SECURITIES PURCHASE AGREEMENT
THIS SECURITIES PURCHASE AGREEMENT, dated as of the date of acceptance set
forth below, is entered into by and between Harvest Restaurant Group, Inc., a
Texas corporation, with headquarters located at 0000 X.X. Xxxx 000, Xxxxx 000,
Xxx Xxxxxxx, XX 00000 ("Company"), and the undersigned (the "Buyer").
WITNESSETH:
WHEREAS, the Company and the Buyer are executing and delivering this
Agreement in accordance with and in reliance upon the exemption from securities
registration afforded, inter alia, by Rule 506 under Regulation D ("Regulation
D" as promulgated by the United States Securities and Exchange Commission (the
"SEC") under the Securities Act of 1933, as amended (the " 1933 Act"), and/or
Section 4(2) of the 1933 Act; and
WHEREAS, the Buyer wishes to purchase, upon the terms and subject to the
conditions of this Agreement, 7% Series C Convertible Preferred Stock, $1.00 par
value per share (the "Preferred Stock"), of the Company which will be
convertible into shares of the Company's Common Stock, $.01 par value per share
(the "Common Stock"), together referred to as the shares ("Shares"); upon the
terms and subject to the conditions of such Preferred Stock (the Common Stock
and the Preferred Stock sometimes referred to herein as the "Securities"), and
subject to acceptance of this Agreement by the Company.
NOW THEREFORE, in consideration of the premises and the mutual covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
1. AGREEMENT TO PURCHASE; PURCHASE PRICE.
a. Purchase. The undersigned hereby agrees to initially purchase from
the Company, the Preferred Stock of the Company, in the principal amount set
forth on the signature page of this Agreement, out of a total offering of
$6,000,000 in Preferred Stock as more specifically set forth in section 4(h),
and having the terms and conditions and being in the form attached hereto as
Annex I. The Preferred Stock is being offered at a purchase price of ten
thousand dollars ($10,000) per share in minimum subscription amounts of at least
five (5) shares ($50,000). The offering amount for the first tranche is two
hundred (200) shares of Preferred Stock and no less than two hundred (200)
shares of Preferred Stock for the second and third tranches each, or a total of
six hundred shares (600) of Preferred Stock and a total of six million dollars
($6,000,000). The offering amount may be increased upon the consent of 100% of
the purchasers. The purchase price for the Preferred Stock for each purchaser
shall be as set forth on the signature page hereto and shall be payable in
United States Dollars.
b. Form of Payment. The Buyer shall pay the purchase price for the
Preferred Stock by delivering immediately available good funds in United States
Dollars to the escrow agent (the "Escrow Agent") identified in the Escrow
Agreement attached hereto as Annex II (the "Escrow Agreement") as set forth
below. Promptly following payment by the Buyer to the Escrow Agent of the
purchase price of the Preferred Stock, the Company shall deliver the Preferred
Stock duly executed on behalf of the Company to the Escrow Agent. By signing
this Agreement, Buyer and Company, and subject to acceptance by the Escrow
Agent, agree to all of the terms and conditions of, and becomes a party to, the
Escrow Agreement, all of the provisions of which are incorporated herein by this
reference as if set forth in full.
c. Method of Payment. Payment into escrow of the purchase price for
the Preferred Stock shall be made by wire transfer of funds to:
The Bank of New York
ABA # 000000000
GLA 111-565
Re: TAS#335400 Harvest Restaurant Group Escrow
Attn: Xxxxx XxXxxxxxx, 000-000-0000
Not later than 12:00 noon, Eastern time, on July 8, 1998 the Company shall have
accepted this Agreement and returned a signed counterpart of this Agreement to
the Escrow Agent by facsimile: the Buyer(s) shall deposit with the Escrow Agent
the aggregate purchase price for the Preferred Stock of an initial amount of
$2,000,000 for the first, $2,000,000 of which shall be for the First Closing (as
defined below), the Second Closing shall be within thirty (30) business days of
the effective date of the merger of Harvest Restaurant Group, Inc. with TRC
Acquisition Corporation. The exact timing of the payment for the Third Closing
shall occur as described in Section 4.g. Time is of the essence with respect to
such payments, and failure by the Buyer to make such payments shall allow the
Company to cancel this Agreement.
2. BUYER REPRESENTATIONS, WARRANTIES, ETC.; ACCESS TO INFORMATION;
INDEPENDENT INVESTIGATION.
a. The Buyer represents and warrants to, and covenants and agrees
with, the Company as follows: Without limiting Buyers right to sell the
Preferred Stock or any Common Stock pursuant to the Registration Statement the
buyer is purchasing the Preferred Stock and will acquiring shares of Common
Stock issuable upon conversion of the Preferred Stock for its own account for
investment only and not with a view towards the public sale or distribution
thereof and not with a view to or for sale in connection with any distribution
thereof;
b. The Buyer is (i) an "accredited investor" as that is defined in
Rule 501 of the General Rules and Regulations under the 1933 Act by reason of
Rule 501(a)(3), and (ii) experienced in making investments of the kind described
in this Agreement and the related documents, (iii) able, by reason of the
business and financial experience of its officers (if an entity) and
professional advisors (who are not affiliated with or compensated in any way by
the Company or any of its affiliates or selling agents), to protect its own
interests in connection with the transactions described in this Agreement, and
the related documents, and (iv) able to afford the entire loss of its investment
in the Securities;
c. All subsequent offers and sales of the Preferred Stock and the
shares of Common Stock issuable upon conversion of, or issued as dividends on,
the Preferred Stock (the "Shares") by the Buyer shall be made pursuant to
registration of the Shares under the 1933 Act or pursuant to an exemption from
registration;
d. The Buyer understands that the Preferred Stock are being offered
and sold, and the shares are being offered, to it in reliance on specific
exemptions from the registration requirements of United States federal and state
securities laws and that the Company is relying upon the truth and accuracy of,
and the Buyers compliance with, the representations, warranties, agreements,
acknowledgements and understanding of the Buyer to acquire the Preferred Stock
and receive an offer of the Shares;
e. The Buyer and its advisors, if any, have been furnished with, or
obtained through independent investigation, all materials relating to the
business, finances and operations of the Company and materials relating to the
offer and sale of the Preferred Stock and the offer of the Shares which have
been requested by the Buyer, including Risk Factors, Capitalization Schedule and
Use of Proceeds included with Annex V hereto. The Buyer and its advisors, if
any, have been afforded the opportunity to ask questions of the Company and have
received complete and satisfactory answers to any such inquiries, Without
limiting the generality of the foregoing, the Buyer has also had the opportunity
to obtain and to review the Company's (1) Annual Report on Form 10-K for the
fiscal year ended December 28, 1997, (2) Quarterly Report on Form 10-Q for the
fiscal quarter ended April 19, 1998, and (3) Forms 8-K available via the XXXXX
on line data base (the "Company's SEC Documents").
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f. The Buyer understands that its investment in the Securities
involves a high degree of risk;
g. The Buyer understands that no United States federal or state agency
or any other government governmental agency has passed on or made any
recommendation or endorsement of the Securities;
h. This Agreement has been duly and validly authorized, executed and
delivered on behalf of the Buyer and is a valid and binding agreement of the
Buyer enforceable in accordance with its terms, subject as to enforceability to
general principles of equity and to bankruptcy, insolvency, moratorium and other
similar laws affecting the enforcement of creditors' rights generally.
i. Neither the Buyer, nor any affiliate of the Buyer, has any present
intention of entering into, any put option, short position, or other similar
position with respect to the Preferred Stock or the Shares.
j. Notwithstanding the provisions hereof or of the Preferred Stock, in
no event (except with respect to an Event of Mandatory Conversion upon the
maturity of the Preferred Stock) shall the holder be entitled to convert any
Preferred Stock to the extent after such conversion, the sum of (1) the number
of shares of Common Stock beneficially owned by the Buyer and its affiliates
(other than shares of Common Stock which may be deemed beneficially owned
through the ownership of the unconverted portion of the Preferred Stock), and
(2) the number of shares of Common Stock issuable upon the conversion of the
Preferred Stock with respect to which the determination of this provision is
being made, would result in beneficial ownership by the Buyer and its affiliates
of more than 4.99% of the outstanding shares of Common Stock. For purposes of
the provision to the immediately preceding sentence, beneficial ownership shall
be determined in accordance with Section 13(d) of the Securities Exchange Act of
1934, as amended (the "1934 Act"), except as otherwise provided in clause (1) of
such provision.
3. COMPANY REPRESENTATIONS, ETC.
The Company represents and warrants to the Buyer that:
a. Concerning the Shares. There are no preemptive rights of any
stockholder of the Company, as such, to acquire the Series A Preferred or Common
Stock.
b. Reporting Company Status. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Texas. The Company has registered its Common Stock pursuant to Section 12 of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the Common
Stock is listed and remains eligible for trading on the Nasdaq Small Cap Market.
The Company has received written notice with respect to the continued
eligibility of the its securities for such listing and has scheduled an oral
hearing with Nasdaq on July 9, 1998 to present its plan for compliance with
listing qualification rules.
c. Authorized Shares. The Company has sufficient, authorized and
unissued Shares as may be reasonably necessary to effect the conversion of the
Preferred Stock. The Shares have been duly authorized and, when issued upon
conversion of, or as dividends on, the Preferred Stock, will be duly and validly
issued, fully paid and non-assessable and will not subject the holder thereof to
personal liability by reason of being such holder.
d. Securities Purchase Agreement; Registration Rights Agreement and
Stock. This Agreement and the Registration Rights Agreement, the form of which
is attached hereto as Annex IV (the "Registration Rights Agreement"), and the
transactions contemplated thereby, have been duly and validly authorized by the
Company, this Agreement has been duly executed and delivered by the Company and
this Agreement is, and the Registration Rights Agreement, when executed and
delivered by the Company, will be, valid and binding agreements of the Company
enforceable in accordance with their respective terms, subject as to
enforceability to general principles of equity and to bankruptcy, insolvency,
moratorium, and other similar laws affecting the enforcement of creditors'
rights generally; and the Preferred Stock will be duly and validly authorized
and, when executed and delivered on behalf of the Company in accordance with
this Agreement, will be a valid and binding obligation of the Company in
accordance with its terms, subject to general principles of equity and to
bankruptcy, insolvency, moratorium or other similar laws affecting the
enforcement of creditors' rights generally.
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e. Non-contravention. The execution and delivery of this Agreement and
the Registration Rights Agreement by the Company, the issuance of the
Securities, and the consummation by the Company of the other transactions
contemplated by this Agreement, the Registration Rights Agreement, and the
Preferred Stock do not and will not conflict with or result in a breach by the
Company of any of the terms or provisions of, or constitute a default under (i)
the articles of incorporation or by-laws of the Company, (ii) any indenture,
mortgage, deed of trust, or other material agreement or instrument to which the
Company is a party or by which it or any of its properties or assets are bound,
including any listing agreement for the Common Stock except as herein set forth,
(iii) to its knowledge, any existing applicable law, rule, or regulation or any
applicable decree, judgment, or (iv) to its knowledge, order of any court,
United States federal or state regulatory body, administrative agency, or other
governmental body having jurisdiction over the Company or any of its properties
or assets, except such conflict, breach or default which would not have a
material adverse effect on the transactions contemplated herein.
f. Approvals. No authorization, approval or consent of any court,
governmental body, regulatory agency, self-regulatory organization, or stock
exchange or market or the Stockholders of the Company is required to be obtained
by the Company for the issuance and sale of the Securities to the Buyer as
contemplated by this Agreement, except such authorizations, approvals and
consents that have been obtained.
g. SEC Filings. None of the SEC Filings with the Securities and
Exchange Commission since and including the filing of the 10-K ending December
28, 1997 contained, at the time they were filed, any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements made therein in light of the circumstances
under which they were made, not misleading. The Company has since December 28,
1997 timely filed all requisite forms, reports and exhibits thereto with the
Securities and Exchange Commission.
h. Absence of Certain Changes. Since January 1, 1998, all material
adverse change and material adverse developments in the business, properties,
operations, financial condition, or results of operations of the Company have
been disclosed in the public filings made by the Company, and no further
material adverse developments exist, except as disclosed in Annex V or in the
documents referred to in Section 2(e) hereof.
i. Full Disclosure. There is no fact known to the Company (other than
general economic conditions known to the public generally) or as disclosed in
the documents referred to in Section 2(e), that has not been disclosed in
writing to the Buyer that (i) would reasonably be expected to have a material
adverse effect on the business or financial condition of the Company or (ii)
would reasonably be expected to materially and adversely affect the ability of
the Company to perform its obligations pursuant to this Agreement.
j. Absence of Litigation. Except as set forth in Annex V hereto, and
in the documents referred to in Section 2(e), which the Buyer has reviewed,
there is no action, suit, proceeding, inquiry or investigation before or by any
court, public board or body pending or, to the knowledge of the Company,
threatened against or affecting the Company, wherein an unfavorable decision,
ruling or finding would have a material adverse effect on the business or
financial condition of the Company or the transactions contemplated by this
Agreement or any of the documents contemplated hereby or which would adversely
affect the validity or enforceability of, or the authority or ability of the
Company to perform its obligations under, this Agreement or any of such other
documents.
k. Absence of Events of Default. Except as set forth in Annex V hereto
and Section 3(e), no Event of Default, as defined in the respective agreement to
which the Company is a party, and no event which, with the giving of notice or
the passage of time or both, would become an Event of Default (as so defined),
has occurred and is continuing, which would have a material adverse effect on
the Company's financial condition or results of operations.
l. Prior Issues. Any convertible securities issued by the Company
during the past 12 months has been fully disclosed as set forth in Annex V.
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4. CERTAIN COVENANTS AND ACKNOWLEDGEMENTS.
a. Transfer Restrictions. The Buyer acknowledges that (1) the
Preferred Stock have not been and are not being registered under the provisions
of the 1933 Act and, except as provided in the Registration Rights Agreement,
the Shares have not been and are not being registered under the 1933 Act, and
may not be transferred unless (A) subsequently registered thereunder or (B) the
Buyer shall have delivered to the Company an opinion of counsel, reasonably
satisfactory in form, scope and substance to the Company, to the effect that the
Securities to be sold or transferred may be sold or transferred pursuant to an
exemption from such registration; (2) any sale of the Securities made in
reliance on Rule 144 promulgated under the 1933 Act may be made only in
accordance with the terms of said Rule and further, if said Rule is not
applicable, any resale of such Securities under circumstances in which the
seller, or the person through whom the sale is made, may be deemed to be an
underwriter, as that term is used in the 1933 Act, may require compliance with
some other exemption under the 1933 Act or the rules and regulations of the SEC
thereunder; and (3) neither the Company nor any other person is under any
obligation to register the Securities (other than pursuant to the Registration
Rights Agreement) under the 1933 Act or to comply with the terms and conditions
of any exemption thereunder.
b. Restrictive Legend. The Buyer acknowledges and agrees that the
Preferred Stock, and, until such time as the Common Stock has been registered
under the 1933 Act as contemplated by the Registration Rights Agreement and sold
in accordance with an effective registration statement ("Registration
Statement"), the Shares issued to the Holder upon conversion of the Preferred
Stock shall bear a restrictive legend in substantially the following form (and a
stop transfer order may be placed against transfer of the Preferred Stock and
such Shares):
THESE SECURITIES (THE "SECURITIES") HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD OR
OFFERED FOR SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT FOR THE SECURITIES OR AN OPINION OF COUNSEL OR OTHER
EVIDENCE ACCEPTABLE TO THE CORPORATION THAT SUCH REGISTRATION IS
NOT REQUIRED.
c. Registration Rights Agreement. The parties hereto agree to enter
into the Registration Rights Agreement, in substantially the form attached
hereto as Annex IV, on or before the Closing Date.
d. Filings. The Company undertakes and agrees to make all necessary
filings in connection with the sale of the Preferred Stock to the Buyer under
any United States laws and regulations, or by any domestic securities exchange
or trading market, and to provide a copy thereof to the Buyer promptly after
such filing.
e. Reporting Status. So long as the Buyer beneficially owns any of the
Preferred Stock, the Company shall file all reports required to be filed with
the SEC pursuant to Section 13 or 15(d) of the 1934 Act, and the Company shall
not terminate its status as an issuer required to file reports under the 1934
Act even if the 1934 Act or the rules and regulations thereunder would permit
such termination.
f. Use of Proceeds. The Company will use the proceeds from the sale of
the Preferred Stock (excluding amounts paid by the Company for legal fees and
finders fees in connection with the sale of the Preferred Stock) as set forth in
Annex V.
g. Company's Option. At the option of the Company, in addition to
Buyer's initial $2,000,000 First Closing, the Buyer agrees to purchase up to an
additional $2,000,000 principal amount of Preferred Stock (the "Additional
Preferred Stock") in two additional closings (the "Additional Closing Dates") of
$2,000,000. The Second Closing shall occur within thirty (30) business days from
the effective date of the merger between the Company and TRC Acquisition
Corporation, and the Third Closing shall occur within thirty (30) days from the
effective date of the Registration Statement to be filed prior to the
Registration Rights Agreement ("Registration Statement") upon the same terms and
5
conditions as those applicable to the Preferred Stock issued pursuant to this
Agreement (collectively, the "Additional Closing Dates"). Buyers obligation to
purchase the Additional Preferred Stock on the Additional Closing Dates shall be
contingent upon the satisfaction of the following conditions: On the Additional
Closing Dates (i) the Company has placed into escrow a sufficient number of
shares of registered Common Stock to the satisfaction of the Buyer, (the
"Effective Date"), and (ii) the representations and warranties of the Company
contained herein are true and correct in all material respects to the
satisfaction of the Buyer. Each share of such Preferred Stock shall mature on
the last day of the 36th month following its issuance.
h. Available Shares. The Company shall have at all times authorized
and reserved for issuance, free from preemptive rights, shares of Preferred and
Common Stock sufficient to yield the number of shares of Preferred or Common
Stock issuable at conversion as may be required to satisfy the conversion rights
of the Buyer pursuant to the terms and conditions of the Preferred Stock.
Company agrees when it files the registration statement in accordance with the
terms of the Registration Rights Agreement it will register 2.5 times the number
of shares of Common Stock that Buyer's Preferred Stock would have converted into
on the date of filing such Registration Statement.
i. Capital Raising Restrictions. The Company agrees that for a period
ending no less than sixty (60) days after any Closing Date or Additional Closing
Date it will not issue any securities at a discount (other than in a public debt
offering with an original issue discount) that can be convertible into Company's
Common Stock without the express written consent of 75% of the then existing
holders of the Preferred Stock.
j. [LEFT INTENTIONALLY BLANK]
k. Company Understands Dilutive Impact of Issuing Additional Shares of
Preferred or Common Stock. Company represents it is aware that the issuance of
additional shares of Series A or B Preferred or Company's Common Stock will have
a dilutive effect on the current security holders of each such class of stock.
Company understands there is a possibility that the stock price of the Company's
Series A or B Preferred Stock or its Common Stock could drop upon the issuance
(or expected issuance) of additional shares of such security and that the larger
amount of money it raises increases the likelihood that a higher number of new
shares will be sold into the market and negatively impact the stock price of
each such class of stock.
l. Rule 144 Stock Issued and Outstanding. Company represents that the
number of shares of Rule 144 stock that have been issued are listed in
accompanying Exhibit V, and that to the best of the Company's knowledge all or
substantially all of such shares have been converted into the market as of June
30, 1998.
m. Company Has Not Paid Brokers to Promote Company's Stock. Company
represents that to the best of its knowledge the Company has never paid off any
brokers or been a party to pay offs to sell or promote its shares of Common
Stock or Series A Preferred.
n. Timely Filing of Registration Statement. Company understands that a
delay in the filing of the S-3 registration statement (or other suitable form
agreed to by Buyer) pursuant to the accompany Registration Rights Agreement
could result in economic loss to the Buyer. As compensation to the Buyer for
such loss, the Company agrees to pay Buyer or holder for the late filing of the
registration statement, Company agrees to pay Buyer or holder for such late
filing an amount, payable in cash, equal to 2% of the gross purchase price paid
by Buyer for the Series C Preferred Stock if not filed within thirty (30) days
from the Closing. Such amounts shall be in addition to the amounts payable if
Company fails to have the registration statement declared effective within 90
days, as detailed in the Registration Rights Agreement of even date.
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5. TRANSFER AGENT INSTRUCTIONS.
a. Promptly following the delivery by the Buyer of the aggregate
purchase price for the Preferred Stock in accordance with Section I (c) hereof,
the Company will irrevocably instruct its transfer agent to issue d or Common
Stock from time to time upon conversion of the Preferred Stock in such amounts
as specified from time to time by the Company to the transfer agent, bearing the
restrictive legend specified in Section 4(b) of this Agreement prior to
registration of the Shares under the 1933 Act, registered in the name of the
Buyer or its nominee and in such denominations to be specified by the Buyer in
connection with each conversion of the Preferred Stock. The Company warrants
that no instruction other than such instructions referred to in this Section 5
and stop transfer instructions to give effect to Section 4(a) hereof prior to
registration and sale of the Shares under the 1933 Act will be given by the
Company to the transfer agent and that the Shares shall otherwise be freely
transferable on the books and records of the Company as and to the extent
provided in this Agreement, the Registration Rights Agreement, and applicable
law. Nothing in this Section shall affect in any way the Buyer's obligations and
agreement to comply with all applicable securities laws upon resale of the
Securities. If the Buyer (or holder) provides the Company with an opinion of
counsel reasonably satisfactory to the Company that registration of a resale by
the Buyer (or holder) of any of the Securities in accordance with clause (1)(B)
of Section 4(a) of this Agreement is not required under the 1933 Act, the
Company shall (except as provided in clause (2) of Section 4(a) of this
Agreement) permit the transfer of the Securities and, in the case of the Shares,
Promptly instruct the Company's transfer agent to issue one or more certificates
for Common Stock without legend in such name and in such denominations as
specified by the Buyer (or holder).
b. The Company will permit the Buyer or holder to exercise its right
to convert the Preferred Stock by taxing an executed and completed Notice of
Conversion to the Company and delivering within three business days thereafter,
a copy or the original Notice of Conversion and the original Preferred Stock
certificate representing a sufficient number of shares to the Company or
transfer agent by express courier, (with a copy to the other party). Each date
on which a Notice of Conversion is faxed to and received by the Company in
accordance with the provisions hereof shall be deemed a Conversion Date. The
Company will transmit the certificates representing the Shares issuable upon
conversion of any Preferred Stock (together with the Preferred Stock
representing the Shares not so converted) to the Buyer via overnight express
courier, by electronic transfer or otherwise, within three business days after
receipt by the Company of a Notice of Conversion and the original Preferred
Stock certificates (the "Delivery Date").
c. The Company understands that a delay in the issuance of the Shares
of Common Stock beyond the Delivery Date could result in economic loss to the
Buyer. As compensation to the Buyer for such loss, the Company agrees to pay
Buyer or holder for late issuance and delivery of the Shares upon conversion in
accordance with the following schedule, where "No. Business Days Late" is
defined as the number of business days beyond three (3) business days from the
Delivery Date.
Late Payment For Each $10,000
No. Business days Late Preferred Share Being Converted
----------------------- -------------------------------
1 0
2 0
3 $50
4 $100
5 $150
6 $200
7 $250
8 $300
9 $400
10 $500
greater than 10 $500 plus $50 for each Business Day Late
beyond 10 days
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The Company shall pay by check any late payments to Buyer or holder
incurred under this section and deliver such payments by overnight courier on
the 15th and last day of each month. The amount of such payment shall include
amounts owed under this section through the 14th and next to last day of each
month. Alternatively, Buyer or holder may elect to receive payment in Shares at
the conversion rate detailed in the Statement of Resolution for the Preferred
Stock.
Furthermore, in addition to any other remedies which may be available
to the Buyer, in the event that the Company fails for any reason to effect
delivery of such shares of Common Stock within five business days after the
Delivery Date, the Buyer will be entitled at its option to revoke the relevant
Notice of Conversion by delivering notice to such effect to the Company
whereupon the Company and the Buyer shall each be restored to their respective
positions immediately prior to delivery of such Notice of Conversion.
6. DELIVERY INSTRUCTIONS.
The Preferred Stock shall be delivered by the Company to the Escrow Agent
pursuant to Section 1(b) hereof, or a delivery against payment basis on the
Closing Date and on each Additional Closing Date.
7. CLOSING DATES.
The date and time of the issuance and sale to Buyer(s) of its initial First
Closing of $2,000,000 of Preferred Stock (the "Closing" or "Issuance") shall
occur upon the fulfillment or waiver of all closing conditions pursuant to
Sections 8 and 9, and the closing of the Second Closing of Preferred Stock and
Third Closing of Preferred Stock (the "Additional Closing Dates") shall occur in
a manner consistent with Section 4.g. The closing shall occur on such date and
at such locations as the parties shall mutually agree. Notwithstanding anything
to the contrary contained herein, the Escrow Agent will be authorized to release
the funds representing the Purchase Price for the Preferred Stock, and the
Preferred Stock only upon satisfaction of the conditions set forth in Section 8
hereof for each Closing.
8. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL.
The Buyer understands that the Company's obligation to sell the Preferred
Stock on the Closing Date and Additional Closing Date to the Buyer pursuant to
this Agreement is conditioned upon:
a. The receipt and acceptance by the Company of such an agreement as
evidenced by execution of this Agreement by the Company for Two Million Dollars
($2,000,000) for its initial First Closing Date, and Two Million Dollars
($2,000,000.00) in Preferred Stock for each of the two the Additional Closing
Dates (or such lesser amount as the Company, in its sole discretion, shall
determine);
b. Delivery by the Buyer to the Escrow Agent of good funds as payment
in full of an amount equal to the purchase price for the Preferred Stock in
accordance with Section I (c) hereof for each separate Closing;
c. The accuracy on the Closing Date and Additional Closing Date(s) of
the representations and warranties of the Buyer contained in this Agreement as
if made on the Closing Date and the performance by the Buyer on or before the
Closing Date and Additional Closing Date of all covenants and agreements of the
Buyer required to be performed on or before the Closing Date and Additional
Closing Date;
d. There shall not be in effect any law, rule or regulation
prohibiting or restricting the transactions contemplated hereby, or requiring
any consent or approval which shall not have been obtained.
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9. CONDITIONS TO THE BUYER'S OBLIGATION TO PURCHASE.
The Company understands that the Buyer's obligation to purchase the
Preferred Stock on the Closing Date and Additional Closing Date is conditioned
upon:
a. Acceptance by Buyer of this Agreement for the sale of Preferred
Stock, as indicated by the execution of this Agreement;
b. Delivery by the Company to the Escrow Agent of the Preferred Stock
in accordance with this Agreement;
c. The accuracy in all material respects on the Closing Date and
Additional Closing Dates of the representations and warranties of the Company
contained in this Agreement as if made on the Closing Date and Additional
Closing Dates and the performance by the Company on or before the Closing Date
and Additional Closing Dates of all covenants and agreements of the Company
required to be performed on or before the Closing Date and Additional Closing
Dates;
d. On the initial First Closing Date and each of the Additional
Closing Dates, the Company's securities shall have been approved for continued
listing on The Nasdaq SmallCap Market;
e. On the first Additional Closing Date, the Company has effected the
merger with TRC Acquisition Corp.; and
f. On the second Additional Closing Date, the Registration Statement
has been declared effective by the U.S. Securities and Exchange Commission.
10. GOVERNING LAW: MISCELLANEOUS.
This Agreement shall be governed by and interpreted in accordance with the
laws of the State of New York. Each of the parties consents to the jurisdiction
of the federal courts whose districts encompass any part of the City of New York
or the state courts of the State of New York sitting in the City of New York in
connection with any dispute arising under this Agreement and hereby waives, to
the maximum extent permitted by law, any objection, including any objection
based upon forum non conveniens, to the bringing of any such proceeding in such
jurisdictions. A facsimile transmission of this signed Agreement shall be legal
and binding on all parties hereto. This Agreement may be signed in one or more
counterparts, each of which shall be deemed an original. The headings of this
Agreement are for convenience of reference and shall not form part of, or affect
the interpretation of, this Agreement. If any provision of this Agreement shall
be invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall not affect the validity or enforceability of the
remainder of this Agreement or the validity or enforceability of this Agreement
in any other jurisdiction. This Agreement may be amended only by an instrument
in writing signed by the party to be charged with enforcement. This Agreement
supersedes all prior agreements and understandings among the parties hereto with
respect to the subject matter hereof.
11. NOTICES.
Any notice required or permitted hereunder shall be given in writing
(unless otherwise specified herein) and shall be deemed effectively given (i) on
the date delivered, (a) by personal delivery, or (b) if advance copy is given by
fax, (ii) seven business days after deposit in the United States Postal Service
by regular or certified mail, or (iii) three business days mailing by
international express courier, with postage and fees paid, addressed to each of
the other parties thereunto entitled as the following addresses, or at such
other addresses as a party may designate by ten days advance written notice to
each of the other parties hereto.
COMPANY: Harvest Restaurant Group, Inc. with a copy to:
0000 X. X. Xxxx 000, Xxxxx 000 Xxxx Xxxxx, Esq.
Xxx Xxxxxxx, XX 00000 0000 XXX Xxxxxxx, Xxxxx 000
Xxxxxxxxx: President Xxxxxxxxx, XX 00000
Telecopier No. (000) 000-0000 Telecopier No. (000) 000-0000
PURCHASER: At the address set forth on the signature page of this Agreement.
ESCROW AGENT: The Bank of New York
BNY Business Center, Inc.
Xxxxx 000
000 Xxxxxxx Xxxxxx Xxxxx
Xxxxxxx, Xxxxxxx 00000
Attn: Xxxxx XxXxxxxxx
Telecopier No. (000) 000-0000
9
12. SURVIVAL OF REPRESENTATIONS AND WARRANTIES.
Company's representations and warranties shall survive the execution and
delivery hereof of this Agreement and the delivery of the Preferred Stock.
Buyer's representations, in the extent not affected by time, shall also survive
the execution and delivery of this Agreement and Buyer's receipt of the
Preferred Stock.
13. EXPENSES.
Each of the Company and the Buyer shall pay all costs and expenses incurred
by such party in connection with the negotiation, investigation, preparation,
execution, and delivery of this Agreement and the Registration Rights Agreement.
The costs and expenses of X.X. Xxxxx Securities, Inc. and its counsel shall be
paid for by the Company at each of the First, Second, and Third Closing.
IN WITNESS WHEREOF, this Securities Purchase Agreement has been duly
executed by the Buyer or one of its officers thereunto duly authorized as of the
date set forth below.
AGGREGATE PURCHASE PRICE OF BUYER'S PREFERRED STOCK: TRANCHE 1 $2,000,000
TRANCHE 2 $2,000,000
TRANCHE 3 $2,000,000
10
SIGNATURES FOR ENTITITES
IN WITNESS WHEREOF, the undersigned represents that the foregoing
statements are true and correct and that it has caused this Securities Purchase
Agreement to be duly executed on its behalf this _________ day of
__________________, 1998.
BUYER
By: __________________________________
(Signature of Authorized Person)
Name:
Title:
This Agreement has been accepted as of __________________, 1998.
HARVEST RESTAURANT GROUP, INC.
By: __________________________________
Xxxxxxx Xxxxxxxxx, Chairman of the
Board and CEO
11
NOTICE OF CONVERSION
--Harvest Restaurant Group, Inc.--
(To be Executed by the Registered Holder
in order to Convert its Series C Preferred Stock)
The undersigned hereby irrevocably elects to convert its Series C Preferred
Stock (the "Preferred Stock") of Harvest Restaurant Group, Inc. (the "Company")
into shares of Company's Common Stock ("Common Stock") according to the
conditions of the Statement of Resolution and consistent with the provisions of
the Securities Purchase Agreement, as of the date written below in connection
with the resale of the underlying Common Stock. If shares are to be issued in
the name of a person other than the undersigned, the undersigned will pay all
transfer taxes payable with respect thereto. No fee will be charged to the
Holder for any conversion, except for transfer taxes, if any.
The undersigned represents and warrants that all offers and sales by the
undersigned of the shares of Common Stock issuable to the undersigned upon
conversion of the Preferred Stock shall be made in compliance with Regulation D,
pursuant to registration of the Common Stock under the Securities Act of 1933,
as amended (the "Act") or pursuant to an exemption from registration under the
Act, subject to any restrictions on sale or transfer set forth in the Securities
Purchase Agreement between the Company and the original holder of the Preferred
Stock submitted herewith for conversion.
The undersigned hereby confirms that its representations and warranties
contained within the Subscription Agreement between the undersigned and the
Company (to the extent not affected by the passing of time) are true and correct
as of the date of this Notice (including but not limited to the fact that the
undersigned is not an underwriter, dealer or other person who participates
pursuant to a contractual arrangement in the distribution of the Securities
offered or sold in reliance on Regulation D).
Date of Conversion:
Number of Series C
Preferred Shares to be
converted:
Stock Certificate Nos. of Series
C Preferred Shares to be Converted:
Applicable Conversion Price:
Number of Shares of Common
Signature: _____________________________
Name: __________________________________
N.Y. Address:
----------------------------------------
----------------------------------------
No shares of Common Stock will be issued until the original Preferred Stock
Certificate(s) to be converted and the Notice of Conversion are received by the
Company or its Transfer Agent. The Holder shall (i) fax, on or prior to 11:59
p.m., New York City time, on the date of conversion, a copy of this completed
and fully executed Notice of Conversion to the Company at the-office of the
12
Company or its designated Transfer Agent for the Preferred Stock that the Holder
elects to convert and (ii) surrender, to a common courier for delivery to the
office of the Company or the Transfer Agent, the original Preferred Stock
Certificate(s) representing the Preferred Stock being converted. The Company or
its Transfer Agent shall issue shares of Common Stock and surrender them to a
common courier for delivery to the Preferred Stock Holder no later than three
(3) business days following receipt of a facsimile of this Notice of Conversion
and receipt by the Company or its Transfer-Agent of the Preferred Stock
Certificates) to be converted, pursuant to the terms of the Statement of
Resolution and the Securities Purchase Agreement, and shall make payments for
the number of business days such issuance and delivery is late, pursuant to the
terms of the Securities Purchase Agreement.
ACKNOWLEDGED AND AGREED
HARVEST RESTAURANT GROUP, INC.
By: __________________________________
Name: __________________________________
Title: __________________________________
Date: __________________________________
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Harvest Restaurant Group, Inc.
------------------------------
ANNEX I FORM OF STATEMENT OF RESOLUTION
ANNEX 11 ESCROW AGREEMENT
ANNEX III OMITTED
ANNEX IV REGISTRATION RIGHTS AGREEMENT
ANNEX V COMPANY DISCLOSURE MATERIALS
14
