office of the Company, accompanied by
payment of the Exercise Price (which can be paid in whole or in part (a)
through application of any outstanding obligation of the Company to Holder, (b)
by delivery to the Company of certificate(s) representing shares of the
Company's common and/or preferred stock together with executed stock powers
wherein the shares represented by such certificates will be valued based upon
the average of the closing bid and ask prices for the stock over the five
trading days immediately preceding such delivery) and/or (c) through
designation of the "net issuance" method of exercise set forth on said Purchase
Form, the Company shall issue and deliver to the Holder within a reasonable
period of time not to exceed 10 days a certificate or certificates of the
shares of Preferred Stock then being issued upon such exercise. Based upon
representations, warranties and covenants of the Company contained in the Loan
and Securities Purchase Agreement of even date herewith by and between the
Company and the Holder, such certificates shall not bear any restricted
legends. If this Warrant shall be exercised with respect to only a part of the
shares of Preferred Stock covered hereby, the Holder shall be entitled to
receive a similar warrant of like tenor and date covering the number of shares
in respect of which this Warrant shall not have been exercised.
Section 2. Reservation of Shares. The Company hereby covenants that at
all times during the term of this Warrant there shall be reserved for issuance
such number of shares of its Preferred Stock as shall be required to be issued
upon exercise of this Warrant.
Section 3. Shares to be Fully Paid and Nonassessable. All shares of
Preferred Stock issued upon the exercise of this Warrant shall be validly
issued, fully paid and nonassessable.
<PAGE>
Section 4. Assignment of Warrant. This Warrant is not transferable
except pursuant to an effective registration statement under the Securities Act
of 1933, as amended, and other applicable securities laws, or unless an
exemption from the registration provisions of such Act and other applicable
securities laws is applicable. All subsequent offers and sales of this Warrant
will be made: (a) outside the United States in compliance with Rule 903 or Rule
904 of Regulation S, (b) pursuant to registration of the Warrant under the Act,
or (c) pursuant to an exemption from such registration. In the event of such
transfer or assignment, the Holder shall surrender this Warrant to the Company
with the Assignment Form in the form annexed hereto duly executed and with
funds sufficient to pay any transfer taxes, and the Company shall cancel this
Warrant and, without charge, shall execute and deliver a new Warrant of like
tenor in the name of the assignee which enables the assignee to succeed to all
rights and interest of its assignor at the time of assignment of this Warrant.
Section 5. Loss of Warrant. Upon receipt by the Company of evidence
satisfactory to it of the loss, theft or destruction of this Warrant, and of
indemnification satisfactory to it, or upon surrender and cancellation of this
Warrant, if mutilated, the Company will execute and deliver a new Warrant of
like tenor and date.
Section 6. Rights of the Holder. No provision of this Warrant shall be
construed as conferring upon the Holder hereof the right to vote, consent,
receive dividends or receive notice other than as herein expressly provided. No
provision hereof, in the absence of affirmative action by the Holder hereof to
purchase Warrant Shares, and no enumeration herein of the rights or privileges
of the Holder hereof shall give rise to any liability of such Holder for the
purchase price of any Warrant Shares or as a stockholder of the Company,
whether such liability is asserted by the Company or by creditors of the
Company.
This Warrant and the shares issuable hereunder shall not be sold,
offered for sale, pledged, hypothecated, or otherwise transferred in the
absence of registration under the Act and other applicable securities laws or
an exemption from the registration provisions of such Act and other applicable
securities laws is available.
Section 7. Exercise Price.
7(a). Initial Exercise Price. The purchase price for each share of
Preferred Stock purchased under this Warrant (the "Exercise Price") shall
initially be $0.50.
7(b). Adjustment of Exercise Price. The Exercise Price, determined
pursuant to Subsection 7(a) hereof, shall, in addition to any adjustments
pursuant to Section 10 hereof, be adjusted from time to time pursuant to this
Subsection 7(b).
7(b)(1). Adjustment of Exercise Price upon Issuance of Preferred
Stock. If and whenever after the date hereof the Company shall issue or sell,
or is, in accordance with the provisions of this Subsection 7(b), deemed to
have issued or sold, any shares of its Preferred Stock for a consideration per
share less than the Exercise Price in effect immediately prior to the time of
such issue or sale, then, forthwith upon such issue or sale, the Exercise Price
shall be reduced to the price per share of Preferred Stock at which such shares
are deemed to have been issued or sold.
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<PAGE>
7(b)(2). Issuance of Rights or Options. In case at any time the
Company shall in any manner grant (whether directly or by assumption in a
merger or otherwise) any rights to subscribe for or to purchase, or any options
for the purchase of, Preferred Stock or any stock or securities convertible
into or exchangeable for Preferred Stock (such rights or options being herein
called "Options" and such convertible or exchangeable stock or securities being
herein called "Convertible Securities"), whether or not such Options or the
right to convert or exchange any such Convertible Securities are immediately
exercisable, and the price per share for which Preferred Stock is issuable upon
the exercise of such Options or upon conversion or exchange of such Convertible
Securities (determined as provided in the following sentence) shall be less
than the Exercise Price in effect immediately prior to the time of the granting
of such Options, then the total maximum number of shares of Preferred Stock
issuable upon the exercise of all such Options or upon conversion or exchange
of the total maximum amount of such Convertible Securities issuable upon the
exercise of such Options shall, for purposes of this Subsection 7(b), be deemed
to have been issued for such price per share as of the date of granting of such
Options and thereafter shall be deemed to be outstanding. The price per share
for which Preferred Stock is issuable, as referred to in the preceding
sentence, shall be determined by dividing (a) the sum of (l) the total amount,
if any, received or receivable by the Company as consideration for the granting
of such Options, plus (2) the minimum aggregate amount of additional
consideration payable to the Company upon the exercise of all such Options,
plus (3) in the case of all such Options that relate to Convertible Securities,
the minimum aggregate amount of additional consideration, if any, payable upon
the issue or sale of all such Convertible Securities (to the extent not counted
in clause (2)) and upon the conversion or exchange of all such Convertible
Securities into Preferred Stock, by (b) the total maximum number of shares of
Preferred Stock issuable upon the exercise of such Options or upon the
conversion or exchange of all such Convertible Securities issuable upon the
exercise of such Options; the consideration received or receivable by the
Company shall in each case be determined in accordance with Paragraph (5) of
Subsection 7(b) hereof. Except as otherwise provided in Paragraph (4) of
Subsection 7(b) hereof, no adjustment of the Exercise Price shall be made upon
the actual issue of such Preferred Stock or of such Convertible Securities upon
exercise of such Options or upon the actual issue of such Preferred Stock upon
conversion or exchange of such Convertible Securities.
7(b)(3). Issuance of Convertible Securities. In case the Company shall
in any manner issue (whether directly or by assumption in a merger or
otherwise) or sell any Convertible Securities, whether or not the rights to
exchange or convert thereunder are immediately exercisable, and the price per
share for which Preferred Stock is issuable upon such conversion or exchange
(determined as provided in the following sentence) shall be less than the
Exercise Price in effect immediately prior to the time of such issue or sale,
then the total maximum number of shares of Preferred Stock convertible or
issuable upon conversion or exchange of all such Convertible Securities shall,
for purposes of this Subsection 7(b), be deemed to have been issued for such
price per share as of the date of the issue of such Convertible Securities and
thereafter shall be deemed to be outstanding, provided that (a) except as
otherwise provided in Paragraph (4) of Subsection 7(b) below, no adjustment of
the Exercise Price shall be made upon the actual issue of such Preferred Stock
upon conversion or exchange of such Convertible Securities, and (b) if any such
issue or sale of such Convertible Securities is made upon exercise of any
Options for which adjustments of the Exercise Price have been or are to be made
pursuant to other provisions of this Subsection 7(b), no further adjustment of
the Exercise Price shall be
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made by reason of such issue or sale. The price per share for which Preferred
Stock is issuable, as referred to in the preceding sentence, shall be
determined by dividing (x) the sum of (1) the total amount received or
receivable by the Company as consideration for the issue or sale of such
Convertible Securities, plus (2) the minimum aggregate amount of additional
consideration, if any, payable upon the conversion or exchange of such
Convertible Securities into Preferred Stock; by (y) the total maximum number of
shares of Preferred Stock issuable upon the conversion or exchange of such
Convertible Securities; the consideration received or receivable by the Company
shall in each case be determined in accordance with Paragraph (5) of Subsection
7(b).
7(b)(4). Change in Option Price or Conversion Rate. Upon the happening
of any of the following events, namely, if (a) the purchase price provided for
in any Option which is referred to in Paragraph (2) of Subsection 7(b) and is
still outstanding, (b) the additional consideration, if any, payable upon the
conversion or exchange of any Convertible Securities which are referred to in
Paragraphs (2) or (3) of Subsection 7(b) and are still outstanding, or (c) the
rate at which any such Convertible Securities are convertible into or
exchangeable for Preferred Stock shall change at any time (other than under or
by reason of provisions designed to protect against dilution), the Exercise
Price in effect at the time of such event shall forthwith be readjusted to the
Exercise Price which would have been in effect at such time had such Options or
Convertible Securities provided for such changed purchase price, additional
consideration or conversion rate, as the case may be, at the time initially
granted, issued or sold. On the expiration of any Option referred to in
Paragraph (2) of Subsection 7(b) prior to the exercise thereof or the
termination of any right to convert or exchange any Convertible Securities
referred to in Paragraphs (2) or (3) of Subsection 7(b) prior to the exercise
of such rights, the Exercise Price then in effect hereunder shall forthwith be
increased to the Exercise Price which would have been in effect at the time of
such expiration or termination had such Option or Convertible Securities, to
the extent outstanding immediately prior to such expiration or termination,
never been issued, and the Preferred Stock issuable thereunder shall no longer
be deemed to be outstanding for the purposes of any calculation under
Paragraphs (2) or (3) of Subsection 7(b). If the purchase price provided for in
any Option referred to in Paragraph (2) of Subsection 7(b) or the
consideration, if any, payable upon the conversion or exchange of any
Convertible Securities referred to in Paragraphs (2) or (3) of Subsection 7(b)
and still outstanding shall decrease, or the number of shares of Preferred
Stock issuable upon conversion or exchange of any such Convertible Securities
shall increase, at any time under or by reason of provisions with respect
thereto designed to protect against dilution, then in case of the delivery of
Preferred Stock, the Exercise Price then in effect hereunder shall forthwith be
adjusted to the Exercise Price which would have obtained had Paragraphs (2) and
(3) of Subsection 7(b) and the provisions of this Paragraph (4) of Subsection
7(b) never been given effect in relation to such Option or Convertible
Securities and had the Exercise Price been adjusted pursuant to Subsection 7(b)
at the time of delivery of such shares of Preferred Stock based on the
consideration received (or deemed received under Paragraph (5) of Subsection
7(b)) for such Preferred Stock, determined as of the date of such delivery,
provided that such adjustment of the Exercise Price shall be made only if as a
result thereof the Exercise Price then in effect hereunder is thereby reduced.
7(b)(5). Consideration for Securities. In case any shares of Preferred
Stock, Options or Convertible Securities shall be issued or sold for cash, the
consideration received therefor shall be deemed to be the amount received by
the Company thereof, without deduction therefrom of any expenses incurred or
any underwriting commissions or concessions paid or allowed by the Company in
connection therewith. In case any shares of Preferred Stock, Options or
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Convertible Securities shall be issued or sold for a consideration other than
cash, the amount of the consideration other than cash received by the Company
shall be deemed to be the fair value of such consideration as determined in
good faith by the Board of Directors of the Company, without deduction of any
expenses incurred or any underwriting commissions or concessions paid or
allowed by the Company in connection therewith. In case any Options shall be
issued in connection with the issue and sale of other securities of the
Corporation, together comprising one integral transaction in which no specific
consideration is allocated to such Options by the parties thereto, such Options
shall be deemed to have been issued for such consideration as determined in
good faith by the Board of Directors of the Corporation.
7(b)(6). Record Date. In case the Company shall declare a record date
of the holders of its Preferred Stock for the purpose of entitling them (a) to
receive a dividend or other distribution payable in Preferred Stock, Options or
Convertible Securities, or (b) to subscribe for or purchase Preferred Stock,
Options, or Convertible Securities, then such record date shall be deemed to be
the date of the issue or sale of the shares of Preferred Stock deemed to have
been issued or sold upon the declaration of such dividend or the making of such
other distribution or the date of the granting of such right of subscription or
purchase, as the case may be.
7(b)(7). Treasury Shares. The number of shares of Preferred Stock
outstanding at any given time shall not include shares owned or held by or for
the account of the Company, and the disposition of any such shares shall be
considered an issue or sale of Preferred Stock for the purposes of this
Subsection 7(b).
7(b)(8). Subdivision or Combination of Stock. In case the Company
shall at any time subdivide (by any stock split, stock dividend, or otherwise)
its outstanding shares of Preferred Stock into a greater number of shares, the
Exercise Price in effect immediately prior to such subdivision shall be
proportionately reduced, and conversely, in case the outstanding shares of
Preferred Stock of the Company shall be combined into a smaller number of
shares, the Exercise Price in effect immediately prior to such combination
shall be proportionately increased.
7(b)(9). Certain Issues of Preferred Stock Excepted. Anything herein
to the contrary notwithstanding, the Company shall not be required to make any
adjustment of the Exercise Price in the case of up to a total of Ten Thousand
(10,000) shares (appropriately adjusted for any stock splits, stock dividends
or stock combinations) issued or issuable to employees pursuant to the exercise
of stock options granted either by the Board of Directors of the Company or
pursuant to stock option plans approved by the Board of Directors of the
Company.
7(b)(10). Duty to Make Fair Adjustments In Certain Cases. If any event
occurs as to which the other provisions of this Subsection 7(b) or the
provisions of Section 10 hereof are not strictly applicable or if strictly
applicable would not fairly protect the purchase rights of the Warrants in
accordance with the essential intent and principles of such provisions, then
the Board of Directors shall make an adjustment in the application of such
provisions, in accordance with such essential intent and principles, so as to
protect such purchase rights as aforesaid.
Section 8. Number of Warrant Shares.
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Initial Number of Warrant Shares. This Warrant shall upon its issuance
be exercisable in accordance with the terms hereof for 100,000 shares of
Preferred Stock (the "Initial Number") subject to adjustment pursuant to
Section 10 hereof. The number of shares of Preferred Stock actually issued will
be subject to further adjustment in the event and to the extent the Holder
designates the "net issuance" method of exercise set forth on the Purchase
Form.
Section 9. Notices to Warrant Holder. So long as this Warrant shall be
outstanding, the Company shall cause to be delivered to the Holder at least 15
days prior written notice of the time, place and agenda of any meeting of its
stockholders or the Board of Directors at which it is proposed to authorize the
issuance of any shares of Preferred Stock or any securities, options, warrants
or rights of conversion the exercise of which would entitle the holder thereof
to receive shares of Preferred Stock. In addition, (i) if the Company shall pay
any dividend or make any distribution upon the shares of its Preferred Stock,
or (ii) if the Company shall offer to the holders of Preferred Stock for
subscription or purchase by them any shares of stock of any classes or any
other rights, or (iii) if any capital reorganization of the Company,
reclassification of the Preferred Stock of the Company, consolidation or merger
of the Company with or into another corporation, or voluntary or involuntary
dissolution, liquidation or winding up of the Company shall be effected, then,
in any such case, the Company shall cause to be delivered to the Holder, at
least 30 days prior to the date specified in (a) or (b) below, as the case may
be, a notice containing a brief description of the proposed action and stating
the date on which (a) a record is to be taken or the stock transfer books of
the Company are to be closed for the purpose of determining the stockholders
entitled to receive such dividend, distribution or rights, or (b) a record is
to be taken or the stock transfer books of the Company are to be closed for the
purpose of determining the stockholders entitled to exchange their shares of
Preferred Stock for securities or other property deliverable upon such
reclassification, reorganization, consolidation, merger, dissolution,
liquidation or winding up.
Section 10. Reclassification, Reorganization or Merger. In case of any
reclassification, capital reorganization or other change of outstanding shares
of Preferred Stock of the Company (other than a change in par value, or from
par value to no par value, or from no par value to par value, or as a result of
an issuance of Preferred Stock except by way of dividend or other distribution
or except by way of a subdivision, split or combination), or in case of any
consolidation or merger of the Company with or into another corporation (other
than a merger with a subsidiary in which merger the Company is the continuing
corporation or which does not result in any reclassification, capital
reorganization or other change of outstanding shares of Preferred Stock of the
class issuable upon exercise of this Warrant), the Company shall cause
effective provision to be made so that the Holder shall have the right
thereafter, by exercising this Warrant, to purchase the kind and amount of
shares of stock and other securities and property receivable upon such
reclassification, capital reorganization or other change, consolidation or
merger, by a holder of the number of shares of Preferred Stock which might have
been purchased upon exercise of this Warrant immediately prior to such
reclassification, change, consolidation or merger. Any such provision shall
include provision for adjustments which shall be as nearly equivalent as may be
practicable to the adjustments provided for in this Warrant. The foregoing
provisions of this Section 10 shall similarly apply to successive
reclassifications, capital reorganizations and changes of shares of Preferred
Stock and to successive consolidations and mergers. In the event that in any
such capital reorganization or reclassification, consolidation or merger,
additional shares of Preferred Stock shall be issued in exchange,
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conversion, substitution or payment, in whole or in part, for or of a security
of the Company other than Preferred Stock, any amount of the consideration
received upon the issue thereof being determined by the Board of Directors of
the Company in good faith shall be final and binding on the Holder.
Section 11. Expiration Date. The Warrant shall terminate on the
Expiration Date and may not be exercised on or after such date. The Expiration
Date shall be October 25, 2001.
Section 12. Applicable Law. The parties hereto acknowledge that the
principal place of business of the Holder is Antigua, West Indies and this
Warrant shall be deemed to have been delivered, is to be performed within and
shall be deemed to be a contract made under, construed and interpreted in
accordance with and governed by the internal laws of the Antigua, West Indies
(without reference to (i) its judicially or statutorily pronounced rules
regarding conflict of law or choice of law; (ii) where any instrument is
executed or delivered; (iii) where performance required by any instrument is
made or required to be made; (iv) where any breach of any provision of any
instrument occurs or any cause of action otherwise accrues; (v) where any
action or other proceeding is instituted or pending; (vi) the nationality,
citizenship, domicile, principal place of business, or jurisdiction,
organization or domestication of any party; (vii) whether the laws of the forum
jurisdiction would otherwise apply the laws of a jurisdiction other than
Antigua, West Indies; or (viii) any combination of the foregoing.
Section 13. Registration. The Holder and the Company hereby agree that
the Registration Rights Agreement, dated as of October __, 1996, between the
Company and the Holder ("Registration Rights Agreement") shall apply to Warrant
Shares acquired by the Holder upon exercise of this Warrant from time to time.
BEV-TYME, INC.
By: /s/ Robert Sipper
---------------------------
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ASSIGNMENT FORM
Dated:_________________
For value received, ____________________________________ hereby sells,
assigns and transfers a Warrant dated ____________ unto:
Name ___________________________________________________________
(Please typewrite or print in block letters)
Address_________________________________________________________
and appoints ___________________________________________________
________________________________________________________________
Attorney to transfer the said Warrant on the books of the within named Company
with full power of substitution in the premises.
The undersigned hereby certifies, as a condition to Bev-Tyme, Inc.
honoring the assignment of the Warrant, that: (a) it is not a U.S. person
(within the meaning of Securities and Exchange Commission Regulation S) and all
offers and sales of the Warrant were made outside the United States in
compliance with Rule 903 or Rule 904 of Regulation S to persons who were not
U.S. persons; or (b) a written opinion of counsel satisfactory to the within
named Company will be delivered to the within named Company to the effect that
the Warrant and the securities delivered upon exercise thereof have been
registered under the Securities Act of 1933, as amended, or are exempt from
registration thereunder.
Signature_________________________
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<PAGE>
PURCHASE FORM
Dated:____________
The undersigned hereby irrevocably elects to exercise his or
its right to purchase __________ shares of the $0.0001 par value Class C
Preferred Stock of Bev-Tyme, Inc. (the "Company"), such right being pursuant to
a Warrant dated October__, 1996, and as issued to the undersigned by the
Company, and hereby:
(i) [ ] remits herewith the sum of $__________ in payment for same in
accordance with the Exercise Price specified in Section 7 of said
Warrant, or
(ii) [ ] directs that the amount of $_________ owed to the undersigned by
Company be applied as payment for same in accordance with the Exercise
Price specified in Section 7 of said Warrant, or
(iii) [ ] delivers certificate(s) representing shares of the Company's
Common and/or Class C Preferred Stock together with executed stock
powers wherein shares with a value of $__________________ are being
surrendered to the Company in payment for same in accordance with the
Exercise Price specified in Section 7 of said Warrant (such value
being calculated as provided in Section 1 of said Warrant), or
(iv) [ ] directs that the purchase be without cash payment and on a "net
issuance" basis whereby the shares of Class C Preferred Stock actually
issued to the undersigned will be that number of shares of Class C
Preferred Stock equal to the number of shares for which the Warrant is
being exercised less the number of shares having a value (calculated
as provided in Section 1 of the Warrant) equal to the aggregate
exercise price of that number of shares for which the Warrant is being
exercised. For example, if the Warrant is being exercised with respect
to 15,000 shares and the value of the Company's Class C Preferred
Stock is $1.50 per share at the time of exercise, the number of shares
issued to the Holder will be 10,000 [15,000-5,000 which is derived by
multiplying 15,000 (the number of shares being exercised) by $0.50
(the exercise price) and dividing the result by $1.50 (the value per
share)], or
(v) [ ] elects the following combination of (i) through (iv), inclusive,
to the extent of $_______________ in payment for same in accordance
with the Exercise Price specified in Section 7 of said Warrant or
through "net issuance" as provided in (iv) above:
The undersigned hereby certifies, as a condition to the Company
honoring the exercise of the Warrant, that: (a) it is not a U.S. person (within
the meaning of Securities and Exchange Commission Regulation S) and the Warrant
is not being exercised on behalf of a U.S. person; or (b) a written opinion of
counsel will be delivered to the Company to the effect that the Warrant and the
securities delivered upon exercise thereof have been registered under the
Securities Act of 1933, as amended, or are exempt from registration thereunder.
-------------------------------------------------------.
INSTRUCTIONS FOR REGISTRATION OF STOCK
Name
---------------------------------------------------------
(Please typewrite or print in block letters)
Address
------------------------------------------------------
Signature:
--------------------------------
Shares Heretofore Purchased
---------------------------------
( ) .
- -------------------------------------
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EXHIBIT E
REGISTRATION RIGHTS AGREEMENT
THIS AGREEMENT is made as of October 25, 1996 by and between Bev-Tyme,
Inc., a Delaware corporation (the "Company"), and Ulster Investments Limited,
an Antiguan corporation ("Purchaser").
The Company and Purchaser are parties to a certain Loan and Warrant
Purchase Agreement of even date herewith (the "Purchase Agreement"). In order
to induce Purchaser to enter into the Purchase Agreement, the Company has
agreed to provide the registration rights to Purchaser as set forth in this
Agreement. The execution and delivery of this Agreement is a condition to the
"Closing" under the Purchase Agreement. Except as otherwise indicated,
capitalized terms used herein are defined in Section 9 hereof.
The parties hereto agree as follows:
1. Effectiveness. In the event the Purchaser is unable to sell the
Registrable Securities to the Public in an open market transaction at any time
after a 40-day restricted period immediately following the Closing (as defined
in the Purchase Agreement) due to any statute, administrative order, rule,
regulation, court decision or regulatory interpretation which amends or repeals
Regulation S as promulgated by the Securities and Exchange Commission or
otherwise makes it unavailable to the Purchaser or due to any breach of
warranty, representation or covenant in the Purchase Agreement by the Company,
the rights of the Purchaser contained herein will become effective ("Effective
Date").
2. Piggyback Registrations.
(a) Right to Piggyback. Whenever, after the Effective Date,
the Company proposes to register any of its securities under the
Securities Act other than pursuant to a Demand Registration hereunder
(as set forth in Subsection 3(a)), and the registration form to be
used may be used for the registration of any Registrable Securities (a
"Piggyback Registration"), the Company will give prompt written notice
to all holders of the Registrable Securities for which the
registration form may be used of its intention to effect such a
registration and will include in such registration all Registrable
Securities (in accordance with the priorities set forth in Subsections
2(c) and 2(d) below) with respect to which the Company has received
written requests for inclusion therein within fifteen (15) days after
the receipt of the Company's notice.
(b) Piggyback Expenses. The Registration Expenses (as defined
in Section 6(a) hereof) of the holders of Registrable Securities will
be paid by the Company in all Piggyback Registrations.
(c) Priority on Primary Registrations. If a Piggyback
Registration is an underwritten primary registration on behalf of the
Company and the managing underwriters advise the Company in writing
that in their opinion the number of securities
<PAGE>
requested to be included in such registration exceeds the number which
can be sold in such offering, the Company will include in such
registration (i) first, the securities that the Company proposes to
sell and the Registrable Securities requested to be included in such
registration, pro rata among the Company and the holders of such
Registrable Securities on the basis of the number of shares which the
Company proposes to register and of the Registrable Securities being
requested for registration which are owned by such holders; provided,
however, that should any state securities administrator require any
escrow or holdback of securities, such securities will come first from
the securities proposed to be sold by the Company, and (ii) second,
other securities requested to be included in such registration.
(d) Priority on Secondary Registrations. If a Piggyback
Registration is an underwritten secondary registration on behalf of
holders of the Company's securities and the managing underwriters
advise the Company in writing that in their opinion the number of
securities requested to be included in such registration exceeds the
number which can be sold in such offering, the Company will include in
such registration (i) first, the Registrable Securities requested to
be included in such registration and the securities requested to be
included therein by the holders requesting such registration, pro rata
among the holders of Registrable Securities and the holders of the
securities requesting such registration on the basis of the number of
securities so requested to be included therein, and (ii) second, the
other securities requested to be included in such registration.
(e) Selection of Underwriters. If any Piggyback Registration
is an underwritten offering, the selection of investment banker(s) and
manager(s) for the offering must be approved by the holders of a
majority of the Registrable Securities included in such Piggyback
Registration, which approval shall not be unreasonably withheld.
(f) Other Registrations. If the Company has previously filed
a registration statement with respect to Registrable Securities
pursuant to Section 3 or pursuant to this Section 2, and if such
previous registration has not been withdrawn or abandoned, the Company
will not file or cause to be effected any other registration of any of
its equity securities or securities convertible or exchangeable into
or exercisable for its equity securities under the Securities Act
(except on Form S-8 or any successor form), whether on its own behalf
or at the request of any holder or holders of such securities, until a
period of at least six (6) months has elapsed from the effective date
of such previous registration except with respect to any Demand
Registration which is required due to the inability of the holders of
Registrable Shares to register the Registrable Shares required to be
included in any Piggyback Registration.
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<PAGE>
3. Demand Registrations.
(a) Requests for Registration. Subject to the terms of this
Agreement, the holders of at least a majority of the Registrable
Securities may, at any time after the Effective Date, request (i)
registration under the Securities Act of all or part of their
Registrable Securities on Form S-1 or any similar long-form
registration ("Long-Form Registrations") or (ii) registration under
the Securities Act of all or part of their Registrable Securities on
Form S-2 or S-3 (if eligible) or any similar short-form registration
("Short-Form Registrations"), if available. Within ten (10) days after
receipt of any such request, the Company will give written notice of
such request to all other holders of the Registrable Securities and
will include in such registration all Registrable Securities with
respect to which the Company has received written requests for
inclusion therein within fifteen (15) days after the receipt of the
Company's notice. All registrations requested pursuant to this
Subsection 2(a) are referred to herein as "Demand Registrations."
(b) Number of Demand Registrations. The holders of the
Registrable Securities will be entitled to request one (1) Demand
Registration pursuant to which the Registrable Securities shall be
registered. The Company will pay all Registration Expenses with
respect to a Demand Registration. A registration will not count as a
permitted Demand Registration (i) until it has become effective
(unless such Demand Registration has not become effective due solely
to the fault of the holders requesting such registration) and (ii)
unless the holders of the Registrable Securities are able to register
all of the Registrable Securities requested to be included in such
registration (unless such holders are not so able to register such
amount of the Registrable Securities due solely to the fault of such
holders); provided, however, that in any event the Company will pay
all Registration Expenses in connection with any registration
initiated as a Demand Registration.
(c) Type of Demand Registration. A Demand Registration will
be a Short- Form Registration in which the Company will pay all
Registration Expenses whenever the Company is permitted to use any
applicable short form. Otherwise, the Demand Registration will be a
Long-Form Registration. As long as the Company remains subject to the
reporting requirements of the Securities Exchange Act, the Company
will use its best efforts to make Short-Form Registrations available
for the sale of Registrable Securities.
(d) Priority on Demand Registrations. The Company will not
include in any Demand Registration any securities which are not
Registrable Securities without the written consent of holders of a
majority of the Registrable Securities. If other securities are
permitted to be included in a Demand Registration which is an
underwritten offering and the managing underwriters advise the Company
in writing that in their opinion the number of Registrable Securities
and other securities requested to be included exceeds the number of
Registrable Securities and other securities which can be sold in such
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<PAGE>
offering, the Company will include in such registration, prior to the
inclusion of any securities which are not Registrable Securities, the
number of Registrable Securities requested to be included which in the
opinion of such underwriters can be sold, pro rata among the respective
holders on the basis of the amount of Registrable Securities so
requested to be included therein.
(e) Selection of Underwriters. The holders of a majority of
the Registrable Securities included in any Demand Registration will
have the right to select the investment banker(s) and manager(s) to
administer the offering.
(f) Period of Effectiveness. The Company will maintain the
effectiveness of any Demand Registration for a period of one (1) year
after effectiveness unless the holders of the Registrable Securities
notify the Company that all of the Registrable Securities have been
sold pursuant to the Demand Registration.
(g) Other Registration Rights. Except as provided in this
Agreement, the Company will not grant to any person or entity the
right to request the Company to register any equity securities of the
Company, or any securities convertible or exchangeable into or
exercisable for such securities, without the written consent of the
holders of a majority of the Registrable Securities.
4. Holdback Agreements.
(a) Each holder of Registrable Securities agrees not to
effect any public sale or distribution of equity securities of the
Company, or any securities convertible into or exchangeable or
exercisable for such securities, during the seven (7) days prior to
and the 90-day period beginning on the effective date of any
underwritten Demand Registration or any underwritten Piggyback
Registration in which Registrable Securities are included (except as
part of such underwritten registration), unless the underwriters
managing the registered public offering otherwise agree and such sale
or distribution otherwise complies with Regulation ss.240.10b-6 of the
Securities Exchange Act; provided, however, that the holders of
Registrable Securities may elect, at their option, to not have the
underwriter sell the Registrable Securities which such holders have
registered and to otherwise determine the method and timing of the
sale of the securities so registered without regard to the holdback
provisions hereof.
(b) The Company agrees (i) not to effect any public sale or
distribution of its equity securities, or any securities convertible
into or exchangeable or exercisable for such securities, during the
seven (7) days prior and the 90-day period beginning on the effective
date of any underwritten Demand Registration or any underwritten
Piggyback Registration (except as part of such underwritten
registration or pursuant to registrations on Form S-8 or any successor
form), unless the underwriters managing the registered public offering
otherwise agree, and (ii) to cause each 10% or greater holder of its
equity securities, or any securities convertible into or exchangeable
or exercisable for such
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<PAGE>
securities, purchased from the Company (other than in a registered
public offering) to agree not to effect any public sale or
distribution of any such securities during such period (except as part
of such underwritten registration, if otherwise permitted, or except
as permitted in subsection (a) of this Section 4), unless the
underwriters managing the registered public offering otherwise agree.
5. Registration Procedures. Whenever the holders of Registrable
Securities have requested that any Registrable Securities will be registered
pursuant to this Agreement, the Company will use its best efforts to effect the
registration and the sale of such Registrable Securities in accordance with the
intended method of disposition thereof, and pursuant thereto, the Company will
as expeditiously as possible:
(a) prepare and file with the Securities and Exchange
Commission a registration statement with respect to such Registrable
Securities and use its best efforts to cause such registration
statement to become effective (provided that, before filing a
registration statement or prospectus or any amendments or supplements
thereto, the Company will furnish to the counsel or counsels of the
holders of the Registrable Securities covered by such registration
statement copies of all such documents proposed to be filed);
(b) prepare and file with the Securities and Exchange
Commission such amendments and supplements to such registration
statement and the prospectus used in connection therewith as may be
necessary to keep such registration statement effective for a period
of not less than twelve (12) months and comply with the provisions of
the Securities Act with respect to the disposition of all securities
covered by such registration statement during such period in
accordance with the intended methods of disposition by the sellers
thereof set forth in such registration statement;
(c) furnish to each seller of Registrable Securities such
number of copies of such registration statement, each amendment and
supplement thereto, the prospectus included in such registration
statement (including each preliminary prospectus) and such other
documents as such seller may reasonably request in order to facilitate
the disposition of the Registrable Securities owned by such seller;
(d) use its best efforts to register or qualify such
Registrable Securities under such other securities or blue sky laws of
such jurisdictions as any seller of Registrable Securities reasonably
requests and do any and all other acts and things which may be
reasonably necessary or advisable to enable such seller to consummate
the disposition in such jurisdictions of Registrable Securities owned
by such seller (provided that the Company will not be required to (i)
qualify generally to do business in any jurisdiction where it would
not otherwise be required to qualify but for this subparagraph, (ii)
subject itself to taxation in any such jurisdiction, or (iii) consent
to general service of process in any such jurisdiction);
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(e) notify each seller of such Registrable Securities, at any
time when a prospectus relating thereto is required to be delivered
under the Securities Act, of the happening of any event as a result of
which the prospectus included in such registration statement contains
an untrue statement of a material fact or omits any fact necessary to
make the statements therein not misleading, and, at the request of any
such seller, the Company will prepare a supplement or amendment to
such prospectus so that, as thereafter delivered to the purchasers of
such Registrable Securities, such prospectus will not contain an
untrue statement of a material fact or omit to state any fact
necessary to make the statements therein not misleading;
(f) cause all such Registrable Securities to be listed on
each securities exchange, the Nasdaq National Market, the Nasdaq Small
Cap Market or other system or facility on which similar securities
issued by the Company are then listed or traded, if any;
(g) provide a transfer agent and registrar for all such
Registrable Securities not later than the effective date of such
registration statement;
(h) enter into such customary agreements (including
underwriting agreements in customary form) and take all such other
actions as the holders of a majority of the Registrable Securities
being sold or the underwriters, if any, reasonably request in order to
expedite or facilitate the disposition of such Registrable Securities
(including, without limitation, effecting a stock split or a
combination of shares); and
(i) make available for inspection during normal business
hours by any seller of Registrable Securities, any underwriter
participating in any disposition pursuant to such registration
statement, and any attorney, accountant or other agent retained by any
such seller or underwriter, all financial and other records, pertinent
corporate documents and properties of the Company, and cause the
Company's officers, directors, employees and independent accountants
to supply all information reasonably requested by any such seller,
underwriter, attorney, accountant or agent in connection with such
registration statement.
6. Registration Expenses.
(a) All expenses incident to the Company's performance of or
compliance with this Agreement, including, without limitation, all
registration and filing fees, fees and expenses of compliance with
securities or blue sky laws, listing fees, printing expenses,
messenger and delivery expenses, and fees and disbursements of counsel
for the Company and all independent certified public accountants,
underwriters (excluding discounts and commissions) and other persons
or entities retained by the Company (all such expenses being herein
called "Registration Expenses") will be borne by the Company. The
Company will also pay its internal expenses (including, without
limitation, all salaries and expenses of its officers and employees
performing legal or
6
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accounting duties), the expense of any annual audit or quarterly
review, the expense of any liability insurance and the expenses and
fees for listing the securities to be registered on each securities
exchange on which similar securities issued by the Company are then
listed.
(b) In connection with each Demand Registration, the Company
will reimburse the holders of Registrable Securities covered by such
registration for the reasonable fees and disbursements of one counsel
chosen by the holders of a majority of such Registrable Securities.
7. Indemnification.
(a) The Company agrees to indemnify, to the extent permitted
by law, each holder of Registrable Securities, its officers and
directors and each person or entity who controls such holder (within
the meaning of the Securities Act) against all losses, claims,
damages, liabilities and expenses caused by any untrue or alleged
untrue statement of material fact contained in any registration
statement, prospectus or preliminary prospectus or any amendment
thereof or supplement thereto or any omission or alleged omission of a
material fact required to be stated therein, except insofar as the
same are caused by or contained in any information furnished in
writing to the Company by such holder expressly for use therein or
which such holder failed to provide after being so requested or by
such holder's failure to deliver a copy of the registration statement
or prospectus or any amendments or supplements thereto after the
Company has furnished such holder with a sufficient number of copies
of the same or which is otherwise attributable to the gross negligence
or willful misconduct of such holder. In connection with an
underwritten offering, the Company will indemnify such underwriters,
their officers and directors and each person or entity who controls
such underwriters (within the meaning of the Securities Act) to the
same extent as provided above with respect to the indemnification of
the holders of Registrable Securities.
(b) In connection with any registration statement in which a
holder of Registrable Securities is participating, each such holder
will furnish to the Company in writing such information and affidavits
as the Company reasonably requests for use in connection with any such
registration statement or prospectus and, to the extent permitted by
law, will indemnify the Company, its directors and officers, each
person or entity who controls the Company (within the meaning of the
Securities Act), against any losses, claims, damages, liabilities and
expenses resulting from any untrue or alleged untrue statement of
material fact contained or required to be contained in the
registration statement, prospectus or preliminary prospectus or any
amendment thereof or supplement thereto or any omission or alleged
omission of a material fact required to be stated therein or necessary
to make the statements therein not misleading, but only to the extent
that such untrue statement or omission is contained or required to be
contained in any information or affidavit so furnished or required to
be so furnished in writing by such holder; provided that the
obligation to indemnify will be several, not joint and several,
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<PAGE>
among such holders of Registrable Securities and the liability of each
such holder of Registrable Securities will be in proportion to and
limited to the net amount received by such holder from the sale of
Registrable Securities pursuant to such registration statement.
(c) Any person or entity entitled to indemnification
hereunder will (i) give prompt written notice to the indemnifying
party of any claim with respect to which it seeks indemnification and
(ii) unless in such indemnified party's reasonable judgment a conflict
of interest between such indemnified and indemnifying parties may
exist with respect to such claim, permit such indemnifying party to
assume the defense of such claim, with counsel reasonably satisfactory
to the indemnified party. If such defense is assumed, the indemnifying
party will not be subject to any liability for any settlement made by
the indemnified party without its consent (but such consent will not
be unreasonably withheld). An indemnifying party who is not entitled
to, or elects not to, assume the defense of a claim will not be
obligated to pay the fees and expenses of more than one counsel for
all parties indemnified by such indemnifying party with respect to
such claim, unless in the reasonable judgment of any indemnified party
a conflict of interest may exist between such indemnified party and
any other of such indemnified parties with respect to such claim.
(d) The indemnification provided for under this Agreement
will remain in full force and effect regardless of any investigation
made by or on behalf of the indemnified party or any officer, director
or controlling person or entity of such indemnified party and will
survive the transfer of securities. The Company also agrees to make
such provisions, as are reasonably requested by any indemnified party,
for contribution to such party in the event the Company's
indemnification is unavailable for any reason.
8. Current Public Information. At all times after the Company has
filed a registration statement with the Securities and Exchange Commission
pursuant to the requirements of either the Securities Act or the Securities
Exchange Act and such registration statement has been declared effective, the
Company will file all reports required to be filed by it under the Securities
Act and the Securities Exchange Act, and will take such further action as any
holder or holders of Registrable Securities may reasonably request, all to the
extent required to enable such holders to sell Registrable Securities pursuant
to (i) Rule 144 adopted by the Securities and Exchange Commission under the
Securities Act (as such rule may be amended from time to time) or any similar
rule or regulation hereafter adopted by the Securities and Exchange Commission
or (ii) a registration statement on Form S-2 or Form S-3, if eligible, or any
similar registration statement form hereafter adopted by the Securities and
Exchange Commission. Upon request, the Company will deliver to such holders of
Registrable Securities a written statement as to whether it has complied with
such requirements.
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9. Definitions.
(a) Registrable Securities.
(1) The term "Registrable Securities" means (i) any
of the Company's Common Stock or other securities issued or
issuable to Purchaser pursuant to the Purchase Agreement upon
exercise of the Warrants (as defined in the Purchase
Agreement) or upon conversion of the Preferred Stock issued
or issuable upon exercise of the Warrant to purchase
Preferred Stock, (ii) any Common Stock issued or issuable
upon exercise of any preemptive rights afforded to those
persons or entities holding securities described in clause
(i) above or pursuant to the Purchase Agreement, (iii) any
Common Stock issued or issuable with respect to the
securities referred to in clauses (i) and (ii) by way of
stock dividend or stock split or in connection with a
combination of shares, recapitalization, merger,
consolidation or other reorganization, and (iv) any other
shares of Common Stock held by persons or entities holding
securities described in clauses (i) to (iii), inclusive,
above.
(2) As to any particular Registrable Securities,
such securities will cease to be Registrable Securities when
they have (a) been effectively registered under the
Securities Act and disposed of in accordance with the
registration statement covering them, (b) been sold to the
public in accordance with Rule 144 (or any similar provision
then in force) under the Securities Act, or (c) been
otherwise transferred on the open market in a public
transaction and new certificates for them not bearing a
Securities Act restrictive legend have been delivered by the
Company pursuant to the Purchase Agreement. Whenever any
particular securities cease to be Registrable Securities, the
holder thereof will be entitled to receive from the Company,
without expense, new securities of like tenor not bearing a
restrictive legend as set forth in the Purchase Agreement.
(b) The term "Securities Act" means the Securities Act of
1933, as amended, and all rules and regulations promulgated
thereunder.
(c) The term "Securities Exchange Act" means the Securities
Exchange Act of 1934, as amended, and all rules and regulations
promulgated thereunder.
(d) The term "Long-Form Registration" means a registration
under the Securities Act on Form S-1 or any similar long form
registration.
(e) The term "Short-Form Registration" means a registration
under the Securities Act on Form S-2 or S-3 (if eligible) or any
similar short form registration.
(f) Unless otherwise stated, other capitalized terms
contained herein have the meanings set forth in the Purchase
Agreement.
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10. Miscellaneous.
(a) No Inconsistent Agreements. The Company will not
hereafter enter into any agreement with respect to its securities
which is inconsistent with the rights granted to the holders of
Registrable Securities in this Agreement.
(b) Adjustments Affecting Registrable Securities. The Company
will not take any action or permit any change to occur with respect to
its securities which would materially and adversely affect the ability
of the holders of Registrable Securities to include such Registrable
Securities in a registration undertaken pursuant to this Agreement or
which would materially and adversely affect the marketability of such
Registrable Securities in any such registration (including, without
limitation, effecting a stock split or a combination of shares).
(c) Remedies. Any person or entity having rights under any
provision of this Agreement will be entitled to enforce such rights
specifically, to recover damages caused by reason of any breach of any
provision of this Agreement, and to exercise all other rights granted
by law.
(d) Amendments and Waivers. Except as otherwise provided
herein, the provisions of this Agreement may be amended and the
Company may take any action herein prohibited, or omit to perform any
act herein required to be performed by it, only if the Company has
obtained the written consent of holders of at least a majority of the
Registrable Securities.
(e) Successors and Assigns. All covenants and agreements in
this Agreement by or on behalf of any of the parties hereto will bind
and inure to the benefit of the respective successors and assigns of
the parties hereto whether so expressed or not. In addition, whether
or not any express assignment has been made, the provisions of this
Agreement which are for the benefit of purchasers or holders of
Registrable Securities are also for the benefit of, and enforceable
by, any subsequent holder of Registrable Securities.
(f) Incorporation of Purchase Agreement Provisions. The
paragraphs entitled "Severability", "Headings", "Governing Law", and
"Notices" of the Purchase Agreement are hereby incorporated in this
Agreement by reference and made a part hereof.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the date first written above.
THE COMPANY:
BEV-TYME, INC., a Delaware corporation
By: /s/ Robert Sipper
------------------------------
Its: President
PURCHASER:
ULSTER INVESTMENTS LIMITED, an
Antiguan corporation
By: /s/ Roslyn Yearwood
--------------------------------
Its: Secretary
For and on behalf of:
ANTIGUA INTERNATIONAL TRUST LTD.
Director
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EXHIBIT F
SECURITY AGREEMENT
DATED OCTOBER 25, 1996
BY AND BETWEEN
BEV-TYME, INC.
AND
ULSTER INVESTMENTS LIMITED
<PAGE>
TABLE OF CONTENTS
ARTICLE I. SECURITY INTEREST.................................. 1
1.1 Collateral......................................... 1
ARTICLE II. REPRESENTATIONS AND COVENANTS OF BORROWER......... 3
2.1 Authorization...................................... 3
2.2 Title to Collateral................................ 3
2.3 Disposition or Encumbrance of Collateral........... 3
2.4 Validity of Accounts............................... 3
2.5 Maintenance of Equipment, Fixtures
and Inventory; Location............................ 4
2.6 Notation on Chattel Paper.......................... 4
2.7 Protection of Collateral........................... 4
2.8 Insurance.......................................... 4
2.9 Compliance with Law................................ 5
2.10 Books and Records; Access.......................... 5
2.11 Notice of Default.................................. 5
2.12 Additional Documentation........................... 5
2.13 Principal Executive Office......................... 6
2.14 Name of Borrower................................... 6
2.15 Power of Attorney.................................. 6
ARTICLE III. COLLECTION OF ACCOUNTS........................... 6
ARTICLE IV. ASSIGNMENT OF INSURANCE........................... 7
ARTICLE V. EVENTS OF DEFAULT.................................. 7
ARTICLE VI. RIGHTS AND REMEDIES ON DEFAULT.................... 7
6.1 Acceleration of Obligations........................ 7
6.2 Deal with Collateral............................... 7
6.3 Realize on Collateral.............................. 7
6.4 Access to Property................................. 8
6.5 Other Rights....................................... 8
ARTICLE VII. MISCELLANEOUS.................................... 8
7.1 No Liability on Collateral......................... 8
7.2 No Waiver.......................................... 8
7.3 Remedies Cumulative................................ 8
7.4 Governing Law...................................... 8
7.5 Expenses........................................... 9
7.6 Successors and Assigns............................. 9
7.7 Recitals........................................... 9
i
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SECURITY AGREEMENT
This SECURITY AGREEMENT is made by Bev-Tyme, Inc., a Delaware
corporation ("Borrower"), as of this 25th day of October, 1996 in favor of
Ulster Investments Limited, an Antigua, West Indies corporation ("Lender").
RECITALS:
A. Lender has agreed to make loans in the aggregate amount of
$248,000.00 pursuant to (i) that certain Loan and Warrant Purchase Agreement
(the "Loan Agreement") of even date herewith, between Borrower and Lender, and
(ii) that certain promissory note of even date herewith in favor of Lender (the
"Note").
B. As a condition to said loans, Lender requires that Borrower grant
to Lender a security interest in its assets in accordance with this Security
Agreement.
C. Borrower has determined that the execution, delivery and
performance of this Security Agreement is in the best interests of Borrower.
AGREEMENT:
In consideration of the foregoing, and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged,
Borrower hereby agrees as follows:
ARTICLE I. SECURITY INTEREST
1.1 Collateral. As security for the payment to the Lender of the Note
and all liabilities, obligations and indebtedness of Borrower to Lender, due or
to become due, direct or indirect, absolute or contingent, joint or several,
howsoever created, arising or evidenced, now existing under, or hereafter any
time created pursuant to, the Loan Agreement, the Note or any other agreement
or understanding whatsoever (all such notes, liabilities, obligations and
indebtedness collectively referred to as the "Secured Obligations"), Borrower
hereby grants to Lender a security interest in all of the assets and property
of the Borrower (the "Collateral") including, but not limited to, the following
described property:
(a) Accounts. The proceeds of and each and every right of
Borrower to the payment of money, whether such right to payment now
exists or hereafter arises, whether such right to payment arises out
of a sale, lease or other disposition of goods or other property by
Borrower, out of a rendering of services by Borrower, out of a loan by
Borrower, out of the overpayment of taxes or other liabilities of the
Borrower, or otherwise arises under any contract or agreement, whether
such right to payment is or is not already earned by performance, and
howsoever such right to payment may be evidenced, together with all
other rights and interests (including all liens and security
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interests) which Borrower may at any time have by law or agreement
against any account debtor or other obligor obligated to make any such
payment or against any of the property of such account debtor or other
obligor; all including, but not limited to, all present and future debt
instruments, chattel papers and accounts of Borrower;
(b) Chattel Paper. Any writing or writings evidencing both a
monetary obligation and a security interest in or a lease of specific
goods now owned or hereafter acquired;
(c) Equipment and Fixtures. Goods used or bought for use
primarily in Borrower's business, whether or not an interest therein
arises under real property law, now owned or hereafter acquired by
Borrower;
(d) General Intangibles. Any personal property other than
goods, accounts, contract rights, chattel paper, documents,
instruments and money, including, but not limited to, things in or
choses of actions, licenses, rights of all types under leases and
license agreements and all manufacturing and processing rights,
patents, patent rights, licenses, trademarks, trade names and
copyrights now owned or hereafter acquired;
(e) Inventory. All personal property now owned or hereafter
acquired by Borrower which is held for sale or lease, or furnished or
to be furnished under contracts of service, or held as raw materials,
work in process or materials used or consumed or to be used or
consumed in Borrower's business, and all returned or repossessed
goods;
(f) Leasehold Improvements. All improvements made by Borrower
to any leasehold of Borrower, including, but not limited to, all
structures, buildings, accessions, accessories, attachments, parts,
equipment and repairs now or hereafter attached, affixed or made to
any leasehold of Borrower, whether or not an interest therein arises
under real property law;
(g) Property in Possession of Lender. Property of every kind
and description in which Borrower has or may acquire any interest, now
or hereafter at any time in the possession or control of Lender for
any reason, including, without limitation, instruments, money,
documents or other property deposited with or delivered to Lender as
collateral, for safekeeping or for collection or exchange for other
property; and all dividends and distributions on, or other rights in
connection with such property;
(h) Customer and Mailing Lists. All lists and compilations
(whether compiled in writing, magnetic tape or discs or otherwise)
pertaining to actual or potential customers, subscribers or others in
which Borrower has or may acquire an interest;
(i) Proceeds. All property received upon the sale, exchange,
collection or other disposition of Collateral or proceeds of
Collateral (including, but not limited to,
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insurance payable by reason of loss or damage to the Collateral)
whether cash or non-cash proceeds, including, but not limited to,
Inventory, Equipment or Fixtures acquired with cash proceeds; and
(j) Products. Goods manufactured, processed, assembled or
commingled with any of the foregoing Collateral;
together with (i) all substitutions and replacements for and proceeds of any
and all of the foregoing property, and in the case of all tangible Collateral,
all accessions, accessories, attachments, parts, equipment and repairs now or
hereafter attached or affixed to or used in connection with any such goods, and
(ii) all warehouse receipts, bills of lading and other documents of title now
or hereafter covering such assets.
ARTICLE II. REPRESENTATIONS AND COVENANTS OF BORROWER
Borrower represents, warrants and covenants that:
2.1 Authorization. The execution, delivery and performance of this
Security Agreement have been duly authorized by all necessary action and do not
and will not (a) require any consent or approval of the stockholders of any
entity, or the consent of any governmental entity, or (b) violate any provision
of any indenture, contract, agreement or instrument to which it is a party or
by which is bound.
2.2 Title to Collateral. Borrower has good and marketable title to all
of the Collateral and none of the Collateral is subject to any lien, except for
(i) the security interests set forth in Exhibit A attached hereto, and (ii) the
security interests created in connection with this Security Agreement.
2.3 Disposition or Encumbrance of Collateral. Borrower will not
encumber, sell or otherwise transfer or dispose of the Collateral without the
prior written consent of the Lender, except as provided in this Section 2.3 and
except for the liens permitted by Section 2.2 above. Until an Event of Default
(as defined in Article V below) has occurred and is continuing, Borrower may
sell Inventory in the ordinary course of business and may sell Equipment and
Fixtures which in the judgment of Borrower have become obsolete or unusable in
the ordinary course of Borrower's business.
2.4 Validity of Accounts. Borrower warrants that all Accounts, Chattel
Paper and Instruments are bona fide existing obligations created by the sale
and actual delivery of goods or the rendition of services to customers in the
ordinary course of business, which Borrower then owns free and clear of any
liens other than the security interests set forth in Exhibit A attached hereto
and the security interests created by this Security Agreement, and which are
then unconditionally owing to the Borrower without defenses, offset or
counterclaim, and that all shipping or delivery receipts, invoice copies and
other documents furnished to Lender in
3
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connection therewith will be genuine, and that the unpaid principal amount of
any Chattel Paper or Instrument and any security therefor is and will be as
represented to Lender on the date hereof.
2.5 Maintenance of Equipment, Fixtures and Inventory; Location.
Borrower will maintain the Equipment, Fixtures and Inventory or cause the
Equipment, Fixtures and Inventory to be maintained in good condition and
repair. At the time of attachment and perfection of the security interest
granted pursuant hereto and thereafter, all Inventory, Equipment and Fixture
Collateral will be located and will be maintained only at the locations set
forth in Exhibit B attached hereto. Such Collateral will not be removed from
such locations unless, prior to any such removal, Borrower has given written
notice to the Lender of the location or locations to which Borrower desires to
remove the Collateral, the Lender has given its written consent to such
removal, and Borrower has delivered to Lender acknowledgment copies of
financing statements filed where appropriate to continue the perfection of
Lender's security interest in the Collateral prior in right to all other
interests except for the security interests set forth in Exhibit A attached
hereto. The security interest of Lender attaches to all of the Collateral
wherever located and Borrower's failure to inform Lender of the location of any
item or items of collateral shall not impair Lender's security interest
therein. Until an Event of Default has occurred and is continuing, Borrower may
sell Inventory in the ordinary course of business and may sell Equipment and
Fixtures which in the judgment of Borrower have become obsolete or unusable in
the ordinary course of business.
2.6 Notation on Chattel Paper. For purposes of the security interest
granted pursuant to this Security Agreement, Lender has been granted a direct
security interest in all Chattel Paper and such Chattel Paper is not claimed
merely as Proceeds of Inventory. Upon the Lender's request, Borrower will
deliver to the Lender the originals of all Chattel Paper. Borrower will not
execute any copies of Chattel Paper other than those which are clearly marked
as a copy. If Lender permits any Chattel Paper to be left in the possession of
Borrower, Borrower will deliver to Lender upon request proof satisfactory to
Lender of the existence of any such Chattel Paper and will affix or permit
Lender to affix any such Chattel Paper with a legend reflecting the Lender's
security interest therein.
2.7 Protection of Collateral. All expenses of protecting, storing,
warehousing, insuring, handling and shipping the Collateral, all costs of
keeping the Collateral free of any liens prohibited by this Security Agreement
and of removing the same if they should arise, and any and all excise,
property, sales and use taxes imposed by any state, federal or local authority
on any of the Collateral or in, respect of the sale thereof, shall be borne and
paid by Borrower. In the event that Borrower fails to promptly pay such
expenses when due, Lender may at its option, but shall not be required to, pay
such expenses, whereupon Lender shall be entitled to reimbursement thereof.
2.8 Insurance. Borrower will procure and maintain, or cause to be
procured and maintained, insurance issued by responsible insurance companies
insuring the Collateral against
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damage and loss by theft, fire, collision (in the case of motor vehicles), and
such other risks as are usually carried by owners of similar properties or as
may be requested by Lender in an amount equal to the fair market value thereof
and, in any event, in an amount sufficient to avoid the application of any
coinsurance provisions. All such insurance shall contain an agreement by the
insurer to provide Lender with 30 days' prior notice of cancellation and an
agreement that the interest of Lender shall not be impaired or invalidated by
any act or neglect of Borrower nor by the occupation of the premises wherein
such Collateral is located for purposes more hazardous than are permitted by
said policy. Borrower will maintain, with financially sound and reputable
insurers, insurance with respect to its properties and business against such
casualties and contingencies of such types (which may include, without
limitation, public and product liability, larceny, embezzlement, or other
criminal misappropriation insurance) and in such amounts as may from time to
time be required by Lender and will cause the Lender to be listed therein as
additional insureds. Borrower will deliver evidence of such insurance and the
policies of insurance or copies thereof to Lender upon request.
2.9 Compliance with Law. Borrower will not use the Collateral, or
knowingly permit the Collateral to be used, for any unlawful purpose or in
violation of any federal, state or municipal law.
2.10 Books and Records; Access.
(a) Borrower will permit the Lender or its designees to
examine Borrower's books and records with respect to the Collateral
and make extracts therefrom and copies thereof at any time and from
time to time, and Borrower will furnish such information and reports
to the Lender regarding the Collateral as the Lender may from time to
time request. Borrower will also permit the Lender or its designees to
inspect the Collateral at any time and from time to time as the Lender
may reasonably request.
(b) Lender shall have authority, at any time, to place, or
require Borrower to place, upon Borrower's books and records relating
to Accounts, Chattel Paper, Instruments and other rights to payment
covered by the security interest granted hereby a notation or legend
stating that such Accounts, Chattel Paper, Instruments and other
rights to payment are subject to a security interest of Lender.
2.11 Notice of Default. Immediately upon any officer of Borrower
becoming aware of the existence of any Event of Default, Borrower will give
notice to the Lender that such Event of Default exists, stating the nature
thereof, the period of existence thereof, and what action Borrower proposes to
take with respect thereto.
2.12 Additional Documentation. Borrower will execute, from time to
time, such financing statements, assignments, and other documents covering the
Collateral, including Proceeds, as Lender may request in order to create,
evidence, perfect, maintain or continue its security interest in the Collateral
as a first priority interest as to all other interests except those
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security interests set forth in Exhibit A (including additional Collateral
acquired by Borrower after the date hereof), and Borrower will pay the cost of
filing the same or reimburse Lender for filing costs in all public offices in
which Lender may deem filing to be appropriate as well as the costs of any lien
searches which Lender may request; and will notify Lender promptly upon
acquiring any additional Collateral. Upon request, Borrower will deliver to
Lender all Borrower's Instruments and Chattel Paper.
2.13 Principal Executive Office. The location of the principal
executive office of Borrower is set forth in Exhibit B attached hereto and will
not be changed without the prior written consent of the Lender. Borrower
warrants that its books and records concerning its Accounts and Chattel Paper
are located at its principal executive office.
2.14 Name of Borrower. Borrower's true name is as set forth in Exhibit
B attached hereto. Borrower has not used any other name within the past five
(5) years except those described in Exhibit B attached hereto. Neither Borrower
nor any predecessor in title to any of the Collateral has, since September 1,
1996, executed any financing statements or security agreements presently
effective as to the Collateral except those described on Exhibit A attached
hereto.
2.15 Power of Attorney. Borrower appoints the Lender or any other
person whom the Lender may from time to time designate, as Borrower's attorney
with power, after the occurrence and during the continuance of an Event of
Default, to endorse Borrower's name on any checks, notes, acceptances, drafts,
or other forms of payment or security that may come into Lender's possession,
to sign Borrower's name on any invoice or bill of lading relating to any
Collateral, on drafts against customers, on schedules and confirmatory
assignments of Accounts, Chattel Paper, Instruments or other Collateral, on
notices of assignment, financing statements under the UCC and other public
records, on verifications of Accounts and on notices to customers, to notify
the post office authorities to change the address for delivery of Borrower's
mail to an address designated by the Lender to receive and open all mail
addressed to Borrower, to send requests for verification of Accounts, Chattel
Paper, Instruments or other Collateral to customers and to do all things
necessary to carry out this Security Agreement. Borrower ratifies and approves
all acts of the attorney taken within the scope of the authority granted.
Neither the Lender nor the attorney will be liable for any acts of commission
or omission nor for any error in judgment or mistake of fact or law. This
power, being coupled with an interest, is irrevocable so long as any Secured
Obligation remains unpaid. Borrower waives presentment and protest of all
instruments and notice thereof, notice of default and dishonor and all other
notices to which Borrower may otherwise be entitled.
ARTICLE III. COLLECTION OF ACCOUNTS
Except as otherwise provided in this Article III, Borrower shall
continue to collect, at its own expense, all amounts due or to become due to
Borrower under the Accounts. In connection with such collections, Borrower may
take (and, at the Lender's direction, shall take)
6
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such action as Borrower or the Lender may deem necessary or advisable to enforce
collection of the Accounts; provided, however, that the Lender shall have the
right, at any time upon written notice to Borrower of its intention to do so, to
notify the account debtors under any Accounts of the assignment of such Accounts
to Lender and to direct such account debtors to make payment of all amounts due
or to become due to Borrower thereunder directly to Lender. Upon such
notification and at the expense of the Borrower, the Lender shall have the right
to enforce collection of such Accounts and to adjust, settle, or compromise the
amount of payment thereof in the same manner and to the same extent as Borrower
might have done.
ARTICLE IV. ASSIGNMENT OF INSURANCE
Borrower hereby assigns to Lender, as additional security for payment
of the Secured Obligations, any and all monies due or to become due under, and
any and all other rights of Borrower with respect to, any and all policies of
insurance covering the Collateral, and Borrower hereby directs the issuer of
any such policy to pay any such monies directly to Lender. After the occurrence
and during the continuation of an Event of Default, Lender may (but need not)
in its own name or in Borrower's name execute and deliver proofs of claim,
receive such monies, endorse checks and the instrument representing such monies
and settle or litigate any claim against the issuer of any such policy.
ARTICLE V. EVENTS OF DEFAULT
The occurrence of any Event of Default as defined in the Loan
Agreement shall constitute an Event of Default hereunder (an "Event of
Default").
ARTICLE VI. RIGHTS AND REMEDIES ON DEFAULT
Upon the occurrence of an Event of Default, and at any time thereafter
until such Event of Default is cured to the satisfaction of the Lender, and in
addition to the rights granted to the Lender under Articles II, III and IV
hereof and under the Loan Agreement, the Lender may exercise any one or more of
the following rights and remedies:
6.1 Acceleration of Obligations. Declare any and all Secured
Obligations to be immediately due and payable, and the same shall thereupon
become immediately due and payable without further notice or demand.
6.2 Deal with Collateral. In the name of Borrower or otherwise,
demand, collect, receive and receipt for, compound, compromise, settle and give
acquittance for and prosecute and discontinue any suits or proceedings in
respect of any or all of the Collateral.
6.3 Realize on Collateral. Take any action which the Lender may deem
necessary or desirable in order to realize on the Collateral, including,
without limitation, the power to
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perform any contract, to endorse in the name of Borrower any checks, drafts,
notes, or other instruments or documents received in payment or on account of
the Collateral.
6.4 Access to Property. Enter upon and into and take possession of all
or such part or parts of the properties of Borrower, including lands, plants,
buildings, machinery, equipment and other property as may be necessary or
appropriate in the judgment of the Lender, to permit or enable the Lender to
store, lease, sell or otherwise dispose of or collect all or any part of the
Collateral, and use and operate said properties for such purposes and for such
length of time as the Lender may deem necessary or appropriate for said purposes
without the payment of any compensation to Borrower therefor. Borrower shall
provide the Lender with all information and assistance requested by the Lender
to facilitate the storage, leasing, sale or other disposition or collection of
the Collateral after an Event of Default.
6.5 Other Rights. Exercise any and all other rights and remedies
available to it by law, in equity or by agreement, including rights and
remedies under the UCC or any other applicable law, or under this Security
Agreement or the Loan Agreement and, in connection therewith, the Lender may
require Borrower to assemble the Collateral and make it available to the Lender
at a place to be designated by the Lender, and any notice of intended
disposition of any of the Collateral required by law shall be deemed reasonable
if such notice is mailed or delivered to Borrower at its address as shown on
Lender's records at least five (5) days before the date of such disposition.
ARTICLE VII. MISCELLANEOUS
7.1 No Liability on Collateral. It is understood that Lender does not
in any way assume any of Borrower' s obligations under any of the Collateral.
Borrower hereby agrees to indemnify Lender against all liability arising in
connection with or on account of any of the Collateral, except for any such
liabilities arising on account of Lender's gross negligence or willful
misconduct.
7.2 No Waiver. Lender shall not be deemed to have waived any of its
rights hereunder or under any other agreement, instrument or paper signed by
Borrower unless such waiver is in writing and signed by the Lender. No delay or
omission on the part of Lender in exercising any right shall operate as a
waiver of such right or any other right. A waiver on any one occasion shall not
be construed as a bar to or waiver of any right or remedy on any future
occasion.
7.3 Remedies Cumulative. All rights and remedies of Lender shall be
cumulative and may be exercised singularly or concurrently, at its option, and
the exercise or enforcement of any one such right or remedy shall not bar or be
a condition to the exercise or enforcement of any other.
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7.4 Governing Law. The parties hereto acknowledge that the principal
place of business of the Lender is Antigua, West Indies and this Agreement, the
Note, the Loan Agreement, the Registration Rights Agreement to be entered into
by the parties, and each other document executed pursuant hereto shall be
deemed to have been delivered, are to be performed within and shall each be
deemed to be a contact made under, construed and interpreted in accordance with
and governed by the internal laws of the Antigua, West Indies (without
reference to (i) its judicially or statutorily pronounced rules regarding
conflict of law or choice of law; (ii) where any instrument is executed or
delivered; (iii) where performance required by any instrument is made or
required to be made; (iv) where any breach of any provision of any instrument
occurs or any cause of action otherwise accrues; (v) where any action or other
proceeding is instituted or pending; (vi) the nationality, citizenship,
domicile, principal place of business, or jurisdiction, organization or
domestication of any party; (vii) whether the laws of the forum jurisdiction
would otherwise apply the laws of a jurisdiction other than Antigua, West
Indies; or (viii) any combination of the foregoing.
7.5 Expenses. The Borrower agrees to pay the reasonable attorneys'
fees and legal expenses incurred by Lender in the exercise of any right or
remedy available to it under this Security Agreement, whether or not suit is
commenced, including, without limitation, attorneys' fees and legal expenses
incurred in connection with any appeal of a lower court's order or judgment.
7.6 Successors and Assigns. This Security Agreement shall be binding
upon and inure to the benefit of the successors and assigns of Borrower and
Lender.
7.7 Recitals. The above Recitals are true and correct as of the date
hereof and constitute a part of this Security Agreement.
IN WITNESS WHEREOF, Borrower has caused the execution of this Security
Agreement by its duly authorized representative as of the day and the year
first above written.
Bev-Tyme, Inc., a Delaware corporation
By: /s/ Robert Sipper
----------------------------
Its: President
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