Document:

f10k2010a2ex10xxxi_attitude.htm

 

Exhibit 10.31 - Modification and Amendment Letters, Form of Warrant January 2010

 

MODIFICATION AND AMENDMENT AGREEMENT

 

This Modification and Amendment Agreement ("Agreement") dated as of January 10 2010 is entered into by and between Attitude Drinks, Inc., a Delaware corporation (the "Company") and Alpha Capital Anstalt ("Holder").

 

WHEREAS, the Company issued to the Holder convertible promissory notes as set on Schedule A ("Notes") and warrants to purchase the Company's commons stock as set f Schedule B ("Warrants"); and

 

WHEREAS, the Company has requested that the Maturity Date of the Notes be extended to June 30, 2010 and certain other modifications made to some of the Notes.

 

NOW THEREFORE, in consideration of the mutual covenants and other agreements contained in this Agreement, the Company and the Holder hereby agree as follows:  

 

        1.           In consideration of the Holder's agreement to extend the Maturity Date of the

 

          Notes, the Company shall issue to Holder a note in the principal amount of $50,000, in the form attached hereto as Exhibit 1.

 

                2.   The Purchase Price of the Warrants is reduced to $0.008 per share subject to further reduction as described in the Warrants.

 

        3.           The Maturity Date of the Notes is extended to June 30, 2010.

 

4.   Sections 1.2, 2.1, 2.2 and 3.1 of the Notes issued on October 23, 2007 and February 15, 2008 are deleted in their entirety. Section 3.1 is replaced with the following:

 

    "The Holder shall have the rights, but not the obligation, to convert any portion of the then aggregate outstanding Principal Amount of this Note, together with interest, if any, and fees due hereon, and any sum arising under the Subscription Agreement, and the Transaction Documents, including but nor limited to Liquidated Damages, into shares of Common stock. Subject to adjustment as provided in Section 3.4(b) hereof, the fixed conversion price per share shall be $.05 ("Fixed Conversion Price"). The per share conversion price shall be the lesser of (i) the Fixed Conversion Price, or (ii) 80% of the average of the three lowest closing bid prices for the Common Stock as reported by Bloomberg L.P. for the Principal Market for the twenty trading days preceding a Conversion Date, but in no event greater than the Fixed Conversion Price (such actual conversion price being the "Conversion Price")."

 

5.           Sections 3.4(a) of the Notes issued on October 23, 2007 and February 15, 2008 are deleted in their entirety and replaced with the following:

                            "The number of shares of Common Stock to be issued upon each conversion of this Note pursuant to this Article III shall be determined by dividing that portion of the Principal Amount and interest and fees to be converted, if any, by the then applicable Conversion Price."

  

  

  

 

        6.            The following words are deleted from the end of the first sentence of Section 2.1(a) of the Note issued on January 27, 2009: "(the "Fixed Conversion Price")."

        7.   Sections 2.1(b) of the Notes issued on January 27, 2009 and March 30, 2009 are deleted in their entirety and replaced with the following:"Subject to adjustment as provided in Section 2.1(c) hereof, the fixed conversion price per share shall be $.05 ("Fixed Conversion Price"). The per share conversion price shall be the lesser of (i) the Fixed Conversion Price, or (ii) 80% of the average of the three lowest closing bid prices for the Common Stock as reported by Bloomberg L.P. for the Principal Market for the twenty trading days preceding a Conversion Date, but in no event greater than the Fixed Conversion Price (such actual conversion price being the "Conversion Price")."

 

        8.   The Company acknowledges that the holding period of the amended Notes and Warrants tacks back to the original issue date of the Notes and Warrants for Rule 144 purposes.

        9.   All other terms and conditions of the Notes, including any damages or interest which has accrued shall remain in full force and effect and payable.

        10.          Each of the undersigned states that he has read the foregoing Agreement and understands and agrees to it.

 

        11.         A copy of this Agreement annexed to the Notes shall be sufficient to reflect the amendment thereto.

 

        12.         This Agreement may be executed and delivered by facsimile or PDF signature.

 

	ATTITUDE DRINKS, INC. 	 	 	ALPHA CAPITAL ANSTALT	 
	 	 	 	 	 
	
/s/ Roy Warren

	 	 	
 

	 
	
By: Roy Warrn

	 	 	
By: Konrad Ackerman

	 
	
Its: CEO

	 	 	
Its: Director

	 

 

  

  

  

 

SCHEDULE A

 

	

Issue Date

	

Original Note Principal

	

10/23/2007

	

$300,000.00

	

1/8/2008

	

$217,674.00

	

2/15/2008

	

$300,000.00

	

9/29/2008

	

$243,333.33

	

9/29/2008

	

$20,000

	

12/18/2008

	

$60,833.33

	

1/27/2009*

	

$120,000.00

	

? 1/27/2009

	

$70,834

	

3/30/2009 **

	

$180,556.00

	

11/   /09

	

$111,111

	

* The principal amount of this note was originally $60,000 and was increased $60,000 on 2/17/09 pursuant to an allonge to the Note

**The principal amount of this note was originally $100,000 and was increased $80,556 on 7/15/09 pursuant to an allonge to the Note

 

SCHEDULE B

 

	

Issue Date

	

Purchasable Shares

	  	  
	  	  
	  	  
	  	  
	  	  
	  	  
	  	  
	  	  
	  	  
	  	  

  

  

  

 

 

MODIFICATION AND AMENDMENT AGREEMENT

 

This Modification and Amendment Agreement ("Agreement") dated as of December 13, 2009 is entered into by and between Attitude Drinks, inc., a Delaware corporation (the "Company") and Whalehaven Capital Fund, Lid. ("Holder").

 

WHEREAS, the Company issued to the Holder convertible promissory notes as set forth on Schedule A ("Notes"); and

 

WHEREAS, the Company has requested that the Maturity Date of the Notes be extended to June 30,2010 and certain other modifications made to some of the Notes.

 

NOW THEREFORE, in consideration of the mutual covenants and other agreements contained in this Agreement the Company and the Holder hereby agree- as Mows.'

 

1.           In consideration of the Holder's agreement to extend the Maturity Date of the Notes, (lie Company shall issue to Holder a note in fee principal amount of $50,000, in the form attached hereto as.

 

        2.   The Maturity Date of the Notes is extended to June 3 0, 2010.

 

3.   Sections 1.2.2.1,2.2 and 3,1 of the Notes issued on October 23,2007 and February 15, 2008 are deleted in their entirety. Section 3.1 is replaced with the Mowing:

 

"The Holder shall have the rights, but not the obligation, to convert my portion of this then aggregate outstanding Principal Amount of this Note, together with interest, if any, and fees due hereon, and arty sum arising under the Subscription Agreement, and die Transaction Documents, including but nor limited to Liquidated Damages, into shares of Common stock. Subject to adjustment as provided in Section 3.4(b) hereof, the fixed conversion price per share shall be $.05 ("Fixed Conversion Price"). The per share conversion pries shall be the lesser of (t) the fixed Conversion Price, or (ii) 80% of the average of Ate three lowest closing bid prices for the Common Stock as reported by Bloomberg L.P. for the Principal Market for the twenty trading days preceding a Conversion Date,, but in no event greater Him the Fixed Conversion Price (such actual conversion price being the "Conversion Perce").1'

 

4.           Sections 3.4(a) of the Notes issued on October 23,2007 and February 15,2008 are deleted hi their entirety and replaced with the following,*

 

      "The number of sixties of Common Stock to be issued upon each conversion of this Note pursuant to this Article IH shall be determined by dividing that portion of the Principal Amount and interest and fees to be converted, if any, by the then applicable Conversion Price."

  

  

  

 

5.   The following words are deleted from the end of the first sentence of Section 2.1 (a) of the Note issued on January 27.2009: "(the "Fixed Conversion Price").'1

 

6.   Sections 2.1(b) of the Notes issued on January 27,2009 and March 30,2009 are deleted in their entirety and replaced with the following:

 

      "Subject to adjustment as provided in Section 2.1(c) hereof, the fixed conversion price per share shall be $.05 ("Fixed Conversion Price'1). The per share conversion price shall be the lesser of (i) the Fixed Conversion Price, or (ii) 80% of the average of the three lowest closing bid prices for tire Common Stock as reported by Bloomberg L.P. for the Principal Market for the twenty trading days preceding a Conversion Date, but in no event greater than the Fixed Conversion Price (such actual conversion price being the "Conversion Price"),"

 

7            The Company acknowledges that the holding period of the amended Notes tacks back to the original issue date of the Notes for Rule 144 purposes,

 

        8.           All other terms and conditions of the Notes, including any damages or interest which has accrued shall-remain in full force and effect and payable.

 

9.           Each of the undersigned states that he has read the foregoing Agreement and understands and agrees to it.

 

               10.          A copy of this Agreement annexed to the Notes shall be sufficient to reflect the amendment thereto.

 

               11.          This Agreement may he executed and delivered by facsimile or PDF signature. 

 

	ATTITUDE DRINKS, INC.	 	 	WIIALEHAVEN CAPITAL FUND, LDT.	 
	 	 	 	 	 
	
/s/

	 	 	
/s/ 

	 
	
By: 

	 	 	
By: 

	 
	
Its: 

	 	 	
Its: 

	 

 

SCHEDULE A

 

	

Issue Date

	

Original Note Principal

	

10/23/2007

	

$150,000.00

	

2/15/2008

	

$150,000.00

	

1/27/2009

	

$60,000.00

	

1/27/2009

	

$5,000.00

	

3/30/2009*

	

$180,556.00

	

* The principal amount of this note was originally $100,000 and was increased $80,556 on 7/15/09 pursuant to an allonge to the Note

 

  

  

  

MODIFICATION AND AMENDMENT AGREEMENT

 

This Modification and Amendment Agreement ("Agreement") dated as of January 28. 2010 is entered into by and between Attitude Drinks. Inc.. 3 Delaware corporation (the "Company") and SM1VEL LLC. (Smivel) collectively (the "Holder").

 

WHEREAS, the Company issued to the Holders warrants to purchase the Company's commons stock as set forth on Schedule A {"Warrants"*): and

 

WHEREAS, the Company and Holders desire to modify the terms of the Warrants as set forth herein.

 

NOW THEREFORE., in consideration of the mutual covenants and other agreements contained in this Agreement the Company and Holders hereby agree as follows:

 

                1.   The Company and Holders acknowledge that the Purchase Price of the Warrants is reduced to S0.008, subject to further reduction as described in the Warrants.

 

                2.   The Holders waive any event that has triggered the provisions of Sections 3.4 of the Warrants prior to die date of this Agreement. Nothing herein shall be deemed a waiver of such Section based on any agreement after the date of this Agreement. Any future application of Section 3.4 will be calculated based upon the original Purchase Price.

 

                3.   The Expiration Date of the Warrants is extended to July 15, 2015.

 

                4.   The Company acknowledges that the holding period of the amended Warrants tacks back to die original issue date of the Warrants for Rule 144 purposes.

 

5.   Ail other terms and conditions of the Warrants, including any damages or interest which has accrued shall remain La full force and effect and payable,

 

6.            Each of the undersigned stales mat he has read the foregoing Agreement and understands and agrees to it.

                7.   A copy of this Agreement annexed to the Warrants shall be sufficient to reflect the amendment thereto.

                8.   This Agreement may be executed and delivered by facsimile or PDF signature and may be executed in two or more counterparts.

  

  

  

 

IN WITNESS WHEREOF, the Company and 1 Holders have caused this Agreement to be signed in its name by an authorized officer as of the date written above.

 

	ATTITUDE DRINKS, INC. 	 
	 	 
	
/s/ Roy Warren

	 
	
By: Roy Warren

	 
	
Its: CEO

	 

 

	Smivel	 	[__]	 	 
	 	 	 	 	 
	
/s/ Joseph A Smith

	 	 	
 

	 
	
By: Joseph A Smith

	 	 	
By: 

	 
	
Its: Managing Member

	 	 	
Its: 

	 

 

SCHEDULE A

 

	Holder	Date	Original Shares	Current Shares
	Smivel	10/23/07	151,515 	1,510,515 
	Smivel 	06/26/08	151,515  	1,510,515 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 

  

  

  

MODIFICATION AND AMENDMENT AGREEMENT

 

This Modification and Amendment Agreement ("Agreement") dated as of January 28. 2010 is entered into by and between Attitude Drinks, Inc.. a Delaware corporation (the "Company") and Monarch Capital Fund Ltd. ("Monarch") collectively (the "Holder").

 

WHEREAS. the Company issued to the Holders warrants to purchase the Company's commons stock as set forth on Schedule A ("Warrants"); and

 

WHEREAS. the Company and Holders desire to modify' the terms of the Warrants as set forth herein.

 

NOW THEREFORE, in consideration of the mutual covenants and other agreements contained in this Agreement, the Company and Holders hereby agree as follows:

 

1 .           The Company and Holders acknowledge that the Purchase Price of the Warrants is reduced to S0.008. subject to further reduction as described in the Warrants.

 

2.   The Holders waive any event that has triggered the provisions of Sections 3.4 of the Warrants prior to the date of this Agreement. Nothing herein shall be deemed a waiver of such Section based on any agreement after the date of this Agreement. Any future application of Section 3.4 will be calculated based upon the original Purchase Price.

 

                3.   The Expiration Date of the Warrants is extended to July 15.2015.

 

4.   The Company acknowledges that the holding period of the amended Warrants tacks hack to the original issue date of the Warrants for Rule 144 purposes.

 

5. All other terms and conditions of the Warrants, including any damages or interest which has accrued shall remain in full force and effect and payable.

 

6. Each of the undersigned states that he has read the foregoing Agreement and understands and agrees to it.

 

7. A copy of this Agreement annexed to the Warrants shall be sufficient to reflect the amendment thereto,

 

8. This Agreement may be executed and delivered by facsimile or PDF signature and may be executed in two or more counterparts.

  

  

  

 

IN WITNESS WHEREOF, the Company and Holders have caused this Agreement to be signed in its name b\ an authorized officer as of the date written above.

 

	ATTITUDE DRINKS, INC. 	 
	 	 
	
/s/ Roy Warren

	 
	
By: Roy Warren

	 
	
Its: CEO

	 

 

	MONARCH	 	[__]	 	 
	 	 	 	 	 
	
/s/ 

	 	 	
 

	 
	
By: Navigator Management Ltd.

	 	 	
By: 

	 
	
Its: Director

	 	 	
Its: 

	 

 

SCHEDULE A

 

	Holder	Date	 Original Shares	Current Shares
	Monarch	10/23/07	303,030	3,030,030
	Monarch	06/26/08	303,030	3,030,030
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 

  

  

  

 

MODIFICATION AND AMENDMENT AGREEMENT

 

                This Modification and Amendment Agreement ("Agreement") dated as of January 28, 2010 is entered into by and between Attitude Drinks, Inc., a Delaware corporation (the "Company") and Alpha Capital Anstalt ("Alpha") and Whalehaven Capital Fund, Ltd. ("Whalehaven") (Alpha and Whalehaven each a "Holder" collectively the "Holders").

 

                WHEREAS, the Company issued to the Holders warrants to purchase the Company's commons stock as set forth on Schedule A ("Warrants"); and

 

                WHEREAS, the Company and Holders desire to modify the terms of the Warrants as set forth herein.

 

                NOW THEREFORE, in consideration of the mutual covenants and other agreements contained in this Agreement, the Company and Holders hereby agree as follows:

                1.           The Company and Holders acknowledge that the Purchase Price of the Warrants is reduced to $0,008, subject to further reduction as described in the Warrants.

                2. No agreement among the Company and the Holders or security issued to the Holders by the Company, prior to the date of this Agreement, shall be deemed to have triggered the provisions of Sections 3.4 of the Warrants. Nothing herein shall be deemed a waiver of such Section based on any agreement with the Holders after the date of this Agreement or any agreement with or security issued to any person other than the Holders.   Any future application of Section 3.4 will be calculated based upon the original Purchase Price.

 

                3.   The Expiration Date of the Warrants is extended to July 15,2015.

 

                4.   The Company acknowledges that the holding period of the amended Warrants tacks back to the original issue date of the Warrants for Rule 144 purposes.

 

                5.   All other terms and conditions of the Warrants, including any damages or interest which has accrued shall remain in full force and effect and payable.

 

                6.   Each of the undersigned states that he has read the foregoing Agreement and understands and agrees to it.

 

                7.   A copy of this Agreement annexed to the Warrants shall be sufficient to reflect the amendment thereto.

 

                8.   This Agreement may be executed and delivered by facsimile or PDF signature and may be executed in two or more counterparts.

  

  

  

 

IN WITNESS WHEREOF, the Company and Holders have caused this Agreement to be signed in its name by an authorized officer as of the date written above.

 

	ATTITUDE DRINKS, INC. 	 
	 	 
	
/s/ Roy Warren

	 
	
By: Roy Warren

	 
	
Its: CEO

	 

 

	ALPHA CAPITAL ANSTALT	 	 	WHALEHAVEN CAPITAL FUND, LTD.	 
	 	 	 	 	 
	
 

	 	 	
 

	 
	
By: Konard Ackerman

	 	 	
By: 

	 
	
Its: Director

	 	 	
Its: 

	 

 

SCHEDULE A

	
Holder

	  	
Date

	  	
Original Shares

	  	
Current Shares

	
Whalehaven

	  	
10/23/07

	  	
454,545

	  	
4,545,450

	
Whalehaven

	  	
2/15/08

	  	
454,545

	  	
4,545,450

	
Whalehaven

	  	
1/27/09

	  	
1,200,000

	  	
1,200,000

	
Whalehaven

	  	
3/30/09

	  	
4,166,667

	  	
4,166,667

	
Whalehaven

	  	
7/15/09

	  	
3,356,482

	  	
3,356,482

	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 

 

  

  

  

 

MODIFICATION AND AMENDMENT AGREEMENT

 

This Modification and Amendment Agreement ("Agreement") dated as of February 1, 2010 is entered into by and between Attitude Drinks, Inc., a Delaware corporation (the "Company") and Alpha Capital Anstalt ("Alpha") and Whalehaven Capital Fund, Ltd. ("Whalehaven") (Alpha and Whalehaven each a "Holder" collectively the "Holders").

 

WHEREAS, the Company issued to the Holders warrants to purchase the Company's commons stock as set forth on Schedule A ("Warrants"); and

 

WHEREAS, the Company and Holders desire to modify the terms of the Warrants as set forth herein.

 

NOW THEREFORE, in consideration of the mutual covenants and other agreements contained in this Agreement, the Company and Holders hereby agree as follows:

 

1. The Company and Holders acknowledge that the Purchase Price of the Warrants is reduced to $0,008, subject to further reduction as described in the Warrants.

 

2.           No agreement among the Company and the Holders or security issued to the Holders by the Company, prior to the date of this Agreement, shall be deemed to have triggered the provisions of Sections 3.4 of the Warrants. Nothing herein shall be deemed a waiver of such Section based on any agreement with the Holders after the date of this Agreement or any agreement with or security issued to any person other than the Holders. Any future application of Section 3.4 will be calculated based upon the original Purchase Price.

 

        3.   The Expiration Date of the Warrants is extended to July 15, 2015.

 

4.   The Company acknowledges that the holding period of the amended Warrants tacks back to the original issue date of the Warrants for Rule 144 purposes,

 

5.   All other terms and conditions of the Warrants, including any damages or interest which has accrued shall remain in full force and effect and payable.

 

6.   Each of the undersigned states that he has read the foregoing Agreement and understands and agrees to it.

 

7.   A Copy of this Agreement annexed to the Warrants shall be sufficient to reflect the amendment thereto.

 

8.   This Agreement may be executed and delivered by facsimile or PDF signature and may be executed in two or more counterparts.

 

  

  

  

 

IN WITNESS WHEREOF, the Company and Holders have caused this Agreement to be signed in its name by an authorized officer as of the date written above.

 

	ATTITUDE DRINKS, INC. 	 
	 	 
	
/s/ Roy Warren

	 
	
By: Roy Warren

	 
	
Its: CEO

	 

 

	ALPHA CAPITAL ANSTALT	 	 	WHALEHAVEN CAPITAL FUND, LTD.	 
	 	 	 	 	 
	
 

	 	 	
 

	 
	
By: Konard Ackerman

	 	 	
By: 

	 
	
Its: Director

	 	 	
Its: 

	 

 

SCHEDULE A

	
Holder

	  	
Date

	  	
Original Shares

	  	
Current Shares

	
Whalehaven

	  	
10/23/07

	  	
454,5545

	  	
4,545,450

	
Whalehaven

	  	
2/15/08

	  	
454,545

	  	
4,545,450

	
Whalehaven

	  	
1/27/09

	  	
1,200,000

	  	
1,200,000

	
Whalehaven

	  	
3/30/09

	  	
4,166,667

	  	
4,166,667

	
Whalehaven

	  	
7/15/09

	  	
3,356,482

	  	
3,356,482

	
Whalehaven

	  	
1/28/10

	  	
1,041,667

	  	
1,041,667

	
Alpha

	  	
10/23/07

	  	
909,091

	  	
9,090,100

	
Alpha

	  	
2/1508

	  	
909,091

	  	
9,090,100

	
Alpha

	  	
1/27/09

	  	
1,200,000

	  	
1,200,000

	
Alpha

	  	
3/30/09

	  	
4,166,667

	  	
4,166,667

	
Alpha

	  	
7/15/09

	  	
3,356,482

	  	
3,356,482

	
Alpha

	  	
1/28/10

	  	
1,041,667

	  	
1,041,667

	  	  	  	  	  	  	  
	  	  	  	  	  	  	  

 

  

  

  

 

Form of Warrant

 

NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLE HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS.  THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER), IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT.  NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.

	  	
Right to Purchase _________ shares of Common Stock of Attitude Drinks Inc. (subject to adjustment as provided herein)

CLASS A COMMON STOCK PURCHASE WARRANT

 

	No.  	 Issue Date: January ___, 2010

 

       ATTITUDE DRINKS INC., a corporation organized under the laws of the State of Delaware (the “Company”), hereby certifies that, for value received, , or its assigns (the “Holder”), is entitled, subject to the terms set forth below, to purchase from the Company at any time after the Issue Date until 5:00 p.m., E.S.T on July 15, 2015 (the “Expiration Date”),  up to ________ fully paid and nonassessable shares of Common Stock at a per share purchase price of $0.008.   The aforedescribed purchase price per share, as adjusted from time to time as herein provided, is referred to herein as the "Purchase Price."  The number and character of such shares of Common Stock and the Purchase Price are subject to adjustment as provided herein.  The Company may reduce the Purchase Price for some or all of the Warrants, temporarily or permanently.  Capitalized terms used and not otherwise defined herein shall have the meanings set forth in that certain Subscription Agreement (the “Subscription Agreement”), dated as of March ___, 2009, entered into by the Company and the Holder.

As used herein the following terms, unless the context otherwise requires, have the following respective meanings:

 

(a)           The term “Company” shall include Attitude Drinks Inc. and any corporation which shall succeed or assume the obligations of Attitude Drinks Inc. hereunder.

 

(b)           The term “Common Stock” includes (a) the Company's Common Stock, $0.001 par value per share, as authorized on the date of the Subscription Agreement, and (b) any other securities into which or for which any of the securities described in (a) may be converted or exchanged pursuant to a plan of recapitalization, reorganization, merger, sale of assets or otherwise.

 

(c)           The term “Other Securities” refers to any stock (other than Common Stock) and other securities of the Company or any other person (corporate or otherwise) which the holder of the Warrant at any time shall be entitled to receive, or shall have received, on the exercise of the Warrant, in lieu of or in addition to Common Stock, or which at any time shall be issuable or shall have been issued in exchange for or in replacement of Common Stock or Other Securities pursuant to Section 4 or otherwise.

 

(d)           The term “Warrant Shares” shall mean the Common Stock issuable upon exercise of this Warrant.

 

  

1

  

 

1.           Exercise of Warrant.

 

1.1.           Number of Shares Issuable upon Exercise.  From and after the Issue Date through and including the Expiration Date, the Holder hereof shall be entitled to receive, upon exercise of this Warrant in whole in accordance with the terms of subsection 1.2 or upon exercise of this Warrant in part in accordance with subsection 1.3, shares of Common Stock of the Company, subject to adjustment pursuant to Section 4.

 

1.2.           Full Exercise.  This Warrant may be exercised in full by the Holder hereof by delivery of an original or facsimile copy of the form of subscription attached as Exhibit A hereto (the “Subscription Form”) duly executed by such Holder and delivery within two days thereafter of payment, in cash, wire transfer or by certified or official bank check payable to the order of the Company, in the amount obtained by multiplying the number of shares of Common Stock for which this Warrant is then exercisable by the Purchase Price then in effect.  The original Warrant is not required to be surrendered to the Company until it has been fully exercised.

 

1.3.           Partial Exercise.  This Warrant may be exercised in part (but not for a fractional share) by delivery of a Subscription Form in the manner and at the place provided in subsection 1.2 except that the amount payable by the Holder on such partial exercise shall be the amount obtained by multiplying (a) the number of whole shares of Common Stock designated by the Holder in the Subscription Form by (b) the Purchase Price then in effect.  On any such partial exercise provided the Holder has surrendered the original Warrant, the Company, at its expense, will forthwith issue and deliver to or upon the order of the Holder hereof a new Warrant of like tenor, in the name of the Holder hereof or as such Holder (upon payment by such Holder of any applicable transfer taxes) may request, the whole number of shares of Common Stock for which such Warrant may still be exercised for the balance of.

 

1.4.           Fair Market Value. Fair Market Value of a share of Common Stock as of a particular date (the "Determination Date") shall mean:

 

(a)           If the Company's Common Stock is traded on an exchange or is quoted on the NASDAQ Global Market, Nasdaq Global Select Market, the NASDAQ Capital Market, the New York Stock Exchange or the American Stock Exchange, LLC, then the average of the closing or last sale prices, respectively, reported for the ten trading days immediately preceding the Determination Date;

 

(b)           If the Company's Common Stock is not traded on an exchange or on the NASDAQ Global Market, Nasdaq Global Select Market, the NASDAQ Capital Market, the New York Stock Exchange or the American Stock Exchange, LLC, but is traded in the over-the-counter market, then the average of the closing bid and ask prices reported for the ten trading days immediately preceding the Determination Date;

 

(c)           Except as provided in clause (d) below and Section 3.1, if the Company's Common Stock is not publicly traded, then as the Holder and the Company agree, or in the absence of such an agreement, by arbitration in accordance with the rules then standing of the American Arbitration Association, before a single arbitrator to be chosen from a panel of persons qualified by education and training to pass on the matter to be decided; or

 

(d)           If the Determination Date is the date of a liquidation, dissolution or winding up, or any event deemed to be a liquidation, dissolution or winding up pursuant to the Company's charter, then all amounts to be payable per share to holders of the Common Stock pursuant to the charter in the event of such liquidation, dissolution or winding up, plus all other amounts to be payable per share in respect of the Common Stock in liquidation under the charter, assuming for the purposes of this clause (d) that all of the shares of Common Stock then issuable upon exercise of all of the Warrants are outstanding at the Determination Date.

 

  

2

  

 

1.5.           Company Acknowledgment. The Company will, at the time of the exercise of the Warrant, upon the request of the Holder hereof acknowledge in writing its continuing obligation to afford to such Holder any rights to which such Holder shall continue to be entitled after such exercise in accordance with the provisions of this Warrant. If the Holder shall fail to make any such request, such failure shall not affect the continuing obligation of the Company to afford to such Holder any such rights.

 

1.6.           Trustee for Warrant Holders. In the event that a bank or trust company shall have been appointed as trustee for the Holder of the Warrants pursuant to Subsection 3.2, such bank or trust company shall have all the powers and duties of a warrant agent (as hereinafter described) and shall accept, in its own name for the account of the Company or such successor person as may be entitled thereto, all amounts otherwise payable to the Company or such successor, as the case may be, on exercise of this Warrant pursuant to this Section 1.

 

1.7           Delivery of Stock Certificates, etc. on Exercise. The Company agrees that the shares of Common Stock purchased upon exercise of this Warrant shall be deemed to be issued to the Holder hereof as the record owner of such shares as of the close of business on the date on which delivery of a Subscription Form shall have occurred and payment made for such shares as aforesaid. As soon as practicable after the exercise of this Warrant in full or in part, and in any event within three (3) business days thereafter (“Warrant Share Delivery Date”), the Company at its expense (including the payment by it of any applicable issue taxes) will cause to be issued in the name of and delivered to the Holder hereof, or as such Holder (upon payment by such Holder of any applicable transfer taxes) may direct in compliance with applicable securities laws, a certificate or certificates for the number of duly and validly issued, fully paid and non-assessable shares of Common Stock (or Other Securities) to which such Holder shall be entitled on such exercise, plus, in lieu of any fractional share to which such Holder would otherwise be entitled, cash equal to such fraction multiplied by the then Fair Market Value of one full share of Common Stock, together with any other stock or other securities and property (including cash, where applicable) to which such Holder is entitled upon such exercise pursuant to Section 1 or otherwise.  The Company understands that a delay in the delivery of the Warrant Shares after the Warrant Share Delivery Date could result in economic loss to the Holder.  As compensation to the Holder for such loss, the Company agrees to pay (as liquidated damages and not as a penalty) to the Holder for late issuance of Warrant Shares upon exercise of this Warrant the proportionate amount of $100 per business day after the Warrant Share Delivery Date for each $10,000 of Purchase Price of Warrant Shares for which this Warrant is exercised which are not timely delivered.  The Company shall pay any payments incurred under this Section in immediately available funds upon demand.  Furthermore, in addition to any other remedies which may be available to the Holder, in the event that the Company fails for any reason to effect delivery of the Warrant Shares by the Warrant Share Delivery Date, the Holder may revoke all or part of the relevant Warrant exercise by delivery of a notice to such effect to the Company, whereupon the Company and the Holder shall each be restored to their respective positions immediately prior to the exercise of the relevant portion of this Warrant, except that the liquidated damages described above shall be payable through the date notice of revocation or rescission is given to the Company.

 

1.8           Buy-In.  In addition to any other rights available to the Holder, if the Company fails to deliver to a Holder the Warrant Shares as required pursuant to this Warrant, within seven (7) business days after the Warrant Share Delivery Date and the Holder or a broker on the Holder’s behalf, purchases (in an open market transaction or otherwise) shares of common stock to deliver in satisfaction of a sale by such Holder of the Warrant Shares which the Holder was entitled to receive from the Company (a "Buy-In"), then the Company shall pay in cash to the Holder (in addition to any remedies available to or elected by the Holder) the amount by which (A) the Holder's total purchase price (including brokerage commissions, if any) for the shares of common stock so purchased exceeds (B) the aggregate Purchase Price of the Warrant Shares required to have been delivered together with interest thereon at a rate of 15% per annum, accruing until such amount and any accrued interest thereon is paid in full (which amount shall be paid as liquidated damages and not as a penalty).  For example, if a Holder purchases shares of Common Stock having a total purchase price of $11,000 to cover a Buy-In with respect to $10,000 of Purchase Price of Warrant Shares to have been received upon exercise of this Warrant, the Company shall be required to pay the Holder $1,000, plus interest. The Holder shall provide the Company written notice indicating the amounts payable to the Holder in respect of the Buy-In.

 

  

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2.           Cashless Exercise.

 

(a)           Payment upon exercise may be made at the option of the Holder either in (i) cash, wire transfer or by certified or official bank check payable to the order of the Company equal to the applicable aggregate Purchase Price, (ii) by delivery of Common Stock issuable upon exercise of the Warrants in accordance with Section (b) below or (iii) by a combination of any of the foregoing methods, for the number of Common Stock specified in such form (as such exercise number shall be adjusted to reflect any adjustment in the total number of shares of Common Stock issuable to the holder per the terms of this Warrant) and the holder shall thereupon be entitled to receive the number of duly authorized, validly issued, fully-paid and non-assessable shares of Common Stock (or Other Securities) determined as provided herein.

 

(b)           Subject to the provisions herein to the contrary, if the Fair Market Value of one share of Common Stock is greater than the Purchase Price (at the date of calculation as set forth below), in lieu of exercising this Warrant for cash, the holder may elect to receive shares equal to the value (as determined below) of this Warrant (or the portion thereof being cancelled) by surrender of this Warrant at the principal office of the Company together with the properly endorsed Subscription Form in which event the Company shall issue to the holder a number of shares of Common Stock computed using the following formula:

 

X=Y (A-B)

          A

   

	
  Where  

	
X=

	
the number of shares of Common Stock to be issued to the holder

 

	
  

	
Y=

	
the number of shares of Common Stock purchasable under the Warrant or, if only a portion of the Warrant is being exercised, the portion of the Warrant being exercised (at the date of such calculation)

 

	
  

	
A=

	
the average of the closing sale prices of the Common Stock for the five (5) Trading Days immediately prior to (but not including) the Exercise Date, or Fair Market Value, whichever is less

 

	
  

	
B=

	
Purchase Price (as adjusted to the date of such calculation)

 

(c)           The Holder may employ the cashless exercise feature described in Section (b) above at any time.

 

For purposes of Rule 144 promulgated under the 1933 Act, it is intended, understood and acknowledged that the Warrant Shares issued in a cashless exercise transaction shall be deemed to have been acquired by the Holder, and the holding period for the Warrant Shares shall be deemed to have commenced, on the date this Warrant was originally issued pursuant to the Subscription Agreement.

 

3.           Adjustment for Reorganization, Consolidation, Merger, etc.

 

 

  

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3.1. Fundamental Transaction. If, at any time while this Warrant is outstanding, (A) the Company effects any merger or consolidation of the Company with or into another entity, (B) the Company effects any sale of all or substantially all of its assets in one or a series of related transactions, (C) any tender offer or exchange offer (whether by the Company or another entity) is completed pursuant to which holders of Common Stock are permitted to tender or exchange their shares for other securities, cash or property, (D) the Company consummates a stock purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with one or more persons or entities whereby such other persons or entities acquire more than the 50% of the outstanding shares of Common Stock (not including any shares of Common Stock held by such other persons or entities making or party to, or associated or affiliated with the other persons or entities making or party to, such stock purchase agreement or other business combination), (E) any "person" or "group" (as these terms are used for purposes of Sections 13(d) and 14(d) of the 1934 Act) is or shall become the "beneficial owner" (as defined in Rule 13d-3 under the 1934 Act), directly or indirectly, of 50% of the aggregate Common Stock of the Company, or (F) the Company effects any reclassification of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property (in any such case, a "Fundamental Transaction"), then, upon any subsequent exercise of this Warrant, the Holder shall have the right to receive, for each Warrant Share that would have been issuable upon such exercise immediately prior to the occurrence of such Fundamental Transaction, at the option of the Holder, (a) upon exercise of this Warrant, the number of shares of Common Stock of the successor or acquiring corporation or of the Company, if it is the surviving corporation, and any additional consideration (the "Alternate Consideration") receivable upon or as a result of such reorganization, reclassification, merger, consolidation or disposition of assets by a Holder of the number of shares of Common Stock for which this Warrant is exercisable immediately prior to such event or (b) if the Company is acquired in (1) a transaction where the consideration paid to the holders of the Common Stock consists solely of cash, (2) a “Rule 13e-3 transaction” as defined in Rule 13e-3 under the 1934 Act, or (3) a transaction involving a person or entity not traded on a national securities exchange, the Nasdaq Global Select Market, the Nasdaq Global Market or the Nasdaq Capital Market, cash equal to the Black-Scholes Value. For purposes of any such exercise, the determination of the Purchase Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one share of Common Stock in such Fundamental Transaction, and the Company shall apportion the Purchase Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration. If holders of Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate Consideration it receives upon any exercise of this Warrant following such Fundamental Transaction. To the extent necessary to effectuate the foregoing provisions, any successor to the Company or surviving entity in such Fundamental Transaction shall issue to the Holder a new warrant consistent with the foregoing provisions and evidencing the Holder's right to exercise such warrant into Alternate Consideration. The terms of any agreement pursuant to which a Fundamental Transaction is effected shall include terms requiring any such successor or surviving entity to comply with the provisions of this Section 3.1 and insuring that this Warrant (or any such replacement security) will be similarly adjusted upon any subsequent transaction analogous to a Fundamental Transaction. “Black-Scholes Value” shall be determined in accordance with the Black-Scholes Option Pricing Model obtained from the “OV” function on Bloomberg L.P. using (i) a price per share of Common Stock equal to the VWAP of the Common Stock for the Trading Day immediately preceding the date of consummation of the applicable Fundamental Transaction, (ii) a risk-free interest rate corresponding to the U.S. Treasury rate for a period equal to the remaining term of this Warrant as of the date of such request and (iii) an expected volatility equal to the 100 day volatility obtained from the HVT function on Bloomberg L.P. determined as of the Trading Day immediately following the public announcement of the applicable Fundamental Transaction.

 

3.2.           Dissolution.  In the event of any dissolution of the Company following the transfer of all or substantially all of its properties or assets, the Company, prior to such dissolution, shall at its expense deliver or cause to be delivered the stock and other securities and property (including cash, where applicable) receivable by the Holder of the Warrants after the effective date of such dissolution pursuant to this Section 3 to a bank or trust company (a "Trustee") having its principal office in New York, NY, as trustee for the Holder of the Warrants.  Such property shall be delivered only upon payment of the Warrant exercise price.

 

  

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3.3.           Continuation of Terms.  Upon any reorganization, consolidation, merger or transfer (and any dissolution following any transfer) referred to in this Section 3, this Warrant shall continue in full force and effect and the terms hereof shall be applicable to the Other Securities and property receivable on the exercise of this Warrant after the consummation of such reorganization, consolidation or merger or the effective date of dissolution following any such transfer, as the case may be, and shall be binding upon the issuer of any Other Securities, including, in the case of any such transfer, the person acquiring all or substantially all of the properties or assets of the Company, whether or not such person shall have expressly assumed the terms of this Warrant as provided in Section 4.  In the event this Warrant does not continue in full force and effect after the consummation of the transaction described in this Section 3, then only in such event will the Company's securities and property (including cash, where applicable) receivable by the Holder of the Warrants be delivered to the Trustee as contemplated by Section 3.2.

 

3.4           Share Issuance.  Until the Expiration Date, if the Company shall issue any Common Stock except for the Excepted Issuances (as defined in the Subscription Agreement), prior to the complete exercise of this Warrant for a consideration less than the Purchase Price that would be in effect at the time of such issue, then, and thereafter successively upon each such issue, the Purchase Price shall be reduced to such other lower price for then outstanding Warrants.  For purposes of this adjustment, the issuance of any security or debt instrument of the Company carrying the right to convert such security or debt instrument into Common Stock or of any warrant, right or option to purchase Common Stock shall result in an adjustment to the Purchase Price upon the issuance of the above-described security, debt instrument, warrant, right, or option if such issuance is at a price lower than the Purchase Price in effect upon such issuance and again at any time upon any subsequent issuances of shares of Common Stock upon exercise of such conversion or purchase rights if such issuance is at a price lower than the Purchase Price in effect upon such issuance.  The reduction of the Purchase Price described in this Section 3.4 is subject to the provisions of, and in addition to the other rights of the Holder described in, the Subscription Agreement.  The number of shares of Common Stock that the Holder of this Warrant shall thereafter, on the exercise hereof, be entitled to receive shall be adjusted to a number determined by multiplying the number of shares of Common Stock that would otherwise (but for the provisions of this Section 3.4 be issuable on such exercise by a fraction of which (a) the numerator is the Purchase Price that would otherwise (but for the provisions of this Section 3.4 be in effect, and (b) the denominator is the Purchase Price in effect on the date of such exercise.

 

4.           Extraordinary Events Regarding Common Stock.  In the event that the Company shall (a) issue additional shares of the Common Stock as a dividend or other distribution on outstanding Common Stock, (b) subdivide its outstanding shares of Common Stock, or (c) combine its outstanding shares of the Common Stock into a smaller number of shares of the Common Stock, then, in each such event, the Purchase Price shall, simultaneously with the happening of such event, be adjusted by multiplying the then Purchase Price by a fraction, the numerator of which shall be the number of shares of Common Stock outstanding immediately prior to such event and the denominator of which shall be the number of shares of Common Stock outstanding immediately after such event, and the product so obtained shall thereafter be the Purchase Price then in effect. The Purchase Price, as so adjusted, shall be readjusted in the same manner upon the happening of any successive event or events described herein in this Section 4. The number of shares of Common Stock that the Holder of this Warrant shall thereafter, on the exercise hereof, be entitled to receive shall be adjusted to a number determined by multiplying the number of shares of Common Stock that would otherwise (but for the provisions of this Section 4 be issuable on such exercise by a fraction of which (a) the numerator is the Purchase Price that would otherwise (but for the provisions of this Section 4 be in effect, and (b) the denominator is the Purchase Price in effect on the date of such exercise.

 

  

6

  

 

5.           Certificate as to Adjustments.  In each case of any adjustment or readjustment in the shares of Common Stock (or Other Securities) issuable on the exercise of the Warrants, the Company at its expense will promptly cause its Chief Financial Officer or other appropriate designee to compute such adjustment or readjustment in accordance with the terms of the Warrant and prepare a certificate setting forth such adjustment or readjustment and showing in detail the facts upon which such adjustment or readjustment is based, including a statement of (a) the consideration received or receivable by the Company for any additional shares of Common Stock (or Other Securities) issued or sold or deemed to have been issued or sold, (b) the number of shares of Common Stock (or Other Securities) outstanding or deemed to be outstanding, and (c) the Purchase Price and the number of shares of Common Stock to be received upon exercise of this Warrant, in effect immediately prior to such adjustment or readjustment and as adjusted or readjusted as provided in this Warrant. The Company will forthwith mail a copy of each such certificate to the Holder of the Warrant and any Warrant Agent of the Company (appointed pursuant to Section 11 hereof).

 

6.           Reservation of Stock, etc. Issuable on Exercise of Warrant; Financial Statements.   The Company will at all times reserve and keep available, solely for issuance and delivery on the exercise of the Warrants, all shares of Common Stock (or Other Securities) from time to time issuable on the exercise of the Warrant.  This Warrant entitles the Holder hereof to receive copies of all financial and other information distributed or required to be distributed to the holders of the Company's Common Stock.

 

7.           Assignment; Exchange of Warrant.  Subject to compliance with applicable securities laws, this Warrant, and the rights evidenced hereby, may be transferred by any registered holder hereof (a "Transferor"). On the surrender for exchange of this Warrant, with the Transferor's endorsement in the form of Exhibit B attached hereto (the “Transferor Endorsement Form") and together with an opinion of counsel reasonably satisfactory to the Company that the transfer of this Warrant will be in compliance with applicable securities laws, the Company will issue and deliver to or on the order of the Transferor thereof a new Warrant or Warrants of like tenor, in the name of the Transferor and/or the transferee(s) specified in such Transferor Endorsement Form (each a "Transferee"), calling in the aggregate on the face or faces thereof for the number of shares of Common Stock called for on the face or faces of the Warrant so surrendered by the Transferor.

 

8.           Replacement of Warrant.  On receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Warrant and, in the case of any such loss, theft or destruction of this Warrant, on delivery of an indemnity agreement or security reasonably satisfactory in form and amount to the Company or, in the case of any such mutilation, on surrender and cancellation of this Warrant, the Company at its expense, twice only, will execute and deliver, in lieu thereof, a new Warrant of like tenor.

 

9.           Registration Rights.  The Holder of this Warrant has been granted certain registration rights by the Company.  These registration rights are set forth in the Subscription Agreement.  The terms of the Subscription Agreement are incorporated herein by this reference.

 

10.           Maximum Exercise.  The Holder shall not be entitled to exercise this Warrant on an exercise date, in connection with that number of shares of Common Stock which would be in excess of the sum of (i) the number of shares of Common Stock beneficially owned by the Holder and its affiliates on an exercise date, and (ii) the number of shares of Common Stock issuable upon the exercise of this Warrant with respect to which the determination of this limitation is being made on an exercise date, which would result in beneficial ownership by the Holder and its affiliates of more than 4.99% of the outstanding shares of Common Stock on such date.  For the purposes of the immediately preceding sentence, beneficial ownership shall be determined in accordance with Section 13(d) of the 1934 Act and Rule 13d-3 thereunder.  Subject to the foregoing, the Holder shall not be limited to aggregate exercises which would result in the issuance of more than 4.99%.  The restriction described in this paragraph may be waived, in whole or in part, upon sixty-one (61) days prior notice from the Holder to the Company to increase such percentage to up to 9.99%, but not in excess of 9.99%.  The Holder may decide whether to convert a Convertible Note or exercise this Warrant to achieve an actual 4.99% or up to 9.99% ownership position as described above, but not in excess of 9.99%.

 

  

7

  

 

11.           Warrant Agent.  The Company may, by written notice to the Holder of the Warrant, appoint an agent (a “Warrant Agent”) for the purpose of issuing Common Stock (or Other Securities) on the exercise of this Warrant pursuant to Section 1, exchanging this Warrant pursuant to Section 7, and replacing this Warrant pursuant to Section 8, or any of the foregoing, and thereafter any such issuance, exchange or replacement, as the case may be, shall be made at such office by such Warrant Agent.

 

12.           Transfer on the Company's Books.  Until this Warrant is transferred on the books of the Company, the Company may treat the registered holder hereof as the absolute owner hereof for all purposes, notwithstanding any notice to the contrary.

 

13.           Notices.   All notices, demands, requests, consents, approvals, and other communications required or permitted hereunder shall be in writing and, unless otherwise specified herein, shall be (i) personally served, (ii) deposited in the mail, registered or certified, return receipt requested, postage prepaid, (iii) delivered by reputable air courier service with charges prepaid, or (iv) transmitted by hand delivery, telegram, or facsimile, addressed as set forth below or to such other address as such party shall have specified most recently by written notice.  Any notice or other communication required or permitted to be given hereunder shall be deemed effective (a) upon hand delivery or delivery by facsimile, with accurate confirmation generated by the transmitting facsimile machine, at the address or number designated below (if delivered on a business day during normal business hours where such notice is to be received), or the first business day following such delivery (if delivered other than on a business day during normal business hours where such notice is to be received) or (b) on the second business day following the date of mailing by express courier service, fully prepaid, addressed to such address, or upon actual receipt of such mailing, whichever shall first occur.  The addresses for such communications shall be:  if to the Company, to: Attitude Drinks Inc., 10415 Riverside Drive, Suite 101, Palm Beach Gardens, FL 33410, Attn: Roy Warren, CEO and President, telecopier: (561) 799-5039, with a copy by telecopier only to: Weed & Co., LLP, 4695 MacArthur Court, Suite 1430, Newport Beach, CA 92660, Attn: Rick Weed, Esq., telecopier number: (949) 475-9087, and (ii) if to the Holder, to the address and telecopier number listed on the first paragraph of this Warrant, with a copy by telecopier only to: Grushko & Mittman, P.C., 551 Fifth Avenue, Suite 1601, New York, New York 10176, telecopier number: (212) 697-3575.

 

14.           Law Governing This Warrant.  This Warrant shall be governed by and construed in accordance with the laws of the State of New York without regard to principles of conflicts of laws.  Any action brought by either party against the other concerning the transactions contemplated by this Warrant shall be brought only in the state courts of New York or in the federal courts located in the state and county of New York.  The parties to this Warrant hereby irrevocably waive any objection to jurisdiction and venue of any action instituted hereunder and shall not assert any defense based on lack of jurisdiction or venue or based upon forum non conveniens.  The Company and Holder waive trial by jury.  The prevailing party shall be entitled to recover from the other party its reasonable attorney's fees and costs.  In the event that any provision of this Warrant or any other agreement delivered in connection herewith is invalid or unenforceable under any applicable statute or rule of law, then such provision shall be deemed inoperative to the extent that it may conflict therewith and shall be deemed modified to conform with such statute or rule of law.  Any such provision which may prove invalid or unenforceable under any law shall not affect the validity or enforceability of any other provision of any agreement.   Each party hereby irrevocably waives personal service of process and consents to process being served in any suit, action or proceeding in connection with this Agreement or any other Transaction Document by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof.  Nothing contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by law.

 

 

  

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IN WITNESS WHEREOF, the Company has executed this Warrant as of the date first written above.

 

 

	 	
ATTITUDE DRINKS INC.

	 	 	 
	 	By: 	/s/  Roy G. Warren
	 	 	
Name:

 

 

 

 

  

9

  

 

Exhibit A

FORM OF SUBSCRIPTION

(to be signed only on exercise of Warrant)

TO:  ATTITUDE DRINKS INC.

The undersigned, pursuant to the provisions set forth in the attached Warrant (No.____), hereby irrevocably elects to purchase (check applicable box):

___           ________ shares of the Common Stock covered by such Warrant; or

___           the maximum number of shares of Common Stock covered by such Warrant pursuant to the cashless exercise procedure set forth in Section 2.

The undersigned herewith makes payment of the full purchase price for such shares at the price per share provided for in such Warrant, which is $___________.  Such payment takes the form of (check applicable box or boxes):

___           $__________ in lawful money of the United States; and/or

___           the cancellation of such portion of the attached Warrant as is exercisable for a total of _______ shares of Common Stock (using a Fair Market Value of $_______ per share for purposes of this calculation); and/or

___           the cancellation of such number of shares of Common Stock as is necessary, in accordance with the formula set forth in Section 2, to exercise this Warrant with respect to the maximum number of shares of Common Stock purchasable pursuant to the cashless exercise procedure set forth in Section 2.

The undersigned requests that the certificates for such shares be issued in the name of, and delivered to ____________________ whose address is ___________________________________________.

The undersigned represents and warrants that all offers and sales by the undersigned of the securities issuable upon exercise of the within Warrant shall be made pursuant to registration of the Common Stock under the Securities Act of 1933, as amended (the "Securities Act"), or pursuant to an exemption from registration under the Securities Act.

 

	
Dated:___________________

	 	 
	 	 	(Signature must conform to name of holder as specified on the face of the Warrant)
	 	 	 
	 	 	 
	 	 	 
	 	 	(Address)

 

 

 

 

 

  

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Exhibit B

FORM OF TRANSFEROR ENDORSEMENT

(To be signed only on transfer of Warrant)

 

For value received, the undersigned hereby sells, assigns, and transfers unto the person(s) named below under the heading "Transferees" the right represented by the within Warrant to purchase the percentage and number of shares of Common Stock of ATTITUDE DRINKS INC. to which the within Warrant relates specified under the headings "Percentage Transferred" and "Number Transferred," respectively, opposite the name(s) of such person(s) and appoints each such person Attorney to transfer its respective right on the books of ATTITUDE DRINKS INC. with full power of substitution in the premises.

 

	
Transferees

	
Percentage Transferred

	
Number Transferred

	  	  	  
	  	  	  
	  	  	  

 

	
Dated:  ______________, ___________

	 	 
	 	 	(Signature must conform to name of holder as specified on the face of the warrant)
	 	 	 
	
Signed in the presence of:

	 	 
	 	 	 
	 	 	 
	(Name)	 	 
	 	 	 
	 	 	
(address)

 

	
ACCEPTED AND AGREED:

	 	 
	[TRANSFEREE]	 	 
	 	 	(address)
	
 

 

	 	 
	(Name)CNO 01.18.2012 EX 10.1

Exhibit 10.1

EMPLOYMENT AGREEMENT

This EMPLOYMENT AGREEMENT, is entered into this 13th day of January, 2012, between CNO Financial Group, Inc., a Delaware corporation (the “Company” or “CNO”), and Frederick J. Crawford (“Executive”).
    
WHEREAS, the services of Executive and his managerial and professional experience are of value to the Company; and

WHEREAS, the Company desires to have the benefit and advantage of the services of Executive to assist the Company upon the terms and conditions set forth herein.

NOW, THEREFORE, in consideration of the foregoing and the mutual covenants contained herein, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

1.    Employment.  The Company hereby employs Executive and Executive hereby accepts employment upon the terms and conditions hereinafter set forth.

2.    Term.  The effective date of this agreement (the “Agreement”) shall be January 23, 2012 (the “Effective Date”).  Subject to the provisions for termination as provided in Section 10 hereof, the term of Executive's employment under this Agreement shall be the period beginning on the Effective Date and ending on the third anniversary of the Effective Date (the “Term").  The Term shall not be automatically renewed and shall end upon any earlier termination of Executive's employment with the Company.

3.    Duties.  During the Term, Executive shall be engaged by the Company in the capacity of Executive Vice President and Chief Financial Officer of the Company.  During the Term, Executive shall report exclusively to the Company's Chief Executive Officer regarding the performance of his duties.   

4.    Extent of Services.  During the Term, subject to the direction and control of the Chief Executive Officer of the Company, Executive shall have the power and authority commensurate with his executive status and necessary to perform his duties hereunder.  Executive shall devote his entire employable time, attention and best efforts to the business of the Company and, during the Term, shall not, without the consent of the Company, be actively engaged in any other business activity, whether or not such business activity is pursued for gain, profit or other pecuniary advantage; provided, however, that this shall not be construed as preventing Executive from serving on boards of professional, community, civic, education, charitable and corporate organizations on which he presently serves or may choose to serve or investing his assets in such form or manner as will not require any services on the part of Executive in the operation of the affairs of the companies in which such investments are made (to the extent not in violation of the non-solicitation provisions of Section 9 hereof); provided, however, that corporate organizations shall be limited to those mutually agreed upon by Executive and the Company.

#PageNum#

5.    Compensation.  During the Term:

(a)    As compensation for services hereunder rendered during the Term hereof, Executive shall receive a base salary (“Base Salary”) of Five Hundred Fifty Thousand Dollars ($550,000) per year payable in equal installments in accordance with the Company's payroll procedure for its salaried executives.  Salary payments and other payments under this Agreement shall be subject to withholding of taxes and other appropriate and customary amounts.  Executive may receive increases in his Base Salary from time to time, based upon his performance, subject to approval of the Company.

(b)    In addition to Base Salary, Executive will have an opportunity to earn a bonus each year, as determined by the Company, with a target annual bonus equal to 100% of Executive's Base Salary (the “Target Bonus”) and a maximum annual bonus of 200% of Executive's Base Salary with respect to any calendar year, with such bonus payable at such time that other similar payments are made to other Company executives but in no event later than March 15 of the year following the year with respect to which such bonus was payable, unless the bonus amounts to be paid cannot be confirmed and paid on or before March 15, in which event the bonuses will be paid within 15 days after the bonus amounts have been confirmed by the Company.  For purposes of clarification, annual executive bonuses are payable on or before March 15 of the year following the year with respect to which such bonuses are payable, if Executive remains employed with the Company through such date or as otherwise payable under Section 11 of this Agreement.  Notwithstanding the above, the 2015 bonus will be paid at the same time that similar payments are made to other Company executives if Executive remains employed through the end of the Term.  The bonus payable for any period of less than one year shall be prorated based on the number of days Executive was employed by the Company during that year.  The performance requirements for Target Bonuses will be based on financial and other objective targets that the Company's Board of Directors (the “Board”) or the Human Resources and Compensation Committee of the Board (the “Compensation Committee”) believes are reasonably attainable at the time that they are set.

(c)    Executive shall be entitled to receive a signing bonus in the amount of Four Hundred Fifty Thousand Dollars ($450,000), payable 60 days after the Effective Date.  In the event that Executive's employment is terminated for Just Cause or if he terminates his employment other than With Reason after payment of such signing bonus but prior to the first anniversary of the Effective Date, Executive agrees to repay the full amount of the signing bonus to the Company (in which event the Company may elect to withhold all or a portion of such amount from any amounts then payable by the Company to Executive).

(d)    Executive shall be entitled to receive a grant of 160,000 shares of restricted stock, two-thirds of which shall vest on December 30, 2013 and one-third of which shall vest on December 30, 2014.  The restricted stock will be governed by the terms and conditions of the award agreement between the Company and Executive.

(e)    Executive shall be entitled to receive a grant of options to purchase 36,000 shares of common stock, one-half of which shall vest on December 30, 2013 and one-half 

#PageNum#

of which shall vest on December 30, 2014.  The options will expire on December 30, 2018.  The option grant will be governed by the terms and conditions of the award agreement between the Company and Executive.

(f)    The Company agrees to make, as soon as reasonably practicable after the Effective Date, a contribution to Executive's deferred compensation account with the Company in the amount of One Hundred Fifty Thousand Dollars ($150,000).  Such contribution shall vest in full on the third anniversary of the Effective Date if Executive remains employed by the Company throughout the Term. 

(g)    Executive shall be eligible to participate in and receive future grants under any CNO stock or equity-based program offered to senior executives, subject to the discretion of the Board or the Compensation Committee. 

6.    Additional Benefits.  During the Term:

(a)    Executive shall be entitled to participate in such existing executive benefit plans and insurance programs offered by the Company, or which it may adopt from time to time, for its executive management or supervisory personnel generally, in accordance with the eligibility requirements for participation therein.  Nothing herein shall be construed so as to prevent the Company from modifying or terminating any executive benefit plans or programs, or executive fringe benefits, that it may adopt from time to time.  

(b)    Executive shall be entitled to four weeks of vacation with pay each year.

(c)    Executive may incur reasonable expenses for promoting the Company's business, including expenses for entertainment, travel, and similar items.  The Company shall reimburse Executive for all such reasonable expenses upon Executive's periodic presentation of an itemized account of such expenditures in accordance with the Company's policies and procedures and Section 21 hereof; provided, however, that any such reimbursement will be made no later than March 15 of the year following the year in which the expense was incurred.  The Company agrees to pay Executive an additional amount to cover the incremental additional income taxes incurred by Executive, if any, with respect to payment or reimbursement of any reasonable business expenses pursuant to this subsection (c); provided, however, that any such payment will be made no later than March 15 of the year following the year in which the income tax was incurred. 

(d)    Executive shall be entitled to reimbursement of reasonable relocation expenses for moving his family to the Carmel, Indiana area in accordance with the Company's current relocation policy, provided that these expenses shall be capped at $50,000.  All expenses must be appropriately documented by Executive to the Company.  In the event that Executive's employment is terminated for Just Cause or if he terminates his employment other than With Reason prior to the first anniversary of the Effective Date, Executive agrees to repay such expenses to the Company.

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(e)    The Company shall reimburse Executive for, or provide at its expense, up to six months of temporary housing in the Carmel, Indiana area in an amount not to exceed $5,000 per month.
 
(f)    Executive shall be permitted to make elective contributions to any Company-sponsored, non-qualified deferred compensation plan in accordance with the terms of such plan.

(g)    Executive shall be entitled to a personal income tax gross-up on any federal, state and local taxable income arising from the benefits provided to him under Section 6(d) above. 

7.    Disability.  

(a)     If Executive shall become physically or mentally disabled during the Term to the extent that his ability to perform his duties and services hereunder is materially and adversely impaired (any such incapacity, a “Disability”), his Base Salary, bonus and other compensation provided herein shall continue while he remains employed by the Company; provided, that if such Disability (as determined in the Company's reasonable judgment, exercised in good faith) continues for at least three (3) consecutive months, the Company may terminate Executive's employment hereunder, in which case the Company within 10 business days shall pay Executive a cash payment equal to (i) his annual Base Salary as provided in Section 5(a) hereof to the extent earned but unpaid as of the date of termination (“Unpaid Salary”), (ii) the bonus payable pursuant to Section 5(b) for the fiscal year of the Company ending prior to the date of termination (to the extent earned based on performance under the goals and objectives of the applicable plan but not previously paid) (“Unpaid Bonus”) and (iii) Executive's then accrued but unused vacation (“Unpaid Vacation”) (the Unpaid Salary, Unpaid Bonus and Unpaid Vacation referred to sometimes together as the “Accrued Amounts”).  Additionally, in the event of a termination of employment due to Disability, the Company shall pay to Executive a pro-rata portion of the Target Bonus for the year in which the termination for Disability occurred, payable at the same time when the bonus payment for the year of termination otherwise would have been paid pursuant to Section 5(b).  All options, restricted stock and/or other awards held by Executive on the date of termination for Disability shall vest only through the date of termination according to the normal vesting schedule applicable to such options or restricted stock and Executive shall be treated in accordance with the applicable award agreements.  

(b)     No payments or vesting under this Section 7 will be made if such Disability arose primarily from (a) chronic use of intoxicants, drugs or narcotics (other than drugs prescribed to Executive by a physician and used by Executive for their intended purpose for which they had been prescribed) or (b) intentionally self-inflicted injury or intentionally self-induced illness.

8.    Disclosure of Information.  Executive acknowledges that, in and as a result of his employment with the Company, he has been and will be making use of, acquiring and/or adding 

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to confidential information of the Company and its affiliates of a special and unique nature and value.  As a material inducement to the Company to enter into this Agreement and to pay to Executive the compensation stated in Section 5, as well as any additional benefits stated herein, Executive covenants and agrees that he shall not, at any time while he is employed by the Company or at any time thereafter, directly or indirectly, divulge or disclose for any purpose whatsoever, any confidential information (whether or not specifically labeled or identified as “confidential information”), in any form or medium, that has been obtained by or disclosed to him as a result of his employment with the Company and which the Company or any of its affiliates has taken appropriate steps to safeguard, except to the extent that such confidential information (a) becomes a matter of public record or is published in a newspaper, magazine or other periodical available to the general public, other than as a result of any act or omission of Executive, (b) is required to be disclosed by any law, regulation or order of any court or regulatory commission, department or agency, in which event Executive shall give prompt notice of such requirement to the Company to enable the Company to seek an appropriate protective order or confidential treatment, (c) must be disclosed to enable Executive properly to perform his duties under this Agreement or (d) was developed by Executive prior to his employment by the Company.  Upon the termination of Executive's employment, Executive shall return such information (in whatever form) obtained from or belonging to the Company or any of its affiliates which he may have in his possession or control.

9.    Covenants Against Solicitation.  Executive acknowledges that the services he is to render to the Company and its affiliates are of a special and unusual character, with a unique value to the Company and its affiliates, the loss of which cannot adequately be compensated by damages or an action at law.  In view of the unique value to the Company and its affiliates of the services of Executive for which the Company has contracted hereunder, because of the confidential information to be obtained by, or disclosed to, Executive as set forth in Section 8 above, and as a material inducement to the Company to enter into this Agreement and to pay to Executive the compensation stated in Section 5 hereof, as well as any additional benefits stated herein, and other good and valuable consideration, Executive covenants and agrees that throughout the period Executive remains employed or compensated hereunder and for one year thereafter, Executive shall not, directly or indirectly, anywhere in the United States of America (i) solicit or attempt to convert to other insurance carriers or other corporations, persons or other entities providing the same or similar products or services provided by the Company and its affiliates, any customers or policyholders of the Company or any of its affiliates; or (ii) solicit for employment or employ any individual who was employed by the Company or any of its affiliates during the term of Executive's employment with the Company.  Should any particular covenant or provision of this Section 9 be held unreasonable or contrary to public policy for any reason, including, without limitation, the time period, geographical area, or scope of activity covered by any restrictive covenant or provision, the Company and Executive acknowledge and agree that such covenant or provision shall automatically be deemed modified such that the contested covenant or provision shall have the closest effect permitted by applicable law to the original form and shall be given effect and enforced as so modified to whatever extent would be reasonable and enforceable under applicable law. 

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10.    Termination.  During the Term:

(a)    Either the Company or Executive may terminate his employment at any time for any reason upon written notice to the other.  The Company may terminate Executive's employment for Just Cause pursuant to Section 10(b) below or in a Control Termination pursuant to Section 10(c) below.  Executive's employment shall also terminate (i) upon the death of Executive or (ii) after Disability of Executive pursuant to Section 7 hereof.

(b)    The Company may terminate Executive's employment at any time for Just Cause.  For purposes of this Agreement, “Just Cause” shall mean: 

 (i)  (A) material breach by Executive of this Agreement not cured within 15 days after written notice to Executive by the Company, (B) a material breach of Executive's duty of loyalty to the Company or its affiliates not cured within 15 days after written notice to Executive by the Company, or (C) willful malfeasance or fraud or dishonesty of a substantial nature in performing Executive's services on behalf of the Company or its affiliates, which in each case is willful and deliberate on Executive's part and committed in bad faith or without reasonable belief that such breach or action is in the best interests of the Company or its affiliates; 

(ii)  Executive's use of alcohol or drugs (other than drugs prescribed to Executive by a physician and used by Executive for their intended purposes for which they had been prescribed) or other repeated conduct which materially and repeatedly interferes with the performance of his duties hereunder, which materially compromises the integrity or the reputation of the Company or its affiliates, or which results in other substantial economic harm to the Company or its affiliates; 

(iii)  Executive's conviction by a court of law, admission that he is guilty, or entry of a plea of nolo contendere with regard to a felony or other crime involving moral turpitude; 

(iv)  Executive's unscheduled absence from his employment duties other than as a result of illness or disability, for whatever cause, for a period of more than three (3) consecutive days, without consent from the Company prior to the expiration of the three (3) day period; 

(v)  Executive's failure to take action or to abstain from taking action, as directed in writing by a member of the Board or a higher ranking executive of the Company, where such failure continues after Executive has been given written notice of such failure and at least five (5) business days thereafter to cure such failure; or

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(vi)  Any intentional wrongful act or omission by Executive that results in the restatement of the Company's financial statements due to a violation of the Sarbanes-Oxley Act of 2002.

No termination shall be deemed to be a termination by the Company for Just Cause if the termination is as a result of Executive refusing to act in a manner that Executive believes in good faith would be a violation of applicable law or where Executive acts (or refrains from taking action) in good faith in accordance with directions of a member of the Board or higher ranking executive but was unable to attain the desired results because such results were inherently unreasonable or unattainable.

(c)    The Company may terminate Executive's employment in a Control Termination.  A "Control Termination" shall mean any termination by the Company (or its successor) of Executive's employment for any reason within six months in anticipation of or within two years following a Change in Control.

The term "Change in Control" shall mean the occurrence of any of the following:

(i) the acquisition (other than an acquisition in connection with a “Non-Control Transaction”) by any "person" (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the "1934 Act")) of "beneficial ownership" (as such term is defined in Rule 13d-3 promulgated under the 1934 Act), directly or indirectly, of securities of the Company or its Ultimate Parent representing 51% or more of the combined voting power of the then outstanding securities of the Company or its Ultimate Parent entitled to vote generally with respect to the election of the Board or the board of directors of the Company's Ultimate Parent; or 
(ii) as a result of or in connection with a tender or exchange offer or contest for election of directors, individual board members of the Company (identified as of the date of commencement of such tender or exchange offer, or the commencement of such election contest, as the case may be) cease to constitute at least a majority of the Board; or 
(iii) the consummation of a merger, consolidation or reorganization with or into the Company unless (x) the stockholders of the Company immediately before such transaction beneficially own, directly or indirectly, immediately following such transaction securities representing 51% or more of the combined voting power of the then outstanding securities entitled to vote generally with respect to the election of the board of directors of the Company (or its successor) or, if applicable, the Ultimate Parent and (y) individual board members of the Company (identified as of the date that a binding agreement providing for such transaction is signed) constitute at least a majority of the board of directors of the Company (or its successor) or, if applicable, the Ultimate Parent (a transaction to which clauses (x) and (y) apply, a “Non-Control Transaction”).  

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For purposes of this Agreement, “Ultimate Parent” shall mean the parent corporation (or if there is more than one parent corporation, the ultimate parent corporation) that, following a transaction, directly or indirectly beneficially owns a majority of the voting power of the outstanding securities entitled to vote with respect to the election of the board of directors of the Company (or its successor).
(d)    At Executive's option, he may terminate employment with the Company "With Reason" provided one or more of the following conditions are met: (i) any reduction in Executive's Base Salary or Target Bonus without his consent, or (ii) there is a "Change in Control" as defined in Section 10(c) and, following Executive's written request made prior to the Change in Control, the ultimate parent entity or entities directly or indirectly gaining control of a majority of the Board or outstanding securities entitled to vote with respect to the Board fails to affirm and guarantee the Company's current and future obligations under this Agreement; provided that the events described in clauses (i) and (ii) above shall constitute With Reason only if the Company fails to cure such event (if capable of being cured) within 30 days after receipt from Executive of written notice of the event which constitutes With Reason; provided, further, that With Reason shall cease to exist for an event on the 60th day following the later of its occurrence or Executive's knowledge thereof, unless Executive has given the Company written notice thereof prior to such date.
		
	. 
	(e)    Upon termination of Executive's employment with the Company for any reason (whether voluntary or involuntary), Executive shall be deemed to have voluntarily resigned from all positions that Executive may then hold with the Company and any of its affiliates; provided that such deemed resignation shall not adversely affect Executive's rights to compensation or benefits under this Agreement and shall not affect the determination of whether Executive's termination was for Just Cause or With Reason.

		
	1.
	Payments Following Termination.

(a)    In the event that Executive's employment is terminated by the Company for Just Cause or if Executive voluntarily resigns, then (i) the Company within 10 business days shall pay Executive a cash payment of his Base Salary as provided in Section 5(a) hereof that was earned but unpaid as of the date of termination (the “Termination Date”) and (ii) no bonus for the year of termination will be earned or paid to Executive.  All stock options, restricted stock and/or other awards held by Executive on the Termination Date shall be treated in accordance with the applicable award agreements. 

(b)    In the event Executive's employment is terminated by the death of Executive, then the Company shall pay Executive's estate within 30 days (i) the Accrued Amounts and (ii) a pro-rata portion of the Target Bonus for the year in which his death occurs.  All stock options, restricted stock and/or other awards held by Executive on the Termination Date shall be treated in accordance with the applicable award agreements.

(c)    In the event that Executive is terminated by the Company without Just Cause (and other than a termination due to expiration of the Term, death, Disability or a 

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Control Termination) or by Executive With Reason, then the Company shall pay Executive within 30 days of the Termination Date the Accrued Amounts.  Additionally, following such a termination, Executive shall be entitled to receive (i) a bonus pursuant to Section 5(b) based on the Company's actual performance for the year in which Executive is terminated (prorated for the partial year period ending on the Termination Date), payable at the same time when such bonus amount normally would have been paid pursuant to Section 5(b), and (ii) a cash lump sum equal to the sum of his annual Base Salary and Target Bonus.  All stock options, restricted stock and/or other awards held by Executive on the Termination Date shall be treated in accordance with the applicable award agreements. 

(d)    In the event that Executive is terminated by the Company (or its successor) in a Control Termination as so defined, then the Company shall pay Executive within 30 days of the Termination Date the Accrued Amounts.  Additionally, following such a termination, Executive shall be entitled to receive (i) a bonus pursuant to Section 5(b) based on the Company's actual performance during the year in which Executive is terminated (prorated for the partial year period ending on the Termination Date), payable at the same time when such bonus would have been paid pursuant to Section 5(b), and (ii) a cash lump sum equal to the sum of (A) his Target Bonus and (B) one and one-half times his annual Base Salary.  All stock options, restricted stock and/or other awards held by Executive upon the occurrence of the Change in Control shall be treated in accordance with the applicable award agreements.   

(e)    Notwithstanding anything to the contrary, payment of any severance under this Agreement is conditioned upon the execution by Executive of a separation and release agreement in a form acceptable to the Company and the observation of such waiting or revocation periods, if any, before and after execution of the agreement by Executive as are required by law, such as, for example, the waiting or revocation periods required for a waiver and release to be effective with respect to claims under the Age Discrimination in Employment Act, provided that the Company delivers to Executive such agreement within seven days of the Termination Date.

12.    Character of Termination Payments.  The amounts payable to Executive upon any termination of his employment shall be considered severance pay in consideration of past services rendered on behalf of the Company and his continued service from the date hereof to the date he becomes entitled to such payments and shall be the sole amount of severance pay to which Executive is entitled from the Company and its affiliates upon termination of his employment during the Term.  Executive shall have no duty to mitigate his damages by seeking other employment and, should Executive actually receive compensation from any such other employment, the payments required hereunder shall not be reduced or offset by any such other compensation.

13.    Representations of the Parties.

(a)    The Company represents and warrants to Executive that (i) this Agreement has been duly authorized, executed and delivered by the Company and constitutes valid 

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and binding obligations of the Company; and (ii) the employment of Executive on the terms and conditions contained in this Agreement will not conflict with, result in a breach or violation of, constitute a default under, or result in the creation or imposition of any lien, charge or encumbrance upon any property or assets of the Company pursuant to: (A) the certificate of incorporation, (B) the terms of any indenture, contract, lease, mortgage, deed of trust, note, loan agreement or other agreement, obligation, condition, covenant or instrument to which the Company is a party or bound or to which its property is subject, or (C) any statute, law, rule, regulation, judgment, order or decree applicable to the Company, or any regulatory body, administrative agency, governmental body, arbitrator or other authority having jurisdiction over the Company.

(b)    Executive represents and warrants to the Company that: (i) this Agreement has been duly executed and delivered by Executive and constitutes a valid and binding obligation of Executive; and (ii) neither the execution of this Agreement by Executive nor his employment by the Company on the terms and conditions contained herein will conflict with, result in a breach or violation of, or constitute a default under any agreement, obligation, condition, covenant or instrument to which Executive is a party or bound or to which his property is subject, or any statute, law, rule, regulation, judgment, order or decree applicable to Executive of any court, regulatory body, administrative agency, governmental body, arbitrator or other authority having jurisdiction over Executive or any of his property.

14.    Arbitration of Disputes; Injunctive Relief.

(a)    Arbitration.  Except as provided in subsection (b) below, any controversy or claim arising out of or relating to this Agreement or the breach thereof shall be settled by binding arbitration in the City of Indianapolis, Indiana, in accordance with the laws of the State of Indiana by three arbitrators, one of whom shall be appointed by the Company, one by Executive, and the third of whom shall be appointed by the first two arbitrators.  If the first two arbitrators cannot agree on the appointment of a third arbitrator, then the third arbitrator shall be appointed by the Chief Judge of the United States District Court for the Southern District of Indiana.  The arbitration shall be conducted in accordance with the rules of the American Arbitration Association, except with respect to the selection of arbitrators, which shall be as provided in this Section.  Judgment upon the award rendered by the arbitrators may be entered in any court having jurisdiction thereof.  All reasonable costs and expenses (including fees and disbursements of counsel) incurred by Executive pursuant to this Section 14 shall be paid on behalf of or reimbursed to Executive promptly by the Company; provided, however, that in the event the Company prevails in such proceedings, Executive shall immediately repay all such amounts to the Company.

(b)    Executive acknowledges that a breach or threatened breach by Executive of Sections 8 or 9 of this Agreement will give rise to irreparable injury to the Company and that money damages will not be adequate relief for such injury.  Notwithstanding paragraph (a) above, the Company and Executive agree that the Company may seek and obtain injunctive relief, including, without limitation, temporary restraining orders, preliminary injunctions and/or permanent injunctions, in a court of proper jurisdiction to 

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restrain or prohibit a breach or threatened breach of Section 8 or 9 of this Agreement.  Nothing herein shall be construed as prohibiting the Company from pursuing any other remedies available to the Company for such breach or threatened breach, including the recovery of damages from Executive.  

15.    Notices.  Any notice required or permitted to be given under this Agreement shall be sufficient if in writing and if sent by registered mail to his residence, in the case of Executive, or to the business office of its General Counsel, in the case of the Company.

16.    Waiver of Breach and Severability.  The waiver by either party of a breach of any provision of this Agreement by the other party shall not operate or be construed as a waiver of any subsequent breach by either party.  In the event any provision of this Agreement is found to be invalid or unenforceable, it may be severed from the Agreement, and the remaining provisions of the Agreement shall continue to be binding and effective.

17.    Entire Agreement.  Other than any equity award agreements entered into pursuant to the CNO Amended and Restated Long-Term Incentive Plan or any subsequent incentive plan, this instrument contains the entire agreement of the parties and, as of the Effective Date, supersedes all other obligations of the Company and its affiliates under other agreements or otherwise.  The compensation and benefits to be paid under the terms of this Agreement are in lieu of all other compensation or benefits to which Executive is entitled from the Company and its affiliates, and upon termination of Executive's employment with the Company Executive will not be entitled to receive any severance or other payments beyond those specified in this Agreement.  This Agreement may not be changed orally, but only by an instrument in writing signed by the party against whom enforcement of any waiver, change, modification, extension or discharge is sought.

18.    Binding Agreement and Governing Law; Assignment Limited.  This Agreement shall be binding upon and shall inure to the benefit of the parties and their lawful successors in interest (including, without limitation, Executive's estate, heirs and personal representatives) and, except for issues or matters as to which federal law is applicable, shall be construed in accordance with and governed by the laws of the State of Indiana.  This Agreement is personal to each of the parties hereto, and neither party may assign or delegate any of its rights or obligations hereunder without the prior written consent of the other.

19.    Indemnification.  If Executive was or is made a party or is threatened to be made a party to or is otherwise involved (including involvement as a witness) in any action, suit or proceeding, whether civil, criminal, administrative or investigative (a “Proceeding”), by reason of the fact that he is or was an officer or employee of the Company or any of its affiliates, Executive shall be indemnified and held harmless by the Company to the fullest extent authorized by the Delaware General Corporation Law, as the same exists or may hereafter be amended (but, in the case of any such amendment, only to the extent that such amendment permits the Company to provide broader indemnification rights than permitted prior thereto), against all expense, liability and loss (including attorneys' fees, judgments, fines, excise taxes or penalties and amounts paid in settlement) reasonably incurred or suffered by Executive in connection therewith and such indemnification shall continue as to Executive if he ceases to be an officer or employee and shall inure to the benefit of Executive's heirs, executors and administrators; provided, however, that the Company shall indemnify Executive in connection 

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with a proceeding (or part thereof) initiated by Executive only if such Proceeding (or part thereof) was authorized by the Board of Directors of the Company.  The right to indemnification conferred in this paragraph shall include the obligation of the Company to pay the expenses incurred in defending any such proceeding in advance of its final disposition (an “Advance of Expenses”); provided, however, that, if and to the extent that the Delaware General Corporation Law requires, an Advance of Expenses incurred by Executive in his capacity as an officer or employee shall be made only upon delivery to the Company of an undertaking, by or on behalf of Executive, to repay all amounts so advanced if it shall ultimately be determined by final judicial decision from which there is no further right to appeal that Executive is not entitled to be indemnified for such expenses under this paragraph or otherwise.

20.     No Third Party Beneficiaries.  The terms and provisions of this Agreement are intended solely for the benefit of each party hereto and their respective successors or permitted assigns, and it is not intended to confer third-party beneficiary rights upon any other person.

21.Section 409A.  This Agreement is intended to comply with Section 409A of the Code and will be interpreted accordingly.  References under this Agreement to Executive's termination of employment shall be deemed to refer to the date upon which Executive has experienced a “separation from service” within the meaning of Section 409A of the Code.  Notwithstanding anything herein to the contrary, (i) if at the time of Executive's separation from service with the Company Executive is a “specified employee” as defined in Section 409A of the Code (and any related regulations or announcements thereunder) and the deferral of the commencement of any payments or benefits otherwise payable hereunder or payable under any other compensatory arrangement between Executive and the Company or any of its affiliates as a result of such separation from service is necessary in order to prevent any accelerated or additional tax under Section 409A of the Code, then the Company will defer the commencement of the payment of any such payments or benefits hereunder (without any reduction in such payments or benefits ultimately paid or provided to Executive) until the date that is six months following Executive's separation from service (or the earliest date as is permitted under Section 409A of the Code), at which point all payments deferred pursuant to this Section 21 shall be paid to Executive in a lump sum and (ii) if any payments of money or other benefits due to Executive hereunder could cause the application of an accelerated or additional tax under Section 409A of the Code, such payments or other benefits shall be deferred if deferral will make such payment or other benefits compliant under Section 409A of the Code, or otherwise such payment or other benefits shall be restructured, to the extent possible, in a manner that does not cause such an accelerated or additional tax.  To the extent any reimbursements or in-kind benefits due to Executive under this Agreement constitute “deferred compensation” under Section 409A of the Code, any such reimbursements or in-kind benefits shall be paid to Executive in a manner consistent with Treas. Reg. Section 1.409A-3(i)(l)(iv).  Additionally, to the extent that Executive's receipt of any in-kind benefits from the Company or its affiliates must be delayed pursuant to this Section 21 due to his status as a “specified employee,” Executive may elect to instead purchase and receive such benefits during the period in which the provision of benefits would otherwise be delayed by paying the Company (or its affiliates) for the fair market value of such benefits (as determined by the Company in good faith) during such period.  Any amounts paid by Executive pursuant to the preceding sentence shall be reimbursed to Executive as described above on the date that is six months following his separation from service.  Each payment made under this Agreement shall be designated as a “separate payment” within the meaning of Section 409A of the Code.  The Company shall consult with Executive in good faith regarding the implementation of the provisions of this Section 21, provided that neither 

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the Company nor any of its employees or representatives shall have any liability to Executive with respect thereto.

22.Counterparts.  This Agreement may be executed in counterparts, each of which shall be deemed to be an original, but all of which together shall constitute one and the same instrument.

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written, effective as of the Effective Date.

COMPANY:
CNO FINANCIAL GROUP, INC.

/s/ Susan L. Menzel            
Susan L. Menzel
Executive Vice President, Human Resources

    
EXECUTIVE:

/s/ Frederick J. Crawford        
Frederick J. Crawford

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