-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Gn6eAR5y/uN0pNcoN/1u90nf4OAxcRFFIhNK9V1D7HdTWB5x7kLPdXxAoyly0oVr clwWm3Yg6hysTSvuPmrdCw== /in/edgar/work/0000891020-00-002028/0000891020-00-002028.txt : 20001116 0000891020-00-002028.hdr.sgml : 20001116 ACCESSION NUMBER: 0000891020-00-002028 CONFORMED SUBMISSION TYPE: 10KSB PUBLIC DOCUMENT COUNT: 19 CONFORMED PERIOD OF REPORT: 20000731 FILED AS OF DATE: 20001115 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AQUA VIE BEVERAGE CORP CENTRAL INDEX KEY: 0001068104 STANDARD INDUSTRIAL CLASSIFICATION: [6770 ] IRS NUMBER: 820506425 STATE OF INCORPORATION: DE FISCAL YEAR END: 0731 FILING VALUES: FORM TYPE: 10KSB SEC ACT: SEC FILE NUMBER: 000-24801 FILM NUMBER: 769893 BUSINESS ADDRESS: STREET 1: 333 SOUTH MAIN STREET STREET 2: PO BOX 6759 CITY: KETCHUM STATE: ID ZIP: 83340 BUSINESS PHONE: 2086227792 MAIL ADDRESS: STREET 1: PO BOX 6759 STREET 2: 333 SOUTH MAIN STREET CITY: KETCHUM STATE: ID ZIP: 83340 FORMER COMPANY: FORMER CONFORMED NAME: BARHILL ACQUISITION CORP DATE OF NAME CHANGE: 19980812 10KSB 1 v67130e10ksb.txt FORM 10KSB 1 U.S. SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-KSB (Mark One) [X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended July 31, 2000 [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Transition period from____________________ to _____________________ Commission file number 0-24801 AQUA VIE BEVERAGE CORPORATION (Name of small business issuer in its charter) Delaware 82-056425 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) P.O. Box 6759 333 South Main Street Ketchum, Idaho 83340 - -------------------------------------------------- ----- (Address of principal executive offices) (Zip Code) Issuer's telephone number (208) 622-7792 Securities registered pursuant to Section 12(b) of the Act: Title of each class Name of each exchange on which registered - ---------------------------- ------------------------------------------- - ---------------------------- ------------------------------------------- Securities registered pursuant to Section 12(g) of the act: - -------------------------------------------------------------------------------- (Title of class) - -------------------------------------------------------------------------------- (Title of class) Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] Check if disclosure of delinquent filers in response to Item 405 of regulation S-B is not contained in this form, and incorporated by reference in Part III of this Form 10-KSB or any amendment to this Form 10-KSB ( ) State issuer's revenues for Its most recent fiscal year $151,933 State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was sold, or the average bid and asked price of such common equity, as of a specified date within the past 60 days. On October 31, 2000 the aggregate market value was $10,398,935. Note: If determining whether a person is an affiliate will involve an unreasonable effort and expense, the issuer may calculate the aggregate market value of the common equity held by non-affiliated on the basis of reasonable assumptions, if the assumptions are stated. (ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS) check whether the issuer has filed all documents and reports required to be filed by Section 12, 13, or 5(d) of the Exchange Act after the distribution of securities under a plan confirm by a court. Yes_______No______ (APPLICABLE ONLY TO CORPORATE REGISTRANTS) State the number of shares outstanding of each of issuer's classes of common equity, as of the latest practicable date. 30,247,049 outstanding on October 31, 2000. 2 DOCUMENTS INCORPORATED BY REFERENCE: IF THE FOLLOWING DOCUMENTS ARE INCORPORATED BY REFERENCE, BRIEFLY DESCRIBE THEM AND IDENTIFY THE PART OF THE FORM 10-KSB (e.g., Part I, Part II, etc.) into which the documents incorporated: (1) any annual report to security holders; (2) any proxy or information statement; and (3) any prospectus filed pursuant to Rule 424(b) or (c) of the Securities Act of 1933 ("Securities Act"). The listed documents should be clearly described for identification Transitional Small Business Disclosure Format (Check one): Yes [ ] No [X] PART I ITEM 1. DESCRIPTION OF BUSINESS. Aqua Vie Beverage Corporation, a Delaware Corporation, ("Aqua Vie") was incorporated on July 29, 1998 and was initially a wholly owned subsidiary of BEVA ("BEVA") Corporation, which had been incorporated in Delaware in 1990. A merger procedure under Section 251(g) of the Delaware Corporate Code in October 1998 resulted in Aqua Vie becoming the parent, and BEVA becoming the wholly owned subsidiary, with the former shareholders of BEVA becoming by action of law the shareholders of Aqua Vie. BEVA retained certain assets it had prior to this procedure, but is now inactive. BEVA had been originally acquired in a Chapter 11 Bankruptcy proceeding. BARHILL EXCHANGE: Pursuant to an agreement and plan of merger dated August 31, 1999 between Barhill Acquisition Corporation (Barhill), a Delaware corporation, and Aqua Vie Beverage Corporation, all outstanding shares of common stock of Barhill were exchanged for 250,000 shares of common stock of Aqua Vie in a transaction in which Aqua Vie was the surviving company. Barhill had no assets, liabilities, or history of operations. This transaction is more fully described in Form 8-K/A dated October 28, 1999. BUSINESS OF ISSUER: PRODUCTS: Aqua Vie Beverage Corporation develops, manufactures, and markets new all-natural beverages. The Company has developed a new category of beverages called "water beverages", that includes Hydrators(TM), a line of spring water beverages that encourages personal hydration, "Eau Vin"(TM) a line of non-alcoholic wines and champagne made from spring water, and PurePlay(TM) a line of spring water beverages for children. Aqua Vie has in development and/or test markets Aqua Vie Smoothies, the "E" line of naturally fortified spring water beverages, and Aquaceuticals(TM) a line of nutraceutical made from spring water. 3 PROCESS: Aqua Vie presently enters into long term contracts with specialized beverage co-packing companies, to produce all of its product lines, utilizing a bottling filler technology that provides for all-natural beverage ingredients to be bottled in Polyethylene Terephthlate (PET) plastic bottles, a universally accepted container/vehicle for bottled water. This state-of-the-art aseptic filling technology protects the desired attributes of the all-natural ingredients, resulting in the exclusive, all-natural product lines that have been developed by Aqua Vie. Spring water is cold filtered with micron filtration so fine that it can remove bacteria from water, and is then combined with crystalline fructose, and all-natural flavors and fragrances that undergo the same filtration process. No artificial ingredients or preservatives are used, and the entire process is reviewed for Kosher certification. The products are then aseptically bottled into distinctive shrink wrapped PET plastic bottles. They are sealed for freshness, capped with a sports cap and then sealed with a tamper-proof outer seal. Although a more expensive process than non-aseptic bottling, aseptic PET bottling provides for the complete sterilization of a PET bottle and its contents. Pasteurization, hot-fill, and processes that utilize preservatives, destroy a substantial amount of the natural attributes of fruits and beverages during the bottling process such as color, taste, and aroma, as well as many of the nutritional elements of these beverages including vitamins, minerals, and herbs. Aqua Vie's PET aseptic process retains nutrition thereby enhancing natural nutrients as well as herbal additives. When Aqua Vie's aseptic research began, there was one aseptic/PET beta test site in the United States capable of processing Aqua Vie's new "water beverages", which Aqua Vie employed as its first domestic co-packer. This year numerous PET/aseptic production facilities are starting up in the US and Europe with equipment manufactured primarily by two different manufacturing companies. Aqua Vie has designed all facets of the retail packaging systems for its product lines to accommodate high-speed production in bottling facilities in the U. S. as well as Europe, for both a co-packer and company owned equipment. Aqua Vie was the first company to introduce the use of a poly-shrink, full-body label on a PET plastic bottle, and in doing so created a system that can be applied by readily available commercial labelers onto a consumer-acceptable, generic PET bottle. 4 Aqua Vie has developed a comprehensive quality assurance system and manual for use by the bottlers. The bottlers are required to adhere to the quality assurance manual as part of their bottling contract. The strict adherence to the manual helps assure product quality. Aqua Vie has a total of 16 employees, consultants and sales agents. Seven are on staff at corporate headquarters and nine are working in sales throughout the United States. The Company also utilizes an extensive consulting network of 11 persons, in a variety of beverage disciplines. DISTRIBUTION OF THE PRODUCT: The Company is negotiating with distributors focusing primarily on retail and food services distribution across the southern half of the U. S., and several population centers in the Northeast. As a result Aqua Vie is now represented in several top US markets including New York City, Philadelphia, Miami/Fort Lauderdale, Houston, Dallas-Fort Worth, Oklahoma City, Sacramento, Los Angeles, San Diego, and San Francisco. The Company has also carried out consumer tests in Saudi Arabia, Europe, and China as a part of initiating a co-packing arrangement in France. Aqua Vie offers information about its products and a product purchasing and subscription service on its Internet site. AQUA VIE'S PLACE IN THE MARKET: Aqua Vie Hydrators bridge two primary market categories in the beverage industry: soft drinks and bottled water. Standard & Poor's Foods & Nonalcoholic Beverages Industry Survey, May 2000, reports, "U.S. retail sales of the five major nonalcoholic refreshment beverage categories totaled approximately $81.7 billion in 1998 (latest available), up 2.8% from 1997's level, according to Beverage World magazine. These categories are soft drinks ($54.3 billion), fruit beverages ($17.5 billion), bottled water ($5.2 billion), ready-to-drink tea ($2.5 billion), and sports drinks ($2.3 billion)." Aqua Vie intends to enter the market with its unique packaging and product to establish a new market segment for flavored water that does not use preservatives or artificial sweeteners. GOVERNMENT APPROVAL: Other than normal corporate registration and licensing the Company does not need any additional and/or unique government license or permit. The food and beverage industries are highly regulated and subject to many federal and state government rules, regulations and oversight but compliance is part of the service furnished by the bottler under the bottling production contract. As to any future possible government regulations it is believed that if any are ever imposed that they will be broad market pervasive and of general application to all members of the beverage industry. ITEM 2. DESCRIPTION OF PROPERTY. Aqua Vie leases approximately 3,800 square feet of office space in Ketchum, Idaho for it's corporate headquarters. The lease runs to November 15, 2001 with an option to extend for one three year period. Aqua Vie contracts with co-packers in California and France to produce its product. 5 ITEM 3. LEGAL PROCEEDINGS. None ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. None PART II ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS. Aqua Vie's common stock is traded in the over-the counter market and prices are quoted on the NASDAQ Bulletin Board. The quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission, and may not represent actual transactions. Year Ended July 31, 1999 High Low - ------------------------------------------------------ First quarter 1.72 1.02 Second quarter 1.25 0.13 Third quarter 1.13 0.14 Fourth quarter 1.94 0.59 Year Ended July 31, 2000 High Low - ------------------------------------------------------ First quarter 1.22 0.39 Second quarter 1.91 0.33 Third quarter 1.91 0.63 Fourth quarter 0.88 0.47 There is one class of common stock and approximately 700 shareholders plus an estimated 10,000 beneficial holders in street name. ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION Matters discussed herein, contain forward-looking statements that involve risk and uncertainties. This is particularly true as it relates to comments about the development and funding of Aqua Vie's future production capability, expectations about profitability, and new product introduction. Results may differ significantly from results indicated by forward-looking statements. Factors that might cause some differences, include, but are not limited to: (1) Changes in general economic conditions, including but not limited to increases in interest rates; (2) Government regulations affecting customers and the packaging process for company products; (3) The potential for product recall; (4) While Aqua Vie is not aware of products quite like theirs there are many similar products competing for shelf space and market share in the bottled water industry; (5) The ability of Aqua Vie to successfully bring new products from their development stage into full and profitable production and sales; (6) Aqua Vie's ability to raise sufficient debt and/or equity capital to perfect its business plans; (7) The occurrences of incidents that could subject Aqua Vie to liability or fines; (8) The ability of Aqua Vie to attract the needed network of dealers and distributors, and secure the shelf space in stores necessary to achieve sales forecasts; (9) Until Aqua Vie is able to build and control its own production facilities Aqua Vie could face difficulties maintaining a suitable relationship with co-packers. 6 PLAN OF OPERATION: During the last year Aqua Vie continued establishing a market presence for its line of Hydrators, lightly flavored spring water beverages. Aqua Vie is in the process of introducing products in more states using distributors and growing revenue. Aqua Vie's bringing product to the market using aseptic filler technology is believed by management to be one feature that has set Aqua Vie apart from the rest of the industry. At present a small portion of Aqua Vie's revenue comes from Internet sales that Aqua Vie believes will have an important part of future revenue. To date the multi-state distributor network is producing revenue at an annualized rate of about 2.5 million dollars a year. Aqua Vie's current capitalization is not sufficient to meet the sudden growth in orders and apparent market acceptance; Aqua Vie is seeking up to $20 million refinancing. Given Aqua Vie's present relationship with co-packers and the present cost structure, adequate levels of profitability may be achieved in a timely fashion. Aqua Vie is negotiating lower packing fees with several new aseptic filler co-packers, which promise more profitable operations, however, meaningful improvements in operating profits are available by gaining control of production facilities with new financing. The immediate solution to profitability in this early growth rests with Aqua Vie obtaining the ability to purchase its own aseptic fillers resulting in a significant reduction in cost and obtaining scheduling control of production runs. In the forthcoming year Aqua Vie expects to improve margins by introducing new products that management believes will support higher gross margins in today's competitive market environment. The first to be introduced will be a non-alcoholic wine made from spring water. It will be a multi flavor line of beverages designed to satisfy the desire for a wine or champagne taste without the presence of alcohol or preservatives as a 7 component of the beverage. That will be followed by a line of Hydrators for children. The third area of new products will be a new fresh fruit smoothie drink management believes is superior to anything now on the market. Aqua Vie's product line contains no patented or patentable features or components. The emphasis will be on copyrighting, trade marking and the use of trade secret formulations. Aqua Vie is instituting non-disclosure/non-compete agreements with employees, suppliers and bottlers. At present the company has not issued any licenses, franchises, concessions, royalty agreements or labor contracts though future development may include such actions as part of the corporate strategy. As mentioned above, Aqua Vie offers information about its products and a subscription service on its Internet site. Management intends to expand and develop marketing of Aqua Vie beverages through the Internet. LIQUIDITY AND CAPITAL RESOURCES: Aqua Vie seeks up to $20 million in new capital to finance receivables, introduce new product lines, purchase equipment and provide working capital in the early stages to implement its expansion program. The new investment sought will allow the Company to meet demand and grow from its current projected annual volume of about 700,000 cases to over 50 million cases by the third year hence. With Aqua Vie undercapitalized for the rapid growth in sales it is suddenly experiencing, it is dependent on stock sales and loans to continue delivering product. In the year ended July 31, 1998 Aqua Vie sold stock for $182,750 and borrowed $144,000. In the year ended July 31, 1999 Aqua Vie sold stock for $1,025,849, increased borrowing by $260,000, and received loans from an officer of $42,416. In the year just ended July 31, 2000 Aqua Vie sold stock for $936,525, increased borrowing by $345,000, and received loans from an officer of $404,105. RESULTS OF OPERATIONS: Aqua Vie began building its multi-state distributor network and began obtaining shelf space in retail stores during the year just ended and as a result received its first meaningful revenue from sales during the year of $151,924. While establishing testing standards, and quality assurance procedures for the Aqua Vie Quality Assurance Production System and Manual, the company internally utilized approximately 24,000 cases of Hydrators. During the new product introductory phase, numerous cases were also distributed in lieu of slotting expenses, which resulted in a negative gross profit of $80,434. These expenses are currently generating a projected annual sales revenue of $2.5 million. General and administrative, legal and accounting expenses increased significantly to accommodate the introduction of Aqua Vie Hydrators and the development of its rapidly growing distributor network. 8 ITEM 7. FINANCIAL STATEMENTS INDEPENDENT AUDITOR'S REPORT The Board of Directors Aqua Vie Beverage Corporation Ketchum, ID I have audited the accompanying consolidated balance sheets of Aqua Vie Beverage Corporation as of July 31, 2000, and the consolidated related statements of operations, stockholders' deficit, and cash flows for the years ended July 31, 2000 and 1999. These financial statements are the responsibility of the Company's management. My responsibility is to express an opinion on these financial statements based on my audit. I conducted my audit in accordance with generally accepted auditing standards. Those standards require that I plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. I believe that my audit provides a reasonable basis for my opinion. In my opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Aqua Vie Beverage Corporation as of July 31, 2000, and the results of its operations and its cash flows for the years ended July 31, 2000 and 1999, in conformity with generally accepted accounting principles. The accompanying financial statements have been prepared assuming that Aqua Vie Beverage Corporation will continue as a going concern. The Company's negative working capital and recurring losses raise substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 1 to the financial statements. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. W. Alan Jorgensen Certified Public Accountant September 26, 2000 Seattle, Washington 9 AQUA VIE BEVERAGE CORPORATION. CONSOLIDATED BALANCE SHEET JULY 31, 2000 ASSETS CURRENT ASSETS Cash and cash equivalents $ 11,127 Accounts receivable 25,238 Inventory 249,790 Prepaid and other assets 93,476 ------------ Total current assets 379,631 Equipment & Property (net of $24,847 accumulated depreciation) 127,489 Intangibles (net of $19,500 accumulated amortization) 78,000 TOTAL ASSETS $ 585,120 ============ LIABILITIES AND STOCKHOLDERS' DEFICIT CURRENT LIABILITIES Accounts payable $ 154,621 Notes payable 792,000 Accrued expenses 467,564 Loan from related party 353,600 ------------ Total current liabilities 1,767,785 Long Term Debt 18,362 ------------ TOTAL LIABILITIES 1,786,147 Commitments and Contingencies STOCKHOLDERS' DEFICIT Preferred stock: $0.001 par value (authorized), issued and outstanding: Series A (200,000), outstanding: 2,557 shares 3 Series B (200,000), outstanding: 4,653 shares 4 Series C (10,000), outstanding: 200 shares 2 Common stock: 120,000,000 shares, $0.001 par, authorized Issued and outstanding: 30,811,408 30,811 Additional paid in capital 2,422,234 Deficit accumulated (3,654,081)
10 ---------- TOTAL STOCKHOLDERS DEFICIT (1,201,027) ---------- TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $ 585,120 ==========
The accompanying notes are an integral part of these financial statements AQUA VIE BEVERAGE CORPORATION. CONSOLIDATED STATEMENTS OF OPERATIONS
JULY 31, JULY 31, 2000 1999 ------------ ------------ REVENUES $ 151,924 $ 16,433 Cost of Goods Sold 232,358 -- ------------ ------------ Gross profit (loss) (80,434) 16,433 ------------ ------------ EXPENSES Promotion and Advertising 578,359 755,583 General and administrative 715,770 594,723 Legal and accounting 360,923 193,594 Depreciation and Amortization 34,597 9,750 ------------ ------------ TOTAL EXPENSES 1,689,649 1,553,650 Loss from operations (1,770,083) (1,537,217) ------------ ------------ Oter Income (Expense) Interest Expense (77,139) (34,560) ------------ ------------ Net loss $ (1,847,222) $ (1,571,777) ============ ============ Basic and primary loss per common share $ (0.07) $ (0.11) Weighted average number of common shares outstanding: 25,649,677 14,044,036
The accompanying notes are an integral part of these financial statements 11 AQUA VIE BEVERAGE CORPORATION. CONSOLIDATED STATEMENT OF CASH FLOWS
YEAR ENDED YEAR ENDED JULY 31, 2000 JULY 31, 1999 ------------- ------------- OPERATING ACTIVITIES Net loss $(1,847,222) $(1,571,777) Adjustments to reconcile net loss to cash used by operating activities: Compensatory stock grants 81,475 Depreciation and amortization 34,597 9,750 Notes payable for compensation 115,000 Changes in operating assets and liabilities: Accrued compensation 240,000 180,000 Accounts receivable (25,238) Inventory (249,790) Accounts payable (114,382) 242,055 Accrued expenses 183,262 44,302 Prepaid expenses (62,707) (136,183) ----------- ----------- Net cash used by operating activities (1,645,005) (1,231,853) INVESTING ACTIVITIES Purchases of equipment (56,796) (74,541) ----------- ----------- Net cash used by investing activities (56,796) (74,541) FINANCING ACTIVITIES Proceeds from sale of common stock 836,525 1,025,849 Proceeds from sale of preferred stock 100,000 Proceeds from notes payable 345,000 260,000 Advances from shareholder 404,105 42,416 ----------- ----------- Net cash provided by financing activities 1,685,630 1,328,265 ----------- ----------- (Decrease) Increase in cash (16,171) 21,871 Beginning of period 27,298 5,427 ----------- ----------- CASH AND CASH EQUIVALENTS END OF YEAR $ 11,127 $ 27,298 =========== =========== Corporate income taxes paid $ -- $ -- Interest paid $ -- $ -- SUPPLEMENTAL SCHEDULE OF NON-CASH TRANSACTIONS Common shares issued for notes $ 128,638 Common shares issued for services $ 81,475 $ 9 Preferred shares issued for assets $ 97,500 Notes payable for current payables for compensation $ 115,000 Shares issued for retainer $ 20,000 Equipment purchased for long term debt $ 21,000
The accompanying notes are an integral part of these financial statements 12 AQUA VIE BEVERAGE CORPORATION CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIT
SERIES A PREFERRED SERIES B PREFERRED SERIES C PREFERRED --------------------- ------------------- ---------------------- Share Amt Share Amt Share Amt ------- ------- ------- ----- ----- ----- BALANCES AT JULY 31, 1998 -- $ -- -- $ -- -- $ -- Issued for cash Issued for assets 1,496 2 Issued to founders 4,343 4 3,491 3 Conversion preferred to common (446) -- Net Loss for year ended July 31, 1999 ------- ------- ------- ----- --- ------ Balances at July 31, 1999 3,897 4 4,987 5 -- -- ------- ------- ------- ----- --- ------ Shares issued for cash Preferred for cash 200 -- Shares issued for services Shares issued for notes payable Converted to common (1,340) (1) Converted to common (334) (1) Net Loss for year ended July 31, 2000 ------- ------- ------- ----- --- ------ Balances at July 31, 2000 2,557 $ 3 4,653 $ 4 200 -- ======= ======= ======= ===== === ======
COMMON STOCK PAID-IN CAPITAL NOTE REC. ACCUM. DEFICIT TOTALS --------------------------- --------------- ----------- -------------- ----------- Share Amt Amt ----------- ---------- --------------- BALANCES AT JULY 31, 1998 2,458,007 $ 2,458 $ 190,292 $ (10,000) $ (235,082) $ (52,332) Issued for cash 18,699,509 18,699 1,007,142 1,025,841 Issued for assets 97,498 97,500 Issued to founders 7 Conversion preferred to common 807,141 807 (807) Net Loss for year ended (1,571,777) (1,571,777) July 31, 1999 ----------- ---------- ----------- ----------- ----------- ----------- Balances at July 31, 1999 21,964,657 21,964 1,294,125 (10,000) (1,806,859) (500,760) ----------- ---------- ----------- ----------- ----------- ----------- Shares issued for cash 2,596,000 2,596 833,928 836,524 Preferred for cash 100,000 100,000 Shares issued for services 2,703,500 2,704 68,772 10,000 81,475 Shares issued for notes payable 322,400 322 128,638 128,960 Converted to common 2,580,851 2,581 (2,582) (1) Converted to common 644,000 644 (645) (2) Net Loss for year ended (1,847,222) (1,847,222) July 31, 2000 ----------- ---------- ----------- ----------- ----------- ----------- Balances at July 31, 2000 30,811,408 $ 30,811 $ 2,422,235 $ -- $(3,654,081) $(1,201,027) =========== ========== =========== =========== =========== ===========
The accompanying notes are an integral part of these financial statements 13 AQUA VIE BEVERAGE CORPORATION NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS July 31, 2000 NOTE 1 ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES ORGANIZATION Aqua Vie Beverage Corporation was incorporated on July 31, 1998 in the state of Delaware. The Company's principal assets, acquired through a bankruptcy court ordered liquidation of the predecessor, included, among other things, the trade name, beverage formulae and the public company status. These assets were acquired by the issuance of Series B preferred stock. The Company's business activities have been financed primarily through the issuance of equity securities, outside loans, and loans from officers and shareholders. The Company's principal products include low calorie, all natural, non-preservative, lightly flavored bottled water. Management plans and believes its products will be marketed nationally and internationally. GOING CONCERN The Company's ability to continue and become a going concern is dependent upon its success in improving gross profits and improving operational efficiencies, continuing to establish distributors and markets for its primary developed and market tested product line, and acquiring adequate financing. Management's plans include expenditures for advertising, inventory production and establishing a distribution network. Management expects to finance its initial operations through borrowings, and private and public offerings of the Company's equity securities. USE OF ESTIMATES The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. CASH AND CASH EQUIVALENTS The Company considers, and the financial statements reflect, all highly liquid short-term investments with original maturity of three months or less as cash. DEPRECIATION AND AMORTIZATION Equipment is depreciated over the estimated useful life of three years using the straight-line method. A full year of depreciation is taken for equipment acquired in the first half of the year and no depreciation is taken for equipment acquired in the second half of the year. Depreciation expense for the fiscal years ended July 31, 2000 and 1999, was $24,847, and $0, respectively. Intangible assets are amortized over 10 years. Amortization expense was $9,750 for each fiscal year ended July 31, 2000 and 1999. SLOTTING FEES The Company pays slotting or shelving fees to retailers. These cost are deferred and amortized over the expected retail life of the product, currently 10 years. Slotting fees paid during fiscal 2000 were $42,500 and covered two months. Amortization of slotting fees for the fiscal year ended July 31, 2000 was $700. COST OF ISSUING COMMON STOCK The Company accounts for the cost incurred in connection with offering securities as a reduction in paid-in capital. INCOME TAXES Deferred income tax assets and liabilities are computed for differences between the financial statement and tax basis of assets and liabilities that will result in taxable or deductible amounts in the future based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances have been established to reduce tax assets to the amount expected to be realized. Income tax expense is the tax payable or refundable for the period plus or minus the change during the period in net deferred tax assets and liabilities. 14 AQUA VIE BEVERAGE CORPORATION NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS July 31, 2000 NET LOSS PER COMMON SHARE Net loss per common share is computed based on the weighted average number of common shares and common share equivalents outstanding. When dilutive, stock options and other potentially dilutive securities are included as common share equivalents using the treasury stock method. There was no difference between basic and fully diluted earnings per share for all periods presented. CONSOLIDATION The Company's accounting policy in consolidating its sole subsidiary is to eliminate all intercompany transactions. NOTE 2 INVENTORY Inventory is valued on a FIFO basis at the lower of cost or market. There was no beginning inventory. Ending inventory consisted only of finished goods amounting to $249,790. Inventory purchased during fiscal 2000 was $482,148. NOTE 3 EQUIPMENT AND PROPERTY Equipment and property at July 31, 2000 consisted of the following:
Accumulated Net Equip Equipment Property Depreciation and Property --------- -------- ------------ ------------ Beginning $74,541 $ -- $(24,847) $ 49,694 Additions 24,818 52,978 77,796 ------- ------- -------- -------- Ending $99,359 $52,978 $(24,847) $127,490 ======= ======= ======== ========
The Company is in the process of acquiring a trade booth to be used in the promotion of it products. At July 31, 2000, the trade booth was about 50% complete. This asset has not been put into use and no depreciation has been recorded. NOTE 4 NET OPERATING LOSS CARRYFORWARD The Company acquired, as part of the assets purchased in the bankruptcy liquidation sale, the predecessor company's net operating loss carryforward (NOL) in the approximate amount of $15 million. A valuation allowance has been established so that no value is reflected at the balance sheet dates for any deferred tax benefit. The value, if any, of the NOL will depend upon a number of unknowns, including, among others, attaining profitable operations and other tax law issues related to the acquisition of the NOL from the Company's predecessor. The aggregate net operating loss carryforwards for federal income tax purposes, which are available to offset future taxable income, expire beginning in 2001. NOTE 5 STOCK BASED COMPENSATION Financial Accounting Standards No. 123 (SFAS 123) addresses the accounting for stock-based compensation arrangements. SFAS 123 permits a company to choose either a new fair-value-based method or the APB Opinion 25 intrinsic-value-based method of accounting for stock-option-based compensation arrangements. Management will continue to record stock-based compensation using APB Opinion 25 intrinsic-value-based method. The pro forma effect on the income statement if the Company had adopted the SFAS 123 fair-value-based method to account for stock-based compensation arrangements would have been to increase net loss by an estimated $250,000, and a nominal amount, for fiscal years ended July 31, 2000 and 1999, respectively. During fiscal 2000 and 1999 there were no options issued to purchase shares of restricted rule 144 stock. 15 AQUA VIE BEVERAGE CORPORATION NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS JULY 31, 2000 NOTE 6 RELATED PARTY TRANSACTIONS A legal dispute with former bankruptcy legal counsel who was engaged in the attempt to reorganize the predecessor corporation concerning their legal fees has been settled. The $80,000 costs of settling the suit have been included in general and administrative expenses. NOTES RECEIVABLE FROM STOCKHOLDERS The Company has issued common shares in return for a note receivable from a stockholder. This note receivable had been accounted for as a reduction of stockholders' equity. The obligor has satisfied receivable providing services valued by the Company at $10,000, the amount of the note. ADVANCES TO OFFICER From time to time the Company borrows money from its CEO, Mr. Thomas Gillespie, and at other times lends money to the CEO. At July 31, 2000, $353,600 was owed to the CEO under this arrangement. At July 31, 1999, $50,505 was due from the CEO. These amounts are payable (due) on demand and carry no interest rate. NOTE 7 COMMON STOCK WARRANTS TO PURCHASE COMMONS SHARES At July 31, 2000 there were warrants outstanding to purchase the 422,800 shares of the Company's common stock at prices and expirations dates indicated below. There were no warrants exercised during the year.
Number Common Common Date Expiration Price of Shares per shares Issued Date per share Warrants Warrant Issuable -------- ---------- --------- -------- ---------- -------- Beginning of year 10/14/98 10/14/99 $1.50 36 4,800 172,800 10/14/98 10/14/00 $2.50 36 4,800 172,800 ------- Totals July 31, 2000 345,600 During fiscal 2000 Warrants issued 8/31/00 8/31/04 $1.00 1 250,000 250,000 Warrants expired 10/14/98 10/14/99 $1.50 (36) (4,800) (172,800) -------- End of year (7/31/00) 10/14/98 10/14/99 $2.50 36 4,800 172,800 8/31/00 8/31/04 $1.00 1 250,000 250,000 ------- Total warrants outstanding at July 31, 2000 422,800 =======
Subsequent to July 31, 2000, 850,000 additional shares of common stock have been issued in a private transaction in exchange for a convertible note payable in the amount of $340,000. 16 AQUA VIE BEVERAGE CORPORATION NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS JULY 31, 2000 MERGER -- RECAPITALIZATION On August 31, 1999, the Company acquired by merger the Barhill Acquisition Corporation ("Barhill") and elected to adopt their successor SEC reporting status. The Company paid the transaction costs of acquisition and initial filing in the amount of $100,000, and issued 250,000 common shares and warrants to purchase 250,000 shares (with an aggregate value of $25,000) to the shareholders of Barhill. Barhill had only nominal assets and liabilities and no operations. The only effect of this merger was that the authorized common stock of the Company was increased from 50,000,000 to 120,000,000 common shares, and the fiscal year end of the Company was changed to July 31. The Company has recorded $125,000 of general and administrative expenses to reflect this transaction. NOTE 8 PREFERRED STOCK The Board of Directors has the authority, without further stockholder action, to determine the preferences, limitations, and relative rights of the preferred stock, subject to the requirements on the Delaware Business Corporation Act. The Company has authorized issued and outstanding Series A, B and C Preferred shares. PREFERRED SERIES A, B AND C STOCK TERMS SUMMARY GENERAL TERMS: All Preferred Series A, B and C contain standard terms relative to adjustment for stock splits and combinations, reorganizations, mergers, and consolidations or sales of assets, registration of stock issued upon conversion, and registration rights. For dividend, liquidation, mergers and consolidations the respective rights of each series are different. 1. Right to preferential dividends before common; 2. Liquidation rights of each preferred share before common; and 3. Merger, consolidation right of each preferred share before common. For these preferences over common stock, the Series A is limited to $300 per share, Series B is limited to $6 per share, and Series C is limited to $0.25 per share. VOTING RIGHTS All Series A and C Preferred shares have the right to vote based on their conversion rights to common shares. CONVERSION FEATURES All Series A, B and C Preferred shares outstanding have the right to convert per their conversion provisions subject to authorized common stock being available. The Company can elect to convert all preferred under certain stated limited events occurring. Holders of Preferred Series A and B shares have the right to: 1. Convert 5% of their shares to common stock after holding 12 months, which was October 14, 1999 (and which conversion has been affected). 2. Convert an additional 10% of their shares to common stock after holding 24 months, which is as of October 14, 2000. 3. Convert all of their shares to common stock held after holding 36 months, which is as of October 14, 2001 The Series Preferred C has the right to convert after 180 days from the date of issue. CONVERSION TO COMMON SHARES Conversion to shares of common stock and common stock equivalent voting rights as of July 31, 2000 are as follows. The Series B Preferred is entitled to a vote on all shareholder matters equal to 6,000 Common Shares or the adjusted conversion amount if greater. 17 AQUA VIE BEVERAGE CORPORATION NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS JULY 31,2000
Preferred Common Shares Voting Right Preferred Shares Conversion Issuable on Ratio of Equivalent Outstanding Ratio Conversion Preferred Voting Rights ----------- ---------- ------------- ------------ ------------- Series A Preferred 2,557 2,166 5,538,462 2,166 5,538,462 Series B Preferred 4,653 2,166 10,078,398 6,000 27,918,000 Series C Preferred 200 1,000 200,000 1,000 200,000 ---------- ---------- 15,816,860 33,656,462 ========== ==========
The Series B Preferred provides that each share is entitled to an additional conversion share to common based on a formula that reflects increased market value of the common stock when the common shares have a market price in excess of $2 but not greater than $12 per share. All Preferred Series A, B and C have a basic conversion rate of 1,000 shares of common stock for every share of preferred. The conversion ratio to common for Series A & B is adjusted upward depending on any future issue of common shares at below $1.65 per share. The conversion rates were 1:2,166 and 1:1,925, preferred to common as of July 31, 2000, and July 31, 1999, respectively. NOTE 9 NOTES PAYABLE Notes payable at July 31, 2000 consisted of the following:
Principal Interest Due Amount Rate Date --------- -------- --------- $340,000 8% 7/27/2002 155,000 8% 9/1/2001 60,000 24% 9/25/1998 237,000 8% 3/15/2000 -------- Total $792,000
Two convertible debentures totaling $155,000, carrying 8% per annum interest, and convertible into one share of common stock for $0.80 of debt (193,750 shares of common stock). Also, subsequent to year-end, the note for $340,000 was exchanged for 850,000 shares of common stock ($0.40). NOTE 10 INCOME TAXES Deferred tax assets primarily consist of net operating loss carry forwards as the Company has not generated taxable income since inception. There are no significant deferred tax liabilities. A valuation allowance has been established to reduce the deferred tax assets to zero as a result of the Company and its recurring losses. Differences between the cumulative net loss for financial reporting purposes and that available for income tax purposes arise primarily as a result of nondeductible expenditures paid by the issuance of securities and capitalized start up costs. NOTE 11 FAIR VALUE OF FINANCIAL INSTRUMENTS The Company's financial instruments include cash, receivables, accounts payable, notes payable and receivables from stockholders and related parties. Except for notes receivable from stockholders and loans from stockholders, the Company believes that the fair value of these financial instruments approximates their carrying amounts based on current market indicators, such as prevailing market rates. It is not practicable to estimate the fair value of notes receivable from stockholders and loans from stockholders, due primarily to the uncertainty surrounding the timing of cash flows. NOTE 12 COMMITMENTS AND CONTINGENCIES OFFICER'S SALARY The Company has agreed to pay its CEO a salary of $20,000 per month. As of July 31, 2000, $420,000 has been accrued for this commitment. 18 AQUA VIE BEVERAGE CORPORATION NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS JULY 31,2000 OFFICE LEASE The Company maintains its administrative offices in Ketchum, Idaho under an annual lease of $7,833 per month for approximately 3,776 square feet. The term of the lease expires November 2001 with an option to renew for three years. The CEO has personally guaranteed this lease. Minimum lease payments for fiscal 2000 total $93,996, and will total $86,163 through November 1, 2001. EQUIPMENT LEASES The Company leases two autos and is making payments for debt incurred to buy a third automobile. The leases on the automobiles are for five years. The minimum lease payments remaining for the automobiles are: Minimum Payments Due
Year Ended Auto Long-Term July 31, Leases Date Totals -------- ------- --------- ------- 2001 $13,554 $5,424 $18,978 2002 $13,554 $5,424 $18,978 2003 $13,554 $5,425 $18,978 2004 $11,295 $5,424 $16,819 2005 $11,295 $5,424 $16,819
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE. None PART III ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
Name Age Position - ---- --- -------- Thomas Gillespie 53 President, Director
Thomas Gillespie is the founder of Aqua Vie Beverage Corporation and has served as president and director since its original formation in 1991. From 1986 to 1991, Mr. Gillespie was the principal of Kauai Water Company, Kauai, Hawaii. Prior to 1986, Mr. Gillespie founded and served as president of Marketing Design, a retail package design and product development company. Since 1996, Mr. Gillespie has owned Aqua Vie Advance Corporation. From 1991 to 1997, Mr. Gillespie served in various positions with Aqua Vie Beverage Corporation, the predecessor corporation to the Aqua Vie subsidiary BEVA Corporation. Thomas Gillespie was president and founder of Aqua Vie Beverage Corporation (BEVA) when it was subjected to an involuntary Chapter 11 Bankruptcy petition in January 1995 as part of a hostile takeover attempt of the company by an outsider. All of the assets associated therewith were transferred by court order in December 1997, which provided for a continuing corporate existence. Series B Preferred shares were issued as a consequence of this transfer. ITEM 10. EXECUTIVE COMPENSATION Thomas Gillespie has accrued pay of $240,000. No compensation was paid out to him. Mr. Gillespie was granted 700,000 restricted shares pursuant to rule 701, as a benefit for minimal consideration, in August 1999. Subsequent to the end of the fiscal year, Mr. Gillespie was granted 600,000 registered common shares as a benefit for minimal consideration pursuant to Form S-8. 19 ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
Amount and Title of class Name and address of beneficial owner nature of Percent of beneficial owner class Common Stock Thomas J. Gillespie, 333 S Maine St #201, Ketchum, ID 83340 586,644.00 1.94% Series A preferred Bruce Butcher, 1001 4th Ave Plaza Bldg #3827, Seattle, WA 98154 910.90 35.63% Common Stock Series A preferred Valerie Gillespie, P.O. Box 4815, Ketchum, Idaho 83340 380.00 14.86% Common Stock Series A preferred Roy Schneiderman, 20 Woodbridge Ave, Buffalo, NY 14225 141.00 5.51% Common Stock Series A preferred Joseph J. Wozniak, 15404 20th SW, Burien, WA 98166 1,124.82 43.99% Common Stock Series C Preferred Eddwin M. Hamlin Sr., 1591 Gold Hills Dr., Redding, CA 96003 200.00 100.00% Series B Preferred Brace Foundation Trust, C/O Bruce Butcher 4,652.85 100.00% Common Stock CEDE, P.O. Box 20, Bowling Green Station, NY, NY 10274 16,046,623.00 53.05% Common Stock Directors and executive officers as a group 586,644.00 1.94%
Thomas Gillespie, President, his wife, Marie, and his four children are the named beneficiaries of the Brace Trust, without designated remainder interest, and T. Gillespie, father of Thomas Gillespie is a designated remainder holder of 30% of the Trust. All voting rights of Trust shares, which constitute a majority of all voting shares (see Exhibits), have been granted to Thomas Gillespie by irrevocable proxy (see Exhibits). ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS. None other than as noted in Note 6 of the Notes to the Consolidated Financial Statements. ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K No reports on Form 8-K were filed since the third quarter. Aqua Vie Beverage Corporation FORM 10KSB Exhibit List 2.1 Certificate of Merger "-S" into BEVA Oct 15, 1998 2.2 Barhill Agreement Aug 31, 1999 2.3 Certificate of Merger-Barhill Aug 31, 1999 2.4 251 G Merger Agreement "-S"/BEVA Oct 14, 1998 3.1 Certificate of Incorporation "-H" July 29, 1998 3.2 Certificate of Amend 1:5 Reverse Nov 10, 1998 3.3 Certificate of Amend B Pfd Ratchet Aug 31, 1999 3.4 Certificate of Amend Conversion Ratio Nov 4, 1998 3.5 Bylaws 4.1 Designation Series A "-H" Oct 8, 1998 4.2 Designation Series B "-H" Oct 8, 1998 4.3 Designation Series C "-H" Oct 8, 1998 9.1 Irrevocable Voting Proxy Oct 14, 1998 10.1 Convertible Note $80K/Wozniak Mar 1, 2000 10.2 Convertible Note $75k/Butcher Mar 1, 2000 10.3 TPG Capital Agreement Aug 31, 1999 10.4 Manufacturing Agreement
20 SIGNATURES In accordance with Section13 or 15(d) of the Exchange Act, the registrant causes this report to be signed on its behalf by the undersigned, thereunto duly authorized. Aqua Vie Beverage Corp. (Registrant) Date 11-13-00 By /s/ Thomas J. Gillespie -------- -------------------------- Thomas J. Gillespie, CEO and President Signature Title Date /s/ Thomas J. Gillespie 11-13-00 - ----------------------- ------------------------ -------- Thomas J. Gillespie CEO, President, Director EX-2.1 2 v67130ex2-1.txt EXHIBIT 2.1 1 AMENDED CERTIFICATE OF MERGER AQUA VIE BEVERAGE CORPORATION-S a Delaware Corporation INTO AQUA VIE BEVERAGE CORPORATION a Delaware Corporation It is hereby certified that: 1. The constituent business corporations participating in the merger herein certified are: a. Aqua Vie Beverage Corporation, which is incorporated under the laws of the State of Delaware; b. Aqua Vie Beverage Corporation-S, which is also incorporated under the laws of the State of Delaware, is an indirect wholly owned subsidiary of the above constituent corporation. 2. Aqua Vie Beverage Corporation-H, which is also incorporated under the laws of the State of Delaware, is a direct wholly owned subsidiary of the above constituent corporation, and is a party to this merger agreement. 3. An Agreement and Plan of Merger has been approved, adopted, certified, executed and acknowledged by each of the aforesaid constituent corporations in accordance with the provisions of subsection (b) of Section 251 of the General Corporation Law of the State of Delaware. 4. The name of the surviving corporation is BEVA CORPORATION 5. The Articles of Incorporation and By-laws of Aqua Vie Beverage Corporation, as now in force and effect, shall continue to be the Articles of Incorporation of said surviving corporation. However, pursuant to Section 251(g) of the General Corporate Law of Delaware, said Articles shall be amended to include a new Article XIV "Shareholders Approval" as follows: Any act or transaction by or involving this corporation which action requires shareholder approval under this Certificate of Incorporation or under the General Corporation Law of Delaware, must, pursuant to section 251(g) of the General Corporation Law of Delaware, also require, in addition, the 1 2 approval of the stockholders of the holding company, Aqua Vie Beverage Corporation Holding, or any successor by merger, by the same vote as is required by the Certificate of Incorporation of this Corporation and/or by the General Corporation Law of Delaware. Said Articles of Aqua Vie Beverage Corporation shall be further amended as follows: (2) To Change the name of the Corporation after the merger is effected to BEVA CORPORATION (3) To reduce the authorized Capital of the Corporation to 100,000 Common Shares and 10,000 Shares Each of Preferred Shares Series A and Series B and Series C. 6. The Articles of Incorporation of Aqua Vie Beverage Corporation-H shall be amended as follows: (1) The name thereof shall be changed to Aqua Vie Beverage Corporation. (2) The Registered Agent, Registered Office, and initial Director and Incorporator shall remain the same, in all other respects the Articles shall be conformed to be those of Aqua Vie Beverage Corporation immediately prior to the Merger (except for the name and such other matters as may be permitted by Sec. 251(g) of the Delaware Corporate Code). 7. The executed Agreement and Plan of Merger between the aforesaid constituent corporations is on file at Aqua Vie Beverage Corporation 191 Sun Valley Rd., PO Box 5569, Ketchum, Idaho 83340 8. A copy of the Merger Plan will be provided to any shareholder of any constituent corporation without cost. 9. The effective date of the merger will be on the date of filing of this Certificate of Merger with the Delaware Secretary of State. AQUA VIE BEVERAGE CORPORATION-S, a Delaware corporation /S/ Thomas J. Gillespie ------------------------------------ Thomas J. Gillespie, President ATTEST: 2 3 /S/ John Cooper - --------------------------- John Cooper, Secretary AQUA VIE BEVERAGE CORPORATION, . a Delaware corporation /S/ Thomas J.Gillespie --------------------------------- Thomas J. Gillespie, President ATTEST: /S/ John Cooper - --------------------------- John Cooper, Secretary 3 EX-2.2 3 v67130ex2-2.txt EXHIBIT 2.2 1 AGREEMENT AND PLAN OF MERGER between BARHILL ACQUISITION CORPORATION, a Delaware corporation ("Barhill"), and AQUA VIE BEVERAGE CORPORATION, a Delaware corporation ("Aqua Vie"), Barhill and Aqua Vie being sometimes referred to herein as the "Constituent Corporations." WHEREAS, the board of directors of each Constituent Corporation deems it advisable that the Constituent Corporations merge into a single corporation in a transaction intended to qualify as a reorganization within the meaning of Section 368(a)(1)(A) of the Internal Revenue Code of 1986, as amended ("the Merger"); NOW, THEREFORE, in consideration of the premises and the respective mutual covenants, representations and warranties herein contained, the parties agree as follows: 1. SURVIVING CORPORATION. Barhill shall be merged with and into Aqua Vie which shall be the surviving reporting corporation (hereinafter the "Surviving Corporation") in accordance with the applicable laws of the State of Delaware. 2. MERGER DATE. The Merger shall become effective (the "Merger Date") upon the completion of: 2.1 Adoption of this Agreement by the shareholders of Barhill pursuant to the General Corporation Law of Delaware and by the shareholders of Aqua Vie by a vote of the shareholders ratified by the Board of Directors of Aqua Vie, pursuant to the Business Corporation Law of Delaware. 2.2 Execution and filing of the Certificate of Merger with the Secretary of State of the State of Delaware in accordance with the General Corporation Law of Delaware. 3. TIME OF FILINGS. The Certificate of Merger shall be filed with the Secretary of State of Delaware upon the approval of this Agreement by the shareholders of the Constituent Corporations and the fulfillment or waiver of the terms and conditions herein. 4. GOVERNING LAW. The Surviving Corporation shall be governed by the laws of the State of Delaware. 5. CERTIFICATE OF INCORPORATION. The Certificate of Incorporation of Aqua Vie shall be the Certificate of Incorporation of the Surviving Corporation from and after the Merger Date, subject to the right of the Surviving Corporation to amend its Certificate of Incorporation in accordance with the laws of the State of Delaware. 6. BYLAWS. The Bylaws of the Surviving Corporation shall be the Bylaws of Aqua Vie as in effect on the date of this Agreement. 7. NAME OF SURVIVING CORPORATION. The Surviving Corporation will continue to use its name "Aqua Vie Beverage Corporation" or such name as it may choose and shall be available. 1 2 8. CONVERSION. The mode of carrying the merger into effect and the manner and basis of converting the shares of Barhill into shares of the Surviving Corporation are as follows: 8.1 The aggregate number of shares of Barhill Common Stock issued and outstanding on the Merger Date shall, by virtue of the merger and without any action on the part of the holders thereof, be converted into an aggregate of 250,000 shares of Aqua Vie Common Stock adjusted by any increase for fractional shares and reduced by any Dissenting Shares (defined below). 8.2 At June 30, 1999, there were issued and outstanding approximately 20,978,516 shares of Common Stock of Aqua Vie. 8.3 The Aqua Vie Common Stock shall be issued to the holders of such Barhill Common Stock in exchange for their shares on a pro rata basis in accordance with each holder's relative ownership of the Barhill Common Stock that is being exchanged. 8.4 All outstanding warrants of Barhill and any other outstanding rights to purchase stock of Barhill shall be adjusted, pursuant to the terms contained in such warrants or other rights documents, for conversion to warrants or rights to purchase stock of Aqua Vie on the same ratio as provided herein for holders of Aqua Vie Common Stock. 8.5 The shares of Aqua Vie Common Stock to be issued in exchange for Barhill Common Stock hereunder shall be proportionately reduced by any shares owned by Barhill shareholders who shall have timely objected to the merger (the "Dissenting Shares") in accordance with the provisions of Business Corporation Law of Delaware which objections will be dealt with as provided in those sections. 8.6 Each share of Barhill Common Stock that is issued and outstanding and owned by Barhill on the Merger Date shall, by virtue of the merger and without any action on the part of Barhill, be retired and canceled. 8.7 Each certificate evidencing ownership of shares of Aqua Vie Common Stock issued and outstanding on the Merger Date or held by Aqua Vie in its treasury shall continue to evidence ownership of the same number of shares of Aqua Vie Common Stock. 9. EXCHANGE OF CERTIFICATES. As promptly as practicable after the Merger Date, each holder of an outstanding certificate or certificates theretofore representing shares of Barhill Common Stock (other than certificates representing Dissenting Shares) shall surrender such certificate(s) for cancellation to the party designated by the Surviving Corporation to handle such exchange (the "Exchange Agent"), and shall receive in exchange a certificate or certificates representing the number of full shares of Aqua Vie Common Stock into which the shares of Barhill Common Stock represented by the certificate or certificates so surrendered shall have been converted. 10. UNEXCHANGED CERTIFICATES. Until surrendered, each outstanding certificate that prior to the Merger Date represented Barhill Common Stock (other than certificates representing Dissenting Shares) shall be deemed for all purposes, other than the payment of dividends or other distributions, to evidence ownership of the number of shares of Aqua Vie Common Stock into which it was converted. No dividend or other distribution payable to holders of Aqua Vie Common Stock as of any date subsequent to the Merger Date shall be paid to the holders of outstanding certificates of Barhill Common Stock; provided, however, that upon surrender and exchange of such outstanding certificates (other than certificates representing Dissenting Shares), there shall be paid to the record holders of the certificates 2 3 issued in exchange therefor the amount, without interest thereon, of dividends and other distributions that would have been payable subsequent to the Merger Date with respect to the shares of Aqua Vie Common Stock represented thereby. 11. BOARD OF DIRECTORS AND OFFICERS. The members of the board of directors of the Surviving Corporation shall be the members of the board of directors of Aqua Vie on the Merger Date or such others as Aqua Vie may designate. The officers of the Surviving Corporation shall be the officers of Aqua Vie on the Merger Date or such others as Aqua Vie may designate. 12. EFFECT OF THE MERGER. On the Merger Date, the separate existence of Barhill shall cease (except insofar as continued by statute), and it shall be merged with and into the Surviving Corporation. All the property, real, personal, and mixed, of each of the Constituent Corporations, and all debts due to either of them, shall be transferred to and vested in the Surviving Corporation, without further act or deed. The Surviving Corporation shall thenceforth be responsible and liable for all the liabilities and obligations, including liabilities to holders of Dissenting Shares, of each of the Constituent Corporations, and any claim or judgment against either of the Constituent Corporations may be enforced against the Surviving Corporation. 13. APPROVAL OF SHAREHOLDERS. This Agreement shall be adopted by the shareholders of the Constituent Corporations at meetings of such shareholders called for that purpose or by written consent pursuant to the laws applicable thereto. There shall be required for the adoption of this Agreement the affirmative vote of the holders of at least a majority of the holders of all the shares of the Common Stock issued and outstanding and entitled to vote for each of the Constituent Corporations. 14. REPRESENTATIONS AND WARRANTIES OF BARHILL. Barhill represents and warrants that: 14.1 CORPORATE ORGANIZATION AND GOOD STANDING. Barhill is a corporation duly organized, validly existing, and in good standing under the laws of the State of Delaware, and is qualified to do business as a foreign corporation in each jurisdiction, if any, in which its property or business requires such qualification. 14.2 REPORTING COMPANY. Barhill has filed with the Securities and Exchange Commission a registration statement on Form F-10 which was declared effective pursuant to the Securities Exchange Act of 1934 and is a reporting company pursuant to Section 12 thereunder. 14.3 REPORTING COMPANY STATUS. Barhill has timely filed and is current on all reports required to be filed by it pursuant to Section 12(g) of the Securities Exchange Act of 1934. 14.4 CAPITALIZATION. Barhill's authorized capital stock consists of 120,000,000 shares of Common Stock, $.0001 par value, of which 5,000,000 shares are issued and outstanding, and 20,000,000 shares of non-designated preferred stock of which 3 4 no shares are designated or issued. 14.5 ISSUANCE OF STOCK. All the outstanding shares of its Common Stock are duly authorized and validly issued, fully paid and non-assessable. 14.6 STOCK RIGHTS. There are no stock grants, options, rights, warrants or other rights to purchase or obtain the Barhill Common or Preferred Stock issued or committed to be issued. 14.7 CORPORATE AUTHORITY. Barhill has all requisite corporate power and authority to own, operate and lease its properties, to carry on its business as it is now being conducted and to execute, deliver, perform and conclude the transactions contemplated by this Agreement and all other agreements and instruments related to this Agreement. 14.8 AUTHORIZATION. Execution of this Agreement has been duly authorized and approved by Barhill's board of directors. 14.9 SUBSIDIARIES. Barhill has no subsidiaries. 14.10 FINANCIAL STATEMENTS. Barhill's audited financial statements dated December 31, 1998, copies of which will have been delivered by Barhill to Aqua Vie prior to the Merger Date (the "Barhill Financial Statements"), fairly present the financial condition of Barhill as of the date therein and the results of its operations for the periods then ended in conformity with generally accepted accounting principles consistently applied. 14.11 ABSENCE OF UNDISCLOSED LIABILITIES. Except to the extent reflected or reserved against in the Barhill Financial Statements, Barhill did not have at that date any liabilities or obligations (secured, unsecured, contingent, or otherwise) of a nature customarily reflected in a corporate balance sheet prepared in accordance with generally accepted accounting principles. 14.12 NO MATERIAL CHANGES. There has been no material adverse change in the business, properties, or financial condition of Barhill since the date of the Barhill Financial Statements. 14.13 LITIGATION. There is not, to the knowledge of Barhill, any pending, threatened, or existing litigation, bankruptcy, criminal, civil, or regulatory proceeding or investigation, threatened or contemplated against Barhill or against any of its officers. 14.14 CONTRACTS. Barhill is not a party to any material contract not in the ordinary course of business that is to be performed in whole or in part at or after the date of this Agreement. 14.15 TITLE. Barhill has good and marketable title to all the real property and good and valid title to all other property included in the Barhill Financial Statements. Except as set out in the balance sheet thereof, the properties of Barhill are not subject to any mortgage, encumbrance, or lien of any kind except minor encumbrances that do not 4 5 materially interfere with the use of the property in the conduct of the business of Barhill. 14.16 TAX RETURNS. All federal, state, county, municipal, local, foreign and other taxes and assessments, including any and all interest, penalties and additions imposed with respect to such amounts, have been properly prepared and filed by Barhill for all years to and including the taxable year ending December 31, 1998. Any and all federal, state, county, municipal, local, foreign and other taxes and assessments, including any and all interest, penalties and additions imposed with respect to such amounts for the year ending December 31, 1998, have been paid or if any is outstanding as at the date hereof provision has been made prorated to the date hereof to be an adjustment to the credit of Aqua Vie payable to Aqua Vie on the merger hereof. The provisions for federal and state taxes reflected in the Barhill Financial Statements are adequate to cover any such taxes that may be assessed against Barhill in respect of its business and its operations during the periods covered by the Barhill Financial Statements and all prior periods. 14.17 NO VIOLATION. Consummation of the merger will not constitute or result in a breach or default under any provision of any charter, bylaw, indenture, mortgage, lease, or agreement, or any order, judgment, decree, law, or regulation to which any property of Barhill is subject or by which Barhill is bound. 15. REPRESENTATIONS AND WARRANTIES OF AQUA VIE. Aqua Vie represents and warrants that: 15.1 CORPORATE ORGANIZATION AND GOOD STANDING. Aqua Vie is a corporation duly organized, validly existing, and in good standing under the laws of the State of Delaware and is qualified to do business as a foreign corporation in each jurisdiction, if any, in which its property or business requires such qualification. 15.2 CAPITALIZATION. Aqua Vie's authorized capital stock consists of 50,000,000 shares of Common Stock, $.001 par value, of which 20,978,516 shares are issued and outstanding, and 1,000,000 shares of Series A preferred stock, $.001 par value and 9,330 shares of Series B preferred stock which shares are convertible into approximately 16,922,995 shares of Aqua Vie Common Stock. 15.3 ISSUED STOCK. All the outstanding shares of its Common Stock are duly authorized and validly issued, fully paid and non-assessable. 15.4 CORPORATE AUTHORITY. Aqua Vie has all requisite corporate power and authority to own, operate and lease its properties, to carry on its business as it is now being conducted and to execute, deliver, perform and conclude the transactions contemplated by this Agreement and all other agreements and instruments related to this Agreement. 15.5 AUTHORIZATION. Execution of this Agreement has been duly authorized and approved by Aqua Vie's board of directors. 15.6 SUBSIDIARIES. Aqua Vie has one subsidiary. 15.7 FINANCIAL STATEMENTS. Aqua Vie's unaudited financial statements of 5 6 May 30, 1999, copies of which will have been delivered by Aqua Vie to Barhill by the Merger Date (the "Aqua Vie Financial Statements"), are believed to be substantially correct and fairly present the financial condition of Aqua Vie as of the date therein and the results of its operations for the periods then ended in conformity with generally accepted accounting principles consistently applied. 15.8 ABSENCE OF UNDISCLOSED LIABILITIES. Except to the extent reflected or reserved against in the Aqua Vie Financial Statements, Aqua Vie did not have at that date any liabilities or obligations (secured, unsecured, contingent, or otherwise) of a nature customarily reflected in a corporate balance sheet prepared in accordance with generally accepted accounting principles. 15.9 NO MATERIAL CHANGES. There has been no material adverse change in the business, properties, or financial condition of Aqua Vie since the date of the Aqua Vie Financial Statements. 15.10 LITIGATION. There is not, to the knowledge of Aqua Vie, any pending, threatened, or existing litigation, bankruptcy, criminal, civil, or regulatory proceeding or investigation, threatened or contemplated against Aqua Vie or against any of its officers. 15.11 CONTRACTS. Aqua Vie is not a party to any material contract not in the ordinary course of business that is to be performed in whole or in part at or after the date of this Agreement. 15.12 TITLE. Aqua Vie has good and marketable title to all the real property and good and valid title to all other property included in the Aqua Vie Financial Statements. Except as set out in the balance sheet thereof, the properties of Aqua Vie are not subject to any mortgage, encumbrance, or lien of any kind except minor encumbrances that do not materially interfere with the use of the property in the conduct of the business of Aqua Vie. 15.13 TAX RETURNS. All federal, state, county, municipal, local, foreign and other taxes and assessments, including any and all interest, penalties and additions imposed with respect to such amounts, have been properly prepared and filed by Aqua Vie for all years to and including the taxable year ending December 31, 1998, unless an extension for filing such return has been properly filed. The provisions for federal and state taxes reflected in the Aqua Vie Financial Statements are adequate to cover any such taxes that may be assessed against Aqua Vie in respect of its business and its operations during the periods covered by the Aqua Vie Financial Statements and all prior periods. 15.14 NO VIOLATION. Consummation of the merger will not constitute or result in a breach or default under any provision of any charter, bylaw, indenture, mortgage, lease, or agreement, or any order, judgment, decree, law, or regulation to which any property of Aqua Vie is subject or by which Aqua Vie is bound. 16. CONDUCT OF BARHILL PENDING THE MERGER DATE. Barhill covenants that between the date of this Agreement and the Merger Date: 16.1 No change will be made in Barhill's articles of incorporation or bylaws. 6 7 16.2 Barhill will not make any change in its authorized or issued capital stock, declare or pay any dividend or other distribution or issue, encumber, purchase, or otherwise acquire any of its capital stock other than as provided herein. 16.3 Barhill will submit this Agreement for its shareholders' approval with a favorable recommendation by its board of directors and will use its best efforts to obtain the requisite shareholder approval. 16.4 Barhill will use its best efforts to maintain and preserve its business organization, employee relationships, and goodwill intact, and will not enter into any material commitment except in the ordinary course of business. 17. CONDUCT OF AQUA VIE PENDING THE MERGER DATE. Aqua Vie covenants that between the date of this Agreement and the Merger Date: 17.1 No change will be made in Aqua Vie's certificate of incorporation or bylaws. 17.2 Aqua Vie will not make any change in its authorized or issued capital stock, declare or pay any dividend or other distribution or issue, encumber, purchase, or otherwise acquire any of its capital stock otherwise than as provided herein. 17.3 Aqua Vie will submit this Agreement for its shareholders' approval with a favorable recommendation by its board of directors and will use its best efforts to obtain the requisite shareholder approval. 17.4 Aqua Vie will use its best efforts to maintain and preserve its business organization, employee relationships, and goodwill intact, and will not enter into any material commitment except in the ordinary course of business. 18. CONDITIONS PRECEDENT TO OBLIGATION OF BARHILL. Barhill's obligation to consummate this merger shall be subject to fulfillment on or before the Merger Date of each of the following conditions, unless waived in writing by Barhill: 18.1 AQUA VIE'S REPRESENTATIONS AND WARRANTIES. The representations and warranties of Aqua Vie set forth herein shall be true and correct at the Merger Date as though made at and as of that date, except as affected by transactions contemplated hereby. 18.2 AQUA VIE'S COVENANTS. Aqua Vie shall have performed all covenants required by this Agreement to be performed by it on or before the Merger Date. 18.3 SHAREHOLDER APPROVAL. This Agreement shall have been approved by the required number of shareholders of the Constituent Corporations. 18.4 SUPPORTING DOCUMENTS OF AQUA VIE. Aqua Vie shall have delivered 7 8 to Barhill supporting documents in form and substance satisfactory to Barhill to the effect that: (i) Aqua Vie is a corporation duly organized, validly existing, and in good standing. (ii) Aqua Vie's authorized and issued capital stock is as set forth herein. (iii) The execution and consummation of this Agreement have been duly authorized and approved by Aqua Vie's board of directors. 19. CONDITIONS PRECEDENT TO OBLIGATION OF AQUA VIE. Aqua Vie's obligation to consummate this merger shall be subject to fulfillment on or before the Merger Date of each of the following conditions, unless waived in writing by Aqua Vie: 19.1 BARHILL'S REPRESENTATIONS AND WARRANTIES. The representations and warranties of Barhill set forth herein shall be true and correct at the Merger Date as though made at and as of that date, except as affected by transactions contemplated hereby. 19.2 BARHILL'S COVENANTS. Barhill shall have performed all covenants required by this Agreement to be performed by it on or before the Merger Date. 19.3 SHAREHOLDER APPROVAL. This Agreement shall have been approved by the required number of shareholders of the Constituent Corporations. 19.4 SUPPORTING DOCUMENTS OF BARHILL. Barhill shall have delivered to Aqua Vie supporting documents in form and substance satisfactory to Aqua Vie to the effect that: (i) Barhill is a corporation duly organized, validly existing, and in good standing. (ii) Barhill's authorized and issued capital stock is as set forth herein. (iii) The execution and consummation of this Agreement have been duly authorized and approved by Barhill's board of directors. 20. ACCESS. From the date hereof to the Merger Date, Aqua Vie and Barhill shall provide each other with such information and permit each other's officers and representatives such access to its properties and books and records as the other may from time to time reasonably request. If the merger is not consummated, all documents received in connection with this Agreement shall be returned to the party furnishing such documents, and all information so received shall be treated as confidential. 21. CLOSING. The transfers and deliveries to be made pursuant to this Agreement (the "Closing") shall be made by and take place at the offices of the Exchange Agent or other location designated by the Constituent Corporations without requiring the 8 9 meeting of the parties hereof. All proceedings to be taken and all documents to be executed at the Closing shall be deemed to have been taken, delivered and executed simultaneously, and no proceeding shall be deemed taken nor documents deemed executed or delivered until all have been taken, delivered and executed. 21.1 Any copy, facsimile telecommunication or other reliable reproduction of the writing or transmission required by this Agreement or any signature required thereon may be used in lieu of an original writing or transmission or signature for any and all purposes for which the original could be used, provided that such copy, facsimile telecommunication or other reproduction shall be a complete reproduction of the entire original writing or transmission or original signature. 21.2 At the Closing, Barhill shall deliver to the Exchange Agent in satisfactory form, if not already delivered to Aqua Vie: (i) A list of the holders of the shares of Barhill Common Stock being exchanged with an itemization of the number of shares held by each, the address of each holder, and the aggregate number of shares of Aqua Vie Common Stock to be issued to each holder; (ii) Evidence of the consent of shareholders of Barhill to this Agreement; (iii) Certificate of the Secretary of State of Delaware as of a recent date as to the good standing of Barhill; (iv)Certified copies of the resolutions of the board of directors of Barhill authorizing the execution of this Agreement and the consummation of the Merger; (v) The Barhill Financial Statements; (vi) Secretary's certificate of incumbency of the officers and directors of Barhill; and (vii) Any document as may be specified herein or required to satisfy the conditions, representations and warranties enumerated elsewhere herein. 21.3 At the Closing, Aqua Vie shall deliver to the Exchange Agent in satisfactory form, if not already delivered to Barhill: (i) A list of the shareholders of record of Aqua Vie, including, wherever available, addresses and telephone numbers; (ii) Evidence of the consent of shareholders of Aqua Vie to this Agreement; (iii) Certificate of the Secretary of State of Delaware as of a recent date as to the good standing of Aqua Vie; (iv) Certified copies of the resolutions of the board of directors of Aqua Vie 9 10 authorizing the execution of this Agreement and the consummation of the merger; (v) The Aqua Vie Financial Statements; (vi) Secretary's certificate of incumbency of the officers and directors of Aqua Vie; and (vii) Any document as may be specified herein or required to satisfy the conditions, representations and warranties enumerated elsewhere herein. 22. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations and warranties of the Constituent Corporations set out herein shall survive the Merger Date. 23. ARBITRATION. 23.1 SCOPE. The parties hereby agree that any and all claims (except only for requests for injunctive or other equitable relief) whether existing now, in the past or in the future as to which the parties or any affiliates may be adverse parties, and whether arising out of this agreement or from any other cause, will be resolved by arbitration before the American Arbitration Association within the District of Columbia. 23.2 CONSENT TO JURISDICTION, SITUS AND JUDGEMENT. The parties hereby irrevocably consent to the jurisdiction of the American Arbitration Association and the situs of the arbitration within the District of Columbia. Any award in arbitration may be entered in any domestic or foreign court having jurisdiction over the enforcement of such awards. 23.3 APPLICABLE LAW. The law applicable to the arbitration and this agreement shall be that of the District of Columbia, determined without regard to its provisions which would otherwise apply to a question of conflict of laws. 23.4 DISCLOSURE AND DISCOVERY. The arbitrator may, in its discretion, allow the parties to make reasonable disclosure and discovery in regard to any matters which are the subject of the arbitration and to compel compliance with such disclosure and discovery order. The arbitrator may order the parties to comply with all or any of the disclosure and discovery provisions of the Federal Rules of Civil Procedure, as they then exist, as may be modified by the arbitrator consistent with the desire to simplify the conduct and minimize the expense of the arbitration. 23.5 RULES OF LAW. Regardless of any practices of arbitration to the contrary, the arbitrator will apply the rules of contract and other law of the jurisdiction whose law applies to the arbitration so that the decision of the arbitrator will be, as much as possible, the same as if the dispute had been determined by a court of competent jurisdiction. 23.6 FINALITY AND FEES. Any award or decision by the American Arbitration Association shall be final, binding and non-appealable except as to errors of law or the failure of the arbitrator to adhere to the arbitration provisions contained in this agreement. Each party to the arbitration shall pay its own costs and counsel fees except as specifically 10 11 provided otherwise in this agreement. 23.7 MEASURE OF DAMAGES. In any adverse action, the parties shall restrict themselves to claims for compensatory damages and\or securities issued or to be issued and no claims shall be made by any party or affiliate for lost profits, punitive or multiple damages. 23.8 COVENANT NOT TO SUE. The parties covenant that under no conditions will any party or any affiliate file any action against the other (except only requests for injunctive or other equitable relief) in any forum other than before the American Arbitration Association, and the parties agree that any such action, if filed, shall be dismissed upon application and shall be referred for arbitration hereunder with costs and attorney's fees to the prevailing party. 23.9 INTENTION. It is the intention of the parties and their affiliates that all disputes of any nature between them, whenever arising, whether in regard to this agreement or any other matter, from whatever cause, based on whatever law, rule or regulation, whether statutory or common law, and however characterized, be decided by arbitration as provided herein and that no party or affiliate be required to litigate in any other forum any disputes or other matters except for requests for injunctive or equitable relief. This agreement shall be interpreted in conformance with this stated intent of the parties and their affiliates. 23.10 SURVIVAL. The provisions for arbitration contained herein shall survive the termination of this agreement for any reason. 24. GENERAL PROVISIONS. 24.1 FURTHER ASSURANCES. From time to time, each party will execute such additional instruments and take such actions as may be reasonably required to carry out the intent and purposes of this Agreement. 24.2 WAIVER. Any failure on the part of either party hereto to comply with any of its obligations, agreements, or conditions hereunder may be waived in writing by the party to whom such compliance is owed. 24.3 BROKERS. Each party agrees to indemnify and hold harmless the other party against any fee, loss, or expense arising out of claims by brokers or finders employed or alleged to have been employed by the indemnifying party. 24.4 NOTICES. All notices and other communications hereunder shall be in writing and shall be deemed to have been given if delivered in person or sent by prepaid first-class certified mail, return receipt requested, or recognized commercial courier service, as follows: If to Barhill, to: 11 12 Barhill Acquisition Corporation 1504 R Street, N.W. Washington, D.C. 20009 If to Aqua Vie, to Aqua Vie Beverage Corporation 333 South Main Street Ketchum, Idaho 83340 25 GOVERNING LAW. This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of Delaware. 26. ASSIGNMENT. This Agreement shall inure to the benefit of, and be binding upon, the parties hereto and their successors and assigns; provided, however, that any assignment by either party of its rights under this Agreement without the written consent of the other party shall be void. 27. COUNTERPARTS. This Agreement may be executed simultaneously in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Signatures sent by facsimile transmission shall be deemed to be evidence of the original execution thereof. 28. EXCHANGE AGENT AND CLOSING DATE. The Exchange Agent shall be Cassidy & Associates. Closing shall take place on August 31, 1999, or as soon thereafter as practicable. The date of Closing may be accelerated or extended by agreement of the parties. 29. EFFECTIVE DATE. This effective date of this Agreement shall be August 31, 1999. 12 13 SIGNATURE PAGE TO AGREEMENT AND PLAN OF MERGER BETWEEN BARHILL ACQUISITION CORPORATION AND AQUA VIE BEVERAGE CORPORATION IN WITNESS WHEREOF, the parties have executed this Agreement. BARHILL ACQUISITION CORPORATION By AQUA VIE BEVERAGE CORPORATION By 13 EX-2.3 4 v67130ex2-3.txt EXHIBIT 2.3 1 CERTIFICATE OF MERGER OF BARHILL ACQUISITION CORPORATION (A DELAWARE CORPORATION) INTO AQUA VIE BEVERAGE CORPORATION (A DELAWARE CORPORATION) Pursuant to Section 251 of the General Corporation Law of the State of Delaware AQUA VIE BEVERAGE CORPORATION, a Delaware corporation, hereby certifies as follows: FIRST: The names and jurisdictions of the constituent corporations are Barhill Acquisition Corporation, a Delaware corporation, and Aqua Vie Beverage Corporation, a Delaware corporation. SECOND: An Agreement and Plan of Merger (the "Merger Agreement") has been approved, adopted, certified, executed and acknowledged by each of the constituent corporations in accordance with Section 251 of the General Corporation Law of the State of Delaware. THIRD: The Merger Agreement has been approved by action by unanimous consent of the Board of Directors of the constituent corporations on August 31, 1999, and by written consent without a meeting of a majority of the shareholders of the constituent corporations dated August 31, 1999. FOURTH: The surviving corporation is Aqua Vie Beverage Corporation (the "Surviving Corporation"). FIFTH: The Certificate of Incorporation of Aqua Vie in effect as of the date and time of filing of this Certificate of Merger shall be the Certificate of Incorporation of the Surviving Corporation and pursuant to the Delaware General Corporation Law shall be amended by the changes set forth in the Merger Agreement to include an increase in its authorized common stock, to permit increases or decreases in the authorized number of shares of a class without class approval, and to elect not to be governed by the provisions of Section 203 of the Delaware General Corporation Law, as follows: ARTICLE FOURTH: The first complete sentence of Article Fourth of the Certificate of Incorporation of AQUA VIE BEVERAGE CORPORATION shall be amended to read as follows: "The aggregate number of shares of common stock which the corporation shall have authority to issue is One Hundred Twenty Million, $.001 par value per share". ARTICLE FOURTH: Article Fourth is further amended to add a new Subsection D which shall provide as follows: 2 Certificate of Merger Page 2 "The authorized shares of a class of stock may be increased or decreased without the approval of the shares of that class, but not below the number of shares issued unless a combination shall have occurred." ARTICLE FOURTEENTH: A new Article Fourteenth is added to read as follows: "Section 203 of the Delaware General Corporation Law shall not be applicable to the Corporation." SIXTH: An executed copy of the Merger Agreement is on file at the principal place of business of the Surviving Corporation at 333 South Main Street, Ketchum, Idaho 83340 and a copy of the Merger Agreement will be furnished by the Surviving Corporation, on request and without cost, to any stockholder of either constituent corporation. SEVENTH: The authorized capital stock of Aqua Vie Beverage Corporation, a Delaware corporation, is 50,000,000 shares of common stock, $.001 par value per share of which 21,785,657 shares are issued and outstanding, and 1,000,000 shares of preferred stock, $.001 par value, consisting of 3,897.689 shares of Series A and 4,987.444 shares of Series B issued and outstanding which shares have voting rights of 7,015,840 and 53,864,395 respectively. EIGHTH: This Certificate of Merger shall be effective immediately upon its filing with the Secretary of State of the State of Delaware. IN WITNESS WHEREOF, Aqua Vie Beverage Corporation has caused this Certificate of Merger to be executed in its corporate name by its President and attested to by its Secretary on the 31st day of August, 1999. AQUA VIE BEVERAGE CORPORATION By: --------------------------------- Name: Title: President ATTEST: By: ---------------------------------- Name: Title: Secretary EX-2.4 5 v67130ex2-4.txt EXHIBIT 2.4 1 AGREEMENT AND PLAN OF MERGER OF AQUA VIE BEVERAGE CORPORATION-S a Delaware corporation INTO AQUA VIE BEVERAGE CORPORATION a Delaware corporation AGREEMENT AND PLAN OF MERGER, dated October 14, 1998, by and among Aqua Vie Beverage Corporation-S, a Delaware corporation, ("Sub"), which is wholly owned by Aqua Vie Beverage Corporation-Holding, Aqua Vie Beverage Corporation-Holding, a Delaware corporation ("Holding"), which is wholly owned by Aqua Vie Beverage Corporation, and Aqua Vie Beverage Corporation, a Delaware corporation ("Parent"). W I T N E S S E T H WHEREAS, the respective Boards of Directors of Sub, Holding and Parent have approved the merger of Sub with and into Parent on the terms and subject to the conditions set forth herein; WHEREAS, pursuant to the merger as set out below, Sub will merge into Parent and shares of Sub will be converted by way of the merger consideration. WHEREAS, pursuant to the merger as set out below, shares of Parent, as the surviving corporation, will be converted into the merger consideration in the manner set forth herein, and as a result, Parent will become a wholly owned subsidiary of Holding; 1 2 NOW, THEREFORE, in consideration of the mutual covenants contained herein, and intending to be legally bound, Sub, Holding and Parent agree as follows: ARTICLE I-DEFINITIONS Section 1.1. DEFINITIONS. The following terms, as used in this Agreement, have the meaning set forth below: 1.1.1 "Agreement" means this Agreement and Plan of Merger. 1.1.2 "Certificate of Merger" shall mean the certificate evidencing the completion of this Agreement, executed in accordance with section 103 of the General Corporation Law of the State of Delaware, and which may be filed in lieu of this Agreement. The merger shall be effective at the time and on the date of the filing of the Certificate of Merger, which filing shall occur on the Closing date. 1.1.3 "Holding company" has the same meaning set forth in section 251(g) of Title 8, Chapter 1, Delaware code. (i.e." A corporation which, from its incorporation until consummation of a merger governed by this subsection, was at all times a direct or indirect wholly-owned subsidiary of the constituent corporation and whose capital stock is issued in such merger...") 1.1.4 "Closing date" means the effective date of the Merger. 1.1.5 "Merger documents" means, collectively, this Agreement, the Certificate of Merger, and all other agreements and documents entered into in connection with the Merger and the other transactions contemplated hereby. 2 3 1.1.6 "Shares of Parent" means certificates evidencing common and preferred stock, {and any warrants options or rights (whether or not certificated) to such stock approved by the Board of Directors prior to the Merger being consummated} of the Parent referred to herein. 1.1.7 "Shares of Sub" means certificates evidencing the common stock of the Sub referred to herein. ARTICLE II- TERMS AND CONDITIONS Section 2.1 THE MERGER. Upon the terms and subject to the conditions of this Agreement, Sub shall, pursuant to section(s) 251(a),(b) and (g) of the General Corporation law of the State of Delaware, be merged with and into Parent, and the separate corporate existence of Sub shall thereupon cease in accordance with the provisions of General Corporation Law of the State of Delaware. Parent, as the surviving corporation in the Merger, shall continue to exist under the name of BEVA CORPORATION, Holding shall be renamed Aqua Vie Beverage Corporation. Parent shall possess all of the rights, privileges and powers of a public and private nature and be subject to all of the restrictions, disabilities and duties of Sub; and all rights, privileges and powers of Sub and all property, real, personal, and mixed, and all debts due to Sub, on whatever account, shall be vested in Parent. Holding shall transfer all of its interest in Sub to Parent. Parent shall transfer and exchange all of its shares to Holding both Common and Preferred, share for share so that the shareholders of Aqua Vie Beverage Corporation shall become the shareholders of Aqua Vie Beverage Corporation-H with the same numbers and Classes, Common and Preferred, and the same rights, designations and preferences as in Parent, it effectively 3 4 becoming a wholly owned subsidiary of Holding. Rights, Reservations, Options and Warrants to Common and Preferred Shares, Series A, B, C, which have been approved by the Board of Directors of Parent prior to the Merger, whether or not Certificated, as defined herein shall become Rights, Reservations, Warrants and Options of Holding in the same fashion and to the same extent as with respect to Parent. Section 2.2 OUTSTANDING SHARES. a) As of the date hereof, the number of outstanding shares of capital stock of Sub is the maximum amount, common and preferred, Series A, B, C provided in the Articles of Incorporation of Sub. b) As of the date hereof, the number of outstanding Shares of capital stock of Parent (including Rights, Reservations, Options and Warrants duly approved by the Board of Parent prior to the Merger provided herein) is as stated in Exhibit A attached hereon and has the same designations, rights, powers and preferences, qualifications, limitations and restrictions thereof, as the shares of stock of Sub being converted in the merger, and the same designations, rights, powers, preferences, qualifications, limitations and restrictions as the Shares of Holding to be issued in lieu and in exchange for Shares of Parent. Section 2.3. ARTICLES OF INCORPORATION. With certain exceptions allowed by statute, the Certificate of Incorporation of the holding company immediately following the effective time of the merger shall contain provisions identical to the Certificate of Incorporation of the Parent, the constituent corporation. Articles of Incorporation of Holding in effect at the closing date shall be the Articles of Incorporation of Parent immediately prior to the 4 5 merger, but not reflecting changes to said Articles made as a result of the Merger as provided hereunder, and shall continue in full force and effect until further amended in the manner prescribed by the provisions of the General Corporation Law of the State of Delaware. Effective upon the date of the Merger, the Articles of Parent shall be amended as follows: "(1) To add a new Article XIV to read: Any act or transaction by or involving this corporation which action requires shareholder approval under this Certificate of Incorporation or under the General Corporation Law of Delaware, must, pursuant to section 251(g) of the General Corporation Law of Delaware, also require, in addition, the approval of the stockholders of Aqua Vie Beverage Corporation-H, or any successor by merger, by the same vote as is required by the Certificate of Incorporation of this corporation and/or by the General Corporation Law of Delaware. (2) To Change the name of Aqua Vie Beverage Corporation after the merger is effected to BEVA CORPORATION. (3) To reduce the authorized Capital of Parent to 100,000 Common Shares and 10,000 Shares Each of Preferred Shares Series A and Series B and Series C." The Articles of Holding shall be amended to conform exactly to the Articles of Parent immediately prior to the Merger, except for Designated Directors and Registered Agent and Office, and shall be further amended to Change the name of Aqua Vie Beverage Corporation-H to Aqua Vie Beverage Corporation. Section 2.4. BY-LAWS. With certain exceptions allowed by statute, the By-laws of the Holding Company immediately prior to the effective time of the merger shall contain provisions identical to the By Laws of the constituent corporation immediately prior to the effective time of the merger. The By-laws of Holding, in effect at the closing date 5 6 shall be the By-laws of Parent and shall continue in full force and effect until further amended in accordance with applicable law. Section 2.5. OFFICERS. The Officers of Holding, immediately prior to the closing date of the merger, shall be the Officers of Parent, and will hold office until their successors are duly elected or appointed and qualify in the manner provided in the certificate of incorporation or by-law of Parent or as otherwise provided by law, or until their earlier death, resignation or removal. Section 2.6. DIRECTORS. The Directors of Holding, immediately prior to the closing date of the merger, shall be the Directors of Parent, and will serve until their successors are duly elected or appointed and qualify in the manner provided in the certificate of incorporation or by-laws of Parent or as otherwise provided by law, or until their earlier death, resignation or removal. Section 2.7. CLOSING. The closing date of this merger shall become effective on the date of the filing of the Certificate of Merger with the Delaware Secretary of State. ARTICLE III-AMENDMENT TO CERTIFICATE OF INCORPORATION Section 3.1 CERTIFICATE OF INCORPORATION. The Certificate of Incorporation of Parent, which is the surviving subsidiary corporation of Holding, shall be amended herein below on the closing date of the merger, as required by Section 251(g) of the General Corporation Law of Delaware and such Amended Certificate of Incorporation shall continue in full force and effect as the Certificate of Incorporation of Parent. Section 3.2 AMENDMENt. The Certificate of Incorporation of Aqua Vie Beverage Corporation shall be amended: 6 7 "(1) To add a new Article XIV to read: Any act or transaction by or involving this corporation which action requires shareholder approval under this Certificate of Incorporation or under the General Corporation Law of Delaware, must, pursuant to section 251(g) of the General Corporation Law of Delaware, also require, in addition, the approval of the stockholders of Aqua Vie Beverage Corporation-H, or any successor by merger, by the same vote as is required by the Certificate of Incorporation of this corporation and/or by the General Corporation Law of Delaware. (2) To Change the name of Aqua Vie Beverage Corporation after the merger is effected to BEVA CORPORATION. (3) To reduce the authorized Capital of Aqua Vie Beverage Corporation to 100,000 Common Shares and 10,000 Shares Each of Preferred Shares Series A and Series B and Series C." Section 3.3 CERTIFICATE OF INCORPORATION. The Certificate of Incorporation of Holding, shall be amended herein below on the closing date of the Merger and such Amended Certificate of Incorporation shall continue in full force and effect as the Certificate of Incorporation of Holding: (i) The name of Aqua Vie Beverage Corporation-H shall be changed to Aqua Vie Beverage Corporation; (ii) The Articles of Aqua vie Beverage Corporation-H shall be conformed to provide as is provided by the Articles of Aqua Vie Beverage Corporation as of immediately prior to the merger date, except for the initial Director, who shall remain Thomas J. Gillespie, the Incorporator and Registered Agent and such other differences as may be permitted by Section 251(g) of the Delaware Corporate Code. 7 8 ARTICLE IV - CONVERSION OF SHARES Section 4.1 CONVERSION OF SHARES. As of the closing date, by virtue of the Merger and without any action on the part of any holder thereof or any party hereto, each share of the Common Stock of Sub, issued and outstanding immediately prior to the closing date, shall be cancelled and converted into one millionth share of fully paid and non-assessable Parent Common Stock, par value $.0001 per share. Section 4.2 EXCHANGE OF SHARES. At the closing date, by virtue of the Merger and without any action on the part of any holder thereof or any party hereto, (a) each share of the Common Stock of Parent, issued and outstanding immediately prior to the closing date, shall be converted into and become one (1) share of fully paid and non-assessable Holding Common Stock; (b) each Preferred Share, Series A issued and outstanding immediately prior to the closing date, shall be converted into and become one (1) share of fully paid and non-assessable Holding Preferred Stock, Series A; (c) each Preferred Share, Series B issued and outstanding immediately prior to the closing date, shall be converted into and become one (1) share of fully paid and non-assessable Holding Preferred Stock, Series B; (d) each Preferred Share, Series C issued and outstanding immediately prior to the closing date, shall be converted into and become one (1) share of fully paid and non-assessable Holding Preferred Stock, Series C; (e) each Right, Warrant, Reservation or Option as to Common Shares approved by the Board of Parent prior to the Merger, whether or not Certificated, shall become an equivalent, Right, Warrant, Reservation or Option of Holding as to its Common Shares; (f) each Right, Warrant, Reservation or Option as to Preferred Shares, Series A approved by the Board of Parent prior to the Merger, whether or not Certificated, shall become an equivalent, Right, 8 9 Warrant, Reservation or Option of Holding as to its Preferred Shares, Series A; (g) each Right, Warrant, Reservation or Option as to Preferred Shares, Series B approved by the Board of Parent prior to the Merger, whether or not Certificated, shall become an equivalent, Right, Warrant, Reservation or Option of Holding as to its Preferred Shares, Series B; (h) each Right, Warrant, Reservation or Option as to Preferred Shares, Series C approved by the Board of Parent prior to the Merger, whether or not Certificated, shall become an equivalent, Right, Warrant, Reservation or Option of Holding as to its Preferred Shares, Series C. Section 4.3 HOLDING OF SHARES. As of the closing date, by virtue of the Merger and without any action on the part of any holder thereof or any party hereto, Holding will receive the shares of Parent, which will become a wholly owned subsidiary of Holding. Section 4.3 OUTSTANDING COMMON CERTIFICATES. After the closing date, each holder of an outstanding certificate representing shares of Common Stock of Parent shall surrender the same to Holding and each holder shall be entitled upon such surrender to receive the number of shares of Common Stock of Holding, on the basis provided herein above. Until so surrendered, the outstanding shares of the stock of Parent to be converted into the stock of Holding, as provided herein may be treated by Holding for all corporate purposes as evidencing the ownership of shares by Holding as though said surrender and exchange had taken place. After the closing date, each registered owner of any uncertificated shares of Common Stock of Parent shall have said shares cancelled and said registered owner shall be entitled to the number of common shares of Holding on the basis provided herein. Section 4.4 OUTSTANDING PREFERRED SHARE CERTIFICATES 9 10 (a) After the closing date, each holder of an outstanding certificate representing shares of Preferred Stock, Series A of Parent shall surrender the same to Holding and each holder shall be entitled upon such surrender to receive the number of shares of Preferred Stock, Series A of Holding, on the basis provided herein above. Until so surrendered, the outstanding shares of the stock of Parent to be converted into the stock of Holding, as provided herein may be treated by Holding for all corporate purposes as evidencing the ownership of shares by Holding as though said surrender and exchange had taken place. After the closing date, each registered owner of any uncertificated shares of Preferred Stock, Series A of Parent shall have said shares cancelled and said registered owner shall be entitled to the number of Preferred Series A shares of Holding on the basis provided herein. (b) After the closing date, each holder of an outstanding certificate representing shares of Preferred Stock, Series B of Parent shall surrender the same to Holding and each holder shall be entitled upon such surrender to receive the number of shares of Preferred Stock, Series B of Holding, on the basis provided herein above. Until so surrendered, the outstanding shares of the stock of Parent to be converted into the stock of Holding, as provided herein may be treated by Holding for all corporate purposes as evidencing the ownership of shares by Holding as though said surrender and exchange had taken place. After the closing date, each registered owner of any uncertificated shares of Preferred Stock, Series B of Parent shall have said shares cancelled and said registered owner shall be entitled to the number of Preferred Series B shares of Holding on the basis provided herein; 10 11 (c) After the closing date, each holder of an outstanding certificate representing shares of Preferred Stock, Series C of Parent shall surrender the same to Holding and each holder shall be entitled upon such surrender to receive the number of shares of Preferred Stock, Series C of Holding, on the basis provided herein above. Until so surrendered, the outstanding shares of the stock of Parent to be converted into the stock of Holding, as provided herein may be treated by Holding for all corporate purposes as evidencing the ownership of shares by Holding as though said surrender and exchange had taken place. After the closing date, each registered owner of any uncertificated shares of Preferred Stock, Series C of Parent shall have said shares cancelled and said registered owner shall be entitled to the number of Preferred Series B shares of Holding on the basis provided herein; Section 4.5 RIGHTS, RESERVATIONS, OPTIONS & WARRANTS Rights, Reservations, Options and Warrants approved by the Board of Directors of Parent as to Common Shares, Series A Preferred Shares, Series B Preferred Shares and Series C Preferred Shares shall be documented in a Directors Resolution of Parent immediately prior to the merger and shall be attached as Exhibit A hereto. Said Exhibit A shall become part of the Corporate Records of Holding after the Merger, and shall then and thereafter constitute the rights of the Holders of said Rights, Reservations, Options and Warrants as to said Common Shares, Series A Preferred Shares, Series B Preferred Shares and Series C Preferred Shares with respect to and to the same extent as to Holding of said Rights, Reservations, Options and Warrants as to said Common Shares, Series A Preferred Shares, Series B Preferred Shares and Series C Preferred Shares. Holders thereof may be issued Certificates as to said Rights, Reservations, Options and 11 12 Warrants as to Holding, but the absence of a certificate issuance shall not affect the validity thereof. IN WITNESS WHEREOF, the parties to this Agreement, pursuant to the approval and authority duly given by resolutions adopted by their respective Board of Directors and that fact having been certified on said Agreement by the Secretary of each corporate party thereto, have caused these presents to be executed by the Presidents of each party hereto as the respective act, deed and agreement of each said corporations, on this 14th day of October, 1998. Aqua Vie Beverage Corporation-S, a Delaware corporation ATTEST: /S/ ------------------------------------------- Thomas J. Gillespie /S/ - ------------------------------ John J. Cooper, Jr. I, John J. Cooper, Jr., Secretary of Aqua Vie Beverage Corporation-S, a corporation organized and existing under the laws of the State of Delaware, hereby certify, as such Secretary that the Agreement and Plan of Merger to which this Certificate is attached, after having first duly signed on behalf of the said corporation and having been signed on behalf of Aqua Vie Beverage Corporation-S, a corporation of the State of Delaware, was duly adopted pursuant to Section 251(g) of the General Corporation law of Delaware without any vote of the stockholders of the surviving corporation; and that no shares of the corporation were issued prior to the adoption of the Merger; and that Section 251(g) of the General Corporation Law of Delaware is applicable; and that the Agreement of Merger was adopted by the Board of Directors by the attached Resolution of said Aqua Vie Beverage Corporation-S, and is the duly adopted agreement and act of said corporation. WITNESS my hand on this 14th day of October, 1998. /S/ ------------------------------------------- 12 13 John J. Cooper, Jr. Aqua Vie Beverage Corporation-H, a Delaware corporation ATTEST: /S/ -------------------------------- /S/ Thomas J. Gillespie - ------------------- John J. Cooper, Jr I, John J. Cooper, Jr., Secretary of Aqua Vie Beverage Corporation-H, a corporation organized and existing under the laws of the State of Delaware, hereby certify, as such Secretary that the Agreement and Plan of Merger to which this Certificate is attached, after having first duly signed on behalf of the said corporation and having been signed on behalf of Aqua Vie Beverage Corporation-H, , a corporation of the State of Delaware, was duly adopted pursuant to Section 251(g) of the General Corporation law of Delaware without any vote of the stockholders of the surviving corporation; and that no shares of the corporation were issued prior to the adoption of the Merger; and that Section 251(g) of the General Corporation Law of Delaware is applicable; and that the Agreement of Merger was adopted by the Board of Directors by the attached Resolution of said Aqua Vie Beverage Corporation-H, and is the duly adopted agreement and act of said corporation. WITNESS my hand on this 14th day of October, 1998. /S/ --------------------------------------- John J. Cooper, Jr. Aqua Vie Beverage Corporation, a Delaware corporation ATTEST: /S/ -------------------------------- /S/ Thomas J. Gillespie - ------------------- 14 John J. Cooper, Jr I, John J. Cooper, Jr., Secretary of Aqua Vie Beverage Corporation-H, a corporation organized and existing under the laws of the State of Delaware, hereby certify, as such Secretary that the Agreement and Plan of Merger to which this Certificate is attached, after having first duly signed on behalf of the said corporation and having been signed on behalf of Aqua Vie Beverage Corporation-H, , a corporation of the State of Delaware, was duly adopted pursuant to Section 251(g) of the General Corporation law of Delaware without any vote of the stockholders of the surviving corporation; and that no shares of the corporation were issued prior to the adoption of the Merger; and that Section 251(g) of the General Corporation Law of Delaware is applicable; and that the Agreement of Merger was adopted by the Board of Directors by the attached Resolution of said Aqua Vie Beverage Corporation-H, and is the duly adopted agreement and act of said corporation. WITNESS my hand on this 14th day of October, 1998. /S/ ------------------------------------------- John J. Cooper, Jr. 14 EX-3.1 6 v67130ex3-1.txt EXHIBIT 3.1 1 CERTIFICATE OF INCORPORATION OF AQUA VIE BEVERAGE CORPORATION-H FIRST: The name of the Corporation is Aqua Vie Beverage Corporation-H, (the "Corporation"). SECOND: The registered office of the Corporation in the State of Delaware is located at 1013 Centre Road, City of Wilmington, County of New Castle. The name and address of its registered agent is CSC, 1013 Centre Road, City of Wilmington, County of New Castle, Delaware 19805. THIRD: The nature of the business, objects and purposes to be transacted, promoted or carried on by the Corporation are: (1) To manufacture, purchase or otherwise acquire, invest in, mortgage, Pledge, sell, assign and transfer or otherwise dispose of, trade, deal in and with goods, wares and merchandise and personal property of every class description; (2) To acquire, and pay for in cash, stock or bonds of this Corporation or otherwise, the goodwill, rights, assets and property, and to undertake or assume the whole or any part of the obligations or liabilities of any person, partnership, trust, joint stock company, syndicate, firm, association or corporation; (3) To acquire, hold use, sell, assign, lease, and grant licenses in respect of, mortgage or otherwise dispose of letters patent of the United States or any foreign country, patent rights, licenses and privileges, inventions, improvements and processes, copyrights, trademark and trade names relating to or useful in connection with any business of the Corporation; (4) To acquire by purchase, subscription or otherwise, and to receive, hold, own, sell, assign, exchange, transfer, mortgage, pledge or otherwise dispose of or deal in and with any of the shares of the capital stock, or any voting trust Certificates in respect of the shares of capital stock, scrip, warrants, rights, Bonds, debentures, notes, trust receipts and other securities, obligations, Chooses in action and evidences of indebtedness or interest issued or created by any corporations, joint stock companies, syndicates, associations, firms, 1 2 trust or person, public or private, or by the government of the United States of America, or by any foreign government, or by any state, territory, province, municipality or other political subdivision or by any governmental agency, and as owner thereof to possess and exercise all the rights, powers, and privileges of ownership, including the right to execute consents and vote thereon, and to do any and all acts and things necessary or advisable for the preservation, protection, improvement and enhancement in value thereof; (5) To borrow or raise money for any of the purposes of the Corporation and, from time to time without limit as to amount, to draw, make, accept, endorse, execute and issue promissory notes, drafts, bills of exchange, warrants, bonds, debentures, and other negotiable or nonnegotiable instruments and evidences of indebtedness, and to secure the payment of any thereof and of the interest thereon by mortgage upon or pledge, conveyance or assignment in trust of the whole or any part of the property of the Corporation, whether at the time owned or thereafter acquired, and to sell, pledge, or otherwise dispose of such bonds or other obligations of the Corporation for its corporate purposes; (6) To purchase, receive, take by grant, gift, devise, bequest or otherwise lease, or otherwise acquire, own, hold, improve, employ, use and otherwise deal in and with, real or personal property, or any interest therein, wherever situated, and to sell, convey, lease, exchange, transfer or otherwise dispose of, or mortgage or pledge, all or any of the Corporation's property and assets, or any interest therein, wherever situated; and (7) To engage in any lawful act or activity for which corporations may be organized under the existing laws of the state of Delaware. The business and purposes specified in the foregoing clauses shall, except where otherwise expressed, be in nowise limited or restricted by reference to, or inference from, the terms of any other clause in this Certificate of Incorporation, but the business and purposes specified in each of the foregoing clauses of this article shall be regarded as independent business and purposes. FOURTH: The total number of shares of all classes of stock which the Corporation shall have authority to issue shall be 51,000,000 shares, of which 1,000,000 shares will be preferred stock of the par value of one tenth of a cent each ($.001) (hereinafter called the "Preferred Stock") and of which 50,000,000 shares shall be common stock of the par value of one tenth of a cent each ($.001) (hereinafter called the "Common Stock"). The following is a statement of the powers, preferences and rights and the qualifications, limitations and restrictions, of classes of stock of the Corporation, and the 2 3 authority with respect thereto expressly vested in the Board of Directors of the Corporation. A. Serial Preferred Stock (1) Shares of Serial Preferred Stock may be issued from time to time in one or more series, each such series to have distinctive serial designations, as shall hereafter be determined in the resolution or resolutions providing for the issue of such Serial Preferred Stock from time to time adopted by the Board of Directors pursuant to authority so to do which is hereby vested in the Board of Directors. (2) Each series of Serial Preferred Stock a. May have such number of shares; b. May have such voting powers, full or limited, or may be without voting powers; c. May be subject to redemption at such time or times and at such prices; d. May be entitled to receive dividends (which may be cumulative or non cumulative), at such rate or rates, on such conditions, from such date or dates, and at such times, and payable in preference to, or in relation to, the dividends payable on any other class or classes or series of stock; e. May have such rights upon the dissolution of, or upon any distribution of the assets of, the Corporation; f. May be made convertible into, or exchangeable for, shares of any other class or classes of any other series of the same or any other class or classes of stock of the Corporation at such price or prices or at such rates of exchange, and with such adjustments; g. May be entitled to the benefit of a sinking fund or purchase fund to be applied to the purchase or redemption of shares of such series in such amount or amounts; h. May be entitled to the benefits of such conditions and restrictions upon the creation of indebtedness of the Corporation or any subsidiary, upon the issuance of any additional stock (including additional shares of such series or any other series) and upon the payment of dividends or the making of other distributions on and the purchase redemption or other acquisition by the Corporation or any subsidiary of any outstanding stock of the Corporation; and 3 4 i. May have such other relative, participating, optional or other special rights, and qualifications, limitations or restrictions thereof; all as shall be stated in said resolution or resolutions providing for the issuance of such Serial Preferred Stock. Except where otherwise set forth in the resolution or resolutions adopted by the Board of Directors providing for the issuance of any series of Serial Preferred Stock, the number of shares comprising such series may be increased or decreased (but not below the number of shares then outstanding) from time to time by like action of the Board of Directors. (3) Shares of any series of Serial Preferred Stock which have been redeemed (whether through the operation of a sinking fund or otherwise) or purchased by the Corporation, or which, if convertible or exchangeable, have been converted into or exchanged for shares of stock of any other class or classes shall have the statue of authorized and unissued shares of Serial Preferred Stock and may be reissued as a part of the series of which there were originally a part or may be reclassified and reissued as part of a new series of Serial Preferred Stock to be created by resolution or resolutions of the Board of Directors or as part of any other series of Preferred Stock, all subject to the conditions or restrictions on issuance set forth in the resolution or resolutions adopted by the Board of Directors providing for the issuance of any series of Serial Preferred Stock and to any filing required by law. B. Common Stock (1) Except as otherwise provided by law or by the resolution or resolutions of the Board of Directors providing for the issuance of any series of the Serial Preferred Stock, the Common Stock shall have the exclusive right to vote for the election of Directors and for all other purposes, each holder of the Common Stock being entitled to one vote for each share held. (2) Subject to all of the rights of the Serial Preferred Stock or any series thereof, the holders of the Common Stock shall be entitled to receive, which, as and if declared by the Board of Directors, out of funds legally available therefor, dividends payable in cash, stock or otherwise. (3) Upon any liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, and after the holders of the Serial Preferred Stock of each series shall have been paid in full, the amounts to which they respectively shall be entitled, or a sum sufficient for such payments in full shall have been set aside, the remaining net assets of the Corporation shall be distributed pro rata to the holders of the Common Stock 4 5 in accordance with their respective rights and interests, to the exclusion of the holders of the Serial Preferred Stock. C. General Provisions Whenever the vote of stockholders at a meeting thereof is required or permitted to be taken for or in connection with any corporate action, the meeting and vote of stockholders may be dispensed with and such action may be taken with the written consent of stockholders having not less than the minimum percentage of the vote required by statute for the proposed corporate action, provided that prompt notice shall be given to all stockholders of the taking of the corporate action without a meeting and by less than unanimous vote. FIFTH: No stockholder of this Corporation shall by reason of his holding shares of any class have any pre-emptive or preferential right to purchase or subscribe to any shares of any class of the Corporation, now or hereafter to be authorized or any notes, debentures, bonds or other securities convertible into or carrying warrants or options to purchase shares of any class, now or hereafter to be authorized, whether or not the issuance of any such shares or such notes, debentures, bonds or other securities would adversely affect the dividend or voting rights of such stockholder other than such rights, in any, as the Board of Directors, in its discretion, may fix; and the Board of Directors may issue shares of any class of this Corporation, or any note, debentures, bonds or other securities convertible into or carrying options or warrants to purchase shares of any class, without offering any such shares of any class, whether in whole or in part, to the existing stockholders of any class. SIXTH: The name and mailing address of the incorporator is:
Name Mailing Address - ---- --------------- Bruce A. Butcher, Esq. Suite 3827-1001 Fourth Ave. Plaza Seattle, WA 98154
SEVENTH: The Corporation is to have perpetual existence. EIGHT: The number of directors constituting the original Board of Directors is one (1). The number of the directors shall be fixed by, or in the manner provided in, the By-Laws of the Corporation. The names and addresses of the initial directors of the Corporation who are to serve until the first annual meeting of the shareholders or until their successors are elected and qualified are: 5 6
Name Mailing Address - ---- --------------- Thomas J. Gillespie 191 Sun Valley Road. PO Box 5569 Ketchum, Idaho 83340
NINTH: In furtherance and not in limitation of the powers conferred by statute, the Board of Directors is expressly authorized: (1) To make, alter or repeal the By-Laws of the Corporation. (2) To authorize and cause to be executed mortgages and liens upon the real and personal property of the Corporation. (3) To set apart out of any of the funds of the Corporation available for dividends a reserve or reserves for any purpose and to abolish any such reserve in the manner in which it was created. (4) By a majority of the whole Board of Directors, to designate one or more committees to consist of two or more of the directors of the Corporation. The Board of Directors may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. Any such committee, to the extent provided in the resolution or in the by-laws of the corporation, shall have and may exercise the powers of the Board of Directors in the management of the business and affairs of the Corporation and may authorize the seal of the Corporation to be affixed to all papers which may require it; provided, however, the by-laws may provide that in the absence or disqualification of any member of such committee or committees the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any such absent or disqualified member. (5) When and as authorized by the affirmative vote of the holders of a majority of the stock issued and outstanding having voting power given at a stockholder's meeting duly called upon such notice as is required by statute, or when authorized by the written consent of the holders of a majority of the voting stock issued and outstanding, to sell, lease or exchange all or substantially all the property and assets of the Corporation, including its goodwill and its corporate franchises, upon such terms and conditions and for such consideration, which may consist in whole or in part of money or property including securities of any other corporation or corporations, as the 6 7 Board of Directors shall deem expedient and for the best interests of the Corporation. TENTH: Meetings of stockholders may be held within or without the State of Delaware, as the by-laws may provide. The books of the Corporation may be kept (subject to any provision contained in the statutes) outside of the State of Delaware at such place or places as may be designated from time to time by the Board of Directors or in the by-laws of the Corporation shall so provide. ELEVENTH: A director of the Corporation shall not be personally liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except for liability (i) for any breach of the director's duty of loyalty to the Corporation or its stockholders, (ii) for acts of omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the Delaware General Corporation Law, as the same exists or hereafter may be amended, or (iv) for any transaction from which the director derived an improper personal benefit. If the Delaware General Corporation Law hereafter is amended to authorize the further elimination of limitation of the liability of directors, then the liability of a director of the Corporation, in addition to the limitation on personal liability provided herein, shall be limited to the fullest extent permitted by the amended Delaware General Corporation Law. Any repeal or modification of this paragraph by the stockholders of the Corporation shall be prospective only, and shall not adversely affect any limitation on the personal liability of a director of the Corporation existing at the time of such repeal or modification. The Corporation shall, to the extent permitted by Section 145 of the Delaware General Corporation Law, as amended from time to time, indemnify and reimburse all persons whom it may indemnify and reimburse pursuant thereto. Expenses incurred by an officer of director in defending a civil or criminal action, suit or proceeding shall be paid by the Corporation in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of such director or officer to repay such amount if it shall ultimately be determined that he is not entitled to be indemnified by the Corporation as authorized in Section 145(e) of the Delaware General Corporation Law. Notwithstanding the foregoing, the indemnification provided for herein shall not be deemed exclusive of any other rights to which those entitled to receive indemnification or reimbursement hereunder may be entitled under any by-law of this Corporation, agreement, vote of stockholders or disinterested directors of otherwise. TWELFTH: No contract or transaction between this corporation and any person, firm, association, or corporation and no act of this Corporation shall, in the absence of fraud, be invalidated or in any way affected by the fact that any of the directors of this Corporation are pecuniarily or otherwise interested directly or indirectly, in such contract, transaction or act, or are related to or interested in, as a director, stockholder, 7 8 officer, employee, member or otherwise, such person, firm, association or corporation. Any director so interested or related who is present at any meeting of the Board of Directors or committee of directors at which action on any contract, transaction or act is taken may be counted in determining the presence of a quorum at such meeting and may vote thereat with respect to such contract, transaction or act with like force and effect as if he were not so interested or related. No director so interested or related shall, because of such interest or relationship, be disqualified from holding his office or be liable to the Corporation or to any stockholder or creditor thereof for any loss incurred by this Corporation under or by reason of such contract, transaction or act, or be accountable for any gains or profits he may have realized therein. THIRTEENTH: The Corporation reserves the right to amend, alter, change or repeal any provision contained in this Certificate of Incorporation, in the manner how or hereafter prescribed by statute, and all rights conferred upon stockholders herein are granted subject to this reservation. THE UNDERSIGNED, being the incorporator herein before named, for the purpose of forming a corporation pursuant to the Corporation Laws of the State of Delaware, does make this Certificate, hereby declaring and certifying that this is my act and deed and the facts herein stated are true and accordingly have hereunto set my hand this 29th day of July, 1998. /s/ Bruce A. Butcher ----------------------------------- Bruce A. Butcher 8 EX-3.2 7 v67130ex3-2.txt EXHIBIT 3.2 1 CERTIFICATE OF AMENDMENT TO THE CERTIFICATE OF INCORPORATION OF AQUA VIE BEVERAGE CORPORATION Aqua Vie Beverage Corporation, a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware (the "Company"), does hereby certify: FIRST: That Article FOURTH of the Certificate of Incorporation of the Company is hereby amended by adding to the end thereof a new paragraph reading in its entirety as follows: "The issued and outstanding shares of common stock, Class A Preferred Shares ("Class A Preferred") and Class B Preferred Shares ("Class B Preferred") of the Company shall be and hereby are reclassified and combined into a lesser number of shares of common, Class A Preferred or Class B Preferred stock, as the case may be, at a ratio of 5:1, such that each five (5) shares of common, Class A Preferred and Class B Preferred stock issued and outstanding shall be reclassified and combined into and become respectively one share of common, one share of Class A Preferred or one share of Class B Preferred stock. Fractional shares resulting from the reclassification and combination shall be rounded to the nearest thousandth of a share". SECOND: That the foregoing amendment was duly adopted by the Board of Directors and stockholders of the Company in accordance with the provisions of Sections 228 and 242 of the General Corporation Law of the State of Delaware. THIRD: That the effective date of this Certificate of Amendment shall be midnight on the day it is filed with the Secretary of State. IN WITNESS WHEREOF, the Company has caused this Certificate of Amendment to be signed by its duly authorized officer this 10th day of November, 1998. AQUA VIE BEVERAGE CORPORATION By: /s/ John Cooper, Jr. ------------------------------- John Cooper, Jr., Secretary EX-3.3 8 v67130ex3-3.txt EXHIBIT 3.3 1 CERTIFICATE OF AMENDMENT TO THE CERTIFICATE OF INCORPORATION OF AQUA VIE BEVERAGE CORPORATION Aqua Vie Beverage Corporation, a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware (the "Company"), does hereby certify: FIRST: That Paragraph 5(k) of the Designation of Rights of Series B Preferred Shares is amended as to provide as follows: (k) Adjustment Based on Market Success. In the event that Common Shares shall have had an average price as defined hereunder of $2.00 per Common Share, then for each $.50 over $2.00, but not over $12.00 per Common Share, then the amount of Common Shares into which these Series B Preferred Shares may be converted shall increase by 25%. Thus at $2.00 or less (unless the conversion Rate is otherwise adjusted as provided above, in which case to reflect the adjusted Conversion Rate), if each Share hereof would be convertible into 1000 shares of Common Stock, then if the average price were $2.50 per Common Share, then the conversion would be 1,250 shares; and at an average price of $12.00 per Common Share, the conversion would be 6,000 Common Shares; likewise, if no other adjustment to the Conversion Rate shall be required, but there shall have been a equivalent reverse split of Common Shares and Series B Preferred Shares of 25 reduced to 1, then the Common price at which the Conversion will be increased would increase proportionately, to a price of $50 per Common share, and for each increase of $12.50 per Common Share, the Conversion of a Series B Preferred Share would be increased 25%, or from 1,000 Common Shares to 1,250 Common Shares, to a maximum of 6,000 Common Shares if the Common Share price shall be $300.00 per Share; likewise, if however there should have been a two for one stock split for Common and Preferred Series B Shares, the price at which the conversion would be increased would be $1.00, and there would be an increased conversion of 25% for each $.25 increase in price. (ii) The average price shall be computed by the average between the bid and ask price of the Common Shares for a period of ten days prior to the conversion request on such markets as the Common Shares may be regularly traded, and if there is more than one market, then the average of the markets upon which 75% or more of the Common Shares are traded; if the Common Shares shall not have been trading during said 10 day period, for regulatory reasons or any other reason, then the ten day prior period in which such trading did occur, or the last placement price of $200,000 or more of the Common Shares, or in the event of an acquisition or merger, the merger or acquisition price, whichever is higher. The average price shall be adjusted in the event that there shall be recapitalizations such as a share split. Thus if there should be a reverse share split of common of 10 to 1, then the price at which an increase in conversion would occur under 2 section (i) would be $20 per Common Share average price, and the increments would be $5.00, rather than $.50. SECOND: That the foregoing amendment was duly adopted by the Board of Directors and stockholders of the Company in accordance with the provisions of Sections 228 and 242 of the General Corporation Law of the State of Delaware. THIRD: That the effective date of this Certificate of Amendment shall be on the day it is filed with the Secretary of State. IN WITNESS WHEREOF, the Company has caused this Certificate of Amendment to be signed by its duly authorized officer this 31st day of August, 1999. AQUA VIE BEVERAGE CORPORATION By: /s/ Joseph J. Wozniak -------------------------------- Joseph J Wozniak, Vice President 2 EX-3.4 9 v67130ex3-4.txt EXHIBIT 3.4 1 CERTIFICATE OF AMENDMENT TO THE CERTIFICATE OF INCORPORATION OF AQUA VIE BEVERAGE CORPORATION [AMENDING THE CERTIFICATES OF DESIGNATIONS OF SERIES A, SERIES B AND SERIES C PREFERRED SHARES] Aqua Vie Beverage Corporation, a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware (the "Company"), does hereby certify: FIRST: That the Certificate of Incorporation of the Company is hereby amended by amending the Certificate of Designations of the Series A Preferred Shares filed October 8, 1998 to delete the last sentence of Section 5(e) and to insert immediately following the first sentence of Section 5(e) a new sentence reading in its entirety as follows: "If the Company at any time or from time to time effects a subdivision of the outstanding Series A Preferred Shares, the Conversion Rate then in effect immediately before that subdivision shall be proportionately decreased, and conversely, if the Company at any time or from time to time combines the outstanding shares of Series A Preferred Shares into a smaller number of shares, the Conversion Rate then in effect immediately before the combination shall be proportionately increased." SECOND: That the Certificate of Incorporation of the Company is hereby amended by amending the Certificate of Designations of the Series B Preferred Shares filed October 8, 1998 to delete the last sentence of Section 5(e) and to insert immediately following the first sentence of Section 5(e) a new sentence reading in its entirety as follows: "If the Company at any time or from time to time effects a subdivision of the outstanding Series B Preferred Shares, the Conversion Rate then in effect immediately before that subdivision shall be proportionately decreased, and conversely, if the Company at any time or from time to time combines the outstanding shares of Series B Preferred Shares into a smaller number of shares, the Conversion Rate then in effect immediately before the combination shall be proportionately increased." THIRD: That the Certificate of Incorporation of the Company is hereby amended by amending the Certificate of Designations of the Series C Preferred Shares filed October 8, 1998 to delete the last sentence of Section 5(e) and to insert immediately following the first sentence of Section 5(e) a new sentence reading in its entirety as follows: "If the Company at any time or from time to time effects a subdivision of the outstanding Series C Preferred Shares, the Conversion Rate then in effect immediately before that 2 subdivision shall be proportionately decreased, and conversely, if the Company at any time or from time to time combines the outstanding shares of Series C Preferred Shares into a smaller number of shares, the Conversion Rate then in effect immediately before the combination shall be proportionately increased." FOURTH: That the foregoing amendments were duly adopted by the Board of Directors and stockholders of the Company in accordance with the provisions of Sections 228 and 242 of the General Corporation Law of the State of Delaware. FIFTH: That this Certificate of Amendment shall be effective as of the date and time of its filing with the Secretary of State. IN WITNESS WHEREOF, the Company has caused this Certificate of Amendment to be signed by its duly authorized officer this 4th day of November, 1998. AQUA VIE BEVERAGE CORPORATION By: /s/ JOHN COOPER --------------------------------- John Cooper, Jr., Secretary 2 EX-3.5 10 v67130ex3-5.txt EXHIBIT 3.5 1 BY-LAWS OF AQUA VIE BEVERAGE CORPORATION Art. I. Offices 1.01 Registered Office 1.02 Principal Office 1.03 Other Offices Art. II. Shareholders 2.01 Time and Place of Meetings 2.02 Annual Meeting - Election of Directors 2.03 Special Meetings 2.04 Notices 2.05 Voting List 2.06 Quorum 2.07 Majority Vote; Withdrawal of Quorum 2.08 Voting 2.09 Record Date; Closing Transfer Books 2.10 Action without Meeting Art. III. Directors 3.01 Management 3.02 Number; Qualification; Election; Term 3.03 Change in Number 3.04 Removal 3.05 Vacancies 3.06 Compensation 3.07 Meetings of the Board of Directors (a) Place (b) First Meetings (c) Regular Meetings (d) Special Meetings (e) Quorum; Majority Vote (f) Procedure 3.08 Action without Meeting 3.09 Telephone and Communications Equipment Meetings Art. IV. Notices 4.01 Method 4.02 Waiver -i- 2 Art. V. Committees of the Board of Directors 5.01 Designation 5.02 Number; Qualification; Term 5.03 Authority of Committees 5.04 Change in Number 5.05 Removal 5.06 Vacancies 5.07 Meetings 5.08 Quorum; Majority Vote 5.09 Compensation 5.10 Procedure 5.11 Action without Meeting 5.12 Responsibility 5.13 Telephone and Communications Equipment Meetings Art. VI. Officers & Agents 6.01 Number; Qualification; Election; Term 6.02 Removal 6.03 Vacancies 6.04 Authority 6.05 Compensation 6.06 Chairman of the Board 6.07 President 6.08 Executive Vice President 6.09 Vice Presidents 6.10 Secretary 6.11 Assistant Secretaries 6.12 Treasurer 6.13 Bonding of Officers Art. VII. Certificates and Shareholders 7.01 Certificates 7.02 Issuance 7.03 Payment for Shares 7.04 Subscriptions 7.05 Lien 7.06 Lost, Stolen or Destroyed Certificates 7.07 Registration or Transfer 7.08 Registered Owner 7.09 Preemptive Rights Art. VIII. Indemnification; Insurance 8.01 Persons 8.02 Extent -- Derivative Suits 8.03 Standard -- Derivative Suits -ii- 3 8.04 Extent -- Nonderivative Suits 8.05 Standard -- Nonderivative Suits 8.06 Determination That Standard Has Been Met 8.07 Proration 8.08 Advance Payment 8.09 Nonexclusive 8.10 Continuation 8.11 Insurance 8.12 Reports Art. IX. General Provisions 9.01 Dividends and Reserves 9.02 Books and Records 9.03 Annual Statement 9.04 Checks and Notes 9.05 Fiscal Year 9.06 Seal 9.07 Resignation 9.08 Amendment of By-laws 9.09 Construction 9.10 Table of Contents; Headings -iii- 4 AQUA VIE BEVERAGE CORPORATION (A Delaware Corporation) BY-LAWS ARTICLE I OFFICES 1.01 Registered Office. The registered office of the Corporation in the State of Delaware shall be the Corporation Services Corporation located at 1013 Centre Road, City of Wilmington, County of New Castle, Delaware 19805. 1.02 Principal Office. The principal office of the Corporation shall be 333 South Main Street, Ketchum, Idaho 83340. 1.03 Other Offices. The Corporation may also have offices at such other places, both within and without the State of Delaware as the board of directors may from time to time determine or the business of the Corporation may require. ARTICLE II STOCKHOLDERS 2.01 Time and Place of Meetings. All meetings of the stockholders shall be held at such time and place, within or without the State of Delaware, as shall be stated in the notice of meeting or in a duly executed waiver thereof. 2.02 Annual Meeting - Election of Directors. An annual meeting of the stockholders, commencing with the year 1999 shall be held each year at a time on the third Friday during the month of September to be selected by the board of directors. If such day is a legal holiday, the meeting shall be held on the next secular day following. At the meeting, the stockholders shall elect the directors and transact such other business as may properly be brought before the meeting. 2.03 Special Meeting. Special meetings of the stockholders, for any purpose or purposes, unless otherwise prescribed by the Act or by the Articles of Incorporation, or by these By-Laws, may be called by the chairman of the board, if any, the president or secretary, and shall be called by the chairman of the board, the president or secretary at the request in writing of a majority of the board of directors or the holders of twenty-five percent (25%) or more of the shares entitled to vote at such meeting. Such request shall state the purpose or purposes of the proposed meeting. Business transacted at any special meeting of stockholders shall be limited to the purposes stated in the 5 notice of the meeting. 2.04 Notices. Written or printed notice of the annual or any special meeting stating the place, day, and hour of the meeting and, in the case of a special meeting, the purpose or purposes for which the meeting is called, shall be delivered to each stockholder of record entitled to vote not less than ten nor more than fifty days before the date of the meeting, either personally or by mail, by or at the direction of the chairman of the board, the president, the secretary or the officer or person calling the meeting. If mailed, such notice shall be deemed to be delivered when deposited in the United States mail addressed to the stockholder at the address as it appears on the stock transfer books of the corporation, with postage thereon prepaid. 2.05 Voting List. The officer or agent who has charge of the stock transfer books of the corporation shall make, at least ten days before every meeting of stockholders, a complete list of the stockholders entitled to vote at said meeting or any adjournment thereof, arranged in alphabetical order, with address of and the number of voting shares held by each. Such list shall be kept on file at the principal office of the corporation for a period of ten days prior to such meeting and shall be subject to inspection by any stockholder at any time during usual business hours. Such list shall also be produced and kept open at the time and place of the meeting and shall be subject to the inspection of any stockholder during the whole time of the meeting. The original stock transfer books shall be prima facie evidence as to who are stockholders entitled to examine such list or transfer books and to vote at any meeting of stockholders. 2.06 Quorum. The holders of a majority of the issued and outstanding stock entitled to vote thereat, present in person or represented by proxy, shall be requisite and shall constitute a quorum at all meetings of the stockholders for the transaction of business except as otherwise provided by statute, by the certificate of incorporation, or by these By-Laws. If a quorum is not present or represented at a meeting of the stockholders, the stockholders entitled to vote thereat, present in person or represented by proxy, shall have power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum is present or represented. At such adjourned meeting at which a quorum is present or represented, any business may be transacted which might have been transacted at the meeting as originally notified. 2.07 Majority Vote; Withdrawal of Quorum. When a quorum is present at any meeting, the vote of the holders of a majority of the shares have voting power, present in person or represented by proxy, shall decide any question brought before such meeting, unless the question is one upon which, by express provision of 2 6 the statutes or of the certificate of incorporation or of these By-Laws, a different vote is required in which case such express provision shall govern and control the decision of such question. The stockholders present at a duly organized meeting may continue to transact business until adjournment, notwithstanding the withdrawal of enough stockholders to leave less than a quorum. 2.08 Voting. (a) Each outstanding share, regardless of class, shall be entitled to one vote on each matter submitted to a vote at a meeting of stockholders, except to the extent that the voting rights of the shares of any class or classes are limited or denied by the articles of incorporation. At any meeting of the stockholders, every stockholder having the right to vote may vote either in person, or by proxy executed in writing by the stockholder or by his duly authorized attorney in fact. No proxy shall be valid after eleven months from the date of its execution, unless otherwise provided in the proxy. Each proxy shall be revocable unless expressly provided therein to be irrevocable and unless otherwise made irrevocable by law. Each proxy shall be filed with the secretary of the corporation prior to or at the time of the meeting. (b) Treasury shares, shares of stock owned by another corporation the majority of the voting stock of which is owned or controlled by this corporation, and shares of stock held by this corporation in a fiduciary capacity shall not be voted, directly or indirectly, at any meeting and shall not be counted in determining the total number of outstanding shares at any given time. (c) Directors shall be elected by plurality vote. (d) Shares standing in the name of another corporation, domestic or foreign, may be voted on by such officer, agent, or proxy as the By-Laws of such corporation may authorize or, in the absence of such authorization, as the board of directors of such corporation may determine. (e) Shares held by an administrator, guardian or conservator may be voted by him so long as such shares forming part of an estate are in the possession and forming a part of the estate being served by him, either in person or by proxy, without a transfer of such shares into his name. Shares standing in the name of a trustee may be voted by him, either in person or by proxy, but no trustee shall be entitled to vote shares held by him without a transfer to such shares into his name as trustee. (f) Shares standing in the name of a receiver may be voted by such receiver, and shares held by or under the control of a receiver may be voted by such receiver without the transfer thereof into his name if authority so to be contained in 3 7 an appropriate order of the court by which such receiver was appointed. (g) A stockholder whose shares are pledged shall be entitled to vote such shares until the shares have been transferred into the name of the pledgee, and thereafter the pledgee shall be entitled to vote the shares so transferred. (h) Voting on any question or in any election may be by voice vote or show of hands unless the presiding officer shall order, or the holders of at least ten percent of the shares entitled to vote shall demand, that voting be by written ballot. 2.09 Record Date; Closing Transfer Books. The board of directors may fix in advance a record date for the purpose of determining stockholders entitled to notice of or to vote at a meeting of the stockholders, the record date to be not less than ten nor more than fifty days prior to the meeting; for such purpose for a period of not less than ten nor more than fifty days prior to such meeting. In the absence of any action by the board of directors, the date upon which the notice of the meeting is mailed shall be the record date. 2.10 Action Without Meeting. Whenever the vote of stockholders at a meeting thereof is required or permitted to be taken for or in connection with any corporate action, the meeting and vote of stockholders may be dispensed with and such action may be taken with the written consent of stockholders having not less than the minimum percentage of the vote required by statute for the proposed corporate action, provided that prompt notice shall be given to all stockholders of the taking of the corporate action without a meeting and by less than unanimous consent. ARTICLE III DIRECTORS 3.01 Management. The business and affairs of the corporation shall be managed by the board of directors who may exercise all such powers of the corporation and do all such lawful actions and things as are not (by statute or by the articles of incorporation or by these By-Laws) directed or required to be exercised or done by the stockholders. 3.02 Number; Qualification; Election; Term. The board of directors shall consist of not fewer than one nor more than eleven directors as shall be fixed from time to time by resolution of the board of directors. The first board after the adoption of these By-Laws shall consist of three directors. Directors need not be residents of the State of Delaware or 4 8 stockholders of the corporation. The directors shall be elected at the annual meeting of the stockholders, except as provided in By-Laws 3.03 and 3.05. Each director shall hold office until his successor shall be elected and shall qualify. 3.03 Change in Number. The number of directors may be increased or decreased from time to time by resolution of the board of directors at any meeting, but not decrease shall have the effect of shortening the term of any incumbent director. 3.04 Removal. Any director may be removed either for or without cause at any special or annual meeting of stockholders, by the affirmative vote of a majority in number of shares of the stockholders present in person or by proxy at such meeting and entitled to vote for the election of such director if notice of intention to act upon such matter shall have been given in the notice calling such meeting. 3.05 Vacancies. Any vacancy occurring in the Board of Directors (by death, resignation, removal or otherwise) may be filled by an affirmative vote of a majority of the Directors then in office, although less than a quorum, or by a sole remaining Director. A Director elected to fill such a vacancy shall be elected for the unexpired term of his predecessor in office. Any newly created directorship resulting from any increase in the authorized number of Directors may be filled by an affirmative vote of a majority of the Directors then in office, although less than a quorum, or by a sole remaining Director. 3.06 Compensation. By resolution of the board of directors, the directors may be paid their expenses, if any, of attendance at each meeting of the board of directors and may be paid a fixed sum of attendance at each meeting of the board of directors or a corporation in any other capacity and receiving compensation therefor. Member of special or standing committees may, by resolution of the board of directors, be allowed like compensation for attending committee meetings. 3.07 Meetings of the Board of Directors. (a) Place. Meetings of the board of directors of the corporation, regular or special, may be held either within or without the state of Delaware. (b) First Meeting. The first meeting of the newly elected board of directors shall be held without further notice immediately following the annual meeting of stockholders, at the same place, unless (by unanimous consent of the directors then elected and serving) such time or place shall be changed. (c) Regular Meetings. Regular meetings of the 5 9 board of directors may be held without notice at such time and at such place as shall from time to time by determined by the board by resolution. (d) Special Meetings. Special meetings of the board of directors may be called by or at the request of the chairman of the board, the president or the secretary and shall be called by the secretary on the written request of two of the incumbent directors. The person or persons authorized to call special meetings of the board of directors may fix the place for holding any special meeting of the board of directors called by them. Notice of any special meeting shall be given at least twenty-four (24) hours previous thereto if given either personally (including written notice delivered personally or notice by telephone) or by telegram, and at least seventy-two (72) hours previous thereto if given by written notice mailed to each director at the address of his business and residence. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the board of directors need by specified in the notice or waiver of notice of such meeting. If mailed, the notice shall be deemed to be delivered when deposited in the United States mail addressed, in the above-specified manner, with postage thereon prepaid. If notice by given by telegram, such notice shall be deemed to be delivered when the telegram is delivered to the telegraph company. Any director may waive notice of any meeting, as provided in By-Law 4.02. (e) Quorum; Majority Vote. At all meetings of the board of directors a majority of the number of directors fixed by these By-Laws shall constitute a quorum for the transaction of business. The act of a majority of the directors present at any meeting at which a quorum is present shall be the act of the board of directors, except as otherwise specifically provided by statute or by the articles of incorporation or by these By-Laws. If a quorum is not present at a meeting of the board of directors, the directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum is present. (f) Procedure. The board of directors shall keep regular minutes of its proceedings. The minutes shall be placed in the minute book of the corporation. 3.08 Action Without Meeting. Any action required or permitted to be taken at a meeting of the board of directors may be taken without a meeting if a consent in writing, setting forth the action so taken, is signed by all the members of the board of directors. Such consent shall have the same force and effect as a unanimous vote at a meeting. The signed consent, or a signed copy, shall be placed in the minute book. 6 10 3.09 Telephone and Communication Equipment Meetings. Stockholders, members of the board of directors, and members of any committee of the board of directors may participate in meetings by means of conference telephone or other communications equipment to the full extent permissible by Section 141 (i) of the General Corporation Law of the State of Delaware. ARTICLE IV NOTICES 4.01 Method. Whenever by statute or the certificate of incorporation or these By-Laws, notice is required to be given to director or stockholder, and no provision is made as to how the notice shall be given, it shall not be construed to mean personal notice, but any such notice may be given (a) in writing, by mail, postage prepaid, addressed to the director or stockholder at the address appearing on the books of the corporation, or (b) in any other method permitted by law. Any notice required or permitted to be given by mail shall be deemed given at the time when the same is this deposited in the United States mail. 4.02 Waiver. Whenever, by statute or the articles of incorporation or these By-Laws, notice is required to be given to a stockholder or director, a waiver thereof in writing signed by the person or persons entitled to such notice, whether before or after the time stated in such notice, shall be equivalent to the giving of such notice. Attendance of a director at a meeting shall constitute a waiver of notice of such meeting, except where a director attends for the express purpose of objecting to the transaction of any business on the ground that the meeting is not lawfully called or convened. ARTICLE V. COMMITTEES OF THE BOARD OF DIRECTORS 5.01 Designation. The board of directors may by resolution of a majority of the whole board, designate an executive committee, and one or more other committees including an audit committee, a compensation committee, and any such other special committees as the board shall deem advisable. 5.02 Number; Qualification; Term. Each committee shall consist of, one or more directors who will serve at the pleasure of the board of directors. The executive committee shall include the president. The other committees may include any members of the board except as provided below with respect to the audit and compensation committees. (a) Audit Committee. The audit committee if any 7 11 shall consist of directors who are not officers or full-time employees of the corporation. (b) Compensation Committee. The compensation committee, if any, may include the chief accounting and financial officer of the corporation provided a majority of the committee are not officers or full-time employees of the corporation. 5.03 Authority of Committees. (a) The Executive Committee. The executive committee, to the extent provided in such resolution, shall have and may exercise all of the authority of the board of directors in the management of the business and affairs of the corporation, certificate of incorporation, and shall have power to authorize the seal of the corporation to be affixed to all papers which may require it. Without limiting the general authority of the executive committee, it shall have the power: (1) to appoint officers and agents of the corporation and determine their salaries (subject to recommendation of the compensation committee, if any). (2) to borrow money, and issue bonds, notes or other obligations and evidences of indebtedness therefor. (3) to authorize the corporate seal to be affixed to documents of the corporation. (4) to determine questions of general policy with regard to the business of the corporation. (5) to make recommendations as to declaration of dividends. (b) Audit Committee. The audit committee, if any, shall nominate the independent public accountants to report on the financial statements of the corporation, and shall have such other powers, duties and authority as shall be set forth in the resolutions of the board of directors appointing the committee. (c) Compensation Committee. The compensation committee, if any, shall have the responsibility of reviewing the remuneration of the officers and key employees of the corporation including stock option and stock purchase rights and such other powers, duties and authority as shall be set forth in the resolutions of the board of directors appointing the committee. (d) Other Committees. Any other committee or committees appointed by the directors shall have and may exercise 8 12 such powers of the board of directors in the management of the business and affairs of the corporation as shall be provided in the resolution(s) creating the committee. Such committee or committees shall have such name or names as may be determined from time to time by resolution of the board of directors. 5.04 Chance in Number. The number of members of any committee may be increased or decreased from time to time by resolution adopted by a majority of the whole board of directors. 5.05 Removal. Any member of a committee may be removed by the board of directors by the affirmative vote of a majority of the whole board, whenever in its judgment the best interests of the corporation will be served thereby. 5.06 Vacancies. A vacancy occurring in any committee (by death, resignation, removal or otherwise) may be filled by the board of directors in the manner provided for original designation in By-Law 5.01. 5.07 Meetings. Time, place and notice (if any) of executive committee meetings shall be determined by the committee. 5.08 Quorum; Majority Vote. At meetings of each committee, a majority of the number of members designated by the board of directors shall constitute a quorum for the transaction of business. The act of a majority of the members present at any meeting at which a quorum is present shall be the act of the committee, except as otherwise specifically provided by statute or by the articles of incorporation or by these By-Laws. If a quorum is not present at a meeting of the committee, the members present thereat may adjourn the meeting from time to time, without notice other than an announcement at the meeting, until a quorum is present. 5.09 Compensation. See By-Law 3.05. 5.10 Procedure. Each committee shall keep regular minutes of its proceedings and report the same to the board of directors when required. The minutes of the proceedings of each committee shall be placed in the minute book of the corporation. 5.11 Action Without Meeting. Any action required or permitted to be taken at a meeting of any committee may be taken without a meeting if a consent in writing, setting forth the action so taken, is signed by all the members of the committee. Such consent shall have the same force and effect as a unanimous vote at a meeting. The signed consent, or a signed copy, shall be placed in the minute book. 5.12 Telephone and Communication Equipment Meetings. Meetings 9 13 of committees may be held by telephone as provided in By-Law 3.09. 5.13 Responsibility. The designation of a committee and the delegation of authority to it shall not operate to relieve the board of directors, or any member thereof, of any responsibility imposed upon it or him by law. ARTICLE VI. OFFICERS AND AGENTS 6.01 Number; Qualification; Election; Term. (a) The corporation shall have: (1) A president, a vice president, a secretary and a treasurer, and (2) Such other officers (including a chairman of the board, an executive vice president and additional vice presidents) and assistant officers and agents as the board of directors may deem necessary. (b) Officers named in By-Law 6.01(a)(1) shall be elected by the board of directors on the expiration of an officer's term or whenever a vacancy exists. Officers and agents named in By-Law 6.01(a)(2) may be elected by the board at any meeting. (c) Unless otherwise specified by the board at the time of election or appointment, or in an employment contract approved by the board, each officer's and agent's term shall end at the first meeting of directors after the next annual meeting of stockholders. He shall serve until the end of his term or, if earlier, his death, resignation, or removal. (d) Any two or more officers may be held by the same person. 6.02 Removal. Any officer or agent elected or appointed by the board of directors may be removed by the board of directors whenever in its judgment the best interests of the corporation will be served thereby. Such removal shall be without prejudice to the contract rights, if any, of the person so removed. Election or appointment of an officer or agent shall not of itself create contract rights. 6.03 Vacancies. Any vacancy occurring in any office of the corporation (by death, resignation, removal or otherwise) may be filed by the board of directors. 10 14 6.04 Authority. Officers and agents shall have such authority and perform such duties in the management of the corporation as are provided in these By-Laws or as may be determined by resolution of the board of directors not inconsistent with these By-Laws. 6.05 Compensation. The compensation of officers and agents shall be fixed from time to time by the board of directors. 6.06 Chairman of the Board. If there be a chairman of the board of directors, he shall be chosen from among the directors and shall be the chief executive officer of the corporation, unless the board of directors shall designate the president as chief executive officer. He shall have the power to call special meetings of the stockholders and of the directors for any purpose or purposes, and he shall preside at all meetings of the stockholders and of the board of directors, unless he shall be absent or unless he shall, at his option, designate the president to preside in his stead at some particular meeting. The chairman of the board shall have all of the powers granted by the By-Laws to the president including the power to make and sign contracts and agreements in the name and on behalf of the corporation. He shall, in general, have supervisory power over the president, the other officers and the business activities of the corporation, subject to the approval or review of the board of directors. 6.07 President. If there be a chairman of the board of directors, the powers and duties of the president shall be subject to the powers and duties of the chairman of the board of directors. If there be no chairman of the board, the president shall have all the powers and duties provided for in By-Law 6.06 as well as those provided in this By-Law 6.07. The president, who need not be chosen from among the directors, shall be an ex officio member of all standing committees, shall, subject to the powers conferred upon the chairman of the board under By-Law 6.06 of this Article, be the chief executive officer of the corporation; preside at all meetings of the stockholders and the board of directors, shall have general and active management of the business and affairs of the corporation, and shall see that all orders and resolutions of the board are carried into effect. He shall perform such other duties and have such other authority and powers as the board of directors may from time to time prescribe. 6.08 Executive Vice President. If there be an executive vice president, he shall be the ranking vice president and shall be the chief operating officer of the corporation unless the board of directors shall designate another officer as chief operating officer. In the absence or disability of the president, the executive vice president shall perform all the duties, exercise 11 15 the powers and assume all responsibilities of the president. He shall also generally assist the president and exercise any other powers and perform such other duties as are delegated to him by the president and as the board of directors shall prescribe. 6.09 Vice Presidents. The vice presidents in the order of their seniority, unless otherwise determined by the board of directors, shall, in the absence or disability of the president, perform the duties and have the authority and powers as the board of directors may from time to time prescribe or as the president may from time to time delegate. 6.10 Secretary. (a) The secretary shall attend all meetings of the board of directors and all meetings of the stockholders and record all votes and the minutes of all proceedings in a book to be kept for that purpose and shall perform like duties for the executive committee when required. (b) He shall give, or cause to be given, notice of all meetings of the stockholders and special meetings of the board of directors. (c) He shall keep in safe custody the seal of the corporation and, when authorized by the board of directors or the executive committee, affix the same to any instrument requiring it and, when so affixed, it shall be attested by his signature or by the signature of the treasurer or an assistant secretary, which may be facsimile. (d) He shall be under the supervision of the president. He shall perform such other duties and have such other authority and powers as the board of directors may from time to time prescribe or as the president may from time to time delegate. 6.11 Assistant Secretaries. The assistant secretaries in the order of their seniority, unless otherwise determined by the board of directors, shall, in the absence or disability of the secretary, perform the duties and have the authority and exercise the powers of the secretary. They shall perform such other duties and have such other powers as the board of directors may from time to time prescribe or as the president may from time to time delegate. 6.12 Treasurer. (a) The treasurer shall have the custody of the corporate funds and securities and shall keep full and accurate accounts of receipts and disbursements of the corporation and 12 16 shall deposit all monies and other valuable effect in the name and to the credit of the corporation in such depositories as may be designated by the boards of directors. (b) He shall disburse the funds of the corporation as may be credited by the board of directors, taking proper vouchers for such disbursements, and shall render to the president and directors, at the regular meetings of the board, or whenever they may require it, an account of all his transactions as treasurer and of the financial condition of the corporation. (c) He shall perform such other duties and have such other authority and powers as the board of directors may from time to time prescribe or as the president may from time to time delegate. 6.12 Assistant Treasurers. The assistant treasurers in the order of their seniority, unless otherwise determined by the board of directors, shall, in the absence or disability of the treasurer, perform the duties and have the authority and exercise the powers of the treasurer. They shall perform such other duties and have such other powers as the board of directors may from time to time prescribe or the president may from time to time delegate. 6.13 Bonding of Officers. If required by the board of directors, all or certain officers shall give the corporation a bond in such form, in such sum, and with such surety or sureties as shall be satisfactory to the board for the faithful performance of the duties of his office and for the restoration to the corporation, in case of his death, resignation, retirement or removal from office, of all books, papers, vouchers, money and other property of whatever kind in his possession or under his control belonging to the corporation. ARTICLE VII CERTIFICATES AND STOCKHOLDERS 7.01 Certificates. The corporation shall deliver certificates representing all shares to which stockholders are entitled. Certificates shall be consecutively numbered and shall be entered in the books of the corporation as they are issued. Each certificate shall state on the face thereof the holder's name, the number and class of shares, the par value of shares or a statement that such shares are without par value, and such other matters as may be required by law. They shall be signed by the president or a vice president and such other officer or officers as the board of directors shall designate, and may be sealed with the seal of the corporation or a facsimile thereof. The signature of any such officer may be facsimile. In case any 13 17 officer who has signed, of whose facsimile signature has been used on such certificate, shall cease to be such officer of the corporation before such certificate has been delivered by the corporation or its agents, such certificate may nevertheless be issued and delivered with the same effect as if he were still such officer at the date of issue. 7.03 Payment for Shares. (1) Kind. The consideration for the issuance of shares shall consist of money paid, labor done (including services actually performed for the corporation), or property (tangible or intangible) actually received. Neither promissory notes nor the promise of future services shall constitute payment for shares. (2) Valuation. In the absence of fraud in the transaction, the judgment of the board of directors as to the value of consideration received shall be conclusive. (3) Effect. When consideration, as fixed by law, has been paid, the shares shall be deemed to have been issued and shall be considered fully paid and non-assessable. (4) Allocation of Consideration. The consideration received for shares shall be allocated by the board of directors, in accordance with law, between stated capital and capital surplus accounts. 7.04 Subscription. Unless otherwise provided in the subscription agreement, subscription of shares, whether made before or after organization of the corporation, shall be paid in full at such time or in such installments and at such times as shall be determined by the board of directors. Any call made by the board of directors for payment on subscriptions shall be uniform as to all shares of the same series, as the case may be. In case of default in the payment on any installment or call when payment is due, the corporation may proceed to collect the amount due in the same manner as any debt due to the corporation. 7.05 Lien. For any indebtedness of a stockholder to the corporation, the corporation shall have a first and prior lien on all shares of its stock owned by him and on all dividends or other distributions declared thereon. 7.06. Lost, Stolen or Destroyed Certificates. The corporation shall issue a new certificate in place of any certificate for shares previously issued if the registered owner of the certificate: (a) Claim. Makes proof in affidavit form that it 14 18 has been lost or wrongfully taken or destroyed; and (b) Timely Request. Requests the issuance of a new certificate before the corporation has notice that the certificate has been acquired by a purchaser for value in good faith and without notice of an adverse claim; and (c) Bond. Gives a bond in such form, and with such surety or sureties, with fixed or open penalty, as the corporation may direct, to indemnify the corporation (and its transfer agent and registrar, if any) against any claim that may be made on account of the alleged loss, destruction, or theft of the certificate; and (d) Other Requirements. Satisfies any other reasonable requirements imposed by the corporation. When a certificate has been lost, apparently destroyed or wrongfully taken, and the holder of record fails to notify the corporation within a reasonable time after he has notice of it, and the corporation registers a transfer of the shares represented by the certificate before receiving such notification, the holder of record is precluded from making any claim against the corporation for the transfer or for a new certificate. 7.07 Registration of Transfer. The corporation shall register the transfer of a certificate for shares presented to it for transfer if: (a) Endorsement. The certificate is properly endorsed by the registered owner or by his duly authorized attorney; and (b) Guaranty and Effectiveness of Signature. The signature of such person has been guaranteed by a national banking association or member of the New York Stock Exchange, and reasonable assurance is given that such enforcements are effective; and (c) Adverse Claims. The corporation has no notice of an adverse claim or has discharged any duty to inquire into such a claim; and (d) Collection of Taxes. Any applicable law relating to the collection of taxes has been complied with; and (e) Stop Transfer Orders and Legends. The corporation has not issued a stop-transfer order or placed a legend on such certificate restricting transfer; or, if legended, the registered owner has complied with the conditions for transfer provided for in the legend. 15 19 ARTICLE VIII INDEMNIFICATION; INSURANCE 8.01 Persons. The corporation shall indemnify, to the extent provided in By-Laws 8.01, 8.02, and 8.04: (a) Any person who is or was director, officer, agent or employee of the corporation, and (b) Any person who serves or served at the corporation's request as a director, officer, agent, employee, partner or trustee of another corporation or of a partnership, joint venture, trust or other enterprise. 8.02 Extent -- Derivative Suits. In case of a suit by or in the right of the corporation against a person named in By-Law 8.01 by reason of his holding a position named in By-Law 8.01, the corporation shall indemnify him if he satisfies the standard in By-Law 8.03 for expenses (including attorney's fees but excluding amounts paid in settlement) actually and reasonably incurred by him in connection with the defense or settlement of the suit. 8.03 Standard -- Derivative Suits. In case of a suit by or in the right of the corporation, a person named in By-Law 8.01 shall be indemnified only if: (a) He is successful on the merits of otherwise; or (b) He acted in good faith in the transaction which is the subject of the suit, and in a manner he reasonably believed to be in, or not opposed to, the best interests of the corporation. However, he shall not be indemnified in respect of any claim, issue or matter as to which he has been adjudged liable for negligence or misconduct in the performance of his duty to the corporation unless, and only to the extent that, the court in which the suit was brought shall determine upon application that, despite the adjudication but in view of all the circumstances, such person is fairly and reasonably entitled to indemnity for such expenses as the court shall deem proper. 8.04 Extent -- Nonderivative Suits. In case of a suit, action or proceeding (whether civil, criminal, administrative or investigative) - other than a suit by or in the right of the corporation - together thereafter referred to as a nonderivative suit, against a person named in By-Law 8.01 by reason of his holding a position named in By-Law 8.01, the corporation shall indemnify him if he satisfied the standard in By-Law 8.05 for amount actually and reasonably incurred by him in connection with the defense or settlement of the nonderivative suit as: 16 20 (a) Expenses (including attorney's fees); (b) Amount paid in settlement; (c) Judgment; and (d) Fines. 8.05 Standard -- Nonderivative Suits. In case of non-derivative suit, a person named in By-Law 8.01 shall be indemnified only if: (a) He is successful on the merits or otherwise; or (b) He acted in good faith in the transaction which is the subject of the nonderivative suit, and in a manner reasonably believed to be in, or not opposed to, the best interest of the corporation and, with respect to any criminal action or proceeding, he has no reason to believe his conduct was unlawful. The termination of nolo contendere or its equivalent shall not, of itself, create a presumption that the person failed to satisfy the standard of this By-Law 8.05(b). 8.06 Determination That Standard Has Been Met. A determination that the standard of By-Laws 8.03 or 8.05(b) (second sentence), the determination may be made by: (1) A majority of the directors of the corporation (whether or not a quorum) who were not parties to the section, suit or proceeding, or; (2) Independent legal counsel in a written opinion; or (3) The stockholders of the corporation. 8.07 Proration. Anyone making a determination under By-Law 8.06 may determine that a person has met the standard as to some matters but not as to others, and may reasonably prorate amounts to be indemnified. 8.08 Advance Payment. The corporation may pay in advance any expenses (including attorney's fees) which may become subject to indemnification under By-Laws 8.01 - 8.08 if: (a) The board of directors authorizes the specific payment; and (b) The person receiving the payment undertakes in writing to repay unless it is ultimately determined that he is 17 21 entitled to indemnification by the corporation under By-Laws 8.01 -- 8.08. 8.09 Nonexclusive. The indemnification provided by By-Laws 8.01 -- 8.08 shall not be exclusive of any other rights to which a person may be entitled by the Certificate of Incorporation, law, by-law, agreement, vote of stockholders or disinterested directors, or otherwise. 8.10 Continuation. The indemnification and advance payment provided by By-Laws 8.01 -- 8.08 shall inure to his heirs, executors and administrators. 8.11 Insurance. The corporation may purchase and maintain insurance on behalf of any person who holds or who has held any position named in By-Laws 8.01, against any liability incurred by him in any position, or arising out of his status as such, whether or not the corporation would have power to indemnify him against such liability under By-Laws 8.01 -- 8.08. 8.12 Reports. Indemnification payments, advance payments and insurance payments made under By-Laws 8.01 -- 8.11 shall be reported in writing to the stock holders of the corporation with the next notice of annual meeting. ARTICLE IX. GENERAL PROVISIONS 9.01 Dividends and Reserves (a) Declaration and Payment. Subject to statute and the articles of incorporation, dividends may be declared by the board of directors at any regular or special meeting and may be paid in cash, in property, or in shares of the corporation. The declaration and payment shall be at the discretion of the board of directors. (b) Record Date. The board of directors may fix in advance a record date for the purpose of determining stockholders entitled to receive payment of any dividend, the record date to be not more than fifty days prior to the payment date of such dividend, or the board of directors may close the stock transfer books for such purpose for a period of not more than fifty days prior to the payment date of such dividend. In the absence of any action by the board of directors, the date upon which the board of directors adopts the resolution declaring the dividend shall be the record date. (c) Reserves. By resolution the board of directors may create such reserve or reserves out of the earned 18 22 surplus of the corporation as the directors from time to time, in their discretion, think proper to provide for contingencies, or to equalize dividends, or to repair or maintain any property of the corporation, or for any other purpose they think beneficial to the corporation. The directors may modify or abolish any such reserve in the manner in which it was created. 9.02 Books and Records. The corporation shall keep correct and complete books and records of account and shall keep minutes of the proceedings of its stockholders and board of directors, and shall keep at its registered office or principal place of business, or at the office of its transfer agent, agent or registrar, a record of its stockholders, giving the names and addresses of all stockholders and the number and class of the shares held by each. 9.03 Annual Statement. The board of directors shall mail to each stockholder of record, at least ten days before each annual meeting a full and clear statement of the business and condition of the corporation, including a reasonably detailed balance sheet, income statement, and surplus statement, all prepared in conformity with generally accepted accounting principles applied on a consistent basis. 9.04 Check and Notes. All checks or demands for money and notes of the corporation shall be signed by such officer or officers or such other person or persons as the board of directors may from time to time designate. 9.05 Fiscal Year. The fiscal year of the corporation shall be fixed by resolution of the board of directors. 9.06 Seal. The corporation seal (of which there may be one or more exemplars) shall contain the name of the corporation and the name of the state of incorporation. The seal may be used by impressing it or reproducing a facsimile of it, or otherwise. 9.07 Resignation. Any director, officer or agent may resign by giving written notice to the president or the secretary. The resignation shall take effect at the time specified therein, or immediately if no time is specified therein. Unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective. 9.08 Amendment of By-Laws. These By-Laws may be altered, amended, or repealed at any meeting of the board of directors at which a quorum is present, by the affirmative vote of a majority of the directors present at such meeting, provided notice of the proposed alteration, amendment, or repeal is contained in the notice of such meeting. 19 23 9.09 Construction. Whenever the context so requires, the masculine shall include the feminine and neuter, and the singular shall include the plural, and conversely. If any portion of these By-Laws shall be invalid or inoperative, then, so far as if reasonable and possible; (a) The remainder of these By-Laws shall be considered valid and operative. (b) Effect shall be given to the intent manifested by the portion held invalid or inoperative. 9.10 Table of Contents; Headings. The table of contents and headings are for organization, convenience and clarity. In interpreting these By-Laws, they shall be subordinated in importance to the other written material. 20 EX-4.1 11 v67130ex4-1.txt EXHIBIT 4.1 1 CERTIFICATE OF DESIGNATION OF RIGHTS OF SERIES A PREFERRED SHARES OF AQUA VIE BEVERAGE CORPORATION-H Pursuant to Section 151 (g) of Title 8 of the General Corporate Law of the State of Delaware and Article V of the Articles of Incorporation, the Directors hereby designate The voting powers, designations, preferences, rights and qualifications, limitations and restrictions of: "SERIES A PREFERRED SHARES" And there is authorized to be issued 200,000 shares thereof with the following rights, terms and preferences: 1. DIVIDENDS. Right to Preferential Dividends. Subject to the rights and preferences of other classes or series of Preferred Shares, the Holders of the then outstanding Series A Preferred Shares {except when there shall have been either a notification of election for conversion by the Holders under Section 5(a), hereunder, or the conditions shall have been fulfilled for a conversion by the Company as provided in Section 5(b) hereunder, whether or not notification thereof has been made by the Company, (unless the Company shall expressly give notice it elects not to require such conversion)} shall be entitled to receive, if, when, and as declared by the Board, out of any funds legally available therefor, a non-cumulative preference of 10% on cash dividends up to $300.00 maximum total accumulated dividends per Series A Preferred Share held thereby. These dividends shall be payable, when and as declared by the Board. Dividends on the Series A Preferred Shares shall be non-cumulative, there shall be no minimum dividends, and no rights shall accrue to the Holders of the Series A Preferred Shares in the event that the Company shall fail to declare or pay dividends on the Series A Preferred Shares, whether or not the earnings of the Company in that previous fiscal year were sufficient to pay such dividends in whole or in part. In the event that the number of outstanding Series A Preferred Shares are adjusted by stock split, reverse split, or other corporate action, the preference stated herein shall be adjusted accordingly. The balance of any such dividends so declared shall be allocated as between Series A Preferred Shares and Common Shares as if said Series A Preferred Shares had been converted to Common Shares based on the Conversion Ratio (as adjusted) provided herein, and as to any other classes or series of Preferred Shares in accordance with the rights and preferences thereof. 2. LIQUIDATION RIGHTS OF SERIES A PREFERRED SHARES. (a) Preference. Subject to the rights and preferences of other classes or series of Preferred Shares in the event of any liquidation, dissolution, or winding-up of the Company, whether voluntary or involuntary, {except when there shall have been either a notification of election for conversion by the Holders under Section 5(a), hereunder, or 1 2 the conditions shall have been fulfilled for a conversion by the Company as provided in Section 5(b) hereunder, whether or not notification thereof has been made by the Company, (unless the Company shall expressly give notice it elects not to require such conversion)} the Holders of the Series A Preferred Shares then outstanding shall be entitled to be paid out of the assets of the Company available for distribution to its shareholders, whether such assets are capital, surplus, or earnings, before any payment or declaration and setting apart for payment of any amount shall be made in respect of the Common Stock, an amount equal to $300.00 per Series A Preferred Share held thereby plus an amount equal to all declared and unpaid dividends thereon, less accumulated total dividends paid thereto (but not less than zero). If upon any liquidation, dissolution, or winding up of the Company, whether voluntary or involuntary, the assets to be distributed to the Holders of the Series A Preferred Shares shall be insufficient to permit the payment to such shareholders of the full preferential amount aforesaid, then all of the assets of the Company to be distributed shall be distributed ratably to the Holders of the Series A Preferred Shares, subject to any rights or preferences of any other classes or series of Preferred Shares, on the basis of the number of shares of Series A Preferred Shares so held. (b) Payments to Common Stock. After the preferred payment of $300.00 per Series A Preferred Share is made to Holders of the Series A Preferred Shares the Holders of the Series A Preferred Shares shall be entitled to share with Common Shares, based on the adjusted conversion ratio of Preferred Series A Shares to Common Shares as if converted, and as to other Classes or Series of Preferred Shares based on the conversion ratio of said Shares to Common as if converted or as otherwise provided in the rights and designations thereof as may from time to time be made by the Board of Directors, all remaining assets of the Company to be distributed. (c) Effect of Adjustments of Shares. In the event that the number of outstanding Series A Preferred Shares are adjusted by stock split, reverse split, or other corporate action, the preference stated herein shall be adjusted accordingly. 3. MERGER, CONSOLIDATION. (a) Preference. Subject to the rights and preferences of other classes or series of Preferred Shares in the event of any merger or share exchange of the Company, or a sale or other disposition of all or substantially all of the assets of the Company {except when there shall have been either a notification of election for conversion by the Holders under Section 5(a), hereunder, or the conditions shall have been fulfilled for a conversion by the Company as provided in Section 5(b) hereunder, whether or not notification thereof has been made by the Company, (unless the Company shall expressly give notice it elects not to require such conversion)} the Holders of the Series A Preferred Shares then outstanding shall be entitled to receive, before any payment or declaration and setting apart for payment of any amount shall be made in respect of the Common Stock, for each share of such Series A Preferred Stock so held, in cash or in securities (including, without limitation, debt securities) received from the acquiring corporation, at the closing of any 2 3 such transaction, an amount equal to $300.00 per Series A Preferred Share, plus an amount equal to all declared and unpaid dividends thereon, less total accumulated dividends paid thereto (but not less than zero). In the event that the number of outstanding Series A Preferred Shares are adjusted by stock split, reverse split, or other corporate action, the preference stated herein shall be adjusted accordingly (b) Remaining Proceeds. Subject to the rights and preferences of other classes or series of Preferred Shares after the payment or distribution to the Holders of the Series A Preferred Shares of the full preferential amount, the Holders of the Series A Preferred Shares, Holders of other Series or Classes of Preferred Shares according to the Rights and Designations thereof and Holders of Common Stock then outstanding shall be entitled to receive ratably, with all Series A Preferred Shares treated as if it had been converted into Common Stock pursuant to Section 5 hereof, all remaining proceeds of the Company to be distributed. (c) Valuation of securities received pursuant to a merger, share exchange, sale of substantially all the assets or similar transaction. In the event that a transaction occurs pursuant to which non-cash assets are received and to which this Section applies, the assets received for the purposes of this Section shall be valued as follows: (i) If the assets received are securities that are listed on NASDAQ or an exchange, the value shall be deemed to be the 3 day high average closing price (or average between bid/ask if OTC) on such exchange or NASDAQ over the 30 day period prior to the closing of the transaction by which the securities are received. (ii) If the assets received are of readily ascertainable market value, then that value shall be used. (iii) If the assets are unlisted securities or other assets that do not have a readily ascertainable value, the Board of Directors in good faith will value said assets. (iv) The fact that assets exist which may require a valuation process as described herein shall not delay closing the transaction by which the assets are being received. (d) Notice. With respect to any transaction which involves a merger or exchange of shares, or a sale of substantially all the assets not in the ordinary course of business, the Series A shareholders shall receive not less than ten days notice of the transaction and the terms and conditions thereof. 4. VOTING RIGHTS. (a) Each Holder of Series A Preferred Shares shall be entitled to vote on all matters including election of the Board of Directors and, except as otherwise expressly 3 4 provided herein, shall be entitled to the number of votes that equal the number of Common Shares to which said Series A Preferred Shares could be converted. (b) Unless otherwise required by law, Series A Preferred shareholders and Common shareholders shall vote together on all matters upon which shareholders are permitted to vote and not as separate classes. In those cases where Series A Preferred Shareholders are required by law to vote as a separate class, the vote required by said class for approval of the proposed action shall be a simple majority of the class. (c) Voting rights shall be adjusted in the event of adjustments in the Conversion Ratio, except that increases or reductions that apply equally to Series A Preferred Shares and Common Shares shall not cause an adjustment to be made. 5. CONVERSION. The Company and the Holders of Series A Preferred Shares shall have the following conversion rights: (a) Right to Convert. Each share of Series A Preferred Shares shall be convertible, if there shall be sufficient Common Shares authorized and issuable therefor at the option of the Holder as follows, (i) none for the 12 month period following issuance to the Holder unless a greater amount is approved by the Company; (ii) 5% of the Series B Preferred Shares held by the Holder may be converted during the twelve month period following the initial twelve months after issuance to the Holder unless a greater amount is approved by the Company; (iii) 10% of the Series B Preferred Shares held by the Holder may be converted during the twelve month period following the initial twenty-four months after issuance to the Holder unless a greater amount is approved by the Company; (iv) all Series B Preferred Shares held by the Holder may be converted at any time after thirty-six months following issuance to the Holder, thereof, into fully paid and non assessable shares of Common Stock at the Conversion Rate set forth in Section 5(c) hereunder (as adjusted). In the event that Series A Preferred Shares subject thereto shall have been transferred, the time period for conversion shall be measured from the date of issuance to the initial Holder hereof. (b) Automatic Conversion at Election of Company. (i) Each share of Series A Preferred Shares shall automatically at the election of the Company be converted into shares of Common Stock based on the then effective Conversion Rate set forth in Section 5(c) hereunder (as adjusted) if any one of the following shall occur: (A) The Holders of 51% of the Series A Preferred Shares outstanding have given notice of election to convert as provided herein in Section 6; (B) The Board of Directors of the Company shall have approved a plan of reorganization, exchange, merger or consolidation to which the Company is a party, or an acquisition of the Company; (C) Immediately upon the 4 5 closing of an underwritten public offering pursuant to an effective registration statement under the Securities Act of 1933, as amended, with respect to the Common Stock of the Company (including shares registered by selling Series A Preferred shareholders) where the amount of such securities sold is $10,000,000. or more; (D) When the Company shall have a net worth of $10,000,000 or more; (E) After the Common Shares shall have been listed on NASDAQ for a period of not less than three months. (ii) Upon the occurrence of any of the events specified in paragraph 5(b)(i) and the election (if applicable) being so made by the Company, the outstanding shares of Series A Preferred Shares shall be converted automatically without any further action by the Holders of such Series A Preferred Shares and whether or not the certificates representing such Series A Preferred Shares are surrendered to the Company or its transfer agent; provided however, that the Company shall not be obligated to issue certificates evidencing the shares of Common Stock issuable upon the conversion unless the certificates evidencing such Series A Preferred Shares are either delivered to the Company or its transfer agent, or the Holder notifies the Company or its transfer agent that such certificate have been lost, stolen or destroyed and executes an agreement satisfactory to the Company to indemnify the Company from any loss incurred by it in connection with such certificates. The conversion shall be deemed to have occurred immediately prior to the business day on which the Series A certificates are to be surrendered, and the person entitled to receive the Common shares upon such a conversion shall be deemed a Common Shareholder of record as of that date. (c) Conversion Rate, adjustments. Except as provided elsewhere herein for adjustment of conversion based on share price, recapitalization or other factors, the Conversion Rate is 1000 Common Shares for One Series A Preferred Share. The Conversion Rate shall be subject to adjustment from time to time as provided below; no adjustment shall apply after a Series A Preferred Share has been converted. (d) Mechanics of Conversion. Each Holder of Series A Preferred Shares who desires to convert the same into shares of Common Stock shall surrender the certificate, duly endorsed, at the office of the Company or of any transfer agent for the Series A Preferred Shares or Common Stock, and shall give written notice to the Company at such office that such Holder elects to convert the same and shall state therein the number of shares of Series A Preferred Shares being converted. Thereupon the Company shall promptly issue and deliver to such Holder a certificate or certificates for the number of shares of Common Stock to which such Holder is entitled. Such conversion shall be deemed to have been made immediately prior to the close of business on the date of such surrender of the certificate representing the Series A Preferred Shares to be converted, and the person entitled to receive the shares of Common Stock issuable upon such 5 6 conversion shall be treated for all purposes as the record Holder of such shares of Common Stock on such date. (e) Adjustment for Stock Splits and Combinations. If the Company at any time or from time to time effects a subdivision of the outstanding Common Stock, the Conversion Rate then in effect immediately before that subdivision shall be proportionately increased, and conversely, if the Company at any time or from time to time combines the outstanding shares of Common Stock into a smaller number of shares, the Conversion Rate then in effect immediately before the combination shall be proportionately decreased. Any adjustment under this subsection (e) shall become effective at the close of business on the date the subdivision or combination becomes effective. Subdivisions or combinations of Series A Preferred Shares shall be similarly considered to compute the final adjustment to the Conversion Rate to reflect stock splits and combinations. (f) Adjustments for Reclassification, Exchange and Substitution. In the event that at any time or from time to time, the Common Stock issuable upon the conversion of the Series A Preferred Shares is changed into the same or a different number of shares of any class or classes of stock, whether by recapitalization, reclassification or otherwise (other than a subdivision or combination of shares or stock dividend or a reorganization, merger, exchange of shares, or sale of assets, provided for elsewhere in this Section), then and in any such event each Holder of Series A Preferred Shares shall have the right thereafter to convert such stock into the kind and the maximum amount of stock and other securities and property receivable upon such recapitalization, reclassification or other change, by Holders of shares of Common Stock into which such shares of Series A Preferred Shares could have been converted immediately prior to such recapitalization, reclassification or change, all subject to further adjustment as provided herein. (g) Reorganizations, Mergers, Consolidations or Sales of Assets. If at any time or from time to time there is a capital reorganization of the Common Stock (other than a recapitalization, subdivision, combination, reclassification or exchange of shares provided for elsewhere in this Section) or a merger or exchange of shares of the Company with or into another corporation, or the sale of all or substantially all of the Company's properties and assets to any other person, then as a part of such reorganization, merger, consolidation or sale, provision shall be made so that the Holders of the Series A Preferred Shares shall have the right thereafter to convert such stock into the number of shares of stock or other securities or property to which a Holder of the number of shares of Common Stock deliverable upon conversion would have been entitled on such capital reorganization, merger, consolidation, or sale. In any such case, appropriate adjustment shall be made in the application of the provisions of this Section with respect to the right of the Holders of the Series A Preferred Shares after the reorganization, merger, consolidation or sale to the end that the provisions of this Section (including adjustment of the Conversion Rate then in effect and the number of shares receivable upon conversion of the Series A Preferred Shares) shall be applicable after that event and be as nearly equivalent as may be practicable. 6 7 (h) Sale of Common Shares Below $.33 per Share. (i) If at any time or from time to time, the Company issues or sells, or is deemed by the express provisions of this subsection (i) to have issued or sold, additional shares of Common Stock (as hereinafter defined), for an effective price (as hereinafter defined) that is less than $.33 Share (or as adjusted after application of adjustments provided in sections (e),(f),(g) hereabove), then in addition to any other adjustments provided herein and in each such case the then existing Conversion Rate shall be increased, the increase being computed to reflect the proportionate decrease in price over all of the previously existing Common Shares such lower price would produce. Thus, if (before any other adjustments provided herein) there were 10,000,000 Shares of Common Stock outstanding and 1,000,000 Common Shares were sold at $.20/ share, the 10,000,000 Common Shares would be valued at $.33/share ($3,300,000), plus the 1,000,000 Common Shares newly sold at $200,000, and the result, 11,000,000 Common Shares would be divided into $3,500,000. The resultant difference between such number and $.33 per Common Share would be the basis to adjust the Conversion Rate to reflect the dilution. (ii) For the purpose of making any adjustment required under subsection 5(h)(i), the consideration received by the Company for any issue or sale of securities shall (aa) to the extent it consists of cash be computed at the amount of cash for which the securities are sold, (bb) to the extent it consists of property other than cash, be computed at the fair value of that property as determined in good faith by the Board. (i) Fractional Shares. Series A Preferred Shares may be issued in fractional amounts. (j) Reservation of Stock Issuable Upon Conversion. The Company shall at all times reserve and keep available out of its authorized but unissued shares of Common Stock, solely for the purpose of effecting the conversion of the shares of the Series A Shares, such number of its shares of Common Stock as shall from time to time be sufficient to effect the conversion of all outstanding shares of the Series A Preferred Shares that shall be convertible at that time; and if at any time the number of authorized but unissued shares of Common Stock shall not be sufficient to effect the conversion of all then outstanding shares of the Series A Preferred Shares that shall be convertible at that time, the Company will take such corporate action as may, in the opinion of its counsel, be necessary to increase its authorized but unissued shares of Common Stock to such number of shares as shall be sufficient for such purpose. Should this action require the affirmative vote of the Holders of Series A Preferred Shares, whether as a Class or voted with Common Shares, said Holders of Series A Preferred Shares shall be deemed solely for this purpose to have consented thereto, and shall be deemed to irrevocably 7 8 constituted management of the Company as their proxy and attorney in fact solely for this purpose to execute such documents as may be required to effect this consent. 6. REGISTRATION RIGHTS (a) At any time after Series A Preferred Shares shall have been converted into Common Shares at the election of the Company as provided in Section 5(b) and the Company shall have exercised its right to require conversion thereunder, or if the Holders of a majority of the Series A Preferred Shares shall have given notice of election for Conversion as provided in Section 5(a), the Holders of a majority of the Series A Preferred Shares may request "piggyback" registration of the Common Shares in conjunction with a registration planned by the Company subject to underwriter approval. (b) Upon such a request being made by the Holders of a majority of the Series A Preferred Shares, the Company will notify all of the remaining Holders of Series A Preferred Shares as well as all Holders of Common Shares who shall have previously converted Series A Preferred Shares (but not the successor thereof if by sale), and they shall be deemed to have requested the registration and shall be fully subject thereto. (c) The Company will use its best efforts to effect a single public registration on the appropriate form available thereto of all converted shares. The Company will be under no obligation to secure an underwriter or other seller for the shares and sales of shares after the registration will be solely the responsibility of the Holder thereof. (d) To the extent required to effect the registration, converting shareholders shall fully cooperate with the Company and its counsel. Failure to cooperate will entitle the Company to exclude a Holder from the registration. 7. EFFECT OF ISSUANCE OF OTHER SERIES OF PREFERRED SHARES (a) Nothing contained in this designation of rights shall limit the ability of the Company to authorize and issue other Series of Preferred Shares or other classes of Preferred Shares with rights or preferences that are senior to these Series A Preferred Shares or that limit or reduce the rights or preferences of these Series A Preferred Shares. In the event that other Series or Classes of Preferred Shares are authorized and issued, unless otherwise provided in the designation of rights of said other Series or Classes, these Series A Preferred Shares shall vote on all matters based on the conversion rates adjusted into common shares provided herein, and said such other preferred shares shall have such voting rights as is provided in the designation thereof; thus, if there were 1000 Series A Preferred Shares Issued, they would have the voting rights of 1,000,000 Shares of Common Stock, and if 1000 other preferred shares had voting rights of 1,000,000 shares of Common Stock, and there were 10,000,000 shares of Common Stock issued and outstanding, then in all votes for the Board of Directors, or any other matters in which shareholders may vote, all Common Shareholders, and all Preferred 8 9 Shareholders shall vote together, and Preferred Shares would have the weight based on their conversion into common. There shall be no class votes of these Series A Preferred Shares unless said vote is non-waivable and is required by law. (b) Unless otherwise provided in the designation of rights and preferences of other preferred shares, any preferences of these Series A Preferred Shares shall be ratable with other series or classes of Preferred Shares that may be hereafter designated. Dated this 8th day of October, 1998 By: /s/ John Cooper, Jr ---------------------------- John Cooper, Jr. Secretary 9 EX-4.2 12 v67130ex4-2.txt EXHIBIT 4.2 1 CERTIFICATE OF DESIGNATION OF RIGHTS OF SERIES B PREFERRED SHARES OF AQUA VIE BEVERAGE CORPORATION-H Pursuant to Section 151 (g) of Title 8 of the General Corporate Law of the State of Delaware and Article V of the Articles of Incorporation, the Directors hereby designate The voting powers, designations, preferences, rights and qualifications, limitations and restrictions of: "SERIES B PREFERRED SHARES" And there is authorized to be issued 200,000 shares thereof with the following rights, terms and preferences: 1. DIVIDENDS. Right to Preferential Dividends. Subject to the rights and preferences of other classes or series of Preferred Shares, the Holders of the then outstanding Series B Preferred Shares {except when there shall have been either a notification of election for conversion by the Holders under Section 5(a), hereunder, or the conditions shall have been fulfilled for a conversion by the Company as provided in Section 5(b) hereunder, whether or not notification thereof has been made by the Company, (unless the Company shall expressly give notice it elects not to require such conversion)} shall be entitled to receive, if, when, and as declared by the Board, out of any funds legally available therefor, a non-cumulative preference of 10% on cash dividends up to $6.00 maximum total accumulated dividends per Series B Preferred Share held thereby. These dividends shall be payable, when and as declared by the Board. Dividends on the Series B Preferred Shares shall be non-cumulative, there shall be no minimum dividends, and no rights shall accrue to the Holders of the Series B Preferred Shares in the event that the Company shall fail to declare or pay dividends on the Series B Preferred Shares, whether or not the earnings of the Company in that previous fiscal year were sufficient to pay such dividends in whole or in part. In the event that the number of outstanding Series B Preferred Shares are adjusted by stock split, reverse split, or other corporate action, the preference stated herein shall be adjusted accordingly. The balance of any such dividends so declared shall be allocated as between Series B Preferred Shares and Common Shares as if said Series B Preferred Shares had been converted to Common Shares based on the Conversion Ratio (as adjusted) provided herein, and as to any other classes or series of Preferred Shares in accordance with the rights and preferences thereof. 2. LIQUIDATION RIGHTS OF SERIES B PREFERRED SHARES. (a) Preference. Subject to the rights and preferences of other classes or series of Preferred Shares in the event of any liquidation, dissolution, or winding-up of the Company, whether voluntary or involuntary, {except when there shall have been either a notification of election for conversion by the Holders under Section 5(a), hereunder, or 2 the conditions shall have been fulfilled for a conversion by the Company as provided in Section 5(b) hereunder, whether or not notification thereof has been made by the Company, (unless the Company shall expressly give notice it elects not to require such conversion)} the Holders of the Series B Preferred Shares then outstanding shall be entitled to be paid out of the assets of the Company available for distribution to its shareholders, whether such assets are capital, surplus, or earnings, before any payment or declaration and setting apart for payment of any amount shall be made in respect of the Common Stock, an amount equal to $6.00 per Series B Preferred Share held thereby plus an amount equal to all declared and unpaid dividends thereon, less accumulated total dividends paid thereto (but not less than zero). If upon any liquidation, dissolution, or winding up of the Company, whether voluntary or involuntary, the assets to be distributed to the Holders of the Series B Preferred Shares shall be insufficient to permit the payment to such shareholders of the full preferential amount aforesaid, then all of the assets of the Company to be distributed shall be distributed ratably to the Holders of the Series B Preferred Shares, subject to any rights or preferences of any other classes or series of Preferred Shares, on the basis of the number of shares of Series B Preferred Shares so held. (b) Payments to Common Stock. After the preferred payment of $6.00 per Series B Preferred Share is made to Holders of the Series B Preferred Shares the Holders of the Series B Preferred Shares shall be entitled to share with Common Shares, based on the adjusted conversion ratio of Preferred Series B Shares to Common Shares as if converted, and as to other Classes or Series of Preferred Shares based on the conversion ratio of said Shares to Common as if converted or as otherwise provided in the rights and designations thereof as may from time to time be made by the Board of Directors, all remaining assets of the Company to be distributed. (c) Effect of Adjustments of Shares. In the event that the number of outstanding Series B Preferred Shares are adjusted by stock split, reverse split, or other corporate action, the preference stated herein shall be adjusted accordingly. 3. MERGER, CONSOLIDATION. (a) Preference. Subject to the rights and preferences of other classes or series of Preferred Shares in the event of any merger or share exchange of the Company, or a sale or other disposition of all or substantially all of the assets of the Company {except when there shall have been either a notification of election for conversion by the Holders under Section 5(a), hereunder, or the conditions shall have been fulfilled for a conversion by the Company as provided in Section 5(b) hereunder, whether or not notification thereof has been made by the Company, (unless the Company shall expressly give notice it elects not to require such conversion)} the Holders of the Series B Preferred Shares then outstanding shall be entitled to receive, before any payment or declaration and setting apart for payment of any amount shall be made in respect of the Common Stock, for each share of such Series B Preferred Stock so held, in cash or in securities (including, without limitation, debt securities) received from the acquiring corporation, at the closing of any 3 such transaction, an amount equal to $6.00 per Series B Preferred Share, plus an amount equal to all declared and unpaid dividends thereon, less total accumulated dividends paid thereto (but not less than zero). In the event that the number of outstanding Series B Preferred Shares are adjusted by stock split, reverse split, or other corporate action, the preference stated herein shall be adjusted accordingly (b) Remaining Proceeds. Subject to the rights and preferences of other classes or series of Preferred Shares after the payment or distribution to the Holders of the Series B Preferred Shares of the full preferential amount, the Holders of the Series B Preferred Shares, Holders of other Series or Classes of Preferred Shares according to the Rights and Designations thereof and Holders of Common Stock then outstanding shall be entitled to receive ratably, with all Series B Preferred Shares treated as if it had been converted into Common Stock pursuant to Section 5 hereof, all remaining proceeds of the Company to be distributed. (c) Valuation of securities received pursuant to a merger, share exchange, sale of substantially all the assets or similar transaction. In the event that a transaction occurs pursuant to which non-cash assets are received and to which this Section applies, the assets received for the purposes of this Section shall be valued as follows: (i) If the assets received are securities that are listed on NASDAQ or an exchange, the value shall be deemed to be the 3 day high average closing price (or average between bid/ask if OTC) on such exchange or NASDAQ over the 30 day period prior to the closing of the transaction by which the securities are received. (ii) If the assets received are of readily ascertainable market value, then that value shall be used. (iii) If the assets are unlisted securities or other assets that do not have a readily ascertainable value, the Board of Directors in good faith will value said assets. (iv) The fact that assets exist which may require a valuation process as described herein shall not delay closing the transaction by which the assets are being received. (d) Notice. With respect to any transaction which involves a merger or exchange of shares, or a sale of substantially all the assets not in the ordinary course of business, the Series B shareholders shall receive not less than ten days notice of the transaction and the terms and conditions thereof. 4. VOTING RIGHTS. 4 (a) Each Holder of Series B Preferred Shares shall be entitled to vote on all matters including election of the Board of Directors and, except as otherwise expressly provided herein, shall be entitled to a vote equal to 6,000 Common Shares or if the Conversion Rate provided herein is adjusted, to the maximum number of votes that equal the number of Common Shares to which said Series B Preferred Shares could be converted, but not less than the adjusted equivalent to 6,000 shares voting weight of Common Shares for each Share of Series B Preferred. (b) Unless otherwise required by law, Series B Preferred shareholders and Common shareholders shall vote together on all matters upon which shareholders are permitted to vote and not as separate classes. In those cases where Series B Preferred Shareholders are required by law to vote as a separate class, the vote required by said class for approval of the proposed action shall be a simple majority of the class. (c) Voting rights shall be adjusted in the event of adjustments in the Conversion Ratio, except that increases or reductions that apply equally to Series B Preferred Shares and Common Shares shall not cause an adjustment to be made. 5. CONVERSION. The Company and the Holders of Series B Preferred Shares shall have the following conversion rights: (a) Right to Convert. Each share of Series B Preferred Shares shall be convertible, if there shall be sufficient Common Shares authorized and issuable therefor at the option of the Holder as follows, (i) none for the 12 month period following issuance to the Holder, unless a greater amount is approved by the Company; (ii) 5% of the Series B Preferred Shares held by the Holder may be converted during the twelve month period following the initial twelve months after issuance to the Holder, unless a greater amount is approved by the Company; (iii) 10% of the Series B Preferred Shares held by the Holder may be converted during the twelve month period following the initial twenty-four months after issuance to the Holder, unless a greater amount is approved by the Company (iv) all Series B Preferred Shares held by the Holder may be converted at any time after thirty-six months after issuance to the Holder, thereof, into fully paid and non assessable shares of Common Stock at the Conversion Rate set forth in Section 5(c) hereunder (as adjusted). In the event that a transfer of Series B Preferred Shares subject hereto shall have occurred, the periods for conversion shall date from the date of issuance to the initial Holder hereof. (b) Automatic Conversion at Election of Company. (1) Each share of Series B Preferred Shares shall automatically at the election of the Company be converted into shares of Common Stock based on the then effective Conversion Rate set forth in Section 5(c) 5 hereunder (as adjusted) if any one of the following shall occur: (B) The Holders of 51% of the Series B Preferred Shares outstanding have given notice of election to convert as provided herein in Section 6; (B) The Board of Directors of the Company shall have approved a plan of reorganization, exchange, merger or consolidation to which the Company is a party, or an acquisition of the Company; (C) Immediately upon the closing of an underwritten public offering pursuant to an effective registration statement under the Securities Act of 1933, as amended, with respect to the Common Stock of the Company (including shares registered by selling Series B Preferred shareholders) where the amount of such securities sold is $10,000,000. or more; (D) When the Company shall have a net worth of $10,000,000 or more; (E) After the Common Shares shall have been listed on NASDAQ for a period of not less than three months. (ii) Upon the occurrence of any of the events specified in paragraph 5(b)(i) and the election (if applicable) being so made by the Company, the outstanding shares of Series B Preferred Shares shall be converted automatically without any further action by the Holders of such Series B Preferred Shares and whether or not the certificates representing such Series B Preferred Shares are surrendered to the Company or its transfer agent; provided however, that the Company shall not be obligated to issue certificates evidencing the shares of Common Stock issuable upon the conversion unless the certificates evidencing such Series B Preferred Shares are either delivered to the Company or its transfer agent, or the Holder notifies the Company or its transfer agent that such certificate have been lost, stolen or destroyed and executes an agreement satisfactory to the Company to indemnify the Company from any loss incurred by it in connection with such certificates. The conversion shall be deemed to have occurred immediately prior to the business day on which the Series B certificates are to be surrendered, and the person entitled to receive the Common shares upon such a conversion shall be deemed a Common Shareholder of record as of that date. (c) Conversion Rate, adjustments. Except as provided elsewhere herein for adjustment of conversion based on share price, recapitalization or other factors, the Conversion Rate is 1000 Common Shares for One Series B Preferred Share. The Conversion Rate shall be subject to adjustment from time to time as provided below; no adjustment shall apply after a Series B Preferred Share has been converted. (d) Mechanics of Conversion. Each Holder of Series B Preferred Shares who desires to convert the same into shares of Common Stock shall surrender the certificate, duly endorsed, at the office of the Company or of any transfer agent for the Series B Preferred Shares or Common Stock, and shall give written notice to the Company at such office that such Holder elects to convert the same and shall state therein the number of 6 shares of Series B Preferred Shares being converted. Thereupon the Company shall promptly issue and deliver to such Holder a certificate or certificates for the number of shares of Common Stock to which such Holder is entitled. Such conversion shall be deemed to have been made immediately prior to the close of business on the date of such surrender of the certificate representing the Series B Preferred Shares to be converted, and the person entitled to receive the shares of Common Stock issuable upon such conversion shall be treated for all purposes as the record Holder of such shares of Common Stock on such date. (e) Adjustment for Stock Splits and Combinations. If the Company at any time or from time to time effects a subdivision of the outstanding Common Stock, the Conversion Rate then in effect immediately before that subdivision shall be proportionately increased, and conversely, if the Company at any time or from time to time combines the outstanding shares of Common Stock into a smaller number of shares, the Conversion Rate then in effect immediately before the combination shall be proportionately decreased. Any adjustment under this subsection (e) shall become effective at the close of business on the date the subdivision or combination becomes effective. Subdivisions or combinations of Series B Preferred Shares shall be similarly considered to compute the final adjustment to the Conversion Rate to reflect stock splits and combinations. (f) Adjustments for Reclassification, Exchange and Substitution. In the event that at any time or from time to time, the Common Stock issuable upon the conversion of the Series B Preferred Shares is changed into the same or a different number of shares of any class or classes of stock, whether by recapitalization, reclassification or otherwise (other than a subdivision or combination of shares or stock dividend or a reorganization, merger, exchange of shares, or sale of assets, provided for elsewhere in this Section), then and in any such event each Holder of Series B Preferred Shares shall have the right thereafter to convert such stock into the kind and the maximum amount of stock and other securities and property receivable upon such recapitalization, reclassification or other change, by Holders of shares of Common Stock into which such shares of Series B Preferred Shares could have been converted immediately prior to such recapitalization, reclassification or change, all subject to further adjustment as provided herein. (g) Reorganizations, Mergers, Consolidations or Sales of Assets. If at any time or from time to time there is a capital reorganization of the Common Stock (other than a recapitalization, subdivision, combination, reclassification or exchange of shares provided for elsewhere in this Section) or a merger or exchange of shares of the Company with or into another corporation, or the sale of all or substantially all of the Company's properties and assets to any other person, then as a part of such reorganization, merger, consolidation or sale, provision shall be made so that the Holders of the Series B Preferred Shares shall have the right thereafter to convert such stock into the number of shares of stock or other securities or property to which a Holder of the number of shares of Common Stock deliverable upon conversion would have been entitled on such capital reorganization, merger, consolidation, or sale. In any such case, appropriate adjustment 7 shall be made in the application of the provisions of this Section with respect to the right of the Holders of the Series B Preferred Shares after the reorganization, merger, consolidation or sale to the end that the provisions of this Section (including adjustment of the Conversion Rate then in effect and the number of shares receivable upon conversion of the Series B Preferred Shares) shall be applicable after that event and be as nearly equivalent as may be practicable. (h) Sale of Common Shares Below $.33 per Share. (i) If at any time or from time to time, the Company issues or sells, or is deemed by the express provisions of this subsection (i) to have issued or sold, additional shares of Common Stock (as hereinafter defined), for an effective price (as hereinafter defined) that is less than $.33 Share (or as adjusted after application of adjustments provided in sections (e),(f),(g) hereabove), then in addition to any other adjustments provided herein and in each such case the then existing Conversion Rate shall be increased, the increase being computed to reflect the proportionate decrease in price over all of the previously existing Common Shares such lower price would produce. Thus, if (before any other adjustments provided herein) there were 10,000,000 Shares of Common Stock outstanding and 1,000,000 Common Shares were sold at $.20/share, the 10,000,000 Common Shares would be valued at $.33/share ($3,300,000), plus the 1,000,000 Common Shares newly sold at $200,000, and the result, 11,000,000 Common Shares would be divided into $3,500,000. The resultant difference between such number and $.33 per Common Share would be the basis to adjust the Conversion Rate to reflect the dilution. (ii) For the purpose of making any adjustment required under subsection 5(h)(i), the consideration received by the Company for any issue or sale of securities shall (aa) to the extent it consists of cash be computed at the amount of cash for which the securities are sold, (bb) to the extent it consists of property other than cash, be computed at the fair value of that property as determined in good faith by the Board. (i) Fractional Shares. Series B Preferred Shares may be issued in fractional amounts. (j) Reservation of Stock Issuable Upon Conversion. The Company shall at all times reserve and keep available out of its authorized but unissued shares of Common Stock, solely for the purpose of effecting the conversion of the shares of the Series B Shares, such number of its shares of Common Stock as shall from time to time be sufficient to effect the conversion of all outstanding shares of the Series B Preferred Shares that shall be convertible at that time; and if at any time the number of authorized but unissued shares of Common Stock shall not be sufficient to effect the conversion of all then outstanding shares of the Series B Preferred Shares, the Company will take such corporate action as may, in the opinion of its counsel, be necessary to increase its authorized but unissued shares of Common Stock to such number of shares as shall be 8 sufficient for such purpose. Should this action require the affirmative vote of the Holders of Series B Preferred Shares, whether as a Class or voted with Common Shares, said Holders of Series B Preferred Shares shall be deemed solely for this purpose to have consented thereto, and shall be deemed to irrevocably constituted management of the Company as their proxy and attorney in fact solely for this purpose to execute such documents as may be required to effect this consent. (k) Adjustment Based on Market Success. (i) In the event that Common Shares shall have had an average price as defined hereunder of $1.00 per Common Share, then for each $.05 over $1.00, but not over $3.50 per Common Share, then the amount of Common Shares into which these Series B Preferred Shares may be converted shall increase by 10%. Thus at $1.00 or less (unless the conversion Rate is otherwise adjusted as provided above, in which case to reflect the adjusted Conversion Rate), if each Share hereof would be convertible into 1000 shares of Common Stock, then if the average price were $1.05 per Common Share, then the conversion would be 1100 shares; and at an average price of $3.50 per Common Share, the conversion would be 6,000 Common Shares; likewise, if no other adjustment to the Conversion Rate shall be required, but there shall have been a equivalent reverse split of Common Shares and Series B Preferred Shares of 25 reduced to 1, then the Common price at which the Conversion will be increased would increase proportionately, to a price of $25 per Common share, and for each increase of $1.25 per Common Share, the Conversion of a Series B Preferred Share would be increased 10%, or from 1,000 Common Shares to 1,100 Common Shares, to a maximum of 6,000 Common Shares if the Common Share price shall be $87.50 per Share; likewise, if however there should have been a two for one stock split for Common and Preferred Series B Shares, the price at which the conversion would be increased would be $.50, and there would be an increased conversion of 10% for each $.025 increase in price. (ii) The average price shall be computed by the average between the bid and ask price of the Common Shares for a period of ten days prior to the conversion request on such markets as the Common Shares may be regularly traded, and if there is more than one market, then the average of the markets upon which 75% or more of the Common Shares are traded; if the Common Shares shall not have been trading during said 10 day period, for regulatory reasons or any other reason, then the ten day prior period in which such trading did occur, or the last placement price of $200,000 or more of the Common Shares, or in the event of an acquisition or merger, the merger or acquisition price, whichever is higher. The average price shall be adjusted in the event that there shall be recapitalizations such as a share split. Thus if there should be a reverse share split of common of 10 to 1, then the price at which an increase in conversion would occur under section (i) would be $10 per Common Share average price, and the increments would be $.50, rather than $.05. 9 6. REGISTRATION RIGHTS (a) At any time after Series B Preferred Shares shall have been converted into Common Shares at the election of the Company as provided in Section 5(b) and the Company shall have exercised its right to require conversion thereunder, or if the Holders of a majority of the Series B Preferred Shares shall have given notice of election for Conversion as provided in Section 5(a), the Holders of a majority of the Series B Preferred Shares may request "piggyback' registration of the Common Shares in conjunction with a registration planned by the Company subject to underwriter approval. (b) Upon such a request being made by the Holders of a majority of the Series B Preferred Shares, the Company will notify all of the remaining Holders of Series B Preferred Shares as well as all Holders of Common Shares who shall have previously converted Series B Preferred Shares (but not the successor thereof if by sale), and they shall be deemed to have requested the registration and shall be fully subject thereto. (c) The Company will use its best efforts to effect a single public registration on the appropriate form available thereto of all converted shares. The Company will be under no obligation to secure an underwriter or other seller for the shares and sales of shares after the registration will be solely the responsibility of the Holder thereof. (d) To the extent required to effect the registration, converting shareholders shall fully cooperate with the Company and its counsel. Failure to cooperate will entitle the Company to exclude a Holder from the registration. 7. EFFECT OF ISSUANCE OF OTHER SERIES OF PREFERRED SHARES (a) Nothing contained in this designation of rights shall limit the ability of the Company to authorize and issue other Series of Preferred Shares or other classes of Preferred Shares with rights or preferences that are senior to these Series B Preferred Shares or that limit or reduce the rights or preferences of these Series B Preferred Shares. In the event that other Series or Classes of Preferred Shares are authorized and issued, unless otherwise provided in the designation of rights of said other Series or Classes, these Series B Preferred Shares shall vote on all matters based on the conversion rates adjusted into common shares provided herein, and said such other preferred shares shall have such voting rights as is provided in the designation thereof; thus, if there were 1000 Series B Preferred Shares Issued, they would have the voting rights of 1,000,000 Shares of Common Stock, and if 1000 other preferred shares had voting rights of 1,000,000 shares of Common Stock, and there were 10,000,000 shares of Common Stock issued and outstanding, then in all votes for the Board of Directors, or any other matters in which shareholders may vote, all Common Shareholders, and all Preferred Shareholders shall vote together, and Preferred Shares would have the weight based on their conversion into common. There shall be no class votes of these 10 Series B Preferred Shares unless said vote is non-waivable and is required by law. (b) Unless otherwise provided in the designation of rights and preferences of other preferred shares, any preferences of these Series B Preferred Shares shall be ratable with other series or classes of Preferred Shares that may be hereafter designated. 8. ASSIGNABLILITY OF ADJUSTMENTS IN CONVERSION RATE BASED ON MARKET SUCCESS Any holder of Series B Preferred Shares may assign or transfer any right to an increased conversion to Common Shares provided in Section 5(k), above, without affecting the voting rights of Series B Preferred Shares provided in Section 4. In the event that a Series B Preferred Shareholder shall elect to assign or transfer all or a portion of such rights, voting rights of the Series B Preferred Shares held by such a transferor shall continue to be calculated to reflect all adjustments to the Conversion Ratio, including adjustments provided by Section 5(k), notwithstanding the assignment or transfer of the increased conversion to common Shares provided under Section 5(k) to another person. Dated this 8th day of October 1998 by: John Cooper, Jr. ---------------- John Cooper, Jr. Secretary EX-4.3 13 v67130ex4-3.txt EXHIBIT 4.3 1 CERTIFICATE OF DESIGNATION OF RIGHTS OF SERIES C PREFERRED SHARES OF AQUA VIE BEVERAGE CORPORATION-H Pursuant to Section 151(g) of Title 8 of the General Corporate Law of the State of Delaware and Article V of the Articles of Incorporation, the Directors hereby designate The voting powers, designations, preferences, rights and qualifications, limitations and restrictions of: "SERIES C PREFERRED SHARES" And there is authorized to be issued 10,000 shares thereof with the following rights, terms and preferences: 1. DIVIDENDS. Right to Preferential Dividends. Subject to the rights and preferences of other classes or series of Preferred Shares, the Holders of the then outstanding Series C Preferred Shares {except when there shall have been either a notification of election for conversion by the Holders under Section 5(a), hereunder, or the conditions shall have been fulfilled for a conversion by the Company as provided in Section 5(b) hereunder, whether or not notification thereof has been made by the Company, (unless the Company shall expressly give notice it elects not to require such conversion)} shall be entitled to receive, if, when, and as declared by the Board, out of any funds legally available therefor, a non-cumulative preference of 10% on cash dividends up to $.25 maximum total accumulated dividends per Series C Preferred Share held thereby. These dividends shall be payable, when and as declared by the Board. Dividends on the Series C Preferred Shares shall be non-cumulative, there shall be no minimum dividends, and no rights shall accrue to the Holders of the Series C Preferred Shares in the event that the Company shall fail to declare or pay dividends on the Series C Preferred Shares, whether or not the earnings of the Company in that previous fiscal year were sufficient to pay such dividends in whole or in part. In the event that the number of outstanding Series C Preferred Shares are adjusted by stock split, reverse split, or other corporate action, the preference stated herein shall be adjusted accordingly. The balance of any such dividends so declared shall be allocated as between Series C Preferred Shares and Common Shares as if said Series C Preferred Shares had been converted to Common Shares based on the Conversion Ratio (as adjusted) provided herein, and as to any other classes or series of Preferred Shares in accordance with the rights and preferences thereof. 2. LIQUIDATION RIGHTS OF SERIES C PREFERRED SHARES. (a) Preference. Subject to the rights and preferences of other classes or series of Preferred Shares in the event of any liquidation, dissolution, or winding-up of the Company, whether voluntary or involuntary, {except when there shall have been either a notification of election for conversion by the Holders under Section 5(a), hereunder, or 2 the conditions shall have been fulfilled for a conversion by the Company as provided in Section 5(b) hereunder, whether or not notification thereof has been made by the Company, (unless the Company shall expressly give notice it elects not to require such conversion)} the Holders of the Series C Preferred Shares then outstanding shall be entitled to be paid out of the assets of the Company available for distribution to its shareholders, whether such assets are capital, surplus, or earnings, before any payment or declaration and setting apart for payment of any amount shall be made in respect of the Common Stock, an amount equal to $.25 per Series C Preferred Share held thereby plus an amount equal to all declared and unpaid dividends thereon, less accumulated total dividends paid thereto (but not less than zero). If upon any liquidation, dissolution, or winding up of the Company, whether voluntary or involuntary, the assets to be distributed to the Holders of the Series C Preferred Shares shall be insufficient to permit the payment to such shareholders of the full preferential amount aforesaid, then all of the assets of the Company to be distributed shall be distributed ratably to the Holders of the Series C Preferred Shares, subject to any rights or preferences of any other classes or series of Preferred Shares, on the basis of the number of shares of Series C Preferred Shares so held. (b) Payments to Common Stock. After the preferred payment of $.25 per Series C Preferred Share is made to Holders of the Series C Preferred Shares the Holders of the Series C Preferred Shares shall be entitled to share with Common Shares, based on the adjusted conversion ratio of Preferred Series C Shares to Common Shares as if converted, and as to other Classes or Series of Preferred Shares based on the conversion ratio of said Shares to Common as if converted or as otherwise provided in the rights and designations thereof as may from time to time be made by the Board of Directors, all remaining assets of the Company to be distributed. (c) Effect of Adjustments of Shares. In the event that the number of outstanding Series C Preferred Shares are adjusted by stock split, reverse split, or other corporate action, the preference stated herein shall be adjusted accordingly. 3. MERGER, CONSOLIDATION. (a) Preference. Subject to the rights and preferences of other classes or series of Preferred Shares in the event of any merger or share exchange of the Company, or a sale or other disposition of all or substantially all of the assets of the Company {except when there shall have been either a notification of election for conversion by the Holders under Section 5(a), hereunder, or the conditions shall have been fulfilled for a conversion by the Company as provided in Section 5(b) hereunder, whether or not notification thereof has been made by the Company, (unless the Company shall expressly give notice it elects not to require such conversion)} the Holders of the Series C Preferred Shares then outstanding shall be entitled to receive, before any payment or declaration and setting apart for payment of any amount shall be made in respect of the Common Stock, for each share of such Series C Preferred Stock so held, in cash or in securities (including, without limitation, debt securities) received from the acquiring corporation, at the closing of any 3 such transaction, an amount equal to $.25 per Series C Preferred Share, plus an amount equal to all declared and unpaid dividends thereon, less total accumulated dividends paid thereto (but not less than zero). In the event that the number of outstanding Series C Preferred Shares are adjusted by stock split, reverse split, or other corporate action, the preference stated herein shall be adjusted accordingly (b) Remaining Proceeds. Subject to the rights and preferences of other classes or series of Preferred Shares after the payment or distribution to the Holders of the Series C Preferred Shares of the full preferential amount, the Holders of the Series C Preferred Shares, Holders of other Series or Classes of Preferred Shares according to the Rights and Designations thereof and Holders of Common Stock then outstanding shall be entitled to receive ratably, with all Series C Preferred Shares treated as if it had been converted into Common Stock pursuant to Section 5 hereof, all remaining proceeds of the Company to be distributed. (c) Valuation of securities received pursuant to a merger, share exchange, sale of substantially all the assets or similar transaction. In the event that a transaction occurs pursuant to which non-cash assets are received and to which this Section applies, the assets received for the purposes of this Section shall be valued as follows: (i) If the assets received are securities that are listed on NASDAQ or an exchange, the value shall be deemed to be the 3 day high average closing price (or average between bid/ask if OTC) on such exchange or NASDAQ over the 30 day period prior to the closing of the transaction by which the securities are received. (ii) If the assets received are of readily ascertainable market value, then that value shall be used. (iii) If the assets are unlisted securities or other assets that do not have a readily ascertainable value, the Board of Directors in good faith will value said assets. (iv) The fact that assets exist which may require a valuation process as described herein shall not delay closing the transaction by which the assets are being received. (d) Notice. With respect to any transaction which involves a merger or exchange of shares, or a sale of substantially all the assets not in the ordinary course of business, the Series C shareholders shall receive not less than ten days notice of the transaction and the terms and conditions thereof. 4 4. VOTING RIGHTS. (a) Each Holder of Series C Preferred Shares shall be entitled to vote on all matters including election of the Board of Directors and, except as otherwise expressly provided herein, shall be entitled to the number of votes that equal the number of Common Shares to which said Series C Preferred Shares could be converted. (b) Unless otherwise required by law, Series C Preferred shareholders and Common shareholders shall vote together on all matters upon which shareholders are permitted to vote and not as separate classes. In those cases where Series C Preferred Shareholders are required by law to vote as a separate class, the vote required by said class for approval of the proposed action shall be a simple majority of the class. (c) Voting rights shall be adjusted in the event of adjustments in the Conversion Ratio, except that increases or reductions that apply equally to Series C Preferred Shares and Common Shares shall not cause an adjustment to be made. 5. CONVERSION. The Company and the Holders of Series C Preferred Shares shall have the following conversion rights: (a) Right to Convert. Each share of Series C Preferred Shares shall be convertible, if there shall be sufficient Common Shares authorized and issuable therefor at the option of the Holder as follows: 180 days after the issuance to a Holder. In the event that Series C Preferred Shares subject thereto shall have been transferred, the time period for conversion shall be measured from the date of issuance to the initial Holder hereof. (b) Automatic Conversion at Election of Company. (i) Each share of Series C Preferred Shares shall automatically at the election of the Company be converted into shares of Common Stock based on the then effective Conversion Rate set forth in Section 5(c) hereunder (as adjusted) if any one of the following shall occur: (A) The Holders of 51% of the Series C Preferred Shares outstanding have given notice of election to convert as provided herein in Section 6; (B) The Board of Directors of the Company shall have approved a plan of reorganization, exchange, merger or consolidation to which the Company is a party, or an acquisition of the Company; (C) Immediately upon the closing of an underwritten public offering pursuant to an effective registration statement under the Securities Act of 1933, as amended, with respect to the Common Stock of the Company (including shares registered by selling Series C Preferred shareholders) where the amount of such securities sold is $10,000,000. or more; (D) When the Company 5 shall have a net worth of $10,000,000 or more; (E) After the Common Shares shall have been listed on NASDAQ for a period of not less than three months; (F) At any time after sufficient Common Shares are available therefore in the event that the Board, after query of the Holders hereof , believes a majority would favor a conversion. (ii) Upon the occurrence of any of the events specified in paragraph 5(b)(i) and the election (if applicable) being so made by the Company, the outstanding shares of Series C Preferred Shares shall be converted automatically without any further action by the Holders of such Series C Preferred Shares and whether or not the certificates representing such Series C Preferred Shares are surrendered to the Company or its transfer agent; provided however, that the Company shall not be obligated to issue certificates evidencing the shares of Common Stock issuable upon the conversion unless the certificates evidencing such Series C Preferred Shares are either delivered to the Company or its transfer agent, or the Holder notifies the Company or its transfer agent that such certificate have been lost, stolen or destroyed and executes an agreement satisfactory to the Company to indemnify the Company from any loss incurred by it in connection with such certificates. The conversion shall be deemed to have occurred immediately prior to the business day on which the Series C certificates are to be surrendered, and the person entitled to receive the Common shares upon such a conversion shall be deemed a Common Shareholder of record as of that date. (c) Conversion Rate, adjustments. Except as provided elsewhere herein for adjustment of conversion based on share price, recapitalization or other factors, the Conversion Rate is 1000 Common Shares for One Series C Preferred Share. The Conversion Rate shall be subject to adjustment from time to time as provided below; no adjustment shall apply after a Series C Preferred Share has been converted. (d) Mechanics of Conversion. Each Holder of Series C Preferred Shares who desires to convert the same into shares of Common Stock shall surrender the certificate, duly endorsed, at the office of the Company or of any transfer agent for the Series C Preferred Shares or Common Stock, and shall give written notice to the Company at such office that such Holder elects to convert the same and shall state therein the number of shares of Series C Preferred Shares being converted. Thereupon the Company shall promptly issue and deliver to such Holder a certificate or certificates for the number of shares of Common Stock to which such Holder is entitled. Such conversion shall be deemed to have been made immediately prior to the close of business on the date of such surrender of the certificate representing the Series C Preferred Shares to be converted, and the person entitled to receive the shares of Common Stock issuable upon such conversion shall be treated for all purposes as the record Holder of such shares of Common Stock on such date. 6 (e) Adjustment for Stock Splits and Combinations. If the Company at any time or from time to time effects a subdivision of the outstanding Common Stock, the Conversion Rate then in effect immediately before that subdivision shall be proportionately increased, and conversely, if the Company at any time or from time to time combines the outstanding shares of Common Stock into a smaller number of shares, the Conversion Rate then in effect immediately before the combination shall be proportionately decreased. Any adjustment under this subsection (e) shall become effective at the close of business on the date the subdivision or combination becomes effective. Subdivisions or combinations of Series C Preferred Shares shall be similarly considered to compute the final adjustment to the Conversion Rate to reflect stock splits and combinations. (f) Adjustments for Reclassification, Exchange and Substitution. In the event that at any time or from time to time, the Common Stock issuable upon the conversion of the Series C Preferred Shares is changed into the same or a different number of shares of any class or classes of stock, whether by recapitalization, reclassification or otherwise (other than a subdivision or combination of shares or stock dividend or a reorganization, merger, exchange of shares, or sale of assets, provided for elsewhere in this Section), then and in any such event each Holder of Series C Preferred Shares shall have the right thereafter to convert such stock into the kind and the maximum amount of stock and other securities and property receivable upon such recapitalization, reclassification or other change, by Holders of shares of Common Stock into which such shares of Series C Preferred Shares could have been converted immediately prior to such recapitalization, reclassification or change, all subject to further adjustment as provided herein. (g) Reorganizations, Mergers, Consolidations or Sales of Assets. If at any time or from time to time there is a capital reorganization of the Common Stock (other than a recapitalization, subdivision, combination, reclassification or exchange of shares provided for elsewhere in this Section) or a merger or exchange of shares of the Company with or into another corporation, or the sale of all or substantially all of the Company's properties and assets to any other person, then as a part of such reorganization, merger, consolidation or sale, provision shall be made so that the Holders of the Series C Preferred Shares shall have the right thereafter to convert such stock into the number of shares of stock or other securities or property to which a Holder of the number of shares of Common Stock deliverable upon conversion would have been entitled on such capital reorganization, merger, consolidation, or sale. In any such case, appropriate adjustment shall be made in the application of the provisions of this Section with respect to the right of the Holders of the Series C Preferred Shares after the reorganization, merger, consolidation or sale to the end that the provisions of this Section (including adjustment of the Conversion Rate then in effect and the number of shares receivable upon conversion of the Series C Preferred Shares) shall be applicable after that event and be as nearly equivalent as may be practicable. (h) Fractional Shares. Series C Preferred Shares may be issued in fractional amounts. 7 (i) Reservation of Stock Issuable Upon Conversion. The Company shall at all times reserve and keep available out of its authorized but unissued shares of Common Stock, solely for the purpose of effecting the conversion of the shares of the Series C Shares, such number of its shares of Common Stock as shall from time to time be sufficient to effect the conversion of all outstanding shares of the Series C Preferred Shares that shall be convertible at that time; and if at any time the number of authorized but unissued shares of Common Stock shall not be sufficient to effect the conversion of all then outstanding shares of the Series C Preferred Shares that shall be convertible at that time, the Company will take such corporate action as may, in the opinion of its counsel, be necessary to increase its authorized but unissued shares of Common Stock to such number of shares as shall be sufficient for such purpose. Should this action require the affirmative vote of the Holders of Series C Preferred Shares, whether as a Class or voted with Common Shares, said Holders of Series C Preferred Shares shall be deemed solely for this purpose to have consented thereto, and shall be deemed to irrevocably constituted management of the Company as their proxy and attorney in fact solely for this purpose to execute such documents as may be required to effect this consent. 6. REGISTRATION RIGHTS (a) At any time after Series C Preferred Shares shall have been converted into Common Shares at the election of the Company as provided in Section 5(b) and the Company shall have exercised its right to require conversion thereunder, or if the Holders of a majority of the Series C Preferred Shares shall have given notice of election for Conversion as provided in Section 5(a), the Holders of a majority of the Series C Preferred Shares may request "piggyback" registration of the Common Shares in conjunction with a registration planned by the Company subject to underwriter approval. (b) Upon such a request being made by the Holders of a majority of the Series C Preferred Shares, the Company will notify all of the remaining Holders of Series C Preferred Shares as well as all Holders of Common Shares who shall have previously converted Series C Preferred Shares (but not the successor thereof if by sale), and they shall be deemed to have requested the registration and shall be fully subject thereto. (c) The Company will use its best efforts to effect a single public registration on the appropriate form available thereto of all converted shares. The Company will be under no obligation to secure an underwriter or other seller for the shares and sales of shares after the registration will be solely the responsibility of the Holder thereof. (d) To the extent required to effect the registration, converting shareholders shall fully cooperate with the Company and its counsel. Failure to cooperate will entitle the Company to exclude a Holder from the registration. 7. EFFECT OF ISSUANCE OF OTHER SERIES OF PREFERRED SHARES 8 (a) Nothing contained in this designation of rights shall limit the ability of the Company to authorize and issue other Series of Preferred Shares or other classes of Preferred Shares with rights or preferences that are senior to these Series C Preferred Shares or that limit or reduce the rights or preferences of these Series C Preferred Shares. In the event that other Series or Classes of Preferred Shares are authorized and issued, unless otherwise provided in the designation of rights of said other Series or Classes, these Series C Preferred Shares shall vote on all matters based on the conversion rates adjusted into common shares provided herein, and said such other preferred shares shall have such voting rights as is provided in the designation thereof; thus, if there were 1000 Series C Preferred Shares Issued, they would have the voting rights of 1,000,000 Shares of Common Stock, and if 1000 other preferred shares had voting rights of 1,000,000 shares of Common Stock, and there were 10,000,000 shares of Common Stock issued and outstanding, then in all votes for the Board of Directors, or any other matters in which shareholders may vote, all Common Shareholders, and all Preferred Shareholders shall vote together, and Preferred Shares would have the weight based on their conversion into common. There shall be no class votes of these Series C Preferred Shares unless said vote is non-waivable and is required by law. (b) Unless otherwise provided in the designation of rights and preferences of other preferred shares, any preferences of these Series C Preferred Shares shall be ratable with other series or classes of Preferred Shares that may be hereafter designated. Dated this 8th Day of October, 1998 By: JOHN COOPER, JR. ----------------------------- John Cooper, Jr. Secretary EX-9.1 14 v67130ex9-1.txt EXHIBIT 9.1 1 IRREVOCABLE PROXY COUPLED WITH AN INTEREST Name of shareholder: TRUSTEE, Brace Foundation Trust This is to certify that the undersigned, a voting member of AQUA VIE BEVERAGE CORPORATION, has designated THOMAS J GILLESPIE as his or her representative in his sole discretion without any approval of the undersigned to cast all votes and express all approvals or disapprovals that said member may be entitled to cast or express at the all meetings of shareholders and/or directors, and for all purposes provided by the Articles of Incorporation and the By-Laws of the AQUA VIE BEVERAGE CORPORATION. This Proxy governs all Series B Preferred Shares owned or that may become owned by the above named shareholder as well as any Common Shares or other securities into which they may be converted. This Proxy applies to any securities of any parent, subsidiary or affiliate of the Company which may be acquired by succession, exchange, reorganization or otherwise pursuant to a merger or reorganization or exchange pursuant to Sec. 251(g) of the Delaware Corporate Code or any other succession. This Proxy is irrevocable and is coupled with an interest for a period of 10 years from the date of execution or until after the Company or its successor or parent or affiliate is sold or liquidated or until the proxy is cancelled by Thomas J. Gillespie. DATED this 14th day of October, 1998 /s/ ------------------------------ Thomas B. Gillespie, Trustee, Brace Foundation Trust EX-10.1 15 v67130ex10-1.txt EXHIBIT 10.1 1 CONVERTIBLE NOTE THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR UNDER THE SECURITIES LAW OF ANY STATE. THEY MAY NOT BE TRANSFERRED, SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED WITHOUT REGISTRATION UNDER SUCH ACT AND ANY APPLICABLE STATE LAW OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED OR UNLESS SOLD PURSUANT TO RULE 144 OF SUCH ACT. Aqua Vie Beverage Corporation Convertible Note Due: September 1, 2001 $ 80,000 March 1, 2000 Aqua Vie Beverage Corporation (the " Company"), a Delaware corporation, for value received, hereby promises to pay to Joseph J. Wozniak or order ("Holder"), the principal amount of $ 80,000 on September 1, 2001 with interest on the unpaid balance of such principal amount at the rate of 8% per annum from March 1, 2000 which interest shall be payable at such time as the unpaid balance hereof becomes due and payable (whether at maturity or at a date fixed for prepayment or otherwise). Payments of principal and interest shall be made in lawful money of the United States of America at the principal office of the above-named payee or at such other place as the Holder hereof shall have designated to the Company in writing. 1.0. CONVERSION 1.1 Conversion Rights All, or any portion of, the unpaid principal amount of this Note may at (i) the election of the Company or the Holder at any time after 181 days have elapsed from the date hereof, and (ii) at the election of the Company if (aa) The Board of Directors of the Company shall have approved a plan of reorganization, exchange, merger or consolidation to which the Company is a party, or an acquisition of the Company; (bb) Immediately upon the closing of an offering with respect to the Common Stock of the Company where the amount of such securities 1 2 sold is $5,000,000. or more; (cc) When the Company shall have a net worth of $5,000,000 or more; (dd) After the Common Shares shall have been listed on NASDAQ for a period of not less than three months be converted at the conversion price per share of the Company's Common Stock of as adjusted and readjusted from time to time in accordance with Section 2 hereof (such conversion price, as so adjusted and readjusted and in effect at any time, being herein called the "Conversion Price"), into the number of fully paid and nonassessable shares of the Company's Common Stock determined by dividing the principal amount to be so converted by the the Conversion Price in effect at the time of such conversion. 1.2 Notice of Conversion; New Note 1.2.1. This Note may be converted in full or in part by the Holder hereof by surrender of this Note with a notice of conversion duly executed by such Holder (specifying the portion of the principal amount hereof to be converted in the case of a partial conversion) to the Company. 1.2.2. Upon any partial conversion of this Note, the Company at its expense will forthwith issue and deliver to or upon the order of the Holder hereof a new Note in a principal amount equal to the unpaid and unconverted principal amount plus accrued and unpaid interest thereon of the surrendered Note with due date and all other provisions except the amount due being the same as this Note, such new Note to be dated the date of issuance and to bear interest from date of issue(this Note and such new Notes being referred to herein as the "Note" and "Notes") Each conversion shall be deemed to have been effected immediately prior to the close of business on the date on which this Note shall have been so surrendered to the Company; and at such time the rights of the Holder of this Note as such shall, to the extent of the principal amount thereof converted, cease, and the person or persons in whose name or names any certificate or certificates for shares of Common Stock shall be issuable upon such conversion shall be deemed to have become the holder or holders of record thereof. 1.3. Delivery of Stock Certificates; Fractional Shares As promptly as practicable after the conversion of this Note in full or in part, and in any event within 20 days thereafter, the Company at its expense will issue and deliver to the Holder of this Note a certificate or certificates for the number of full shares of Common Stock issuable upon such conversion, plus, in lieu of any fractional share to which such Holder would otherwise be entitled, cash equal to such fraction of the Conversion Price. 2 3 2.0. CONVERSION PRICE DETERMINATION AND ADJUSTMENTS: MINIMUM AND MAXIMUM The Conversion Price of this Note shall be subject to adjustment from time to time as follows: 2.1. In the event a Notice of Conversion is given, the average closing transaction price of the Company Shares on the NASD OTC BB, or NASDAQ, as the case may be for the 10 trading days prior to the date of the Notice of Conversion shall be the Conversion Price, except that the Conversion price shall not in any event be less than $.80 per share nor more than $3.00 per share, subject to any adjustments provided hereunder for dilution and other corporation actions. 2.2. Share Splits or Subdivisions or Combinations If the number of shares of Common Stock outstanding at any time after the date hereof is increased by a split or decreased by a combination of the outstanding shares of Common Stock, then, following the record date of such combination, the Conversion Price for this Note shall be appropriately decreased or increased so that the number of shares of Common Stock issuable on conversion hereof shall be decreased in proportion to such decrease in outstanding shares. 2.3 Reorganization, Reclassification, Consolidation, Merger or Sale If any capital reorganization, reclassification, consolidation, merger or any sale of all or substantially all of the Company's assets to another person (collectively "Reorganization") is effected in such a way that holders of Common Stock are entitled to receive (either directly or upon subsequent liquidation) stock, securities or assets with respect to or in exchange for Common Stock, then, as a condition to such Reorganization, unless waived by the Holder of this Note, lawful and adequate provision (in form and substance satisfactory to the Holder of this Note) will be made whereby the Holder of this Note will thereafter have the right to acquire and receive in lieu of shares of Common Stock immediately theretofore acquirable and receivable upon the conversion of this Note, such shares of stock, securities or assets as may be issued or payable with respect to or in exchange for the number of shares of Common Stock immediately theretofore acquirable and receivable upon conversion of this Note had such Reorganization not taken place. In any such case appropriate provision will be made with respect to such Holder's rights and interests to the end that the provisions of this Section 2.3 will thereafter be applicable in relation to any shares of stock, securities or assets thereafter deliverable upon the conversion of this Note. The Company will not effect any such Reorganization unless prior to the consummation thereof and unless waived by the Holder of this Note, the successor corporation (if other than the Company) resulting from 3 4 consolidation or merger or the Company purchasing such assets assumes by written instrument (in form reasonably satisfactory to the Holder of this Note) the obligation to deliver to each such holder such shares of stock, securities or assets as, in accordance with the foregoing provisions, such holder may be entitled to acquire. 2.4. Certificate as to Adjustments In the case of each adjustment or readjustment of the Conversion Price pursuant to this Section 2, the Company will promptly compute such adjustment or readjustment in accordance with the terms hereof and cause a certificate setting forth such adjustment or readjustment and showing in detail the facts upon which such adjustment or readjustment is based to be delivered to the Holder of this Note. The Company will, upon the written request at any time of the Holder of this Note, furnish or cause to be furnished to such Holder a certificate setting forth: 2.4.1. Such adjustments and readjustments; 2.4.2. The Conversion Price at the time in effect; and 2.4.3. The number of shares of Common Stock and the amount, if any, of other property at the time receivable upon the conversion of the principal amount of this Note. 2.5 Notices of Record Date, etc In the event of: 2.5.1. Any taking by the Company of a record of the holders of any class of securities of the Company for the purpose of determining the holders thereof who are entitled to receive any dividend (other than a cash dividend payable out of earned surplus at the same rate as that of the last such cash dividend theretofore paid) or other distribution, or any right to subscribe for, purchase or otherwise acquire any shares of stock of any class or any other securities or property, or to receive any other right, or 2.5.2. Any capital reorganization of the Company, any reclassification or recapitalization of the capital stock of the Company or any transfer of all or substantially all of the assets of the Company to any other person or any consolidation or merger involving the Company, or 2.5.3. Any voluntary or involuntary dissolution, liquidation or winding-up of the Company, the Company will mail to the Holder of this 4 5 Note at least 15 days prior to the earliest date specified therein, a notice specifying: 2.5.3.1. The date on which any such record is to be taken for the purpose of such dividend, distribution or right, and the amount and character of such dividend, distribution or right; and, 2.5.3.2. The date on which any such reorganization, reclassification, transfer, consolidation, merger, dissolution, liquidation or winding-up is expected to become effective and the record date for determining shareholders entitled to vote thereon. 2.6. Reservation of Stock Issuable Upon Conversion. This Company shall at all times reserve and keep available out of its authorized but unissued shares of Common Stock solely for the purpose of effecting the conversion of the Notes such number of its shares of Common Stock as shall from time to time be sufficient to effect the conversion of the Notes; and if at any time the number of authorized but unissued shares of Common Stock shall not be sufficient to effect the conversion of all then outstanding Notes, in addition to such other remedies as shall be available to the Holder of this Note, this Company will take such corporate action as may, in the opinion of its counsel, be necessary to increase its authorized but unissued shares of Common Stock to such number of shares as shall be sufficient for such purposes. 3.0 REDEMPTION OF NOTE 3.1. General: At any time after issuance hereof, the Company may give notice of redemption of the principal and interest due on the Note. 3.2. Notices: Notice of Redemption shall be made not less than 10 days prior to the Date of Redemption, and not more than 20 days. 3.3. Conversions: A Holder is not able to elect to convert a Note after Notice of Redemption has been made and while subject to redemption providing the redemption is made in full not less that five business days upon submission of the Note for redemption pursuant to a Notice hereunder. 3.4. Payment on Redemption: Notes shall be submitted for redemption within 10 days of the Redemption Date, or ten days after actual receipt of the Notice of Redemption, whichever is later. Payment shall be in cash not less than five business days after submission by a Holder. Failure to pay in full shall nullify a Notice of Redemption and a Holder may elect to convert as otherwise provided herein, or hold the Notes to maturity or convert in part as otherwise provided herein. 5 6 4.0. EVENTS OF DEFAULT The following described events shall be hereinafter individually called an "Event of Default " and collectively shall be called "Events of Default": 4.1 Default in Payments The Company defaults in the payment of any principal of or interest on this Note when due and such default continues for 30 days. 4.2 Failure to Perform The Company otherwise fails to perform any other covenant or provision set forth in its Restated Articles of Incorporation if such failure is materially adverse to the Company or to the Holders of these Notes. 4.3 Bankruptcy, Insolvency, Etc The Company or any subsidiary which is material to the consolidated financial condition of the Company makes an assignment for the benefit of creditors or admits in writing its inability to pay its debts generally as they become due; or an order, judgment or decree is entered adjudicating the Company or any such subsidiary bankrupt or insolvent; or the Company or any such subsidiary petitions or applies to any tribunal for the appointment of a trustee, receiver or liquidator of the Company or any such subsidiary or of any substantial part of the assets of the Company or any such subsidiary, or commences any proceeding (other than a proceeding for the voluntary liquidation and dissolution of a subsidiary) relating to the Company or any such subsidiary under any bankruptcy, reorganization, arrangement, insolvency, readjustment of debt, dissolution or liquidation law of any jurisdiction; or any such petition or application is filed, or any such proceeding is commenced, against the Company or any such subsidiary and either (a) the Company or any such subsidiary by any act indicates its approval thereof, consent thereto or acquiescence therein or (b) such petition, application or proceeding is not dismissed within 120 days. 5.0 MISCELLANEOUS 5.1 Successors and Assigns The terms and conditions of this Note shall inure to the benefit of and be binding upon the respective successors and assigns of the Company and the Holder hereof. Nothing in this Note, express or implied, 6 7 is intended to confer upon any party other than such parties or their respective successors and assigns any rights, remedies, obligations, or liabilities under or by reason of this Note, except as expressly provided in this Note. 5.2 Titles and Subtitles The titles and subtitles used in this Note are for convenience only and are not to be considered in construing or interpreting this Note. 5.3 Notices Any notice required or permitted under this Note shall be given in writing and shall be deemed effectively given upon personal delivery to the party to be notified or upon deposit with the United States Post Office, by registered or certified mail, postage prepaid and addressed to the party to be notified at the address indicated for such party on the Company's books and records, or at such other address as such party may designate by 15 days' advance written notice to the other parties. 5.4 Amendments and Waivers Any term of this Note may be amended and the observance of any term of this Note may be waived (either generally or in a particular instance and either retroactively or prospectively), only with the written consent of the Company and the Holder hereof. Any amendment or waiver effected in accordance with this paragraph shall be binding upon the Holder of this Note (and any securities into which this Note is convertible), each future holder of all such securities, and the Company. 5.5 Severability If one or more provisions of this Note are held to be unenforceable under applicable law, such provision shall be excluded from this Note and the balance of the Note shall be interpreted as if such provision were so excluded and shall be enforceable in accordance with its terms. 5.6 Remedies on Default, Etc In case of a default in the payment of any principal of or interest on this Note, the Company will pay to the Holder hereof such further amount as shall be sufficient to cover the cost and expenses of collection, including, without limitation, reasonable attorneys' fees, expenses and disbursements. No right, power or remedy conferred by this Note upon any Holder hereof shall be exclusive of any other right, power or remedy 7 8 referred to herein or now or hereafter available at law, in equity, by statute or otherwise. 5.7 This Note shall be governed by and construed and enforced in accordance with the laws of the State of Washington except insofar as and to the extent that the laws of the United States of America shall have application. AQUA VIE BEVERAGE CORPORATION By: /s/ --------------------------- Thomas Gillespie President 8 EX-10.2 16 v67130ex10-2.txt EXHIBIT 10.2 1 CONVERTIBLE NOTE THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR UNDER THE SECURITIES LAW OF ANY STATE. THEY MAY NOT BE TRANSFERRED, SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED WITHOUT REGISTRATION UNDER SUCH ACT AND ANY APPLICABLE STATE LAW OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED OR UNLESS SOLD PURSUANT TO RULE 144 OF SUCH ACT. Aqua Vie Beverage Corporation Convertible Note Due: September 1, 2001 $ 75,000 March 1, 2000 Aqua Vie Beverage Corporation (the " Company"), a Delaware corporation, for value received, hereby promises to pay to Bruce A. Butcher or order ("Holder"), the principal amount of $ 75,000 on September 1, 2001 with interest on the unpaid balance of such principal amount at the rate of 8% per annum from March 1, 2000 which interest shall be payable at such time as the unpaid balance hereof becomes due and payable (whether at maturity or at a date fixed for prepayment or otherwise). Payments of principal and interest shall be made in lawful money of the United States of America at the principal office of the above-named payee or at such other place as the Holder hereof shall have designated to the Company in writing. 1.0. CONVERSION 1.1 Conversion Rights All, or any portion of, the unpaid principal amount of this Note may at (i) the election of the Company or the Holder at any time after 181 days have elapsed from the date hereof, and (ii) at the election of the Company if (aa) The Board of Directors of the Company shall have approved a plan of reorganization, exchange, merger or consolidation to which the Company is a party, or an acquisition of the Company; (bb) Immediately upon the closing of an offering with respect to the Common Stock of the Company where the amount of such securities 1 2 sold is $5,000,000. or more; (cc) When the Company shall have a net worth of $5,000,000 or more; (dd) After the Common Shares shall have been listed on NASDAQ for a period of not less than three months be converted at the conversion price per share of the Company's Common Stock of as adjusted and readjusted from time to time in accordance with Section 2 hereof (such conversion price, as so adjusted and readjusted and in effect at any time, being herein called the "Conversion Price"), into the number of fully paid and nonassessable shares of the Company's Common Stock determined by dividing the principal amount to be so converted by the the Conversion Price in effect at the time of such conversion. 1.2 Notice of Conversion; New Note 1.2.1. This Note may be converted in full or in part by the Holder hereof by surrender of this Note with a notice of conversion duly executed by such Holder (specifying the portion of the principal amount hereof to be converted in the case of a partial conversion) to the Company. 1.2.2. Upon any partial conversion of this Note, the Company at its expense will forthwith issue and deliver to or upon the order of the Holder hereof a new Note in a principal amount equal to the unpaid and unconverted principal amount plus accrued and unpaid interest thereon of the surrendered Note with due date and all other provisions except the amount due being the same as this Note, such new Note to be dated the date of issuance and to bear interest from date of issue(this Note and such new Notes being referred to herein as the "Note" and "Notes") Each conversion shall be deemed to have been effected immediately prior to the close of business on the date on which this Note shall have been so surrendered to the Company; and at such time the rights of the Holder of this Note as such shall, to the extent of the principal amount thereof converted, cease, and the person or persons in whose name or names any certificate or certificates for shares of Common Stock shall be issuable upon such conversion shall be deemed to have become the holder or holders of record thereof. 1.3. Delivery of Stock Certificates; Fractional Shares As promptly as practicable after the conversion of this Note in full or in part, and in any event within 20 days thereafter, the Company at its expense will issue and deliver to the Holder of this Note a certificate or certificates for the number of full shares of Common Stock issuable upon such conversion, plus, in lieu of any fractional share to which such Holder would otherwise be entitled, cash equal to such fraction of the Conversion Price. 2 3 2.0. CONVERSION PRICE DETERMINATION AND ADJUSTMENTS: MINIMUM AND MAXIMUM The Conversion Price of this Note shall be subject to adjustment from time to time as follows: 2.1. In the event a Notice of Conversion is given, the average closing transaction price of the Company Shares on the NASD OTC BB, or NASDAQ, as the case may be for the 10 trading days prior to the date of the Notice of Conversion shall be the Conversion Price, except that the Conversion price shall not in any event be less than $.80 per share nor more than $3.00 per share, subject to any adjustments provided hereunder for dilution and other corporation actions. 2.2. Share Splits or Subdivisions or Combinations If the number of shares of Common Stock outstanding at any time after the date hereof is increased by a split or decreased by a combination of the outstanding shares of Common Stock, then, following the record date of such combination, the Conversion Price for this Note shall be appropriately decreased or increased so that the number of shares of Common Stock issuable on conversion hereof shall be decreased in proportion to such decrease in outstanding shares. 2.3 Reorganization, Reclassification, Consolidation, Merger or Sale If any capital reorganization, reclassification, consolidation, merger or any sale of all or substantially all of the Company's assets to another person (collectively "Reorganization") is effected in such a way that holders of Common Stock are entitled to receive (either directly or upon subsequent liquidation) stock, securities or assets with respect to or in exchange for Common Stock, then, as a condition to such Reorganization, unless waived by the Holderof this Note, lawful and adequate provision (in form and substance satisfactory to the Holder of this Note) will be made whereby the Holder of this Note will thereafter have the right to acquire and receive in lieu of shares of Common Stock immediately theretofore acquirable and receivable upon the conversion of this Note, such shares of stock, securities or assets as may be issued or payable with respect to or in exchange for the number of shares of Common Stock immediately theretofore acquirable and receivable upon conversion of this Note had such Reorganization not taken place. In any such case appropriate provision will be made with respect to such Holder's rights and interests to the end that the provisions of this Section 2.3 will thereafter be applicable in relation to any shares of stock, securities or assets thereafter deliverable upon the conversion of this Note. The Company will not effect any such Reorganization unless prior to the consummation thereof and unless waived by the Holder of this Note, the successor corporation (if other than the Company) resulting from 3 4 consolidation or merger or the Company purchasing such assets assumes by written instrument (in form reasonably satisfactory to the Holder of this Note) the obligation to deliver to each such holder such shares of stock, securities or assets as, in accordance with the foregoing provisions, such holder may be entitled to acquire. 2.4. Certificate as to Adjustments In the case of each adjustment or readjustment of the Conversion Price pursuant to this Section 2, the Company will promptly compute such adjustment or readjustment in accordance with the terms hereof and cause a certificate setting forth such adjustment or readjustment and showing in detail the facts upon which such adjustment or readjustment is based to be delivered to the Holder of this Note. The Company will, upon the written request at any time of the Holder of this Note, furnish or cause to be furnished to such Holder a certificate setting forth: 2.4.1. Such adjustments and readjustments; 2.4.2. The Conversion Price at the time in effect; and 2.4.3. The number of shares of Common Stock and the amount, if any, of other property at the time receivable upon the conversion of the principal amount of this Note. 2.5 Notices of Record Date, etc In the event of: 2.5.1. Any taking by the Company of a record of the holders of any class of securities of the Company for the purpose of determining the holders thereof who are entitled to receive any dividend (other than a cash dividend payable out of earned surplus at the same rate as that of the last such cash dividend theretofore paid) or other distribution, or any right to subscribe for, purchase or otherwise acquire any shares of stock of any class or any other securities or property, or to receive any other right, or 2.5.2. Any capital reorganization of the Company, any reclassification or recapitalization of the capital stock of the Company or any transfer of all or substantially all of the assets of the Company to any other person or any consolidation or merger involving the Company, or 2.5.3. Any voluntary or involuntary dissolution, liquidation or winding-up of the Company, the Company will mail to the Holder of this 4 5 Note at least 15 days prior to the earliest date specified therein, a notice specifying: 2.5.3.1. The date on which any such record is to be taken for the purpose of such dividend, distribution or right, and the amount and character of such dividend, distribution or right; and, 2.5.3.2. The date on which any such reorganization, reclassification, transfer, consolidation, merger, dissolution, liquidation or winding-up is expected to become effective and the record date for determining shareholders entitled to vote thereon. 2.6. Reservation of Stock Issuable Upon Conversion. This Company shall at all times reserve and keep available out of its authorized but unissued shares of Common Stock solely for the purpose of effecting the conversion of the Notes such number of its shares of Common Stock as shall from time to time be sufficient to effect the conversion of the Notes; and if at any time the number of authorized but unissued shares of Common Stock shall not be sufficient to effect the conversion of all then outstanding Notes, in addition to such other remedies as shall be available to the Holder of this Note, this Company will take such corporate action as may, in the opinion of its counsel, be necessary to increase its authorized but unissued shares of Common Stock to such number of shares as shall be sufficient for such purposes. 3.0 REDEMPTION OF NOTE 3.1. General: At any time after issuance hereof, the Company may give notice of redemption of the principal and interest due on the Note. 3.2. Notices: Notice of Redemption shall be made not less than 10 days prior to the Date of Redemption, and not more than 20 days. 3.3. Conversions: A Holder is not able to elect to convert a Note after Notice of Redemption has been made and while subject to redemption providing the redemption is made in full not less that five business days upon submission of the Note for redemption pursuant to a Notice hereunder. 3.4. Payment on Redemption: Notes shall be submitted for redemption within 10 days of the Redemption Date, or ten days after actual receipt of the Notice of Redemption, whichever is later. Payment shall be in cash not less than five business days after submission by a Holder. Failure to pay in full shall nullify a Notice of Redemption and a Holder may elect to convert as otherwise provided herein, or hold the Notes to maturity or convert in part as otherwise provided herein. 5 6 4.0. EVENTS OF DEFAULT The following described events shall be hereinafter individually called an "Event of Default " and collectively shall be called "Events of Default": 4.1 Default in Payments The Company defaults in the payment of any principal of or interest on this Note when due and such default continues for 30 days. 4.2 Failure to Perform The Company otherwise fails to perform any other covenant or provision set forth in its Restated Articles of Incorporation if such failure is materially adverse to the Company or to the Holders of these Notes. 4.3 Bankruptcy, Insolvency, Etc The Company or any subsidiary which is material to the consolidated financial condition of the Company makes an assignment for the benefit of creditors or admits in writing its inability to pay its debts generally as they become due; or an order, judgment or decree is entered adjudicating the Company or any such subsidiary bankrupt or insolvent; or the Company or any such subsidiary petitions or applies to any tribunal for the appointment of a trustee, receiver or liquidator of the Company or any such subsidiary or of any substantial part of the assets of the Company or any such subsidiary, or commences any proceeding (other than a proceeding for the voluntary liquidation and dissolution of a subsidiary) relating to the Company or any such subsidiary under any bankruptcy, reorganization, arrangement, insolvency, readjustment of debt, dissolution or liquidation law of any jurisdiction; or any such petition or application is filed, or any such proceeding is commenced, against the Company or any such subsidiary and either (a) the Company or any such subsidiary by any act indicates its approval thereof, consent thereto or acquiescence therein or (b) such petition, application or proceeding is not dismissed within 120 days. 5.0 MISCELLANEOUS 5.1 Successors and Assigns The terms and conditions of this Note shall inure to the benefit of and be binding upon the respective successors and assigns of the Company and the Holder hereof. Nothing in this Note, express or implied, 6 7 is intended to confer upon any party other than such parties or their respective successors and assigns any rights, remedies, obligations, or liabilities under or by reason of this Note, except as expressly provided in this Note. 5.2 Titles and Subtitles The titles and subtitles used in this Note are for convenience only and are not to be considered in construing or interpreting this Note. 5.3 Notices Any notice required or permitted under this Note shall be given in writing and shall be deemed effectively given upon personal delivery to the party to be notified or upon deposit with the United States Post Office, by registered or certified mail, postage prepaid and addressed to the party to be notified at the address indicated for such party on the Company's books and records, or at such other address as such party may designate by 15 days' advance written notice to the other parties. 5.4 Amendments and Waivers Any term of this Note may be amended and the observance of any term of this Note may be waived (either generally or in a particular instance and either retroactively or prospectively), only with the written consent of the Company and the Holder hereof. Any amendment or waiver effected in accordance with this paragraph shall be binding upon the Holder of this Note (and any securities into which this Note is convertible), each future holder of all such securities, and the Company. 5.5 Severability If one or more provisions of this Note are held to be unenforceable under applicable law, such provision shall be excluded from this Note and the balance of the Note shall be interpreted as if such provision were so excluded and shall be enforceable in accordance with its terms. 5.6 Remedies on Default, Etc In case of a default in the payment of any principal of or interest on this Note, the Company will pay to the Holder hereof such further amount as shall be sufficient to cover the cost and expenses of collection, including, without limitation, reasonable attorneys' fees, expenses and disbursements. No right, power or remedy conferred by this Note upon any Holder hereof shall be exclusive of any other right, power or remedy 7 8 referred to herein or now or hereafter available at law, in equity, by statute or otherwise. 5.7 This Note shall be governed by and construed and enforced in accordance with the laws of the State of Washington except insofar as and to the extent that the laws of the United States of America shall have application. AQUA VIE BEVERAGE CORPORATION By: /S/ ------------------------------- Thomas Gillespie President 8 EX-10.3 17 v67130ex10-3.txt EXHIBIT 10.3 1 AGREEMENT setting forth the terms and conditions upon which TPG CAPITAL CORPORATION ("TPG") is engaged by AQUA VIE BEVERAGE CORPORATION together with any successors (collectively "Aqua Vie") to effect transactions ("the Transactions") intended to merge or otherwise combine Aqua Vie with a United States reporting company and for related matters. SERVICES PROVIDED. Following its engagement, TPG and its affiliates will: Advise Aqua Vie on the structure of the Transactions and actions to be taken by Aqua Vie in preparation for the completion of the Transactions; Merge Aqua Vie or exchange its stock with or assist in transferring its assets into an existing United States corporation ("the Business Combination") which is or will become a reporting company under Section 12(g) of the Securities Exchange Act of 1934, as amended. Prepare, assist in preparing or review the agreement for the Business Combination ("Business Combination Agreement"); Prepare and file with the Securities and Exchange Commission a Form 10 or Form 8-K describing the Business Combination with the Company ("the Company" hereinafter shall mean the United States corporation following the Business Combination, unless the context requires otherwise); Take any other actions reasonably required of it to complete the Transactions as contemplated by this agreement. BUSINESS COMBINATION. TPG will provide, at its expense, a United States corporation with audited financial statements showing no material assets or liabilities which is or which TPG will cause to become a reporting company under Section 12(g) of the Securities Exchange Act of 1934 ("the 1934 Act"). Aqua Vie, at its election, will merge into, exchange its stock with, or transfer its assets to the United States corporation. Upon the effective date of the Business Combination, the officers and directors selected by Aqua Vie will become the officers and directors of the United States corporation. The name of the United States corporation following the Business Combination will be chosen by Aqua Vie. The United States corporation will have authorized capital of 100,000,000 shares of common stock, $.0001 par value per share, and 20,000,000 shares of preferred stock, $.0001 par value per share. 2 PAGE NUMBER 2 Upon the effective date of the Business Combination, there will be issued and outstanding by the Company (i) 250,000 common shares issued to TPG (ii) a common stock purchase warrant (described below) granted to TPG and (iii) such common stock and other securities as designated by Aqua Vie in the Business Combination Agreement. PAYMENTS. Aqua Vie will pay TPG $100,000 for its services and the services of its affiliates in regard to the Transactions. Payment of this amount will be made $25,000 on execution of this agreement, $50,000 on the Business Combination and $25,000 on the filing of a Form 10 or Form 8-K with the Securities and Exchange Commission. In the event that Aqua Vie is a foreign corporation, or for other reasons TPG deems sufficient, TPG may request Aqua Vie, and Aqua Vie agrees, to deposit an amount equal to the remaining payments to be made after execution of this agreement in escrow under an escrow agreement satisfactory to both parties. Aqua Vie hereby grants TPG a 5-year transferrable warrant ("TPG Warrant") to acquire up to 250,000 registered shares of the Company's common stock at a strike price of $1.00 per share. The Company will execute and deliver to TPG a form of common stock purchase warrant agreement, warrant and warrant exercise subscription not inconsistent with the terms provided herein. Aqua Vie will not at any time take or allow any action (whether by reverse stock split or otherwise) which would have the effect of reducing the absolute number of common shares owned or to be owned by TPG or its designee under this agreement. EXPENSES. TPG will bear its expenses incurred in regard to the Transactions, including, without limitation, travel, telephone, duplication costs, and postage. Aqua Vie will pay its own and third-party expenses (other than those of TPG) including, without limitation, Federal, state and Nasdaq filing fees, underwriting and market making costs, corporate financial relations, accounting fees, duplicating costs and other expenses of the Company. 3 PAGE NUMBER 3 AGREEMENT TO COMPLETE TRANSACTIONS. Aqua Vie agrees that it will timely take all steps necessary to complete the Transactions to include, without limitation, causing audited financial statements to be prepared in proper form for Aqua Vie; obtaining consents of the Board of Directors and the shareholders of Aqua Vie, as required; causing all necessary documents to be properly and timely prepared, executed, approved or ratified, and filed, as appropriate; making timely and fully all required payments related to the registration and listing of the Company's securities for public trading, including filing fees; and timely taking all other actions reasonably required of it to complete the Transactions. In the event that at any time Aqua Vie determines not to continue with the Transactions TPG hereby grants to Aqua Vie the right to buyout the interest of TPG in this agreement on the terms contained herein, in which case TPG agrees not to seek specific enforcement of this agreement. In the event that Aqua Vie elects not to continue with the Transactions (or if Aqua Vie does not timely take all such steps and do all things as may be reasonably required of it to complete the Transactions) TPG will be entitled to (i) retain the securities in Aqua Vie acquired or to be acquired by TPG or its affiliates under this agreement as though the Business Combination had occurred and (ii) receive in full all payments to be due to it or its affiliates through and upon completion of the Transactions as though those events had occurred provided, however, that Aqua Vie will not be obligated to make any payment under this paragraph if the failure to complete the Transactions is due to any actions or failure to act by TPG or its affiliates. Upon payment of the buyout fee provided for herein, all obligations of the parties under this agreement will cease except for obligations which expressly or by their nature survive termination. PERFORMANCE OF SERVICES BY OTHERS. From time to time, the achievement of certain results desired by the Company, including the promotion of interest in its public securities, may be enhanced by the services of other parties. These parties may include consultants, advertising agencies, financial analysts and similar persons who may, directly or indirectly, assist in creating interest in the Company's securities. All compensation, costs and expenses of such parties, if engaged by the Company, will be borne by it. 4 PAGE NUMBER 4 ACTIONS AND UNDERSTANDINGS FOLLOWING THE BUSINESS COMBINATION. Aqua Vie understands the obligations and responsibilities that will arise in regard to its becoming a reporting company and the trading of its securities in the public market. Aqua Vie understands that in order to achieve the greatest market interest in its securities it, its officers and its directors, all or some, will be required to continuously interact with the financial community. This interaction will include, without limitation, timely filing of reports under the Securities Exchange Act of 1934, including audited financial statements; annual reports to shareholders and shareholder meetings; issuing periodic press releases; and meetings and discussions with existing and prospective brokers, market makers, investment bankers and institutions. Aqua Vie understands that the completion of the Transactions will not, in itself, result in capital investment in the Company. The public status of the Company and its introduction to market makers and others in the financial community may result in investment interest. However, investment interest will depend upon the successes of the Company, market conditions and other factors over which neither TPG nor its affiliates have control. Aqua Vie understands that the ultimate judgement of the financial community of the investment merits of the Company will depend upon the Company's ability to successfully carry out its business plans and operations, to operate at a profit and similar business considerations. Aqua Vie represents in good faith that it currently has no reason to believe that it will not be able to complete the Transactions and to achieve its business objections. During the Transactions and so long as TPG or an affiliate is a shareholder of the Company, it will provide TPG continuing and reasonable access as requested to all information concerning the Company's operations, past, current and intended, including, without limitation, full access to the financial records of the Company. COMPLIANCE WITH SECURITIES LAW. Now and following the Business Combination, as applicable, Aqua Vie represents and warrants that: Aqua Vie and its affiliates will at all times observe and comply with Federal and State securities laws, rules and regulations incident to the issuance and trading of the securities of the Company and will take all steps reasonably required within its control to prohibit any persons, whether or not affiliated with Aqua Vie, from engaging in any transactions in contravention of such laws, rules and regulations. Aqua Vie and its affiliates will furnish all information and documents concerning it and its affiliates required for the preparation and filing of a Form 8-K or Form 10-SB by the Company and will assure that such information is complete and accurate and does not contain 5 PAGE NUMBER 5 any material misstatement or omit any material information. Toward that end, Aqua Vie and its affiliates will timely provide all requested information and documents, including officers' and directors' questionnaires. Aqua Vie and its affiliates will not at any time knowingly engage in any activity which would constitute a prohibited market manipulation of the securities of the Company and will take all steps reasonably required within its control to prohibit any officer, director, other affiliate, agent or employee from engaging in such conduct. The Company will not at any time issue securities registered on Form S-8 or issued pursuant to Regulation S of the General Rules and Regulations of the Securities and Exchange Commission without (i) prior written notification to TPG and (ii) either the written content of TPG or a written opinion of qualified counsel that neither the issuance nor intended use of such securities will violate any law, rule, or regulation under the Securities Act of 1933 or the Securities Exchange Act of 1934. The Company will not issue any securities to any person for the promotion or maintenance of a trading market in the Company's securities without first receiving an opinion of qualified counsel that such issuance will be in accord with securities laws, rules and regulations and will not, directly or indirectly, receive from such persons any capital by loan, investment or otherwise resulting from the sale or pledge of such securities. For not less than 36 months following the execution of this agreement, the Company will timely make all required Federal, state and other filings necessary to allow the public trading of the Company's securities and, if the Company's securities are then quoted on the Nasdaq Stock Market or listed on any regional or national exchange, will take all actions necessary to maintain such status for the Company's securities. For so long as TPG or its designee in an owner of any of the securities to be received by it under this agreement, TPG shall have the right to enforce the provisions of this paragraph and to seek damages for any violation thereof by the Company, including damages for any reduced value of the TPG securities if resulting from such violation. NOTICES. Any notices required or permitted under this agreement shall be deemed to have been given when delivered in writing by hand, certified mail (return receipt requested) or commercial courier, such as FedEx, to the following addresses or to such other addresses as may have been given to each party in the manner provided for in this paragraph. In the case of Aqua Vie or the Company to 6 PAGE NUMBER 6 Aqua Vie Beverage Corporation 333 South Main Street Ketchum, Idaho 83340 In the case of TPG to TPG Capital Corporation 1504 R Street N.W. Washington, D.C. 20009 ARBITRATION. SCOPE. The parties hereby agree that any and all claims (except only for requests for injunctive or other equitable relief) whether existing now, in the past or in the future as to which the parties or any affiliates may be adverse parties, and whether arising out of this agreement or from any other cause, will be resolved by arbitration before the American Arbitration Association within the District of Columbia. CONSENT TO JURISDICTION, SITUS AND JUDGEMENT. The parties hereby irrevocably consent to the jurisdiction of the American Arbitration Association and the situs of the arbitration within the District of Columbia. Any award in arbitration may be entered in any domestic or foreign court having jurisdiction over the enforcement of such awards. APPLICABLE LAW. The law applicable to the arbitration and this agreement shall be that of the District of Columbia, determined without regard to its provisions which would otherwise apply to a question of conflict of laws. DISCLOSURE AND DISCOVERY. The arbitrator may, in its discretion, allow the parties to make reasonable disclosure and discovery in regard to any matters which are the subject of the arbitration and to compel compliance with such disclosure and discovery order. The arbitrator may order the parties to comply with all or any of the disclosure and discovery provisions of the Federal Rules of Civil Procedure, as they then exist, as may be modified by the arbitrator consistent with the desire to simplify the conduct and minimize the expense of the arbitration. RULES OF LAW. Regardless of any practices of arbitration to the contrary, the arbitrator will apply the rules of contract and other law of the jurisdiction whose law applies to the arbitration so that the decision of the arbitrator will be, as much as possible, the same as if the dispute had been determined by a court of competent jurisdiction. FINALITY AND FEES. Any reward or decision by the American Arbitration Association shall be final, binding and non-appealable except as to errors of law or the failure of the arbitrator to adhere to the arbitration provisions contained in this agreement. Each party to the 7 PAGE NUMBER 7 arbitration shall pay its own costs and counsel fees except as specifically provided otherwise in this agreement. MEASURE OF DAMAGES. In any adverse action, the parties shall restrict themselves to claims for compensatory damages and/or securities issued or to be issued and no claims shall be made by any party or affiliate for lost profits, punitive or multiple damages. COVENANT NOT TO SUE. The parties covenant that under no conditions will any party or any affiliate file any action against the other (except only requests for injunctive or other equitable relief) in any forum other than before the American Arbitration Association, and the parties agree that any such action, if filed, shall be dismissed upon application and shall be referred for arbitration hereunder with costs and attorney's fees to the prevailing party. INTENTION. It is the intention of the parties and their affiliates that all disputes of any nature between them, whenever arising, whether in regard to this agreement or any other matter, from whatever cause, based on whatever law, rule or regulation, whether statutory or common law, and however characterized, be decided by arbitration as provided herein and that no party or affiliate be required to litigate in any other forum any disputes or other matters except for requests for injunctive or equitable relief. This agreement shall be interpreted in conformance with this stated intent of the parties and their affiliates. SURVIVAL. The provision for arbitration contained herein shall survive the termination of this agreement for any reason. ASSIGNMENT. In order to better carry out the Transactions, TPG may assign all or parts of this agreement provided that the assignee agrees to all the terms and conditions of this agreement pertaining to such assignment. An assignment will not relieve TPG of any of its obligations under this agreement. CONFIDENTIALITY. As a result of entering into this agreement Aqua Vie will have access to information which TPG regards as confidential and proprietary regarding TPG's methods of carrying out the Transactions (collectively the "Business of TPG"). Aqua Vie agrees that it will not, except as reasonably required pursuant to this Agreement, use itself, or divulge, furnish, or make accessible to any person any knowledge, knowhow, techniques, or information with respect to TPG or the Business of TPG without the prior written agreement of TPG. TERMINATION. 8 PAGE NUMBER 8 TPG may terminate this agreement, without further obligation or liability, at any time (i) that TPG has a reasonable basis to believe that any aspect of the transactions covered by this agreement would constitute a fraud or deception on the market or (ii) that the Company fails to meet its obligations under this agreement in a manner which would constitute a material breach. In any such case, TPG will be entitled to the buyout fee provided for in this agreement. MISCELLANEOUS. COVENANT OF FURTHER ASSURANCES. The parties agree to take any further actions and to execute any further documents which may from time to time be necessary or appropriate to carry out the purposes of this agreement. SCOPE OF AGREEMENT. This agreement constitutes the entire understanding of the parties. No undertakings, warranties or representations have been made other than as contained herein, and no party shall assert otherwise. This agreement may not be changed or amended orally. CURRENCY. All references to currency in this agreement are to United States Dollars. REVIEW OF AGREEMENT. Each party acknowledges that it has had time to review this agreement and, as desired, consult with counsel. In the interpretation of this agreement, no adverse presumption shall be made against any party on the basis that it has prepared, or participated in the preparation of, this agreement. EFFECTIVE DATE. The effective date of this agreement is August 31, 1999. 9 PAGE NUMBER 9 IN WITNESS WHEREOF, the parties have approved and executed this agreement. TPG CAPITAL CORPORATION - ---------------------------------- President AQUA VIE BEVERAGE CORPORATION - ---------------------------------- PRESIDENT 10 PAGE NUMBER 10 WARRANTIES BY OFFICERS, DIRECTORS AND OTHER AFFILIATES Each of the undersigned officers, directors and other affiliates of Aqua Vie agree that they have read this agreement and that they (i) will not violate any of the provision of this agreement relating to compliance with securities laws, rules and regulations (ii) will not violate any provision of this agreement relating to confidentiality of the business of TPG and (iii) consent to be governed by the provisions of this agreement relating to arbitration in the case of any claims arising from their warranties herein. ----------------------------------- ----------------------------------- ----------------------------------- ----------------------------------- 11 PAGE NUMBER 11 PERSONAL GUARANTEES In consideration of benefits to be received by Aqua Vie and to them personally, the following persons, individually and severally, (i) guarantee all payments required of Aqua Vie under this agreement as and when due (ii) covenant to take all actions and do all things reasonably required to carry out the intent and purpose of this agreement, whether as officers, directors, shareholders or otherwise and (iii) consent to be governed by the provisions of this agreement relating to arbitration. ----------------------------------- ----------------------------------- EX-10.4 18 v67130ex10-4.txt EXHIBIT 10.4 1 MANUFACTURING AGREEMENT This Manufacturing Agreement ("The Agreement") is made as of this 5th day of March 1999, between LYONS MAGNUS, a California corporation, having its principal place of business at 1636 South Second Street, Fresno, California (herein after "Packer") and AQUA VIE BEVERAGE CORPORATION, a Delaware Corporation, having its principal place of business at 333 South Main Street Suite 201, Ketchum, Idaho (herein after "Company"). RECITALS WHEREAS Packer is engaged in the business of preparing and aseptically processing fruit, fruit juices, beverage products and other related commodities in Fresno, California and Florence, Kentucky; WHEREAS Company is engaged in the business of developing, marketing and selling certain products including various proprietary beverages; and WHEREAS Company desires to retain Packer to aseptically process and package their proprietary beverage products for it on the terms and conditions as set forth herein. WHEREAS Packer proposes to provide at its best available price to utilize its organization and production capabilities support the Company in development, production and distribution of its products to the extent desired by the Company, so that the Company may emphasize product development, marketing and sales with all other activities at its option fully supported by the organization and production capabilities of Packer. AGREEMENT For good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, Packer and Company agree as follows. I. Product Specifications: Processing and Packaging. A. Processing: For the term of this Agreement, Packer will aseptically process and package for Company several Company proprietary beverage products known as Hydrators and Nutritionals, other Company developed or acquired proprietary products, Smoothies and other similar products (the "Products"). In accordance with the specifications as developed jointly by Company and Packer, (the "Specifications"), (Exhibit A) and the terms and conditions of this Agreement. Packer shall initially process and package seven flavors of Hydrators(TM) and three Nutritional products (the "E Line"(TM), Elixir(TM), Empower(TM), and Ecstasy(TM)) in either of the two containers as listed below in 1 2 Section B, and a line of 3 or more Smoothies provided by Packer. During the term of this Agreement, Company may request Packer to process and package additional flavors and/or package configurations upon thirty (30) days written notice to Packer providing Packer has the capacity and available equipment to produce such products and Company agrees to pay the price that Packer demands for such production. (1). A line of Smoothie products for retail bottles have been developed by Packer and will require production test runs for each flavor to verify shelf life stability and other quality attributes all at Packer's expense. Test runs were conducted on Peach and Raspberry Smoothies on February 12, 1999, and samples in PET bottles have been delivered to the Company for evaluation and flavor enhancement. Additional flavors will be produced and delivered to the Company from time to time upon request. Shelf life studies will be conducted for sixty (60) days from the test production and if approved by Packer, and the cost parameters are mutually acceptable, the Smoothie product will then be released to Company. (2). Smoothie products developed by Packer for retail bottles will be under license to be exclusively enhanced, produced and sold by the Company for a period of 6 (six) months after shelf life studies are completed and a flavor is released to the Company for sale. Thereafter, the exclusive production and sales right of the Company will continue as to a flavor provided the Company sells not less than an aggregate of 50,000 cases in the first per year of all Smoothie flavors, and 50,000 cases thereafter per year, increased by 10% per year over the preceding year. If this sales level is not attained, the company will have a non-exclusive right to produce and sell a Smoothie flavor. B. Packaging: The Products shall be packaged in either 16 ounce and/or 12 ounce PET bottles with 28 mm openings with either flat or sports closures. Such bottles will be further packaged in cases consisting of 24 bottles as further described in the Specifications as set forth hereto in Exhibit A. Packaging in Company's gift packs or in less than 24 bottle cases may be covered by separate cost quote. Bottles shall be labeled with full wrap around labels with all artwork and plate costs to be charged to Company. Company will utilize Packer's label vendor unless the Vendor's costs are not competitive. Packer, in any instance, must approve any new label vendors. C. Labeler: In the event Company elects to utilize a full sleeve shrink label, a specialized label applicator will be purchased by Company for the approximate sum of $95,000 plus conveyor modifications of $10,000 for a total of $105,000 for use in Packer's line to produce Company products, and such other non-competitive products as may be agreed upon from time to time between the parties, subject to availability limitations and payment for use. Packer will install this labeler and components at a cost to be borne by Packer of approximately $15,000 to $20,000. Packer will maintain equipment in top 2 3 condition at all times. If Packer utilizes this equipment for other projects, Packer agrees to pay Company at the rate of $.10 per case for all throughput cases. The equipment can not be used for projects that involve products that directly compete with the Products of the Company as defined herein or subsequently added. Packer will have the option of purchasing the equipment from Company at the termination of the Agreement based upon a twenty percent per year depreciated value. At the end of five years, Packer may acquire ownership of the equipment for $1, however, the Company may still utilize said equipment without charge for labeling its products, and Packer will replace the Labeler with new equipment if considered necessary by Company at no cost to Company for acquisition or use. D. Company is aware and understands that it is responsible for and will pay all costs associated with the changing of flavors and/or container sizes which are detailed on Packer cost quotations in the form set forth in Exhibit B. E. Packer agrees to process a minimum of 50,000 cases of Product per month, exclusive of the Smoothie product production, for the Company based upon quarterly projections received from the Company. Forward reserve volume will be calculated by reserving one hundred fifty percent of the preceding quarterly volume to a maximum of 100,000 cases per month. Example: If Company orders and ships 100,000 cases in Quarter 1, Packer will then commit to processing 150,000 cases in Quarter 2, adjusted for seasonality. When Company volume reaches 100,000 cases per month for 3 continuous months then the volume will again be increased by a factor of 125% per quarter. F. Packer agrees in good faith to provide volume discounts to Company that reflect Packer's ability to secure such discounts by its purchasing. G. All Products shall be aseptically processed and packaged at Packer's facility in Fresno, California. H. Cross Sales: (1) A vital issue to the spirit of this agreement, is the concept of "cross sales" of each party's products by the other party. "Cross Sales" will include but are not limited to the Packer providing to the Company the exclusive rights to label, market, and sell the product line called "Smoothies", originally developed by the Packer subject to the conditions set forth above, other Packer-label products; and the Company providing to the Packer the option to have the exclusive right to market and sell, through a licensing agreement (or some mutually agreed to alternative method), Aqua Vie Products through the Packer's Food Services Distribution Network, subject to potential acceptable sales demand therefor. (2) From time to time, at the request of the Company, Packer will make available to Company on an exclusive basis for enhancement, production and 3 4 sale any Packer-label products for all sales exclusive of Packer's Food Services Distribution Network. Said exclusive license will continue from year to year if Company sells 50,000 or more cases of said product during a year, or averaged over a two year period, whichever is less. If said sales levels are not met, the Company shall have a non-exclusive right for production and sale. Whether or not exclusive, packer will not offer products provided by it to Company hereunder to competitors or entities if it will derogate or detract from the sales activities of the Company. I. The Company may distribute and sell the Products worldwide; however, Products bottled by Packer for foreign sales will be subject to Company satisfying import compliance. II. Sourcing of Raw Materials and Packaging. A. Packer will make available at cost, plus appropriate loss factors based on volume as setout in "Specifications" Exhibit A, any raw materials and packaging supplies currently maintained in the Packer's raw material inventory requested by the Company for use in this project. Special raw materials currently not inventoried by Packer which Company specifies as a necessary component in the Products formulation and packaging of its Products, not including the production of the Smoothie product which costs shall be covered separately, shall also be purchased by the Packer or the Company to support this project at Company's expense. Special flavor components shall be timely furnished to the Packer by the Company in order to support production schedules. Packer shall bear all risk of loss based upon its failure to account for or negligence leading to inventory loss on all of the above mentioned raw materials and flavor components and shall be accountable for these supplies and materials and will provide inventories on a monthly basis or more often if required to adequately manage the production function. B. Packer will review all raw material requirements and provide appropriate inbound quality control and inventory procedures to assure that all raw materials meet the Specifications and are adequately accounted for. C. Company shall place orders for the Products approximately four weeks prior to expected shipment date. Upon receipt of a valid purchase order, Packer shall, within three (3) working days of receipt thereof, forward an invoice for said order with appropriate detail acceptable to Company. Company will then forward funds or letter of credit to Packer who will allow Packer to order raw materials and schedule processing time. Products will be produced no later than three 3 weeks after receipt of funds or letter of credit. At the conclusion of each run, a final invoice will be prepared indicating the exact number of cases of Products produced with a resulting charge or credit, with any such charge amount to be cleared prior to any subsequent orders being accepted. 4 5 D. Packer shall bear risk of loss based on failure to account for damage to or inventory loss on raw materials and supplies. Packer shall maintain books and records relating to all such raw materials and will provide detailed schedules of raw material inventories on hand as verified by a physical inventory observation on a monthly basis if required to meet Company's production requirements. III. Manufacturing A. Packer will process and package Products for Company in accordance with the Specifications. Packer may change Specifications that relate to the production of the Products from time to time and any such changes will only be effective upon written notice from Packer to Company and approved in writing by Company, which approval shall not be unreasonably withheld. Company may change Specifications that relate to matters other than production scheduling of the Product from time to time and any changes will only be effective upon fifteen (15) days written notice from Company to Packer and must be approved in writing by Packer. B. Packer shall store all products and raw materials at a temperature that is suitable to maintain the quality of the Products in accordance with the Specifications. C. Packer will maintain production records on all raw materials utilized in sufficient detail so that Packer and Company may track product batch numbers to specific raw materials and finished goods code numbers. Prior to the acceptance of incoming raw materials, Packer will test samples of such raw materials to ensure that these raw materials meet the Specifications. Raw materials failing to meet the Specifications will be returned to the vendor and Company shall have no obligation to pay Packer for any non-conforming raw materials returned to vendor by Packer. Manufacturing yield loss on production runs of twenty (20) hours shall be no more than five percent. Manufacturing yield loss on production runs exceeding twenty (20) hours shall be no more than three percent. Packaging yield loss shall be less than two percent (flavor and size change issues excepted). Manufacturing yield loss on production runs of less than 20 hours will be detailed on cost quotations on a form as set out in Exhibit B. D. Products shall be processed on tubular heat exchange equipment to include appropriate heating, hold times and cooling to conform to the Specifications. E. The fees provided as set forth in Exhibit B shall constitute payment for all services provided by Packer hereunder including, without limitation, all product processing, raw material receiving, quality control procedures, microbiological testing of the product, and record keeping required hereunder 5 6 including the production and accounting functions necessary to fulfill documentation of packaging of raw materials by lot numbers to correspond with finished goods code numbers on all Products, warehousing, accounting, product development, and general administrative costs. IV. Warehousing and Testing A. For the term of this Agreement Packer agrees: 1) To conduct all microbiological testing of the Products as required by the Specifications and hold all finished Products for a period of no less than six (6) days pending microbiological approval and release for shipment. 2) To transfer all finished Products to a warehouse facility in Fresno, California that will be adequately ventilated to maintain the quality of the Products in accordance with the Specifications or, at the option of the Company, to some other warehouse facility. 3) To warehouse all raw materials in appropriate storage areas in Fresno, California, which will preserve the quality of such raw materials to enable such raw materials to meet the Specifications. 4) To receive and process, at the Company's option, all inbound orders from Company for Products, to generate bills of lading and load Products for shipment as directed by Company with all complete inventory control; and 5) To provide finished goods, accounting systems, and inventory control documentation to Company on a monthly basis. B. For the term of this Agreement, Company, at its option, agrees: 1) To forward orders for Products to Packer on a monthly basis which will specify the dates the Products shall be furnished and available for shipment to Company's customers; and 2) To arrange for shipping of all Products F.O.B. Packer's warehouse in Fresno, California. Packer can assist in arranging transportation if required by Company, however, payment guarantees will be necessary. V. General A. Company will be assigned an account executive, Mr. Larry Young, who will be responsible for the management and administration of this agreement on behalf of Packer including and without limitation all areas of manufacturing and processing of the Products from both a technical and business standpoint. 6 7 B. Upon receipt of orders from Company, Packer will schedule same into normal production to ensure a timely delivery of all Products in accordance with Section II.C. C. Packer will place code markings on all finished Products that include such Products' day code and "use by date" and which conform in all respects to the Specifications. The code markings will include bar coding and item numbering on all secondary packaging and master pallet identification labels. D. Packer will provide to Company a certificate indicating proof of product liability insurance. This certificate shall show liability coverage of no less than $10,000,000 in the aggregate and $1,000,000 per occurrence and shall name the Company as an Additional Insured. E. Company shall take delivery of the finished Products no later than thirty (30) days from the date of production. F. Packer will approve or submit changes to any proposed press release containing their name within 24 hours of submission to them or within that same time provide written response containing the reasons for their objection. G. Packer intends to make available its organizational, production, and purchasing capabilities to facilitate the business of the Company to the full extent desired thereby, subject to other obligations of Packer, so that the Company may to the extent desired thereby devote its attention to marketing, product development and sales activities without the distraction of developing its own capabilities in the areas which may be supported by Packer. VI. Effective Term The term of this Agreement shall commence on the date this Agreement is signed by the parties and will continue in full force for a term of three consecutive years from that date. The term of this agreement will be renewable on a year to year basis with 12 month written notice by Company to Packer. VII. Forecasts Upon execution hereof, Company shall provide Packer with a written ninety (90) day forecast of its needs for production of the Products and shall thereafter update this forecast on a monthly basis. Estimates contained in any forecast shall not be deemed to constitute a binding commitment to purchase on behalf of the Company. 7 8 VIII. Termination A. This Agreement may be terminated: 1) By Packer, immediately without notice, if Company shall become insolvent, or shall file a voluntary petition in bankruptcy, or there is a filing of an involuntary petition in bankruptcy against Company, or an appointment by a court or a temporary or permanent receiver, trustee, or custodian for Company or Company's business or if Company shall make a general assignment for the benefit of its creditors except to prevent an involuntary petition to bankrupt the Company by creditors due to past performance of the Packer. 2) By Company, immediately without notice, if Packer shall become insolvent, or shall file a voluntary petition in bankruptcy, or there is a filing of an involuntary petition in bankruptcy against Packer, or an appointment by a court or a temporary or permanent receiver, trustee or custodian for Packer or packer's business or if Packer shall make a general assignment for the benefit of it's creditors; except to prevent an involuntary petition to bankrupt the Packer by creditors due to past performance of the Company. 3) By either party, with cause, upon thirty (30) days written notice to the other party; except in the case of product recall due to negligence on the part of the Packer. 4) By either party, upon the breach of this Agreement by the other party and thirty (30) days advance written notice for the non-breaching party to the breaching party that specifies the breach; provided, however, that if the breaching party shall remedy such breach during such thirty (30) day period, then any such notice of termination shall be null and void; except for non-payment or failure to pay in a timely manner as contract requires, then contract can be terminated on ten (10) days written notice by Packer to Company. 5) Thirty (30) days following receipt by one party hereto of the notice, as described below: If either party hereto (the "Defaulting Party") is at any time during the effective term of this Agreement prevented or delayed in complying with any provision of this Agreement by reason of matters such as acts of God, strike, civil commotion, riots, war, revolution, acts of governments, or any similar cause which is reasonably beyond the control of the Defaulting Party, but excluding lack of funds, unless caused by one of the parties 8 9 against the other due to neglect, or failure to perform according to the terms of this Agreement; then the duties and obligations of both parties hereto shall be suspended for the duration of the event preventing proper performance under this Agreement; provided, however, that if such prevention or delay shall continue in excess of thirty (30) days, the other party hereto shall immediately have the right to terminate this Agreement upon thirty (30) days prior written notice to the defaulting party. B. In the event this Agreement is terminated: 1) All obligations of each party shall be adjusted up to and including the date of termination; except in the instance of Products recalled due to negligence of the Packer, which will enure to the time when all settlements are satisfied between the Company and it's customer(s). 2) Packer shall, within thirty (30) days following the date of termination, destroy or cause to be destroyed in compliance with any and all applicable regulations, any finished Product which is not in compliance with this Agreement, and 3) Company shall within thirty (30) days following the date of termination, remove all unused raw materials supplied by or paid for by it hereunder, which are at Packer's facilities. C. In addition to any other rights of Packer under this Agreement, if within thirty (30) days following the date of termination, Company shall not have paid in full for the finished Products or raw materials, then Packer shall be entitled to sell the same to satisfy any outstanding obligation or liability owed by Company to Packer at the date of termination, but at all times must meet the requirements and restrictions as set forth in Agreements between Company and it's customers. IX. Warranties; Indemnities A. Packer warrants that all of the Products supplied to Company pursuant to this Agreement shall be free from defects and shall conform in all respects to the Specifications as may be modified by the written Agreements of the parties from time to time. B. If any of the Products do not conform in all respects to the Specifications, Company shall have the right to reject such Products provided that it gives Packer notice in writing within ten (10) days of receipt of such shipment at final destination point as identified by Company at time of shipment as THE FINAL DESTINATION POINT. Company shall return any rejected Products 9 10 to the Packer at Packer's expense unless otherwise instructed by Packer. Company shall not be obligated to pay the Processing Fee on any rejected Products, and to the extent such Processing Fee has been paid by Company prior to rejection, Packer shall reimburse Company for such Processing Fee as soon as practicable after rejection of any such Products, Company shall not be required to pay Packer for any raw materials consumed in the processing of any rejected Products, and to the extent any rejected Products was produced from raw materials paid for by Company, Packer shall reimburse Company for the cost of any such raw materials as soon as practicable after rejection of such Products. C. Packer agrees to indemnify and hold harmless Company and it's directors, officers, employees, agents and representatives from and against any loss, cost, liability or expense (including any reasonable attorney's fees) arising from or related to any claim by any such third party alleging injury to such third party resulting from defects in the Product(s ) supplied hereunder resulting from defects in the manufacturing of the Product(s) supplied hereunder. D. Company agrees to indemnify and hold harmless Packer and its directors, officers, employees, agents and representatives, from and against any loss, cost, liability or expense, (including reasonable attorney's fees) arising from or related to any claim by any third party alleging injury to such third party resulting from defects in the Products supplied hereunder resulting in defects in the Products from shipping, marketing and storage by Company. X. Integration This Agreement supersedes all prior agreements and negotiations between the parties respecting the subject matter hereof and shall not be varied, amended or supplemented except by writing of subsequent or even date executed by the authorized representatives of the parties. XI. Successors and Assigns A. This Agreement and the rights and obligations arising herefrom are binding upon the successors or permitted assigns of the parties hereto. B. Packer may not assign this Agreement in whole or in part by operation of law or otherwise without the prior written consent of Company. Any attempted assignment in derogation or this provision shall be null and void. 10 11 XII. Authorized Representatives The individuals signing this Agreement represent and warrant that they are authorized to execute this Agreement by and on behalf of their respective corporations and to bind such corporations to the terms and conditions hereof. XIII. Inspection Rights Upon forty-eight (48) hours advance written notice to Packer, Company and/or its authorized representatives may enter the premises of Packer (i) to determine whether Packer is complying with the provisions of this Agreement, (ii) to observe and inspect the raw materials inventoried, (iii) to observe Packer's testing and quality control procedures, and (iv) to inspect the books and records of Packer relating to this Agreement and the transactions contemplated hereby. Company and its authorized representatives shall be permitted to make and retain copies from Packer's books and records. XIV. Notices Any notice or report provided for in this Agreement shall be deemed sufficiently given when sent by certified or registered mail, postage prepaid, personally delivered or by overnight mail as follows: If it is for Packer, to: Lyons Magnus Attn: Robert Smithcamp 1636 S. Second Street Fresno, CA 93702 If it is for Company, to: By Mail: Aqua Vie Beverage Corporation Attn: Tom Gillespie P.O. Box 6759 Ketchum, ID 83340 Or if by express mail delivery: Aqua Vie Beverage Corporation Attn: Tom Gillespie 333 S. Main Street Ste. 201 Ketchum, ID 83340 11 12 The parties may, from time to time, specify in writing other addresses for this purpose. Any notice, consent or other communication required or permitted to be given hereunder shall be deemed to have been given on the date of mailing, or personal delivery thereof and shall be conclusively presumed to have been received by the second business day following the date of mailing or, in the case of personal delivery, the actual day of personal delivery thereof, except that a change of address shall not be effective until actually received. XV. Governing Law This Agreement is made under and shall be governed by and construed in accordance with the laws of the State of California; without reference to conflict of law principals. XVI. Miscellaneous A. The headings and captions contained in this Agreement are of reference purposes only and shall not affect the meaning or interpretation of the Agreement. B. This Agreement may be executed in counterparts, each of which shall be deemed to be an original, but all of which together shall constitute but one and the same instrument. C. If any article, section, subsection or provision of this Agreement, or the application of such article, section, subsection or provision, is held illegal, invalid or unenforceable under present or future laws effective during the term of this Agreement, it is the intention of the parties hereto that the remainder of this Agreement shall not be affected thereby, and it is also the intention of the parties that in lieu of any such illegal, invalid or unenforceable clause or provision, there be added to this Agreement by the court or other party making such determination of a clause or provision as similar in terms and substance to such clause or provision as may be real, valid and enforceable. D. The exhibits are part of this Agreement as if set forth fully herein. E. Subject to the terms and conditions of this Agreement, each of the parties will use all reasonable efforts to take, or cause to be taken, all action, and to do, or cause to be done, all things necessary, proper or advisable, under the applicable laws and regulations or otherwise, to fulfill its obligations under this Agreement and to consummate the transactions contemplated by this Agreement. 12 13 XVII. Time Time is of the essence to this Agreement. IN WITNESS WHEREOF, Company and Packer have executed this Agreement by their duly authorized representative this ____________ day of ________________, 1999.
Packer: Company: Lyons Magnus Aqua Vie Beverage Company By: By: ------------------------ ----------------------- Title: Title: ------------------------ ----------------------- Date Date: ----------------------- ------------------------
13 EX-27.1 19 v67130ex27-1.txt EXHIBIT 27.1
5 12-MOS JUL-31-2000 AUG-01-1999 JUL-31-2000 11,127 0 25,238 0 249,790 379,631 152,336 24,847 585,120 1,767,785 0 0 9 30,811 (1,201,027) 585,120 151,924 151,924 232,358 1,689,649 0 0 77,139 (1,847,222) 0 0 0 0 0 (1,847,222) (0.07) (0.07)
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