Amendment to Agreement
This Amendment dated April 7 , 2003 is to the Agreement between Championlyte
Holdings, Inc. (formerly known as Championlyte Products, Inc.) (the "Company")
and Knightsbridge Holdings, LLC d/b/a Knightsbridge Capital ("Knightsbridge")
dated January 6, 2003, collectively (the "Parties").
I. Background The Company hereby agrees to make an Amendment to the Agreement
between thc Company and Knightsbridge in view of the unforeseen efforts being
expended on the Company's behalf by Knightsbridge and its principals and
employees. These efforts are in addition to Knightsbridge's normal scope of
activities and are therefore in addition to its normal activities.
II. Amendments The Company agrees to amend the following sections of the
Agreement as follows:
A. Section 3.1.1 Monthly Cash Retainer. As of April 1, 2003, the Company shall
pay to Knightsbridge a Monthly Cash Retainer in the amount of $7,500 per month.
As of September 1, 2003, this Month1y Cash Retainer shall be increased to
$10,000 per month until the expiration or cancellation of the Agreement
B. Section 3.1.2 Equity Based Compensation. The Warrants issued to Knightsbridge
shall have an Initial Exercise Price equal to the Company's closing bid, price
on the Over The Counter Bulletin Board as maintained by NASDAQ as of the date of
this Agreement. Additionally, the Warrants shall have a Subsequent Exercise
Price equal to 80% of the Company's closing bid price on the Over The Counter
Bulletin Board as maintained by NASDAQ as of the date of Exercise by
Knightsbridge.
This constitutes the Amendments to the Agreement between the Company and
Knightsbridge and any subsequent amendments shall be agreed to by the Parties
and evidenced in a written amendment.
Agreed and Accepted this 7th day of April 2003
By:
CHAMPIONLYTE PRODUCTS, INC.
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
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Its: Director
KNIGHTSBRIDGE CAPITAL
/s/ ▇▇▇▇▇▇ Press
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Its: President
KnightsBridge
Capital
January 6, 2003
Championlyte Products, Inc.
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Attn: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Interim Chief Operating Officer
Gentleman:
Knightsbridge Holdings, LLC, ("Knightsbridge") is pleased to be retained,
on the terms and conditions set forth in this letter of engagement ("Engagement
Letter") as a consultant to your company, Championlyte Products, Inc. (the
"Company"), to assist in a variety of areas relating to the financial,
strategic, and related developmental growth of the Company (the "Engagement").
1. Services of Knightsbridge.
For the Term of Engagement (as hereinafter defined), and with your general
knowledge and consent, we agree to provide to the Company a range of
consultative and related services which may, but which will not necessarily,
include the following: (i) identifying, evaluating and advising in relation to
the Company's current structural (including business model), financial,
operational, managerial, strategic and other needs and objectives, (ii)
preparing and coordinating with the Company and others in the development of
business plans, investor presentations and financial models, (iii) identifying
potential sources of private and/or public financing ("Financing Sources"),
including those involving transactions requiring any issuance by the Company of
either equity, debt and/or equity-linked securities ("Financing Transactions")
and negotiating, structuring and advising in relation to potential Financing
Transactions, (iv) identifying potential merger, acquisition, divestiture,
consolidation or other combintion ("M&A Transaction") opportunities and
negotiating, structuring and advising in connection with potential M&A
Transactions, (v) advising and assisting the Company in connection with the
preparation of any registration statements, periodic or other SEC reports or
proxies, and (vi) coordinating with, and advising in connection with the
activities of, Outside Professionals, including without limitation attorneys,
accountants, market professionals, etc.
2. Term of Engagement.
The Engagement shall be effective for a period of six (6) months,
commencing on the date first appearing above (the "Term of Engagement").
Thereafter, the Engagement shall automatically renew on a month-to-month basis,
subject to the right of the Company and/or Knightsbridge to terminate the
Engagement as of the end of any given month by giving written notice to the
other party at least thirty (30) days notice ("Termination"). Said right of
termination shall commence upon the one month anniversary of this signing
Ageement. Notwithstanding the foregoing, the Company shall not have the right to
cancel this Agreement until such time as it has fulfilled all its obligations
under any and all outstanding Agreements with the Advantage Fund I, LLC or its
assignees.
3. Compensation.
In consideration for the services rendered by Knightsbridgc to the Company
pursuant to the Engagement (and in addition to the expenses provided for in
Paragraph 4 hereof), and throughout the Term of Engagement, the Company shall
compensate Knightsbridge as follows:
3.1 Engagement Retainer.
3.1.1 Monthly Cash Retainer. An initial non-refundable retainer fee in
an amount equal to USD $2,500 payable in cash upon the delivery of this
Engagement Letter and, thereafter, a monthly retainer in an amount equal to
$2,500 payable in cash on the first day of each month of the Term of Engagemmt
(the "Monthly Retainer"). Invoices shall be rendered upon the first of the month
and are due upon presentation. Knightsbridge shall, at its option accept shares
of registered stock under the same terms/discounts/return characteristics as any
funding, from The Advantage Fund I, LCC (the "Fund") or accept payments of its
fees out of closings of the Fund with the Company. Knightsbridge agrees to apply
any and all retainer amounts against the consideration earned under sections
3.2.1 through 3.2.2 herein after the first $50,000 fees earned under sections
3.2.1 through 3.2.2 are paid on each transaction.
3.1.2 Equity-Based Incentive Compensation. Company agrees to pay to
Knightsbridge an amount of common stock of the Company, upon finalization of
this Agreement, in an amount not less than 2.99% of the fully diluted, shares of
the Company. Company shall also issue to Knightsbridge a warrant to purchase
("warrant"), an additional 2.99% of the Company's fully diluted, shares of the
company, exercisable for five (5) years at an exercise price equal to 90% of the
Company's closing bid price on the Over The Counter Bulletin Board as maintained
by NASDAQ as of the date of this Agreement. Should the engagement be cancelled
prior to the end of its term, but after thirty days, then this equity-based
incentive compensation shall vest on a pro-rata basis. If the engagement is
terminated at or prior to thirty days then the company shall have no obligation
to Knightsbridge for any equity-based incentive compensation. Company shall file
a registration statement covering the shares underlying these warrants within
120 days of the date of this Engagement Letter. Company shall use its best
efforts to enable the registration statement to become effective at the earliest
possible time. Company shall bear any and all expenses associated with the
filing of the registration statement. The shares and warrants described in this
Section shall carry full ratchet anti-dilution provisions for the term of this
Agreement and a period of an additional 90 days.
3.2 Additional Compensation. In addition to any amounts payable pursuant to
Section 3.1 above, Knightsbridge shall be paid additional compensation
("Additional Compensation") in connection with certain transactions and other
events ("Compensable Events") throughout the Engagement and thereafter the
amount of which Additional Compensation shall be determined in each case with
reference to the following corresponding sections:
3.2.1 Financing Transactions (Knightsbridge Introduction). For
purposes of any Financing Transactions involving any Financing Source directly
or indirectly to the Company by Knightsbridge, and whether occurring during the
Term of Engagement or during a period ending two (2) years following
Termination, Additional Compensation shall be payable to Knightsbridge upon the
closing thereof in accordance with the following schedule where "Consideration"
shall mean (i) the total amount of gross proceeds received by, or otherwise
deliverable to, the Company without condition as part of any such Financing
Transaction, and (ii) any common stock or other securities of the Company
(including without limitation any warrants, options and/or convertible
securities) issued or otherwise transferred as a direct or indirect part of such
Financing Transaction. Debt financing shall include but not be limited to any on
or off balance sheet financing, mortgages, debentures, notes or convertible
securities, factoring, receivables financing, or credit facilities introduced
directly or indirectly to the Company by Knightsbridge. Any equity financing
transaction entered into with the Advantage Fund I, LLC shall reduce the
compensation to an amount equal to 50% of the schedule delineated below.
(i) Consideration Amount of Additional Compensation
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Equity Financing:
$-0- to $250,000 $10,000 (minimum)
$250,001 to $500,000 $20,000
$500,OOl to $5 million 8% of Consideration
$5 million+ $400,000 + 1.5% of Consideration in
excess of $5 million
Debt Financing:
$-0- to $250,000 $2O,O00
$250,001 to $500,000 $30,000
$500,001 to $5 million 6% of Consideration
$5 million+ $300,000 + 3% of Consideration in excess
of $5 million for debt financing. And;
(ii) Any Securities issued by or to the Company: 5% (in kind)
3.2.2 M&A Transactions (Knightsbridge Introduction). For purposes of
any M&A Transactions involving any entity or entities originally introduced
directly or indirectly to the Company by Knightsbridge, and whether occurring
during the Term of Engagement or during a period ending two (2) years following
Termination, Additional Compensation shall be payable to Knightsbridge upon the
closing thereof in accordance with the following schedule where "Consideration"
shall mean the total of all cash, assets (including without limitation any real
property, personal property and intellectual property) common stock or other
securities (including without limitation any warrants, options and/or
convertible securities) paid by or to the Company or its shareholders, and shall
further include (a) any commercial bank or other indebtedness of the Company
that is repaid or for which the responsibility to pay is assumed by the Company
in connection with such M&A Transaction, (b) the greater of the stated value or
the liquidation value of preferred stock of the Company that is assumed or
acquired by the Company that is not converted into common stock upon the
consummation of such transaction, (c) the value of any net operating losses
transferred as part of the M&A Transaction and from which a party to such
transaction expects at the time of closing to benefit, and (d) future payments
for which the Company is obligated either absolutely or upon the attainment of
milestones or financial results ("Company Future Payments"). Any Additional
Compensation payable as a result of Company Future Payments shall be paid at
closing and shall be valued at the present value of the Company Future Payments.
For the purpose of calculating the present value, the Company and Knightsbridge
agree to discount all Company Future Payments by a discount factor equal to 15%
per annum, and where necessary, to use the projections which have been provided
by the Company in the course of the M&A Transaction to quantify these amounts
and their timing. Should Knightsbridge not be responsible for the entity or
entities introduced to the Company under this section, Knightsbridge's
compensation shall be at a rate equal to 50% of that delineated below.
Consideration Amount of Additional Compensation
$-0- to $500,000 $30,000 (minimum)
$500,001 to $5 million 5% of Consideration
$5 million+ $250,000 + 3.0% of Consideration in excess
of $5 million
4. Expenses.
In addition to any Engagement Retainers and Additional Compensation payable
hereunder, and without regard to whether any Compensable Events occur hereunder,
the Company shall reimburse Knightsbridge for a11 fees approved by an officer of
the Company, relating to Knightsbridge's travel and out-of-pocket expenses
reasonably incurred in connection with the services performed by Knightsbridge
pursuant to this Engagement Letter, including without limitation, hotel, food
and associated expenses and long-distance telephone calls.
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Said expenses shall not exceed $500 in any 30-day period of the term unless
approved by an officer, director or other authorized designee of the company.
5. Procedure for Initiating Discussions.
In order to coordinate our efforts with respect to a possible Transaction
satisfactory to the Company, during the period of our engagement hereunder
neither the Company nor any representative there (other than Knightsbridge) will
initiate discussions regarding a Transaction except through Knightsbridge. In
the event the Company or its management receives an inquiry regarding a
Transaction, it will promptly advise Knightsbridge of such inquiry in order that
Knightsbridge may evaluate such prospective purchaser and its interest and
assist the Company in any resulting negotiations.
6. Post-Termination Notice
In addition, if at any time prior to 12 months after the termination or
expiration or this Engagement Letter a Transaction is consummated, or if at any
time prior to 24 months after the termination or expiration of this Engagement
Letter a Transaction is consummated with any party contacted regarding a
Transaction during the period of this engagement, Knightsbridge will provide the
Company with written notice of the parties contacted by Knightsbridge regarding
a Transaction during the period of this engagement.
7. Non-Exclusivity of Knightsbridge Services.
It is understood and acknowledged by the Company that Knightsbridge
presently has, and anticipates having throughout the Engagement Term, other
clients for which it performs the same or similar services to those to be
performed in accordance herewith, and that Knightsbridge shall be under no
obligation under this Engagement to restrict its abilily in any way to perform
services for any other clients. It is further acknowledged that, by virtue of
the nature of the services to be performed by Knightsbridge hereunder, the value
of such services bear no relation necessarily to the amount of time invested on
the part of Knightsbridge to the performance of such services, and
Knightsbridge, therefore, shall be under a continuing obligation hereunder to
devote only as much time to the performance of its services hereunder as deemed
appropriate in the exclusive discretion of its principal(s).
8. Role of Finder.
In connection with any Financing Transactions hereunder, the Company
acknowledges that Knightsbridge is not a registered broker-dealer under Section
15A of the U.S. Securities Exchange Act of 1934, or any similar state law, and
that Knightsbridge cannot, and shall not be required hereunder to, engage in the
offer or sale of securities for or on behalf of the Company. While Knightsbridge
has preexisting relationships and contacts with various investors, registered
broker-dealers and investment funds, Knightsbridge's participation in any actual
or proposed offer or sale of Company securities shall be limited to that of an
advisor to the Company and, if applicable, a "finder" of investors,
broker-dealers and/or funds. The Company acknowledges and agrees that the
solicitation and consummation of any purchases of the Company's securities shall
be handled by the Company or one or more NASD member firms engaged by the
Company for such purposes.
9. Referral Fees.
Any referral fees payable in connection with any Compensable Transactions
shall be the exclusive responsibility of, and shall be paid by Knightsbridge.
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10. Cooperation by Company.
In order to enable Knightsbridge to provide the services requested, the
Company agrees to provide to Knightsbridge, among other things, all information
reasonably requested or required by Knightsbridge including without limitation
information concerning historical and projected financial results with respect
to the Company and its subsidiaries and possible and known litigious,
environmental and contingent liabilities. The Company also agrees to make
available to Knightsbridge such representatives of the Company, including, among
others, directors, officers, employees, outside counsel and independent
certified public accountants, as Knightsbridge may reasonably request.
11. Reliance by Knightsbridge on Accuracy of Information; 12(b)5
Representation.
The Company recognizes and acknowledges that, in advising the Company and
in fulfilling the engagement hereunder, Knightsbridge will use and rely on data,
material and other information furnished to Knightsbridge by the Company. The
Company agrees that Knightsbridge may do so without independently verifying the
accuracy or completeness of such data, material or other information. The
Company represents and warrants that any such data, material or information
shall be true and accurate and shall not, as of the time communicated, contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstanccs under which they were made, not
misleading.
12. Confidentiality.
If any of the data, material or other information is non-public or
confidential when revealed or otherwise shared with representatives of
Knightsbridge, and identified in writing as such at the time it is revealed or
shared ("Confidential Information"), Knightsbridge and its officers, directors,
employees, agents and associates shall hold all Confidential Information in
complete and strict confidence and will not, without prior written consent of
the Company, in each instance, disclose any Confidential Information, in whole
or part, to any other person or for any other purpose than is expressly approved
by the Company in writing. To the extent that disclosure of Confidential
Information is approved by the Company in writing, excepting information
required to be disclosed by legal process, law or regulation. Knightsbridge
agrees that each party or individual to whom such disclosure is made shall be
informed of the confidential nature of the information disclosed and be
obligated to sign standard non-disclosure agreements.
13. Indeminification.
Each party (an "Indemnifying Party") hereby agrees to indemnify and hold
the other party and its respective affiliates, directors, officers, employees
and agents (collectively, the "Indemnified Parties") harmless from, and to
reimburse each of the Indemnified Parties for, any loss, damage, deficiency,
claim, obligation, suit, action, fee, cost or expense of any nature whatsoever
(including, but not limited to, reasonable attorney's fees and costs) arising
out of, based upon or resulting from any breach of any of the representations,
warranties, covenants, agreements or undertakings of the Indemnifying Party
contained in or made pursuant to this Engagement Letter.
14. Miscellaneous.
(a) This Engagement 1etter constitutes the entire agreement and
understanding of the parties hereto, and supersedes any and all
previous agreements and understandings, whether oral or written,
between the parties with respect to the matters set forth herein.
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(b) Any notice or communication permitted or required hereunder shall
be in writing and shall be deemed sufficiently given if
hand-delivered via courier or overnight service or sent (i)
postage prepaid by registered mail, return receipt requested, to
the respective parties as set forth below, or to such other
address as either party may notify the other of in writing:
If to Knightsbridge, to: Knightsbridge Holdings, LLC
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Attn: ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Company, to: ChampionLyte Products, Inc.
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▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Fax: (▇▇▇)-▇▇▇-▇▇▇▇
(c) This Engagement Letter shall be binding upon and inure to the
benefit of each of the parties hereto and their respective
successors, legal representatives and assigns.
(d) The Company represents that it has the power to enter into this
Engagement Letter and to carry out its obligations hereunder. This Engagement
Letter constitutes the valid and binding obligation of the Company and is
enforceable in accordance with its terms. The Company further represents that
this Engagement Letter does not conflict with or breach any agreement to which
it is subject or by which it is bound.
(e) This Engagement Letter may be executed in any number of
counterparts, each of which together shall constitute one and the same original
document.
(f) No provision of this Engagement Letter may be amended, modified or
waived, except in writing signed by all of the parties hereto.
(g) This Engagement Letter shall be construed in accordance with and
governed by the laws of the State of Florida, without giving effect to its
conflict of law principles. The parties hereby agree that any dispute which may
arise between them arising out of or in connection with this Engagement Letter
shall be adjudicated before a court located in Dade County Florida, and they
hereby submit to the exclusive jurisdiction of the courts of the State of
Florida located in Dade County, Florida and of the federal courts in the
Southern District of Florida with respect to any action or legal proceeding
commenced by any party. Company agrees to waive a trial by jury for any dispute
requiring adjudication before a court of law.
(h) The Company hereby acknowledges that it shall bear the burden of
proof in any action or proceeding involving a claim by Knightsbridge to any
Additional Compensation due hereunder arising out of any Compensable Event
involving a third party claimed by Knightsbridge to have been originally
introduced to the Company by Knightsbridge.
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If the foregoing correctly sets forth the understanding between Knightsbridge
and the Company with respect to the foregoing, please so indicate by signing in
the place provided below, at which time this Engagement Letter shall become a
binding agreement.
KNIGHTSBRIDGE HOLDINGS, LLC
By: /s/ ▇▇▇▇▇▇ Press
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▇▇▇▇▇▇ Press, President
For the Managing Member
Acceptcd and Agreed:
[CHAMPIONLYTE PRODUCTS, INC.]
By:/s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
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Title: Interim COO
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