SECURITIES PURCHASE AGREEMENT
This
Securities Purchase Agreement (this “Agreement”)
is
dated as of February 19, 2008, among Organic To Go Food Corporation, a Delaware
corporation (the “Company”),
and
X.Xxxxxx
L.P., a limited partnership organized under the laws of the Bahamas (the
“Investor”).
WHEREAS,
subject to the terms and conditions set forth in this Agreement and pursuant
to
Section 4(2) of the Securities Act (as defined below) and/or Regulation S
promulgated thereunder, the Company desires to issue and sell to the Investor,
and the Investor desires to purchase from the Company certain securities
of the
Company, as more fully described in this Agreement.
NOW,
THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement,
and for other good and valuable consideration the receipt and adequacy of
which
are hereby acknowledged, the Company and the Investor agree as
follows:
ARTICLE
1.
DEFINITIONS
1.1. Definitions
In
addition to the terms defined elsewhere in this Agreement, for all purposes
of
this Agreement, the following terms shall have the meanings indicated in
this
Section 1.1:
“Action”
means
any action, suit, inquiry, notice of violation, proceeding (including any
partial proceeding such as a deposition) or investigation pending or threatened
in writing against or affecting the Company, any Subsidiary or any of their
respective properties before or by any court, arbitrator, governmental or
administrative agency, regulatory authority (federal, state, county, local
or
foreign), stock market, stock exchange or trading facility.
“Affiliate”
means
any Person that, directly or indirectly through one or more intermediaries,
controls or is controlled by or is under common control with a Person, as
such
terms are used in and construed under Rule 144.
“Business
Day”
means
any day except Saturday, Sunday and any day which is a federal legal holiday
in
the United States or a day on which banking institutions in the State of
New
York are authorized or required by law or other governmental action to
close.
“Buy-In”
has
the
meaning set forth in Section 4.1(c).
“Closing”
means
the closing of the purchase and sale of the Securities pursuant to Article
2.
“Closing
Date”
means
the Business Day on which all of the conditions set forth in Sections 5.1
and
5.2 hereof are satisfied, or such other date as the parties may
agree.
“Commission”
means
the Securities and Exchange Commission.
“Common
Stock”
means
the common stock of the Company, par value $0.001 per share, and any securities
into which such common stock may hereafter be reclassified.
“Common
Stock Equivalents”
means
any securities of the Company or any Subsidiary which entitle the holder
thereof
to acquire Common Stock at any time, including without limitation, any debt,
preferred stock, rights, options, warrants or other instrument that is at
any
time convertible into or exchangeable for, or otherwise entitles the holder
thereof to receive, Common Stock or other securities that entitle the holder
to
receive, directly or indirectly, Common Stock.
“Company
Counsel”
means
Loeb & Loeb LLP.
“Company
Deliverables”
has the
meaning set forth in Section 2.2(a).
“Conditional
Warrant” means
the
Common Stock purchase warrant in the form of Exhibit
A
which is
issuable to the Investor at the Closing.
“Conditional
Warrant Shares” means
the
shares of Common Stock issuable upon exercise of the Conditional
Warrant.
“Deferred
Registration Rights Agreement”
means
the Registration Rights Agreement, dated as of the date of this Agreement,
among
the Company and the Investor, in the form of Exhibit
F
hereto.
“Deferred
Registration Statement”
means a
registration statement meeting the requirements set forth in the Deferred
Registration Rights Agreement and covering the resale by the Investor of
the
Conditional Warrant Shares.
“Disclosure
Materials”
has the
meaning set forth in Section 3.1(h).
“Effective
Date”
means
the date that the initial Registration Statement required by Section 2(a)
of the
Registration Rights Agreement is first declared effective by the
Commission.
“Evaluation
Date”
has the
meaning set forth in Section 3.1(s).
“Exchange
Act”
means
the Securities Exchange Act of 1934, as amended.
“GAAP”
means
U.S. generally accepted accounting principles.
“Indemnification
Agreement” has
the
meaning set forth in Section 5.1(k)
“Intellectual
Property Rights”
has the
meaning set forth in Section 3.1(p).
“Investment
Amount”
means
$10,000,000.
“Investment
Expenses”
has
the
meaning set forth in Section 6.1.
“Investor
Deliverables”
has the
meaning set forth in Section 2.2(b).
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“Investor
Party”
has the
meaning set forth in Section 4.7.
“Lien”
means
any lien, charge, encumbrance, security interest, right of first refusal
or
other restrictions of any kind.
“Losses”
has the
meaning set forth in Section 4.7.
“Material
Adverse Effect”
means
any of (i) a material and adverse effect on the legality, validity or
enforceability of any Transaction Document, (ii) a material and adverse effect
on the results of operations, assets, prospects, business or condition
(financial or otherwise) of the Company and the Subsidiaries, taken as a
whole,
or (iii) an adverse impairment to the Company’s ability to perform on a timely
basis its obligations under any Transaction Document.
“Outside
Date”
means
the thirtieth day following the date of this Agreement.
“Person”
means an
individual or corporation, partnership, trust, incorporated or unincorporated
association, joint venture, limited liability company, joint stock company,
government (or an agency or subdivision thereof) or other entity of any
kind.
“Proceeding”
means an
action, claim, suit, investigation or proceeding (including, without limitation,
an investigation or partial proceeding, such as a deposition), whether commenced
or threatened.
“Registration
Rights Agreement”
means
the Registration Rights Agreement, dated as of the date of this Agreement,
among
the Company and the Investor, in the form of Exhibit
B
hereto.
“Registration
Statement”
means a
registration statement meeting the requirements set forth in the Registration
Rights Agreement and covering the resale by the Investor of the Shares and
the
Warrant Shares.
“Rule
144”
means
Rule 144 promulgated by the Commission pursuant to the Securities Act, as
such
Rule may be amended from time to time, or any similar rule or regulation
hereafter adopted by the Commission having substantially the same effect
as such
Rule.
“SEC
Reports”
has the
meaning set forth in Section 3.1(h).
“Securities”
means
the Shares, the Warrant, the Conditional Warrant, the Warrant Shares and
the
Conditional Warrant Shares.
“Securities
Act”
means
the Securities Act of 1933, as amended.
“Share
Delivery Date”
has
the
meaning set forth in Section 4.1(c).
“Shares”
means
7,142,857 shares of Common Stock issuable to the Investor pursuant to this
Agreement.
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“Short
Sales”
include,
without limitation, all “short sales” as defined in Rule 200 promulgated under
Regulation SHO under the Exchange Act and all types of direct and indirect
stock
pledges, forward sale contracts, options, puts, calls, swaps and similar
arrangements (including on a total return basis), and sales and other
transactions through non-US broker dealers or foreign regulated
brokers.
“Subsidiary”
means
any “significant subsidiary” as defined in Rule 1-02(w) of the Regulation S-X
promulgated by the Commission under the Exchange Act.
“Term
Sheet”
means
the Proposed Term Sheet for Common Stock Financing and Associated Warrants,
by
and between the Investor and the Company, dated February 13, 2008.
“Trading
Day”
means
(i) a day on which the Common Stock is traded on a Trading Market (other
than
the OTC Bulletin Board), or (ii) if the Common Stock is not listed on a Trading
Market (other than the OTC Bulletin Board), a day on which the Common Stock
is
traded in the over-the-counter market, as reported by the OTC Bulletin Board,
or
(iii) if the Common Stock is not quoted on any Trading Market, a day on which
the Common Stock is quoted in the over-the-counter market as reported by
the
Pink Sheets LLC (or any similar organization or agency succeeding to its
functions of reporting prices); provided, that in the event that the Common
Stock is not listed or quoted as set forth in (i), (ii) and (iii) hereof,
then
Trading Day shall mean a Business Day.
“Trading
Market”
means
whichever of the New York Stock Exchange, the American Stock Exchange, the
NASDAQ Global Select Market, the NASDAQ Global Market, the NASDAQ Capital
Market
or OTC Bulletin Board on which the Common Stock is listed or quoted for trading
on the date in question.
“Transaction
Documents”
means
this Agreement, the Warrants, the Registration Rights Agreement, the Deferred
Registration Rights Agreement and any other documents or agreements executed
in
connection with the transactions contemplated hereunder.
“Warrant”
means
the
Common Stock purchase warrant in the form of Exhibit
C
which is
issuable to the Investor at the Closing.
“Warrant
Shares” means
the
shares of Common Stock issuable upon exercise of the Warrant.
“Warrants”
means
the
Conditional Warrant and the Warrant, collectively.
4
ARTICLE
2.
PURCHASE
AND SALE
2.1. Closing
Subject
to the terms and conditions set forth in this Agreement, at the Closing,
the
Company shall issue and sell to the Investor, and the Investor shall purchase
from the Company, the Shares and the Warrants representing such Investor’s
Investment Amount. The Closing shall take place at the offices of Loeb &
Loeb LLP, 00000 Xxxxx Xxxxxx Xxxxxxxxx, Xxxxx 0000, Xxx Xxxxxxx, XX 00000
on the
Closing Date or at such other location or time as the parties may
agree.
2.2. Closing
Deliveries
(a)
At the
Closing, the Company shall deliver or cause to be delivered to the Investor
the
following (the “Company
Deliverables”):
(i) a
certificate evidencing the Shares, registered in the name of such
Investor;
(ii) the
Warrants, registered in the name of such Investor;
(iii) the
legal
opinion of Company Counsel, in agreed form, addressed to the
Investor;
(iv) the
legal
opinion of Xxxx
XxXxxxxxx Xxxxxxxxx Xxxxxxxx & Xxxx Professional Law Corporation,
in
agreed form, addressed to the Investor;
(v) the
Registration Rights Agreement, duly executed by the Company;
(vi) the
Deferred Registration Rights Agreement, duly executed by the
Company;
(vii) the
Indemnification Agreement;
(viii) good
standing certificates from (a) the State of Delaware and (b) the State of
Washington, dated as of no more than three days prior to the Closing Date,
certifying that the Company is in good standing and qualified to do business
in
these jurisdictions; and
(ix) certificate
of the Company, dated the Closing Date, signed by the Chief Executive Officer
of
the Company, certifying that the conditions specified in Sections 5.1(b),
5.1(c)
and 5.1(e) hereof have been fulfilled.
(b) At
the
Closing, the Investor shall deliver or cause to be delivered to the Company
(the
“Investor
Deliverables”):
(i) the
Registration Rights Agreement, duly executed by such Investor;
(ii) the
Deferred Registration Rights Agreement, duly executed by such Investor;
and
5
(iii) the
Investment Amount, in United States dollars and in immediately available
funds,
by wire transfer to an account designated in writing by the Company. The
Investor shall deliver to the Company, within seven (7) Business Days after
the
date of this Agreement, written evidence confirming the initiation of the
bank
wire transfer of the Investment Amount, subject to the satisfaction of the
conditions in Section 5.1.
ARTICLE
3.
REPRESENTATIONS
AND WARRANTIES
3.1. Representations
and Warranties of the Company
The
Company hereby makes the following representations and warranties to the
Investor:
(a) Subsidiaries.
The
Company has no direct or indirect Subsidiaries other than as specified in
the
SEC Reports. Except as disclosed in Schedule
3.1(a),
the
Company owns, directly or indirectly, all of the capital stock of each
Subsidiary free and clear of any and all Liens, and all the issued and
outstanding shares of capital stock of each Subsidiary are validly issued
and
are fully paid, non-assessable and free of preemptive and similar rights.
(b) Organization
and Qualification.
The
Company and each Subsidiary are duly incorporated or otherwise organized,
validly existing and in good standing under the laws of the jurisdiction
of its
incorporation or organization (as applicable), with the requisite power and
authority to own and use its properties and assets and to carry on its business
as currently conducted. Neither the Company nor any Subsidiary is in violation
of any of the provisions of its respective certificate or articles of
incorporation, bylaws or other organizational or charter documents. The Company
and each Subsidiary are duly qualified to conduct its respective businesses
and
are in good standing as a foreign corporation or other entity in each
jurisdiction in which the nature of the business conducted or property owned
by
it makes such qualification necessary, except where the failure to be so
qualified or in good standing, as the case may be, could not, individually
or in
the aggregate, have or reasonably be expected to result in a Material Adverse
Effect.
(c) Authorization;
Enforcement.
The
Company has the requisite corporate power and authority to enter into and
to
consummate the transactions contemplated by each of the Transaction Documents
and otherwise to carry out its obligations thereunder. The execution and
delivery of each of the Transaction Documents by the Company and the
consummation by it of the transactions contemplated thereby have been duly
authorized by all necessary action on the part of the Company and no further
action is required by the Company in connection therewith. Each Transaction
Document has been (or upon delivery will have been) duly executed by the
Company
and, when delivered in accordance with the terms hereof, will constitute
the
valid and binding obligation of the Company enforceable against the Company
in
accordance with its terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium, liquidation
or
similar laws relating to, or affecting generally the enforcement of, creditors’
rights and remedies or by other equitable principles of general
application.
(d) No
Conflicts.
The
execution, delivery and performance of the Transaction Documents by the Company
and the consummation by the Company of the transactions contemplated thereby
do
not and will not (i) conflict with or violate any provision of the Company’s or
any Subsidiary’s certificate or articles of incorporation, bylaws or other
organizational or charter documents, or (ii) conflict with, or constitute
a
default (or an event that with notice or lapse of time or both would become
a
default) under, or give to others any rights of termination, amendment,
acceleration or cancellation (with or without notice, lapse of time or both)
of,
any agreement, credit facility, debt or other instrument (evidencing a Company
or Subsidiary debt or otherwise) or other understanding to which the Company
or
any Subsidiary is a party or by which any property or asset of the Company
or
any Subsidiary is bound or affected, or (iii) result in a violation of any
law,
rule, regulation, order, judgment, injunction, decree or other restriction
of
any court or governmental authority to which the Company or a Subsidiary
is
subject (including federal and state securities laws and regulations), or
by
which any property or asset of the Company or a Subsidiary is bound or affected;
except in the case of each of clauses (ii) and (iii), such as could not,
individually or in the aggregate, have or reasonably be expected to result
in a
Material Adverse Effect.
6
(e) Filings,
Consents and Approvals.
Neither
the Company nor any Subsidiary is required to obtain any consent, waiver,
authorization or order of, give any notice to, or make any filing or
registration with, any court or other federal, state, local or other
governmental authority or other Person in connection with the execution,
delivery and performance by the Company of the Transaction Documents, other
than
(i) the filing with the Commission of one or more Registration Statements
or
Deferred Registration Statements in accordance with the requirements of the
Registration Rights Agreement and the Deferred Registration Rights Agreement,
as
applicable, (ii) filings required by state securities laws, (iii) the filings
required in accordance with Section 4.5 and (iv) those that have been made
or
obtained prior to the date of this Agreement.
(f) Issuance
of the Securities.
The
Securities have been duly authorized and, when issued and paid for in accordance
with the Transaction Documents, will be duly and validly issued, fully paid
and
nonassessable, free and clear of all Liens. The Company has reserved from
its
duly authorized capital stock (i) the shares of Common Stock issuable pursuant
to this Agreement and the Warrant in order to issue the Shares and the Warrant
Shares and (ii) twenty percent (20%) of the total number of shares of capital
stock of Company on a fully diluted basis using the treasury
method.
(g) Capitalization.
The
number of shares and type of all authorized, issued and outstanding capital
stock of the Company, and all shares of Common Stock reserved for issuance
under
the Company’s various option and incentive plans, is specified in the SEC
Reports, and set forth in Exhibit
E
attached
hereto. Except as specified in the SEC Reports and in Exhibit
E
attached
hereto, no securities of the Company are entitled to preemptive or similar
rights, and no Person has any right of first refusal, preemptive right, right
of
participation, or any similar right to participate in the transactions
contemplated by the Transaction Documents. Except as specified in the SEC
Reports
and
except as set forth on Schedule 3.1(g),
there
are no outstanding options, warrants, scrip rights to subscribe to, calls
or
commitments of any character whatsoever relating to, or securities, rights
or
obligations convertible into or exchangeable for, or giving any Person any
right
to subscribe for or acquire, any shares of Common Stock, or contracts,
commitments, understandings or arrangements by which the Company or any
Subsidiary is or may become bound to issue additional shares of Common Stock,
or
securities or rights convertible or exchangeable into shares of Common Stock.
Except
with respect to 2,229,430 warrants to purchase Common Stock, the
issue
and sale of the Securities will not, immediately or with the passage of time,
obligate the Company or any Subsidiary to issue shares of Common Stock or
other
securities to any Person (other than the Investor) and will not result in
a
right of any holder of Company or Subsidiary securities to adjust the exercise,
conversion, exchange or reset price under such securities.
7
(h) SEC
Reports; Financial Statements.
Except
as
set forth on Schedule 3.1(h), the
Company
has
filed all reports required to be filed by it under the Securities Act and
the
Exchange Act, including pursuant to Section 13(a) or 15(d)
thereof, for the twelve months preceding the date hereof (or such shorter
period
as the Company was required by law to file such reports) (the foregoing
materials being collectively referred to herein as the “SEC
Reports”
and,
together with the Schedules to this Agreement (if any), the “Disclosure
Materials”),
on a
timely basis or has timely filed a valid extension of such time of filing
and
has filed any such SEC Reports prior to the expiration of any such extension.
As
of their respective dates, the SEC Reports complied in all material respects
with the requirements of the Securities Act and the Exchange Act and the
rules
and regulations of the Commission promulgated thereunder, and none of the
SEC
Reports, when filed, contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary
in
order to make the statements therein, in light of the circumstances under
which
they were made, not misleading. The
Company has not received any material correspondence from the SEC or any
Trading
Market concerning the SEC Reports. The
financial statements of the Company and any Subsidiary included in the SEC
Reports comply in all material respects with applicable accounting requirements
and the rules and regulations of the Commission with respect thereto as in
effect at the time of filing. Such financial statements have been prepared
in
accordance with GAAP applied on a consistent basis during the periods involved,
except as may be otherwise specified in such financial statements or the
notes
thereto, and fairly present in all material respects the financial position
of
the Company and its consolidated Subsidiaries as of and for the dates thereof
and the results of operations and cash flows for the periods then ended,
subject, in the case of unaudited statements, to normal, immaterial, year-end
audit adjustments.
(i) Press
Releases.
The
press releases
disseminated by the Company since February
13, 2007
taken as
a whole do not contain any untrue statement of a material fact or omit to
state
a material fact required to be stated therein or necessary in order to make
the
statements therein, in light of the circumstances under which they were made
and
when made, not misleading.
(j) Material
Changes.
Since
the
date of the latest audited financial statements included within the SEC Reports,
except as specifically
disclosed in the SEC Reports and
except as disclosed on Schedule 3.1(j),
(i)
there has been no event, occurrence or development that has had or that could
reasonably be expected to result in a Material Adverse Effect, (ii) neither
the
Company nor any Subsidiary has entered into any material contract, agreement
or
other transaction that is not in the ordinary course of business, (iii) neither
the Company nor any Subsidiary has incurred any liabilities or obligations
(contingent or otherwise) other than (A) trade payables, accrued expenses
and
other liabilities incurred in the ordinary course of business consistent
with
past practice, (B) liabilities not required to be reflected in the Company’s
financial statements pursuant to GAAP or required to be disclosed in filings
made with the Commission, and (C) liabilities not exceeding in the aggregate
$200,000; (iv) neither the Company nor any Subsidiary has altered its method
of
accounting or the identity of its auditors, (v) neither the Company nor any
Subsidiary has declared or made any dividend or distribution of cash or other
property to its stockholders or purchased, redeemed or made any agreements
to
purchase or redeem any shares of its capital stock, and (vi) neither the
Company
nor any Subsidiary has issued any equity securities to any officer, director
or
Affiliate, except pursuant to existing stock option plans. The Company does
not
have pending before the Commission any request for confidential treatment
of
information.
8
(k) Litigation.
Except
as set forth on Schedule
3.1(k),
there
is no Action which (i) adversely affects or challenges the legality, validity
or
enforceability of any of the Transaction Documents or the Securities or (ii)
except as specifically disclosed in the SEC Reports, could, if there were
an
unfavorable decision, individually or in the aggregate, have or reasonably
be
expected to result in a Material Adverse Effect. Neither the Company nor
any
Subsidiary, nor any director or officer thereof (in his or her capacity as
such), is or has been the subject of any Action involving a claim of violation
of or liability under federal or state securities laws or a claim of breach
of
fiduciary duty, except as specifically disclosed in the SEC Reports. There
has
not been, and to the knowledge of the Company, there is not pending any
investigation by the Commission involving the Company, any Subsidiary or
any
current or former director or officer of the Company (in his or her capacity
as
such). The Commission has not issued any stop order or other order suspending
the effectiveness of any registration statement filed by the Company or any
Subsidiary under the Exchange Act or the Securities Act.
(l) Labor
Relations.
Except
as set forth on Schedule
3.1(l),
no
material labor dispute exists or, to the knowledge of the Company, is imminent
with respect to any of the employees of the Company or any
Subsidiary.
(m) Compliance.
Except
as set forth on Schedule
3.1(m),
neither
the Company nor any Subsidiary (i) is in default under or in violation of
(and
no event has occurred that has not been waived that, with notice or lapse
of
time or both, would result in a default by the Company or any Subsidiary
under),
nor has the Company or any Subsidiary received notice of a claim that it
is in
default under or that it is in violation of, any indenture, loan or credit
agreement or any other agreement or instrument to which it is a party or
by
which it or any of its properties is bound (whether or not such default or
violation has been waived), (ii) is in violation of any order of any court,
arbitrator or governmental body, or (iii) is or has been in violation of
any
statute, rule or regulation of any governmental authority, including without
limitation all foreign, federal, state and local laws relating to taxes,
environmental protection, occupational health and safety, product quality
and
safety and employment and labor matters, except in each case as could not,
individually or in the aggregate, have or reasonably be expected to result
in a
Material Adverse Effect. The Company is in compliance with all effective
requirements of the Xxxxxxxx-Xxxxx Act of 2002, as amended, and the rules
and
regulations thereunder, that are applicable to it, except where such
noncompliance could not have or reasonably be expected to result in a Material
Adverse Effect.
(n) Regulatory
Permits.
The
Company and the Subsidiaries possess all certificates, authorizations and
permits issued by the appropriate federal, state, local or foreign regulatory
authorities necessary to conduct their respective businesses as described
in the
SEC Reports, except where the failure to possess such permits could not,
individually or in the aggregate, have or reasonably be expected to result
in a
Material Adverse Effect, and neither the Company nor any Subsidiary has received
any notice of proceedings relating to the revocation or modification of any
such
permits.
9
(o) Title
to Assets.
Except
as set forth on Schedule
3.1(o),
the
Company and the Subsidiaries have good and marketable title in fee simple
to all
real property owned by them that is material to their respective businesses
and
good and marketable title in all personal property owned by them that is
material to their respective businesses, in each case free and clear of all
Liens, except for Liens as do not materially affect the value of such property
and do not materially interfere with the use made and proposed to be made
of
such property by the Company and the Subsidiaries. Any real property and
facilities held under lease by the Company and the Subsidiaries are held
by them
under valid, subsisting and enforceable leases of which the Company and the
Subsidiaries are in compliance, except as could not, individually or in the
aggregate, have or reasonably be expected to result in a Material Adverse
Effect.
(p) Patents
and Trademarks.
The
Company and the Subsidiaries have, or have rights to use, all patents, patent
applications, trademarks, trademark applications, service marks, trade names,
copyrights, licenses and other similar rights that are necessary or material
for
use in connection with their respective businesses as described in the SEC
Reports and which the failure to so have could, individually or in the
aggregate, have or reasonably be expected to result in a Material Adverse
Effect
(collectively, the “Intellectual
Property Rights”).
Except
as set forth on Schedule
3.1(p),
neither
the Company nor any Subsidiary has received a written notice that the
Intellectual Property Rights used by the Company or any Subsidiary violates
or
infringes upon the rights of any Person. Except as set forth in the SEC Reports,
to the knowledge of the Company, all such Intellectual Property Rights are
enforceable and there is no existing infringement by another Person of any
of
the Intellectual Property Rights.
(q) Insurance.
The
Company and the Subsidiaries are insured by insurers of recognized financial
responsibility against such losses and risks and in such amounts as are prudent
and customary in the businesses in which the Company and the Subsidiaries
are
engaged. The Company is the named beneficiary of a key-man life insurance
policy
with respect to its Chief Executive Officer for a coverage amount of no less
than $1,000,000. The Company has a directors and officers liability insurance
policy with respect to the Company’s Board of Directors for a coverage amount of
no less than $5,000,000. The Company has no reason to believe that it will
not
be able to renew its and the Subsidiaries’ existing insurance coverage as and
when such coverage expires or to obtain similar coverage from similar insurers
as may be necessary to continue its business on terms consistent with market
for
the Company’s and such Subsidiaries’ respective lines of business.
(r) Transactions
With Affiliates and Employees.
Except
as set forth in or otherwise not required to be disclosed in the SEC Reports,
none of the officers or directors of the Company and, to the knowledge of
the
Company, none of the employees of the Company or any Subsidiary is presently
a
party to any transaction with the Company or any Subsidiary (other than for
services as employees, officers and directors), including any contract,
agreement or other arrangement providing for the furnishing of services to
or
by, providing for rental of real or personal property to or from, or otherwise
requiring payments to or from any officer, director or such employee or,
to the
knowledge of the Company, any entity in which any officer, director, or any
such
employee has a substantial interest or is an officer, director, trustee or
partner.
10
(s) Internal
Accounting Controls.
The
Company and the Subsidiaries maintain a system of internal accounting controls
sufficient to provide reasonable assurance that (i) transactions are executed
in
accordance with management’s general or specific authorizations, (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with GAAP and to maintain asset accountability,
(iii)
access to assets is permitted only in accordance with management’s general or
specific authorization, and (iv) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and appropriate
action
is taken with respect to any differences. The Company has established disclosure
controls and procedures (as defined in Exchange Act Rules 13a-15(e) and
15d-15(e)) for the Company and designed such disclosure controls and procedures
to ensure that material information relating to the Company, including its
Subsidiaries, is made known to the certifying officers by others within those
entities, particularly during the period in which the Company’s Form 10-KSB or
10-QSB, as the case may be, is being prepared. The Company’s certifying officers
have evaluated the effectiveness of the Company’s controls and procedures in
accordance with Item 307 of Regulation S-B under the Exchange Act for the
Company’s most recently ended fiscal quarter or fiscal year-end (such date, the
“Evaluation
Date”).
The
Company presented in its most recently filed Form 10-KSB or Form 10-QSB the
conclusions of the certifying officers about the effectiveness of the disclosure
controls and procedures based on their evaluations as of the Evaluation Date.
Since the Evaluation Date, there have been no significant changes in the
Company’s internal controls (as such term is defined in Item 308(c) of
Regulation S-B under the Exchange Act) or, to the Company’s knowledge, in other
factors that could significantly affect the Company’s internal
controls.
(t) Solvency.
Based
on the financial condition of the Company and each Subsidiary as of the Closing
Date (and assuming that the Closing shall have occurred), (i) the Company’s and
each Subsidiary’s fair saleable value of its assets exceeds the amount that will
be required to be paid on or in respect of the Company’s and each Subsidiary’s
existing debts and other liabilities (including known contingent liabilities)
as
they mature, (ii) the Company’s and each Subsidiary’s assets do not constitute
unreasonably small capital to carry on its business for the current fiscal
year
as now conducted and as proposed to be conducted including its capital needs
taking into account the particular capital requirements of the business
conducted by the Company and each Subsidiary, and projected capital requirements
and capital availability thereof, and (iii) the current cash flow of the
Company
and each Subsidiary, together with the proceeds the Company and each Subsidiary
would receive, were it to liquidate all of its assets, after taking into
account
all anticipated uses of the cash, would be sufficient to pay all amounts
on or
in respect of its debt when such amounts are required to be paid. The Company
and each Subsidiary does not intend to incur debts beyond its ability to
pay
such debts as they mature (taking into account the timing and amounts of
cash to
be payable on or in respect of its debt).
(u) Certain
Fees.
Except
as described in Schedule
3.1(u),
no
brokerage or finder’s fees or commissions are or will be payable by the Company
or any Subsidiary to any broker, financial advisor or consultant, finder,
placement agent, investment banker, bank or other Person with respect to
the
transactions contemplated by this Agreement. The Investor shall have no
obligation with respect to any fees or with respect to any claims (other
than
such fees or commissions owed by the Investor pursuant to written agreements
executed by the Investor which fees or commissions shall be the sole
responsibility of the Investor) made by or on behalf of other Persons for
fees
of a type contemplated in this Section that may be due in connection with
the
transactions contemplated by this Agreement.
11
(v) Certain
Registration Matters.
Assuming the accuracy of the Investor’s representations and warranties set forth
in Section 3.2, no registration under the Securities Act is required for
the
offer and sale of the Shares and Warrants, and the offer of the Warrant Shares
and the Conditional Warrant Shares, by the Company to the Investor under
the
Transaction Documents. The Company is eligible to register its Common Stock
for
resale by the Investor under Form S-1 promulgated under the Securities Act.
Except as specified in the SEC Reports and except as set forth on Schedule
3.1(v),
neither
the Company nor any Subsidiary has granted or agreed to grant to any Person
any
rights (including “piggy-back” registration rights) to have any securities of
the Company registered with the Commission or any other governmental authority
that have not been satisfied.
(w) Listing
and Maintenance Requirements.
Except
as specified in the SEC Reports, the Company has not, since February 13,
2007,
received notice from any Trading Market to the effect that the Company is
not in
compliance with the listing, quoting or maintenance requirements thereof.
The
Company is, and has no reason to believe that it will not in the foreseeable
future continue to be, in compliance with the listing, quoting or maintenance
requirements for continued listing or quoting of the Common Stock on the
Trading
Market on which the Common Stock is currently listed or quoted. The issuance
and
sale of the Securities under the Transaction Documents does not contravene
the
rules and regulations of the Trading Market on which the Common Stock is
currently listed or quoted, and no approval of the shareholders of the Company
thereunder is required for the Company to issue and deliver to the Investor
the
Securities contemplated by Transaction Documents.
(x) Investment
Company.
The
Company and each Subsidiary is not, and is not an Affiliate of, and immediately
following the Closing will not have become, an “investment company” within the
meaning of the Investment Company Act of 1940, as amended.
(y) Application
of Takeover Protections.
The
Company has taken all necessary action, if any, in order to render inapplicable
any control share acquisition, business combination, poison pill (including
any
distribution under a rights agreement) or other similar anti-takeover provision
under the Company’s Certificate of Incorporation (or similar charter documents)
or the laws of its state of incorporation that is or could become applicable
to
the Investor as a result of the Investor and the Company fulfilling their
obligations or exercising their rights under the Transaction Documents,
including without limitation the Company’s issuance of the Securities and the
Investor’s ownership of the Securities.
(z) No
Additional Agreements.
The
Company does not have any agreement or understanding with the Investor with
respect to the transactions contemplated by the Transaction Documents other
than
as specified in the Transaction Documents.
(aa) Consultation
with Auditors.
The
Company and each Subsidiary has consulted its independent auditors concerning
the accounting treatment of the transactions contemplated by the Transaction
Documents, and in connection therewith has furnished such auditors complete
copies of the Transaction Documents.
12
(bb) Foreign
Corrupt Practices Act.
Neither
the Company nor any Subsidiary, nor to the knowledge of the Company, any
agent
or other person acting on behalf of any of the Company or any Subsidiary,
has,
directly or indirectly, (i) used any funds, or will use any proceeds from
the
sale of the Securities, for unlawful contributions, gifts, entertainment
or
other unlawful expenses related to foreign or domestic political activity,
(ii)
made any unlawful payment to foreign or domestic government officials or
employees or to any foreign or domestic political parties or campaigns from
corporate funds, (iii) failed to disclose fully any contribution made by
the
Company or any Subsidiary (or made by any Person acting on their behalf of
which
the Company is aware) which is in violation of law, or (iv) has violated
in any
material respect any provision of the Foreign Corrupt Practices Act of 1977,
as
amended, and the rules and regulations thereunder.
(cc) PFIC.
Neither
the Company nor any Subsidiary is or intends to become a “passive foreign
investment company” within the meaning of Section 1297 of the U.S. Internal
Revenue Code of 1986, as amended.
(dd) OFAC.
Neither
the Company nor any Subsidiary nor, to the knowledge of the Company, any
director, officer, agent, employee, Affiliate or Person acting on behalf
of the
Company or any Subsidiary is currently subject to any U.S. sanctions
administered by the Office of Foreign Assets Control of the U.S. Treasury
Department (“OFAC”);
and
the Company will not directly or indirectly use the proceeds of the sale
of the
Securities, or lend, contribute or otherwise make available such proceeds
to any
Subsidiary, joint venture partner or other Person or entity, towards any
sales
or operations in Cuba, Iran, Syria, Sudan, Myanmar or any other country
sanctioned by OFAC or for the purpose of financing the activities of any
Person
currently subject to any U.S. sanctions administered by OFAC.
(ee) Money
Laundering Laws.
The
operations of each of the Company and any Subsidiary are and have been conducted
at all times in compliance with the money laundering statutes of applicable
jurisdictions, the rules and regulations thereunder and any related or similar
rules, regulations or guidelines, issued, administered or enforced by any
applicable governmental agency (collectively, the “Money
Laundering Laws”)
and no
action, suit or proceeding by or before any court or governmental agency,
authority or body or any arbitrator involving the Company and/or any Subsidiary
with respect to the Money Laundering Laws is pending or, to the best knowledge
of the Company, threatened.
(ff) Dependence
on Major Customers.
No
single customer of the Company or any of its Subsidiaries accounted for more
than 10% of the Company’s or any of its Subsidiaries’ total sales during the
calendar year of 2007.
(gg) Disclosure.
The
Company (on behalf of each Subsidiary) confirms that neither it nor any Person
acting on its behalf has provided the Investor or its respective agents or
counsel with any information that the Company believes constitutes material,
non-public information except insofar as the existence and terms of the proposed
transactions hereunder may constitute such information. The Company understands
and confirms that the Investor will rely on the foregoing representations
and
covenants in effecting transactions in securities of the Company. All disclosure
provided to the Investor regarding the Company (including each Subsidiary),
its
and any Subsidiary’s business and the transactions contemplated hereby,
furnished by or on behalf of the Company (including the Company’s
representations and warranties set forth in this Agreement) are true and
correct
and do not contain any untrue statement of a material fact or omit to state
any
material fact necessary in order to make the statements made therein, in
light
of the circumstances under which they were made, not misleading.
13
3.2. Representations
and Warranties of the Investor
The
Investor hereby represents and warrants to the Company as follows:
(a) This
Agreement is made by the Company with the Investor who is a Non-U.S. Person
in
reliance upon such Non-U.S. Person’s representations, warranties and covenants
made in this Section 3.2.
(b) Such
Non-U.S. Person has been advised and acknowledges that (i) the Securities
have
not been, and when issued, will not be registered under the Securities Act,
the
securities laws of any state of the United States or the securities laws
of any
other country; (ii) in issuing and selling the Securities to such Non-U.S.
Person pursuant hereto, the Company is relying upon the “safe harbor” provided
by Regulation S and/or on Section 4(2) under the Securities Act; (iii) it
is a condition to the availability of the Regulation S “safe harbor” that the
Securities not be offered or sold in the United States or to a U.S. Person
until
the expiration of a period of six (6) months following the Closing Date;
(iv)
notwithstanding the foregoing, prior to the expiration of six (6) months
after
the Closing (the “Restricted
Period”),
the
Securities may be offered and sold by the holder thereof only if such offer
and
sale is made in compliance with the terms of this Agreement and either: (A)
if
the offer or sale is within the United States or to or for the account of
a U.S.
Person, the securities are offered and sold pursuant to an effective
registration statement or pursuant to Rule 144 under the Securities Act or
pursuant to an exemption from the registration requirements of the Securities
Act; or (B) the offer and sale is outside the United States and to other
than a
U.S. Person.
(c) As
used
in this Agreement, the term “United
States”
means
and includes the United States of America, its territories and possessions,
any
State of the United States, and the District of Columbia, the term “U.S.
Person”
means:
(i) a natural person resident in the United States; (ii) any partnership
or
corporation organized or incorporated under the laws of the United States;
(iii)
any estate of which any executor or administrator is a U.S. person.; (iv)
any
trust of which any trustee is a U.S. person; (v) any agency or branch of
a
foreign entity located in the United States; (vi) any nondiscretionary account
or similar account (other than an estate or trust) held by a dealer or other
fiduciary for the benefit or account of a U.S. person; (vii) any discretionary
account or similar account (other than an estate or trust) held by a dealer
or
other fiduciary organized, incorporated and (if an individual) resident in
the
United States; or (viii) A corporation or partnership organized under the
laws
of any foreign jurisdiction and formed by a U.S. person principally for the
purpose of investing in securities not registered under the Securities Act,
unless it is organized or incorporated, and owned, by accredited investors
(as
defined in Rule 501(a) under the Securities Act) who are not natural persons,
estates or trusts, and the term “Non-U.S.
Person”
means
any person who is not a U.S. Person or is deemed not to be a U.S. Person
under
Rule 902(k)(2) of the Securities Act.
14
(d) Such
Non-U.S. Person agrees that with respect to the Securities until the expiration
of the Restricted Period: (i) such Non-U.S. Person, its agents or its
representatives have not and will not solicit offers to buy, offer for sale
or
sell any of the securities, or any beneficial interest therein in the United
States or to or for the account of a U.S. Person during the Restricted Period;
(ii) notwithstanding the foregoing, prior to the expiration of the Restricted
Period, the securities may be offered and sold by the holder thereof only
if
such offer and sale is made in compliance with the terms of this Agreement
and
either: (A) if the offer or sale is within the United States or to or for
the
account of a U.S. Person, the securities are offered and sold pursuant to
an
effective registration statement or pursuant to Rule 144 under the Securities
Act or pursuant to an exemption from the registration requirements of the
Securities Act; or (B) the offer and sale is outside the United States and
to
other than a U.S. Person; and (iii) such Non-U.S. Person shall not engage
in
hedging transactions with regard to the securities unless in compliance with
the
Securities Act. The foregoing restrictions are binding upon subsequent
transferees of the securities, except for transferees pursuant to an effective
registration statement. Such Non-U.S. Person agrees that after the Restricted
Period, the securities may be offered or sold within the United States or
to or
for the account of a U.S. Person only pursuant to applicable securities
laws.
(e) Such
Non-U.S. Person has not engaged, nor is it aware that any party has engaged,
and
such Non-U.S. Person will not engage or cause any third party to engage,
in any
directed selling efforts (as such term is defined in Regulation S) in the
United
States with respect to the Securities.
(f) Such
Non-U.S. Person: (i) is domiciled and has its principal place of business
outside the United States; (ii) certifies it is not a U.S. Person and is
not
acquiring the Common Stock or Warrants for the account or benefit of any
U.S.
Person; and (iii) at the time of the Closing Date, the Non-U.S. Person or
persons acting on Non-U.S. Person’s behalf in connection therewith will be
located outside the United States.
(g) At
the
time of offering to such Non-U.S. Person and communication of such Non-U.S.
Person’s order to purchase the Common Stock and Warrants and at the time of such
Non-U.S. Person’s execution of this Agreement, the Non-U.S. Person or persons
acting on Non-U.S. Person’s behalf in connection therewith were located outside
the United States.
(h) Such
Non-U.S. Person is not a “distributor” (as defined in Regulation S) or a
“dealer” (as defined in the Securities Act).
(i) Such
Non-U.S. Person acknowledges that the Company shall make a notation in its
stock
books regarding the restrictions on transfer set forth in this Section 3.2
and shall transfer such securities on the books of the Company only to the
extent consistent therewith. In particular, such Non-U.S. Person acknowledges
that the Company shall refuse to register any transfer of the Securities
not
made in accordance with the provisions of Regulation S, pursuant to registration
under the Securities Act or pursuant to an available exemption from
registration.
15
(j) The
Investor understands and agrees that the certificates for the Common Stock
being
purchased hereunder shall bear substantially the following legend until (i)
such
securities shall have been registered under the Securities Act pursuant to
a
registration statement that has been declared effective or (ii) in the opinion
of counsel reasonably acceptable to the Company, such securities may be sold
without registration under the Securities Act as well as any applicable “Blue
Sky” or state securities laws:
THE
SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT
OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND MAY NOT BE SOLD, TRANSFERRED,
ASSIGNED, PLEDGED OR HYPOTHECATED EXCEPT IN ACCORDANCE WITH THE PROVISIONS
OF
REGULATION S PROMULGATED UNDER THE SECURITIES ACT, PURSUANT TO REGISTRATION
UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM
REGISTRATION. HEDGING TRANSACTIONS INVOLVING THE SHARES REPRESENTED HEREBY
MAY
NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE SECURITIES ACT. THIS
CERTIFICATE MUST BE SURRENDERED TO THE COMPANY OR ITS TRANSFER AGENT AS A
CONDITION PRECEDENT TO THE SALE, PLEDGE, HYPOTHECATION OR ANY OTHER TRANSFER
OF
ANY INTEREST IN ANY OF THE SHARES REPRESENTED BY THIS CERTIFICATE.
(k) The
Investor understands and agrees that the Warrants being issued hereunder
shall
bear the legend set forth on the forms attached hereto as Exhibits A
and
C,
until
(i) the shares of Common Stock underlying the Warrants shall have been
registered under the Securities Act pursuant to a registration statement
that
has been declared effective or (ii) in the opinion of counsel reasonably
acceptable to the Company, such securities may be sold without registration
under the Securities Act as well as any applicable “Blue Sky” or state
securities laws.
(l) The
Investor hereby represents that the Investor is satisfied as to the full
observance of the laws of such Investor’s jurisdiction in connection with any
invitation to subscribe for the securities, including (i) the legal requirements
within such Investor’s jurisdiction for the purchase of the securities, (ii) any
foreign exchange restrictions applicable to such purchase, (iii) any
governmental or other consents that may need to be obtained and (iv) the
income
tax and other tax consequences, if any, that may be relevant to the purchase,
holding, redemption, sale or transfer of such securities. Such Investor’s
subscription and payment for, and such Investor’s continued beneficial ownership
of, the Securities, will not violate any applicable securities or other laws
of
such Investor’s jurisdiction.
(m) The
Investor has full power and authority to enter into this Agreement, the
execution and delivery of which has been duly authorized, if applicable,
and
this Agreement constitutes a valid and legally binding obligation of the
Investor enforceable against the Investor in accordance with its terms, except
as such enforceability may be limited by general principles of equity or
to
applicable bankruptcy, insolvency, reorganization, moratorium, liquidation
and
other similar laws relating to, or affecting generally, the enforcement of
applicable creditors’ rights and remedies.
16
(n) The
information in the “Investor Questionnaire,” attached hereto as Exhibit
D,
completed and executed by the Investor (the “Investor Questionnaire”) is
accurate and true in all material respects.
(o) The
Investor is not relying on the Company or its affiliates with respect to
economic considerations involved in this investment.
(p) The
Investor understands and agrees that the Investor must bear the economic
risk of
the Investor’s purchase because, among other reasons, neither the Common Stock
nor the Common Stock underlying the Warrants have been registered under the
Securities Act or under the securities laws of any state and, therefore,
cannot
be resold, assigned or otherwise disposed of unless they are subsequently
registered under the Securities Act and under the applicable securities laws
of
such states, or an exemption from such registration is available.
(q) No
representations or warranties have been made to the Investor by the Company
or
any of its officers, employees, agents, affiliates or subsidiaries, other
than
any representations of the Company contained herein, and in subscribing for
the
Common Stock and Warrants the Investor is not relying upon any representations
other than any contained herein; provided that nothing contained herein shall
modify, amend or affect the Investor’s right to rely on the Company’s
representations and warranties contained herein.
(r) The
Investor understands and acknowledges that the Investor’s purchase of the Common
Stock and Warrants is a speculative investment that involves a high degree
of
risk and the potential loss of the Investor’s entire investment.
(s) Neither
the Commission nor any state securities commission has approved the Common
Stock
or Warrants, or passed upon or endorsed the merits of this offering or confirmed
the accuracy or determined the adequacy of any information provided to the
Investor by the Company.
(t) The
Investor and the Investor’s advisors, if any, have had a reasonable opportunity
to ask questions of and receive answers from a person or persons acting on
behalf of the Company concerning the offering and the business, financial
condition, results of operations and prospects of the Company, and all such
questions have been answered to the reasonable satisfaction of the Investor
and
the Investor’s advisors, if any.
(u) The
Investor is unaware of, is in no way relying on, and did not become aware
of the
offering through or as a result of, any article, notice, advertisement or
other
communication published in any newspaper, magazine or similar media or broadcast
over television, radio or over the Internet, in connection with the offering
and
sale of the Common Stock and Warrants and is not subscribing for the securities
and did not become aware of the offering of the securities through or as
a
result of any seminar or meeting to which the Investor was invited by, or
any
solicitation of a subscription by, a person not previously known to the Investor
in connection with investments in securities generally.
(v) The
Investor has not engaged any placement agent, financial advisor or broker,
which
would give rise to any claim by any person for brokerage commissions, finders’
fees or the like relating to this Agreement or the transactions contemplated
hereby and, in turn, to be paid to other selected dealers.
17
(w) The
foregoing representations, warranties and agreements shall survive the
Closing.
ARTICLE
4.
OTHER
AGREEMENTS OF THE PARTIES
4.1.
(a)
Securities
may only be disposed of in compliance with state and federal securities laws.
In
connection with any transfer of the Securities other than pursuant to an
effective registration statement, to the Company, to an Affiliate of the
Investor or in connection with a pledge as contemplated in Section 4.1(b),
the
Company may require the transferor thereof to provide to the Company an opinion
of counsel selected by the transferor, the form and substance of which opinion
shall be reasonably satisfactory to the Company, to the effect that such
transfer does not require registration of such transferred Securities under
the
Securities Act.
(b) The
Company acknowledges and agrees that the Investor may from time to time pledge,
and/or grant a security interest in some or all of the Securities pursuant
to a
bona fide margin agreement in connection with a bona fide margin account
and, if
required under the terms of such agreement or account, such Investor may
transfer pledged or secured Securities to the pledgees or secured parties.
Such
a pledge or transfer would not be subject to approval or consent of the Company
and no legal opinion of legal counsel to the pledgee, secured party or pledgor
shall be required in connection with the pledge, but such legal opinion may
be
required in connection with a subsequent transfer following default by the
Investor transferee of the pledge. No notice shall be required of such pledge.
At the appropriate Investor’s expense, the Company will execute and deliver such
reasonable documentation as a pledgee or secured party of Securities may
reasonably request in connection with a pledge or transfer of the Securities
including the preparation and filing of any required prospectus supplement
under
Rule 424(b)(3) of the Securities Act or other applicable provision of the
Securities Act to appropriately amend the list of Selling Stockholders
thereunder. Except as otherwise provided in Section 4.1(c), any Shares subject
to a pledge or security interest as contemplated by this Section 4.1(b) shall
continue to bear the legend set forth in this Section 4.1(b) and be subject
to
the restrictions on transfer set forth in Section 4.1(a).
(c) Certificates
evidencing Shares shall not contain any legend (including the legend set
forth
in Section 3.2(j)): (i) following a sale or transfer of such Shares pursuant
to
an effective registration statement (including a Registration Statement and
a
Deferred Registration Statement), or (ii) following a sale or transfer of
such
Shares pursuant to Rule 144 (assuming the transferee is not an Affiliate
of the
Company). If
the
Investor shall make a sale or transfer of Shares either (x) pursuant to Rule
144
or (y) pursuant to a registration statement and in each case shall have
delivered to the Company or the Company’s transfer agent the certificate
representing Shares containing a restrictive legend which are the subject
of
such sale or transfer
and a representation letter in customary form (the
date of
such sale or transfer and Share delivery being the “Share
Delivery Date”)
and (1)
the Company shall fail to deliver or cause to be delivered to such Investor
a
certificate representing such Shares that is free from all restrictive or
other
legends by the third Trading Day following the Share Delivery Date and (2)
following such third Trading Day after the Share Delivery Date and prior
to the
time such Shares are received free from restrictive legends, the Investor,
or
any third party on behalf of such Investor, purchases (in an open market
transaction or otherwise) shares of Common Stock to deliver in satisfaction
of a
sale by the Investor of such Shares (a "Buy-In"),
then
the Company shall pay in cash to the Investor (for costs incurred either
directly by such Investor or on behalf of a third party) the amount by which
the
total purchase price paid for Common Stock as a result of the Buy-In (including
brokerage commissions, if any) exceed the proceeds received by such Investor
as
a result of the sale to which such Buy-In relates. The Investor shall provide
the Company written notice indicating the amounts payable to the Investor
in
respect of the Buy-In.
18
4.2. Furnishing
of Information.
As
long
as the Investor owns the Securities, the Company covenants to timely file
(or
obtain extensions in respect thereof and file within the applicable grace
period) all reports required to be filed by the Company after the date hereof
pursuant to the Exchange Act. As long as the Investor owns Securities, if
the
Company is not required to file reports pursuant to such laws, it will prepare
and furnish to the Investor and make publicly available in accordance with
Rule
144(c) such information as is required for the Investor to sell the Shares,
Warrant Shares and Conditional Warrant Shares under Rule 144. The Company
further covenants that it will take such further action as any holder of
Securities may reasonably request, all to the extent required from time to
time
to enable such Person to sell the Shares, Warrant Shares and Conditional
Warrant
Shares without registration under the Securities Act within the limitation
of
the exemptions provided by Rule 144.
4.3. Integration
The
Company shall not, and shall use its best efforts to ensure that no Affiliate
of
the Company shall, sell, offer for sale or solicit offers to buy or otherwise
negotiate in respect of any security (as defined in Section 2 of the Securities
Act) that would be integrated with the offer or sale of the Securities in
a
manner that would require the registration under the Securities Act of the
sale
of the Securities to the Investor, or that would be integrated with the offer
or
sale of the Securities for purposes of the rules and regulations of any Trading
Market in a manner that would require stockholder approval of the sale of
the
securities to the Investor.
4.4. Subsequent
Registrations
Other
than pursuant to the Registration Statement, prior to the Effective Date,
the
Company may not file any registration statement (other than on Form S-8)
with
the Commission with respect to any securities of the Company.
4.5. Securities
Laws Disclosure; Publicity
By
9:00
a.m. (New York time) four (4) Trading Days following the execution of this
Agreement, and by 9:00 a.m. (New York time) four (4) Trading Days following
the
Closing Date, the Company shall issue press releases disclosing the transactions
contemplated hereby and the Closing. Within four (4) Trading Days following
the
execution of this Agreement the Company will file a Current Report on Form
8-K
disclosing the material terms of the Transaction Documents (and attach as
exhibits thereto the Transaction Documents), and within four (4) Trading
Days
following the Closing Date the Company will file an additional Current Report
on
Form 8-K to disclose the Closing (unless this Agreement is executed on the
same
date as the Closing Date, in which case only one Form 8-K disclosing the
execution of this Agreement and the Closing need be filed). In addition,
the
Company will make such other filings and notices in the manner and time required
by the Commission and the Trading Market on which the Common Stock is quoted
or
listed. Except as otherwise provided herein or to the extent such disclosure
is
required by law or Trading Market regulations, the Company shall keep the
existence and content of its negotiations with the Investor, including the
terms
of the proposed offering, confidential and will not disclose to any third
party
any information relating to this Agreement or the proposed offering, except
to
its agents and counsel
19
4.6. Limitation
on Issuance of Future Priced Securities
During
the six months following the Closing Date, the Company shall not issue any
“Future Priced Securities” as such term is described by NASD
IM-4350-1.
4.7. Indemnification
of Investor
In
addition to the indemnity provided in the Registration Rights Agreement and
the
Deferred Registration Rights Agreement, the Company will indemnify and hold
the
Investor and its directors, officers, shareholders, partners, employees and
agents (each, an “Investor
Party”)
harmless from any and all losses, liabilities, obligations, claims,
contingencies, damages, costs and expenses, including all judgments, amounts
paid in settlements, court costs and reasonable attorneys’ fees and costs of
investigation (collectively, “Losses”)
that
any such Investor Party may suffer or incur as a result of or relating to
any
misrepresentation, breach or inaccuracy of any representation, warranty,
covenant or agreement made by the Company in any Transaction Document. In
addition to the indemnity contained herein, the Company will reimburse each
Investor Party for its reasonable legal and other expenses (including the
cost
of any investigation, preparation and travel in connection therewith) incurred
in connection therewith, as such expenses are incurred. Except as otherwise
set
forth herein, the mechanics and procedures with respect to the rights and
obligations under this Section 4.7 shall be the same as those set forth in
Section 5 of the Registration Rights Agreement.
4.8. Non-Public
Information
The
Company covenants and agrees that neither it nor any other Person acting
on its
behalf will provide the Investor or its agents or counsel with any information
that the Company believes constitutes material non-public information, unless
prior thereto such Investor shall have executed a written agreement regarding
the confidentiality and use of such information. The Company understands
and
confirms that the Investor shall be relying on the foregoing representations
in
effecting transactions in securities of the Company.
4.9. Listing
of Securities
The
Company agrees, (i) if the Company applies to have the Common Stock listed
or
quoted on any Trading Market, other than the Trading Market on which the
Common
Stock is currently listed or quoted, it will include in such application
the
Shares, the Warrant Shares and the Conditional Warrant Shares, and will take
such other action as is necessary or desirable to cause the Shares, the Warrant
Shares and the Conditional Warrant Shares to be listed or quoted on such
other
Trading Market as promptly as possible, and (ii) it will take all action
reasonably necessary to continue the listing or quoting of its Common Stock
on a
Trading Market and will comply in all material respects with the Company’s
reporting, filing and other obligations under the bylaws or rules of the
Trading
Market.
4.10. Use
of
Proceeds
The
Company shall not use the Investor's Investment Amount for the
repayment of any loans incurred by the Company or its Subsidiaries prior to
Closing, other than the repayment of $500,000 in term debt which matures
in
March 2008. The Company shall continue to pay its other obligations and
liabilities in the ordinary course of its business as such obligations and
liabilities come due.
20
4.11. Right
of First Refusal.
(a)
During the thirty-six (36) month period immediately following the Closing,
the
Investor shall be given not less than ten (10) Business Days prior written
notice (the “Company
Notice”)
of any
proposed sale by the Company of Common Stock or Common Stock Equivalents,
except
any Excluded Issuances (as defined below). The Investor shall have the right
to
purchase such number of the shares of Common Stock or Common Stock Equivalents
being offered in such proposed sale equal to the number of shares of Common
Stock or Common Stock Equivalents being offered times a fraction, the numerator
of which is the number of shares of Common Stock owned by the Investor
immediately after the Closing multiplied by two (2) and the denominator of
which
is the number of shares of Common Stock of the Company outstanding immediately
after the Closing determined on a fully diluted basis in accordance with
the
treasury stock method under the United States Generally Accepted Accounting
Principles, at the same price and on the same terms as such shares are offered
to other investors (the “Right
of First Refusal”).
If the
Investor elects to exercise the Right of First Refusal, the Investor shall,
within ten (10) Business Days after the Investor receives the Company Notice,
provide written notice to the Company of such election, specifying the number
of
shares the Investor desires to purchase (the “Investor
Notice”).
Payment of the purchase price for the shares purchased by the Investor pursuant
to the Right of First Refusal shall be made within seven (7) Business Days
after
the Company receives the Investor Notice. The Right of First Refusal described
in this Section 4.11 shall terminate upon the issuance by the Company of
Common
Stock or Common Stock Equivalents which the Investor has had the opportunity
to
purchase in one or multiple financings having an aggregate purchase price
of
$10.0 million.
(b) For
purposes of this Section 4.11, the Right of First Refusal will not apply
to any
securities issued to (i) to directors, officers, employees, or consultants
of
the Company and its Subsidiaries pursuant to any stock option or stock incentive
plan approved by the Board of Directors of the Company, (ii) pursuant to
any
stock split, recapitalization, reclassification or payment of any dividend
or
distribution with respect to the Company's issued and outstanding capital
stock,
(iii) upon the conversion or exercise of convertible or exercisable securities
outstanding as of the Closing Date, (iv) in connection with bona fide business
acquisitions, or (v) with unanimous approval of the Company’s Board of Directors
(collectively, the “Excluded
Issuances”).
4.12
Restrictive
Covenants.
The
Company covenants that prior to Closing, it shall not, without
the Investor's prior written consent: (i) change the nature of its
business; (ii) issue any equity, equity securities (other than stock options
issued pursuant to the Company’s stock option or stock incentive plan in the
ordinary course of business) or debt in any form; (iii) divest, acquire,
change
the structure of its assets or otherwise decrease the value of its assets;
or
(iv) enter into any collaboration, partnership, distribution or other agreement
binding the Company to any future payments, services or other contractual
obligations exceeding $250,000.
4.13 Observer
Rights.
Prior
to
the Closing, the Investor shall designate one representative to serve as
an
observer (the “Observer”)
who
shall be entitled to attend all meetings of the Company's Board of Directors
in
a nonvoting, observer capacity, and to receive electronic copies of all notices,
minutes, consents and other materials that the Company provides to its
directors, as and when such materials are provided to directors; provided,
however, that the Observer shall agree in writing to be bound by the same
duties
of confidentiality, good faith and loyalty as if such Observer were a director
of the Company, with respect to all information provided to him or her in
such
materials and in the course of his or her attendance at any meeting of the
Company's Board of Directors. Notwithstanding the foregoing, the Company
reserves the right to withhold any information and exclude such Observer
from
any meeting of the Board of Directors, or any portion thereof, only to the
extent that access to such information or attendance at such meeting would
adversely affect the attorney-client privilege, or would cause the Company
to
violate a confidentiality agreement with a third party, or would give rise
to a
conflict of interest with such Observer. The Observer shall not be entitled
to
vote on any matter as to which action of the Board of Directors is to be
taken.
The right of the Observer to attend the Company's Board meetings and receive
materials shall cease and be of no further force or effect at such time as
the
Investor and its Affiliates collectively own less than 5.0% of the issued
and
outstanding shares of the Company's Common Stock.
21
4.14 Board
of Directors.
Prior
to
the Closing, the Investor shall designate one representative to serve as
a
director of the Company (the “Investor
Director”)
who
shall upon or prior to the Closing be elected to the Company's Board of
Directors. The Company shall provide the Investor Director with copies of
all
notices, minutes, consents and other materials that the Company provides
to its
other directors. The Investor Director shall have the right to sit on any
committee established by the Board of Directors. The Company shall maintain
adequate directors' and officers' liability insurance covering all directors
and
officers (including without limitation the Investor Director) in an amount,
form
and substance reasonably satisfactory to the Investor Director. The Board
of
Directors of the Company shall not take any action to remove the Investor
Director without the written consent of the Investor, and shall nominate
the
Investor Director for election or re-election at each annual meeting of the
Company’s stockholders. If the Investor Director resigns or dies, the remaining
directors of the Company shall elect a new designee of the Investor to serve
on
the Company’s Board of Directors as the Investor Director. This Section 4.11
shall terminate and no longer be of any force or effect if at any time the
Investor and its Affiliates collectively own less than 5.0% of the issued
and
outstanding shares of the Company's Common Stock.
4.15 Board
Meetings.
The Board
of
Directors of the Company shall meet at least once every quarter in person
or via conference telephone upon not less than ten (10) days prior
notice or upon the written request of any director. The Company shall
reimburse the
Investor
Director
and the Observer
for
reasonable out-of-pocket expenses incurred by them in connection with their
attendance at Board meetings. This Section 4.15 shall terminate and no longer
be
of any force or effect if at any time the Investor and its Affiliates
collectively own less than 5.0% of the issued and outstanding shares of the
Company’s Common Stock.
4.16 Protective
Agreements.
The
Company shall cause all of the officers and consultants of the Company and
its Subsidiaries who have access to proprietary information of the Company
and its Subsidiaries to execute agreements which contain restrictions
regarding non-solicitation of employees and customers, non-disclosure of
information and assignment of technology to the Company, which are each in
a
form acceptable to the Investor.
4.17 Confidentiality.
The
Company will keep the existence and
content of its negotiations with the Investor, including the terms of the
Transaction Documents, confidential and will not disclose to any third party
any
information relating to the transactions hereunder, except to its employees,
shareholders, affiliates, counsel or consultants, who will each be bound
by
confidentiality agreements and who will have a ‘need to know’, and except as
required by law. Except as required by applicable law, the Company will make
no
public statement, press release, or other announcement with respect to the
transactions hereunder, without the Investor’s prior written approval.
22
4.18 Warrant
Adjustment.
If
between the date of this Agreement and the Closing Date, (i) the weighted
average daily trading price of the Company’s Common Stock drops below $1.19 for
more than two (2) consecutive Trading Days, and (ii) the average trading
volume
for each such day exceeds 100,000 shares of Common Stock, then the amount
of
Warrant Shares issuable under the Warrant will be increased at Closing from
4,285,715 Warrant Shares to 5,357,144 Warrant Shares.
4.19 Due
Diligence.
Until
the
Closing Date, the Company will continue to furnish to the Investor all
documents, materials and other information, pursuant to the written due
diligence request previously sent by the Investor and any updated requests
provided by the Investor prior to the Closing Date.
ARTICLE
5.
CONDITIONS
PRECEDENT TO CLOSING
5.1. Conditions
Precedent to the Obligations of the Investor to Purchase
Securities
The
obligation of the Investor to acquire Securities at the Closing is subject
to
the satisfaction or waiver by the Investor, at or before the Closing, of
each of
the following conditions:
(a) Due
Diligence.
The
Investor shall have completed customary due diligence and shall have received
favorable due diligence reports, including intellectual property, business,
financial, scientific and legal, without producing any information that would
have a Material Adverse Effect on the Company.
(b) Representations
and Warranties.
The
representations and warranties of the Company contained herein shall be true
and
correct in all material respects as of the date when made and as of the Closing
as though made on and as of such date;
(c) Performance.
The
Company shall have performed, satisfied and complied in all material respects
with all covenants, agreements and conditions required by the Transaction
Documents to be performed, satisfied or complied with by it at or prior to
the
Closing;
(d) No
Injunction.
No
statute, rule, regulation, executive order, decree, ruling or injunction
shall
have been enacted, entered, promulgated or endorsed by any court or governmental
authority of competent jurisdiction that prohibits the consummation of any
of
the transactions contemplated by the Transaction Documents;
(e) Adverse
Changes.
Since
the date of execution of this Agreement, no event or series of events shall
have
occurred that reasonably could have or result in a Material Adverse
Effect;
23
(f) No
Suspensions of Trading in Common Stock; Listing.
Trading
in the Common Stock shall not have been suspended by the Commission or any
Trading Market (except for any suspensions of trading of not more than one
Trading Day solely to permit dissemination of material information regarding
the
Company) at any time since the date of execution of this Agreement, and the
Common Stock shall have been at all times since such date listed or quoted
for
trading on a Trading Market;
(g) Company
Deliverables.
The
Company shall have delivered the Company Deliverables in accordance with
Section
2.2(a);
(h) Transaction
Documents.
The
Company shall have executed all agreements and documents and satisfied all
conditions as required to be executed or satisfied at the Closing pursuant
to
the Transaction Documents;
(i) Miscellaneous
Confirmations.
The
Company shall have provided written confirmation, in form reasonably
satisfactory to the Investor, of the following: (1) the amount of any loans
or
other forms of indebtedness between the Company or its Subsidiaries and any
director, officer, key employee and/or consultant; (2) that the Company has
“key
man” life insurance for the CEO in the amount of not less than $1,000,000,
naming the Company as beneficiary; and (3) that the Company has directors’ and
officers’ liability insurance for members of the Board in a coverage amount of
no less than $5,000,000;
(j) Board
of Directors.
The
Investor Director shall have been elected to the Board of Directors of the
Company;
(k) Indemnification
Agreement.
The
Company and the Investor Director shall have entered into an indemnification
agreement in form reasonably approved by the Investor (the “Indemnification
Agreement”);
(l) Termination.
This
Agreement shall not have been terminated by the Investor in accordance with
Section 6.5; and
(m) Amendment
to Agreements.
The
Company shall cause to be amended: (i) that certain Securities Purchase
Agreement dated as of June 26, 2007, among the Company and the investors
identified on the signature pages thereto; (ii) that certain Securities Purchase
Agreement dated as of October 12, 2007, among the Company and the investors
identified on the signature pages thereto; and (iii) that certain Securities
Purchase Agreement dated as of January 25, 2008, among the Company and the
investors identified on the signature pages thereto, so that the Right of
First
Refusal is not adversely impaired.
5.2. Conditions
Precedent to the Obligations of the Company to sell Securities
The
obligation of the Company to sell Securities at the Closing is subject to
the
satisfaction or waiver by the Company, at or before the Closing, of each
of the
following conditions:
(a) Representations
and Warranties.
The
representations and warranties of the Investor contained herein shall be
true
and correct in all material respects as of the date when made and as of the
Closing Date as though made on and as of such date;
24
(b) Performance.
The
Investor shall have performed, satisfied and complied in all material respects
with all covenants, agreements and conditions required by the Transaction
Documents to be performed, satisfied or complied with by such Investor at
or
prior to the Closing;
(c) No
Injunction.
No
statute, rule, regulation, executive order, decree, ruling or injunction
shall
have been enacted, entered, promulgated or endorsed by any court or governmental
authority of competent jurisdiction that prohibits the consummation of any
of
the transactions contemplated by the Transaction Documents;
(d) Investor
Deliverables.
The
Investor shall have delivered its Investor Deliverables in accordance with
Section 2.2(b); and
(e) Termination.
This
Agreement shall not have been terminated as to such Investor in accordance
with
Section 6.5.
ARTICLE
6.
MISCELLANEOUS
6.1. Fees
and Expenses
Each
party shall pay the fees and expenses of its advisers, counsel, accountants
and
other experts, if any, and all other expenses incurred by such party incident
to
the negotiation, preparation, execution, delivery and performance of the
Transaction Documents; provided, however, that the Company shall pay (i)
at the
Closing all costs and expenses, including out-of-pocket travel expenses,
incurred by any and all counsel, attorneys consultants, auditors, experts
and
representatives of the Investor, in connection with the performance of due
diligence and the negotiation, preparation, execution, delivery and
implementation of the Transaction Documents, up to a maximum of $75,000 (the
“Investment
Expenses”)
and
(ii) certain compliance expenses agreed to in writing by the parties in the
Term
Sheet. The Company shall pay all stamp and other taxes and duties levied
in
connection with the issuance of the Securities.
6.2. Entire
Agreement
The
Transaction Documents, together with the exhibits and schedules thereto,
contain
the entire understanding of the parties with respect to the subject matter
hereof and, except as provided under Section 6.1, supersede all prior
agreements, understandings, discussions and representations, oral or written,
with respect to such matters, which the parties acknowledge have been merged
into such documents, exhibits and schedules.
6.3. Notices
(a) All
notices and other communications made pursuant to this Agreement shall be
in
writing and shall be conclusively deemed to have been duly given:
(i) in
the
case of hand delivery to the address set forth below, on the next Business
Day
after delivery;
(ii) in
the
case of delivery by an internationally recognized overnight courier to the
address set forth below, freight prepaid, on the next Business Day after
delivery and signed receipt by the recipient; and
25
(iii) in
the
case of a notice sent by facsimile transmission to the number and addressed
as
set forth below, on the next Business Day after delivery, if receipt of such
facsimile transmission is confirmed.
(b)For
all
notices given pursuant to one of the methods listed in sub-clause (a) above,
a
copy of the notice should also be sent by email to the email address set
forth
below.
(c) Contact
details:
If
to Investor:
Address
for notices being delivered by hand/courier:
c/o
Inventages Whealth Management Inc.
Winterbotham
Place, Marlborough & Queen Streets
P.
O. Box
N-3026
Nassau,
The Bahamas, Attn: Xx. Xxxxxx Xxxxxxx
Always
with a copy to: IVC SA, Xxxxx xx Xxxxxx 00X, 0000 - Xxxxxxxx, Xxxxxxxxxxx,
Attn:
Xx. Xxxxxx xxx Xxxxxxxxx
Always
with a copy to: xxxxxxx@xxxxxxxxxx.xxx
and
xxxxxxxxx@xxxxxxxxxx.xxx
Number
for notices being delivered by facsimile transmission:
To:
IVC
SA, Attn: Xx. Xxxxxx xxx Xxxxxxxxx, at: x00 00 000 0000
Always
with a copy to: xxxxxxx@xxxxxxxxxx.xxx
and
xxxxxxxxx@xxxxxxxxxx.xxx
If
to the
Company:
Address
for notices being delivered by hand/courier:
Organic
To Go Food Corporation
0000
Xxxxx Xxxxxx Xxxxx
Xxxxxxx,
Xxxxxxxxxx 00000
Attn:
Chief Financial Officer
Always
with a copy to:
Loeb
& Loeb LLP
00000
Xxxxx Xxxxxx Xxxxxxxxx
Xxxxx
0000
Xxx
Xxxxxxx, Xxxxxxxxxx 00000
Attention:
Xxxxxxxx Xxxxxx, Esq.
26
Number
for notices being delivered by facsimile transmission:
To:
Organic To Go Food Corporation, Attn: Chief Financial Officer, at: x0 000
000
0000
Always
with a copy to: Loeb & Loeb LLP, Attn: Xxxxxxxx Xxxxxx, Esq, at: x0 000 000
0000
(d) A
party
may change or supplement the contact details for service of any notice pursuant
to this Agreement, or designate additional addresses, facsimile numbers and
email addresses for the purposes of this Section 6.3 by giving the other
parties
written notice of the new contact details in the manner set forth
above.
6.4. Amendments;
Waivers; No Additional Consideration
No
provision of this Agreement may be waived or amended except in a written
instrument signed by the Company and the Investor. No waiver of any default
with
respect to any provision, condition or requirement of this Agreement shall
be
deemed to be a continuing waiver in the future or a waiver of any subsequent
default or a waiver of any other provision, condition or requirement hereof,
nor
shall any delay or omission of either party to exercise any right hereunder
in
any manner impair the exercise of any such right. Without the written consent
of
the Investor, an amendment or waiver under this Section 6.4 may not waive
or
amend any Transaction Document the effect of which would be to permit the
Company to (1) name the Investor as an underwriter in a Registration Statement
or the Deferred Registration Statement without such Investor’s specific written
consent thereto, or (2) not include any Registrable Securities (as defined
in
the Registration Rights Agreement and in the Deferred Registration Rights
Agreement) of an Investor in a Registration Statement or a Deferred Registration
Statement due to their refusal to be named as an underwriter
therein.
6.5. Termination
This
Agreement may be terminated prior to Closing:
(a) by
written agreement of the Investor and the Company; and
(b) by
the
Company or the Investor upon written notice to the other, if the Closing
shall
not have taken place by 6:30 p.m. Eastern time on the Outside Date; provided,
that
the right to terminate this Agreement under this Section 6.5(b) shall not
be available to any Person whose failure to comply with its obligations under
this Agreement has been the cause of or resulted in the failure of the Closing
to occur on or before such time.
Upon
a
termination in accordance with this Section 6.5, the Company and the Investor
shall not have any further obligation or liability (including as arising
from
such termination) to the other under the Transaction Documents as a result
therefrom; provided, however, that the Company shall pay to the Investor
a cash
amount equal to the Investor Expenses, together with all costs and expenses,
including reasonable legal fees, incurred by the Investor in collecting payment
of the Investment Expenses, in the event that the Closing does not occur
due to
the Company’s failure to comply with all the closing conditions listed in
Section 5.1 hereof.
6.6. Construction
The
headings herein are for convenience only, do not constitute a part of this
Agreement and shall not be deemed to limit or affect any of the provisions
hereof. The language used in this Agreement will be deemed to be the language
chosen by the parties to express their mutual intent, and no rules of strict
construction will be applied against any party. This Agreement shall be
construed as if drafted jointly by the parties, and no presumption or burden
of
proof shall arise favoring or disfavoring any party by virtue of the authorship
of any provisions of this Agreement or any of the Transaction
Documents.
27
6.7. Successors
and Assigns
This
Agreement shall be binding upon and inure to the benefit of the parties and
their successors and permitted assigns. The Company may not assign this
Agreement or any rights or obligations hereunder without the prior written
consent of the Investor. The Investor may assign any or all of its rights
under
this Agreement to any Person to whom such Investor assigns or transfers any
Securities, provided such transferee agrees in writing to be bound, with
respect
to the transferred Securities, by the provisions hereof that apply to the
“Investor.”
6.8. No
Third-Party Beneficiaries
This
Agreement is intended for the benefit of the parties hereto and their respective
successors and permitted assigns and is not for the benefit of, nor may any
provision hereof be enforced by, any other Person, except as otherwise set
forth
in Section 4.7 (as to each Investor Party).
6.9. Governing
Law.
All
questions concerning the construction, validity, enforcement and interpretation
of this Agreement shall be governed by and construed and enforced in accordance
with the internal laws of the State of California, without regard to the
principles of conflicts of law thereof.
6.10. Arbitration.
Each
party agrees that any dispute, controversy, or claim arising in relation
to this
Agreement, including with regard to its validity, invalidity, breach,
enforcement or termination, shall be resolved by binding arbitration in London,
England, in accordance with the rules of arbitration which are in force in
the
United Kingdom on the date when the notice of arbitration is submitted. The
arbitrability of such dispute, claim or controversy shall also be determined
in
such arbitration. Such arbitration proceeding shall be conducted in the English
language before one (1) arbitrator agreed to by the parties. Both the foregoing
agreement of the parties to arbitrate any and all such disputes, claims and
controversies, and the results, determinations, findings, judgments and/or
awards rendered through any such arbitration shall be final and binding on
the
parties hereto and may be specifically enforced by legal
proceedings.
6.11. Survival.
The
representations, warranties, agreements and covenants contained herein shall
survive the Closing and the delivery of the Securities.
6.12. Execution
This
Agreement may be executed in two or more counterparts, all of which when
taken
together shall be considered one and the same agreement and shall become
effective when counterparts have been signed by each party and delivered
to the
other party, it being understood that both parties need not sign the same
counterpart. In the event that any signature is delivered by facsimile or
electronic mail transmission, such signature shall create a valid and binding
obligation of the party executing (or on whose behalf such signature is
executed) with the same force and effect as if such facsimile or electronic
mail
signature page were an original thereof.
28
6.13. Severability
If
any
provision of this Agreement is held to be invalid or unenforceable in any
respect, the validity and enforceability of the remaining terms and provisions
of this Agreement shall not in any way be affected or impaired thereby and
the
parties will attempt to agree upon a valid and enforceable provision that
is a
reasonable substitute therefor, and upon so agreeing, shall incorporate such
substitute provision in this Agreement.
6.14. Rescission
and Withdrawal Right
Notwithstanding
anything to the contrary contained in (and without limiting any similar
provisions of) the Transaction Documents, whenever the Investor exercises
a
right, election, demand or option under a Transaction Document and the Company
does not timely perform its related obligations within the periods therein
provided, then such Investor may rescind or withdraw, in its sole discretion
from time to time upon written notice to the Company, any relevant notice,
demand or election in whole or in part without prejudice to its future actions
and rights.
6.15. Replacement
of Securities
If
any
certificate or instrument evidencing any Securities is mutilated, lost, stolen
or destroyed, the Company shall issue or cause to be issued in exchange and
substitution for and upon cancellation thereof, or in lieu of and substitution
therefor, a new certificate or instrument, but only upon receipt of evidence
reasonably satisfactory to the Company of such loss, theft or destruction
and
customary and reasonable indemnity, if requested. The applicants for a new
certificate or instrument under such circumstances shall also pay any reasonable
third-party costs associated with the issuance of such replacement Securities.
If a replacement certificate or instrument evidencing any Securities is
requested due to a mutilation thereof, the Company may require delivery of
such
mutilated certificate or instrument as a condition precedent to any issuance
of
a replacement.
6.16. Remedies
In
addition to being entitled to exercise all rights provided herein or granted
by
law, including recovery of damages, the Investor and the Company will be
entitled to specific performance under the Transaction Documents. The parties
agree that monetary damages may not be adequate compensation for any loss
incurred by reason of any breach of obligations described in the foregoing
sentence and hereby agrees to waive in any action for specific performance
of
any such obligation the defense that a remedy at law would be
adequate.
6.17. Payment
Set Aside
To
the
extent that the Company makes a payment or payments to the Investor pursuant
to
any Transaction Document or an Investor enforces or exercises its rights
thereunder, and such payment or payments or the proceeds of such enforcement
or
exercise or any part thereof are subsequently invalidated, declared to be
fraudulent or preferential, set aside, recovered from, disgorged by or are
required to be refunded, repaid or otherwise restored to the Company, a trustee,
receiver or any other person under any law (including, without limitation,
any
bankruptcy law, state or federal law, common law or equitable cause of action),
then to the extent of any such restoration the obligation or part thereof
originally intended to be satisfied shall be revived and continued in full
force
and effect as if such payment had not been made or such enforcement or setoff
had not occurred.
6.18. Limitation
of Liability
Notwithstanding
anything herein to the contrary, the Company acknowledges and agrees that
the
liability of the Investor arising directly or indirectly, under any Transaction
Document of any and every nature whatsoever shall be satisfied solely out
of the
assets of such Investor, and that no trustee, officer, other investment vehicle
or any other Affiliate of such Investor or any investor, shareholder or holder
of shares of beneficial interest of such a Investor shall be personally liable
for any liabilities of such Investor.
29
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE
PAGES FOLLOW]
30
IN
WITNESS WHEREOF, the parties hereto have caused this Securities Purchase
Agreement to be duly executed by their respective authorized signatories
as of
the date first indicated above.
ORGANIC TO GO FOOD CORPORATION | ||
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By: | /s/ Xxxxx Xxxxx | |
Name: Xxxxx Xxxxx |
||
Title: Chairman and Chief Executive Officer |
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE
PAGE FOR THE INVESTOR FOLLOWS]
IN
WITNESS WHEREOF, the parties hereto have caused this Securities Purchase
Agreement to be duly executed by their respective authorized signatories
as of
the date first indicated above.
X.XXXXXX L.P. | ||
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||
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By: | /s/ Xx. Xxxxxx Xxxxxxx | |
Xx.
Xxxxxx Xxxxxxx
Director,
Inventages Whealth Management, Inc.,
as
General Partner of X.Xxxxxx
L.P.
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|
|
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By: | /s/ Xx. Xxxxxxxx Xxxxxxxxxxxxx | |
Xx.
Xxxxxxxx Xxxxxxxxxxxxx
Director,
Inventages Whealth Management, Inc.,
as
General Partner of X.Xxxxxx
L.P.
|
2