Exhibit 99.1
SECURITIES PURCHASE AGREEMENT
SECURITIES PURCHASE AGREEMENT, dated as of November 23, 2005 (this
"Agreement"), by and among Bravo! Foods International Corp., a Delaware
corporation with headquarters located at 00000 X.X. Xxxxxxx 0, Xxxxx 000
Xxxxx Xxxx Xxxxx, XX (the "Company"), and the investors listed on the
Schedule of Investors attached hereto as Exhibit A (individually, an
"Investor" and collectively, the "Investors").
WHEREAS:
A. The Company and each Investor is executing and delivering this
Agreement in reliance upon the exemption from registration afforded by
Section 4(2) of the Securities Act of 1933, as amended (the "Securities
Act"), and Rule 506 of Regulation D ("Regulation D") as promulgated by the
United States Securities and Exchange Commission (the "SEC") under the
Securities Act.
B. Each Investor, severally and not jointly, wishes to purchase, and
the Company wishes to sell, upon the terms and conditions stated in this
Agreement, (i) the number of shares of the Common Stock, par value $.001
per share, of the Company (the "Common Stock"), set forth opposite such
Investor's name in column two (2) on the Schedule of Investors attached
hereto as Exhibit A (the "Schedule of Investors") (which aggregate amount
for all Investors together shall be 40,500,000 shares of Common Stock and
shall collectively be referred to herein as the "Common Shares") and (ii)
warrants, in substantially the form attached hereto as Exhibit F (the
"Warrants") to acquire up to that number of additional shares of Common
Stock set forth opposite such Investor's name in column three (3) on the
Schedule of Investors (as exercised, collectively, the "Warrant Shares").
C. The Common Shares, the Warrants and the Warrant Shares issued
pursuant to this Agreement are collectively are referred to herein as the
"Securities".
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
Investors agree as follows:
ARTICLE I
DEFINITIONS
1.1 Definitions. In addition to the terms defined elsewhere in this
Agreement, the following terms have the meanings indicated:
"Advice" has the meaning set forth in Section 6.5.
"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 under the Securities Act.
"Business Day" means any day other than Saturday, Sunday or other day
on which commercial banks in The City of New York are authorized or
required by law to remain closed.
"Closing" means the closing of the purchase and sale of the
Securities pursuant to Section 2.1.
"Closing Date" means the date and time of the Closing and shall be
10:00 a.m., New York City Time, on November 28, 2005 (or such other date
and time as is mutually agreed to by the Company and each Investor).
"Closing Price" means, for any Trading Day, the closing price per
share of the Common Stock on such Trading Day (or the nearest preceding
date) on the Trading Market or Eligible Market on which the Common Stock is
then listed or quoted.
"Company Counsel" means Xxxxx & XxXxxxxx LLP, counsel to the Company.
"Common Shares" has the meaning set forth in the recitals to this
Agreement.
"Common Stock" has the meaning set forth in the recitals to this
Agreement.
"Common Stock Equivalents" means, collectively, Options and
Convertible Securities.
"Convertible Securities" means any stock or securities (other than
Options) convertible into or exercisable or exchangeable for Common Stock.
"Disclosure Materials" has the meaning set forth in Section 3.1.
"Effective Date" means the date that the Registration Statement is
first declared effective by the SEC.
"Effectiveness Period" has the meaning set forth in Section 6.1.
"Eligible Market" means any of the New York Stock Exchange, the
American Stock Exchange, The NASDAQ National Market, The NASDAQ Capital
Market or the NASD OTC Bulletin Board.
"Event" has the meaning set forth in Section 6.1.
"Event Payments" has the meaning set forth in Section 6.1.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Excluded Events" has the meaning set forth in Section 6.1.
"Excluded Investors" means XX Xxxxx & Co., LLC and its Affiliates.
"Filing Date" means forty-five (45) days after the Closing Date.
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"Indemnified Party" has the meaning set forth in Section 6.4.
"Indemnifying Party" has the meaning set forth in Section 6.4.
"Intellectual Property Rights" has the meaning set forth in Section
3.1.
"Lead Investor" shall mean Magnetar Capital Master Fund, Ltd.
"Lead Investor Counsel" shall mean legal counsel selected by the Lead
Investor, which shall initially be Xxxxxxx Xxxx & Xxxxx, LLP
"Lien" means any lien, charge, claim, security interest, encumbrance,
right of first refusal or other similar encumbrance.
"Losses" means any and all actual losses, claims, damages,
liabilities, settlement costs and expenses, including, without limitation,
reasonable out-of-pocket costs of preparation and reasonable attorneys'
fees of outside legal counsel and specifically excluding lost profits,
consequential damages and punitive damages.
"Material Adverse Effect" has the meaning set forth in Section
3.1(b).
"Material Permits" has the meaning set forth in Section 3.1.
"Options" means any rights, warrants or options to subscribe for or
purchase Common Stock or Convertible Securities.
"Person" means any individual or corporation, partnership, trust,
incorporated or unincorporated association, joint venture, limited
liability company, or joint stock company.
"Proceeding" means an action, claim, suit, investigation or
proceeding.
"Prospectus" means the prospectus included in the Registration
Statement (including, without limitation, a prospectus that includes any
information previously omitted from a prospectus filed as part of an
effective registration statement in reliance upon Rule 430A promulgated
under the Securities Act), as amended or supplemented by any prospectus
supplement, with respect to the terms of the offering of any portion of the
Registrable Securities covered by the Registration Statement, and all other
amendments and supplements to the Prospectus including post effective
amendments, and all material incorporated by reference or deemed to be
incorporated by reference in such Prospectus.
"Registrable Securities" means the Common Shares and the Warrant
Shares issued or issuable pursuant to the Transaction Documents, together
with any securities issued or issuable upon any stock split, dividend or
other distribution, recapitalization or similar event with respect to the
foregoing.
"Registration Statement" means each registration statement required
to be filed under Article VI, including (in each case) the Prospectus,
amendments and supplements to such
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registration statement or Prospectus, including pre- and post-effective
amendments, all exhibits thereto, and all material incorporated by
reference or deemed to be incorporated by reference in such registration
statement.
"Related Person" has the meaning set forth in Section 4.6.
"Repurchase Notice" has the meaning set forth in Section 6.1.
"Repurchase Price" has the meaning set forth in Section 6.1.
"Required Effectiveness Date" means one hundred twenty (120) days
after the Closing Date.
"Rule 144," "Rule 415," and "Rule 424" means Rule 144, Rule 415 and
Rule 424, respectively, promulgated by the SEC pursuant to the Securities
Act, as such Rules may be amended from time to time, or any similar rule or
regulation hereafter adopted by the SEC having substantially the same
effect as such Rule.
"SEC" has the meaning set forth in the first WHEREAS Paragraph
hereof.
"SEC Reports" has the meaning set forth in Section 3.1.
"Securities" has the meaning set forth in the Preamble.
"Shares" means shares of the Company's Common Stock.
"Subsidiary" means any Person in which the Company, directly or
indirectly, owns more than 5% of any capital stock or holds more than 5% of
any equity or similar interest other than China Premium Food Corp.
(Shanghai) Ltd.
"Trading Day" means (a) any day on which the Common Stock is listed
or quoted and traded on its primary Trading Market, (b) if the Common Stock
is not listed or quoted and traded on an Eligible Market, then on any or
which trading occurs on the NASD OTC Bulletin Board (or any successor
thereto) or (c) if trading ceases to occur on the NASD OTC Bulletin Board
(or any successor thereto), any Business Day.
"Trading Market" means the NASD OTC Bulletin Board.
"Transaction Documents" means this Agreement, the schedules and
exhibits attached hereto, the Warrants and the Transfer Agent Instructions.
"Transfer Agent" means American Stock Transfer and Trust Co., or any
successor transfer agent for the Company.
"Transfer Agent Instructions" means, with respect to the Company, the
Irrevocable Transfer Agent Instructions, in the form of Exhibit E, executed
by the Company and delivered to and acknowledged in writing by the Transfer
Agent
"Warrants" has the meaning set forth in the Preamble.
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"Warrant Shares" has the meaning set forth in the Preamble.
ARTICLE II
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 each
Investor, and each Investor shall, severally and not jointly, purchase from
the Company, such number of Common Shares and Warrants set forth opposite
such Investor's name on Exhibit A hereto under the headings "Common Shares"
and "Warrants". The date and time of the Closing and shall be 10:00 a.m.,
New York City Time, on the Closing Date. The Closing shall take place at
the offices of Xxxxxxx Xxxx & Xxxxx, LLP, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx
Xxxx 00000.
2.2 Closing Deliveries.
(a) At the Closing, the Company shall deliver or cause to be
delivered to each Investor the following:
(i) one or more stock certificates, free and clear of all
restrictive and other legends (except as expressly provided in Section
4.1(b) hereof), evidencing such number of Company Shares equal to the
number of Shares set forth opposite such Investor's name on Exhibit A
hereto under the heading "Common Shares," registered in the name of such
Investor;
(ii) one or more Warrants, each issued in the name of such
Investor, pursuant to which such Investor shall have the right to acquire
such number of Warrant Shares set forth opposite such Investor's name on
Exhibit A hereto under the heading "Warrant Shares";
(iii) a legal opinion of Company Counsel, in the form of
Exhibit C, executed by such counsel and delivered to the Investors; and
(iv) duly executed Transfer Agent Instructions acknowledged by
the Company's transfer agent.
(b) At the Closing, each Investor shall deliver or cause to be
delivered to the Company and pay or cause to be paid the purchase price set
forth opposite such Investor's name on Exhibit A hereto under the heading
"Purchase Price" in United States dollars and in immediately available
funds, by wire transfer to an account designated in writing to such
Investor by the Company for such purpose.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of the Company. The Company
hereby represents and warrants to the Investors as of the date hereof and
as of the Closing Date as follows:
(a) Subsidiaries. The Company has no direct or indirect
Subsidiaries other than those listed in Schedule 3.1(a) hereto. Except as
disclosed in Schedule 3.1(a) hereto, the Company
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owns, directly or indirectly, all of the capital stock or comparable equity
interests of each Subsidiary free and clear of any Lien and all the issued
and outstanding shares of capital stock or comparable equity interest of
each Subsidiary are validly issued and are fully paid, non-assessable and
free of preemptive and similar rights. China Premium Food Corp. (Shanghai)
Ltd. has no more than $10,000 in the aggregate of assets and liabilities
and conducts no operations or activities. The Company covenants and agrees
that China Premium Food Corp. (Shanghai) Ltd. will not hold any assets or
incur any liabilities in excess of $10,000 in the aggregate and covenants
and agrees that China Premium Food Corp. (Shanghai) Ltd. will not conduct
any operations in the future.
(b) Organization and Qualification. Each of the Company and the
Subsidiaries is an entity duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation), with the
requisite legal 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. Each of the Company and the Subsidiaries is duly
qualified to do business and is 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, (i) materially
and adversely affect the legality, validity or enforceability of any
Transaction Document, (ii) have or result in a material adverse effect on
the results of operations, assets, properties, operations, business or
financial condition or prospects of the Company and the Subsidiaries, taken
as a whole on a consolidated basis, or (iii) materially and adversely
impair the Company's ability to perform fully on a timely basis its
obligations under any of the Transaction Documents (any of (i), (ii) or
(iii), a "Material Adverse Effect").
(c) Authorization; Enforcement. The Company has the requisite
corporate authority to enter into and to consummate the transactions
contemplated by each of the Transaction Documents to which it is a party
and otherwise to carry out its obligations hereunder and thereunder. The
execution and delivery of each of the Transaction Documents to which it is
a party by the Company and the consummation by it of the transactions
contemplated hereby and thereby have been duly authorized by all necessary
action on the part of the Company and no further consent or action is
required by the Company, its Board of Directors or its stockholders. Each
of the Transaction Documents to which it is a party has been (or upon
delivery will be) duly executed by the Company and is, or 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 may be limited by (i) applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance or other laws
of general application relating to or affecting the enforcement of
creditors rights generally, and (ii) the effect of rules of law governing
the availability of specific performance and other equitable remedies.
Assuming the accuracy of the representations and warranties contained in
Section 3.2, the offer and issuance by the Company of the Securities is
exempt from registration under the Securities Act.
(d) No Conflicts. The execution, delivery and performance of the
Transaction Documents to which it is a party by the Company and the
consummation by the Company of the transactions contemplated hereby and
thereby do not, and will not, (i) conflict with or violate any provision of
the Company's or any Subsidiary certificate or articles of incorporation,
bylaws or other
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organizational or charter documents, (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 any 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, except to the extent that such conflict, default, termination,
amendment, acceleration or cancellation right could not reasonably be
expected to have a Material Adverse Effect, 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 and the rules and regulations of any self-regulatory
organization to which the Company or its securities are subject, including
all applicable Trading Markets), or by which any property or asset of the
Company or a Subsidiary is bound or affected, except to the extent that
such violation could not reasonably be expected to have a Material Adverse
Effect.
(e) The Securities. The Securities (including the Warrant Shares)
are duly authorized and, when issued and paid for in accordance with the
Transaction Documents (and upon the exercise of the Warrants in the case of
the Warrant Shares), will be duly and validly issued, fully paid and
nonassessable, free and clear of all Liens and shall not be subject to
preemptive or similar rights of stockholders (other than those imposed by
the Investors). The Company has reserved from its duly authorized capital
stock the number of shares of Common Stock issuable upon exercise of the
Warrants.
(f) Capitalization. The aggregate number of shares and type of all
authorized, issued and outstanding classes of capital stock, Options and
other securities of the Company (whether or not presently convertible into
or exercisable or exchangeable for shares of capital stock of the Company)
is set forth in Schedule 3.1(f) hereto. All outstanding shares of capital
stock are duly authorized, validly issued, fully paid and nonassessable and
have been issued in compliance with all applicable securities laws. Except
as disclosed in Schedule 3.1(f) hereto, the Company has not issued any
other Options or warrants, rights to subscribe to, calls or commitments of
any character whatsoever relating to, or securities, rights or obligations
convertible into or exercisable or exchangeable for, or entered into any
agreement giving any Person any right to subscribe for or acquire, any
shares of Common Stock, or securities or rights convertible or exchangeable
into shares of Common Stock. Except as set forth on Schedule 3.1(f)
hereto, and except for customary adjustments as a result of stock
dividends, stock splits, combinations of shares, reorganizations,
recapitalizations, reclassifications or other similar events, there are no
anti-dilution or price adjustment provisions contained in any security
issued by the Company (or in any agreement providing rights to security
holders) and the issuance and sale of the Securities will not obligate the
Company to issue shares of Common Stock or other securities to any Person
(other than the Investors) and will not result in a right of any holder of
securities to adjust the exercise, conversion, exchange or reset price
under such securities. To the knowledge of the Company, except as
specifically disclosed SEC Reports or in Schedule 3.1(f) hereto, no Person
or group of related Persons beneficially owns (as determined pursuant to
Rule 13d-3 under the Exchange Act), or has the right to acquire, by
agreement with or by obligation binding upon the Company, beneficial
ownership of in excess of 5% of the outstanding Common Stock, ignoring for
such purposes any limitation on the number of shares of Common Stock that
may be owned at any single time.
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(g) SEC Reports. The Company has filed all reports required to be
filed by it under the Exchange Act, including pursuant to Section 13(a) or
15(d) thereof, for the two years preceding the date hereof (the foregoing
materials (together with any materials filed by the Company under the
Exchange Act, whether or not required) being collectively referred to
herein as the "SEC Reports" and, together with this Agreement and the
Schedules to this Agreement, the "Disclosure Materials") on a timely basis
or has received 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, as
applicable, and the rules and regulations of the SEC 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 the light of the circumstances under which they were made, not
misleading. The financial statements of the Company included in the SEC
Reports comply in all material respects with applicable accounting
requirements and the rules and regulations of the SEC with respect thereto
as in effect at the time of filing. Such financial statements have been
prepared in accordance with United States generally accepted accounting
principles applied on a consistent basis during the periods involved
("GAAP"), 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, year-end audit adjustments. All material agreements to which the
Company or any Subsidiary is a party or to which the property or assets of
the Company or any Subsidiary are subject are included as part of or
specifically identified in the SEC Reports.
(h) Financial Statements. Since the date of the latest audited
financial statements included within the SEC Reports, except as set forth
in Schedule 3.1(h) hereto, (i) there has been no event, occurrence or
development that, individually or in the aggregate, has had or could
reasonably be executed to result in a Material Adverse Effect, (ii) the
Company has not incurred any material liabilities other than (A) trade
payables and accrued expenses incurred in the ordinary course of business
consistent with past practice and (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 SEC, (iii) the Company
has not altered its method of accounting or the identity of its auditors,
except as disclosed in its SEC Reports, (iv) the Company has not declared
or made any dividend or distribution of cash or other property to its
stockholders, in their capacities as such, or purchased, redeemed or made
any agreements to purchase or redeem any shares of its capital stock
(except for repurchases by the Company of shares of capital stock held by
employees, officers, directors, or consultants pursuant to an option of the
Company to repurchase such shares upon the termination of employment or
services), and (v) the Company has not issued any equity securities to any
officer, director or Affiliate, except pursuant to existing Company stock-
based plans. The Company has not taken any steps to seek protection
pursuant to any bankruptcy law nor does the Company have any knowledge or
reason to believe that its creditors intend to initiate involuntary
bankruptcy proceedings or any actual knowledge of any fact which would
reasonably lead a creditor to do so. The Company, after giving effect to
the transactions contemplated hereby to occur at the Closing, will not be
Insolvent (as defined below). For purposes of this Section 3.1(h),
"Insolvent" means (i) the present fair saleable value of the Company's
assets is less than the amount required to pay the Company's total
Indebtedness (as defined in Section 3.1(aa)), (ii) the Company is unable to
pay its
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debts and liabilities, subordinated, contingent or otherwise, as such debts
and liabilities become absolute and matured, (iii) the Company intends to
incur or believes that it will incur debts that would be beyond its ability
to pay as such debts mature or (iv) the Company has unreasonably small
capital with which to conduct the business in which it is engaged as such
business is now conducted and is proposed to be conducted.
(i) Absence of Litigation. There is no action, suit, claim,
arbitration or Proceeding, pending or, to the knowledge of the Company,
threatened against the Company or any of its Subsidiaries that could,
individually or in the aggregate, have a Material Adverse Effect.
(j) Compliance. Except as set forth in Schedule 3.1(j), neither the
Company nor any Subsidiary is, (i) 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 written 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) in
violation of any order of any court, arbitrator or governmental body, or
(iii) in violation of any statute, rule or regulation of any governmental
authority.
(k) Title to Assets. The Company and its Subsidiaries have good and
marketable title in fee simple to all real property owned by them that is
material to the business of the Company and its Subsidiaries, and good and
marketable title in all personal property owned by them that is material to
the business of the Company and its Subsidiaries in each case free and
clear of all Liens, except for Liens that do not, individually or in the
aggregate, have or result in a Material Adverse Effect. 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 material compliance.
(l) No General Solicitation; Placement Agent's Fees. Neither the
Company, its Subsidiaries nor any of its Affiliates, nor any Person acting
on its or their behalf, has engaged in any form of general solicitation or
general advertising (within the meaning of Regulation D) in connection with
the offer or sale of the Securities. The Company shall be responsible for
the payment of any placement agent's, financial advisory or brokers' fees
(other than for persons engaged by any Investor or its investment advisor)
relating to or arising out of the issuance of the Securities pursuant to
this Agreement. The Company has engaged XX Xxxxx & Co., LLC as placement
agent (the "Placement Agent") in connection with the sale of the
Securities. Other than the Placement Agent, the Company has not engaged
any placement agent or other agent in connection with the sale of the
Securities.
(m) Private Placement. Neither the Company nor, any Person acting
on the Company's behalf has sold or offered to sell or solicited any offer
to buy the Securities by means of any form of general solicitation or
advertising. Neither the Company nor any of its Affiliates nor, any Person
acting on the Company's behalf has, directly or indirectly, at any time
within the past six months, made any offer or sale of any security or
solicitation of any offer to buy any security under circumstances that
would (i) eliminate the availability of the exemption from registration
under
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Regulation D under the Securities Act in connection with the offer and sale
by the Company of the Securities as contemplated hereby or (ii) cause the
offering of the Securities pursuant to the Transaction Documents to be
integrated with prior offerings by the Company for purposes of any
applicable law, regulation or stockholder approval provisions, including,
without limitation, under the rules and regulations of the Trading Market.
The Company is not required to be registered as, and is not an Affiliate
of, an "investment company" within the meaning of the Investment Company
Act of 1940, as amended. The Company is not required to be registered as,
a United States real property holding corporation within the meaning of the
Foreign Investment in Real Property Tax Act of 1980.
(n) Requirements of the Trading Market. The Company has not, in the
twelve months preceding the date hereof, received notice (written or oral)
from any Trading Market on which the Common Stock is or has been listed,
quoted or included for trading to the effect that the Company is not in
compliance with the listing requirements, maintenance requirements or the
requirements of inclusion for trading of such Trading Market. The Company
is in compliance with all the requirements of inclusion for trading on the
Trading Market.
(o) Registration Rights. Except as described in Schedule 3.1(o),
the Company has not 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 SEC or any other governmental authority that
have not been satisfied or waived.
(p) Application of Takeover Protections. There is no control share
acquisition, business combination, poison pill (including any distribution
under a rights agreement) or other similar anti-takeover provision under
the Company's charter documents or the laws of its state of incorporation
that is or could become applicable to any of the Investors as a result of
the Investors and the Company fulfilling their obligations or exercising
their rights under the Transaction Documents, including, without
limitation, as a result of the Company's issuance of the Securities and the
Investors' ownership of the Securities.
(q) Disclosure. The Company confirms that neither it nor any
officers, directors or Affiliates, has provided any of the Investors (other
than Excluded Investors) or their agents or counsel with any information
that constitutes or might constitute material, nonpublic information (other
than the existence and terms of the issuance of Securities, as contemplated
by this Agreement). The Company understands and confirms that each of the
Investors will rely on the foregoing representations in effecting
transactions in securities of the Company (other than Excluded Investors).
All disclosure provided by the Company to the Investors regarding the
Company and its Subsidiaries, their business and the transactions
contemplated hereby included in the Transaction Documents, including the
Schedules to this Agreement, furnished by or on the behalf of the Company
are true and correct in all material respects 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 the light of the
circumstances under which they were made, not misleading. To the Company's
knowledge, no event or circumstance has occurred or information exists with
respect to the Company or any of its Subsidiaries or its or their business,
properties, operations or financial conditions, which, under applicable
law, rule or regulation, requires public disclosure or announcement by the
Company prior to the date hereof but which has not been so publicly
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announced or disclosed. The Company acknowledges and agrees that no
Investor (other than Excluded Investors) makes or has made any
representations or warranties with respect to the transactions contemplated
hereby other than those specifically set forth in the Transaction
Documents.
(r) Acknowledgment Regarding Investors' Purchase of Securities.
Based upon the assumption that the transactions contemplated by this
Agreement are consummated in all material respects in conformity with the
Transaction Documents, the Company acknowledges and agrees that each of the
Investors (other than Excluded Investors) is acting solely in the capacity
of an arm's length purchaser with respect to the Transaction Documents and
the transactions contemplated hereby and thereby. The Company further
acknowledges that no Investor (other than Excluded Investors) is acting as
a financial advisor or fiduciary of the Company (or in any similar
capacity) with respect to this Agreement and the transactions contemplated
hereby and any advice given by any Investor (other than Excluded Investors)
or any of their respective representatives or agents in connection with the
Transaction Documents and the transactions contemplated hereby and thereby
is merely incidental to the Investors' purchase of the Securities. The
Company further represents to each Investor that the Company's decision to
enter into this Agreement has been based solely on the independent
evaluation of the transactions contemplated hereby by the Company and its
representatives.
(s) Patents and Trademarks. Except as set forth on Schedule 3.1(r),
the Company and its Subsidiaries own, or possess adequate rights or
licenses to use, all trademarks, trade names, service marks, service xxxx
registrations, service names, patents, patent rights, copyrights,
inventions, licenses, approvals, governmental authorizations, trade secrets
and other intellectual property rights ("Intellectual Property Rights")
necessary to conduct their respective businesses now conducted. The
Company has not infringed upon the Intellectual Property Rights of others.
There is no Proceeding being made or brought, or to the knowledge of the
Company, being threatened, against the Company regarding its Intellectual
Property Rights. The Company is unaware of any facts or circumstances
which might give rise to any of the foregoing infringements or claims,
actions or proceedings. The Company and its Subsidiaries have taken
reasonable security measures to protect the secrecy, confidentiality and
value of all of their intellectual properties. Except as set forth in
Schedule 3(s), none of the Company's Intellectual Property Rights have
expired, terminated or have been abandoned, or are expected to expire,
terminate or be abandoned, within three years from the date of this
Agreement, except for such expirations, terminations or abandonments which
would not, individually or in the aggregate have a Material Adverse Effect.
(t) Insurance. The Company and its Subsidiaries are insured by
insurers of recognized financial responsibility against such losses and
risks and in such amounts as are reasonable and customary in the businesses
and location in which the Company and its Subsidiaries are engaged.
Neither the Company nor any Subsidiary has any knowledge that it will not
be able to renew its 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 without a significant increase in cost.
(u) Regulatory Permits. The Company and its Subsidiaries possess
all certificates, authorizations and permits issued by the appropriate
federal, state, local or foreign
11
regulatory authorities necessary to conduct their respective businesses as
described in the SEC Reports, except where the failure to possess such
permits does not, individually or in the aggregate, have or result in a
Material Adverse Effect ("Material Permits"), and neither the Company nor
Subsidiary has received any written notice of proceedings relating to the
revocation or modification of any Material Permit.
(v) Transactions With Affiliates and Employees. None of the
officers, directors or employees of the Company is presently a party to any
transaction that would be required to be reported on Form 10-KSB with the
Company or any of its Subsidiaries (other than for ordinary course services
as employees, officers or 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 such officer, director or employee or, to
the Company's knowledge, any corporation, partnership, trust or other
entity in which any such officer, director, or employee has a substantial
interest or is an officer, director, trustee or partner.
(w) Internal Accounting Controls. The Company maintains a system of
internal accounting controls that the Company believes is sufficient to
provide reasonable assurance that (i) transactions are executed in
accordance with management's general or specific authorizations, and (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.
(x) Xxxxxxxx-Xxxxx Act. The Company is in compliance with all
material requirements of the Xxxxxxxx-Xxxxx Act of 2002 and applicable
rules and regulations promulgated by the SEC thereunder to the extent
applicable to the Company.
(y) Foreign Corrupt Practices. Neither the Company nor any of its
Subsidiaries nor any director, officer, agent, employee or other Person
acting on behalf of the Company or any of its Subsidiaries has, in the
course of its actions for, or on behalf of, the Company (i) used any
corporate funds for any unlawful contribution, gift, entertainment or other
unlawful expenses relating to political activity; (ii) made any direct or
indirect unlawful payment to any foreign or domestic government official or
employee from corporate funds; (iii) violated or is in violation of any
provision of the U.S. Foreign Corrupt Practices Act of 1977, as amended; or
(iv) made any unlawful bribe, rebate, payoff, influence payment, kickback
or other unlawful payment to any foreign or domestic government official or
employee.
(z) OFAC. Neither the Company nor any of its Subsidiaries (i) is a
Person whose property or interest in property is blocked or subject to
blocking pursuant to Section 1 of Executive Order 13224 of September 23,
2001 Blocking Property and Prohibiting Transactions with Persons Who
Commit, Threaten to Commit, or Support Terrorism (66 Fed. Reg. 49079
(2001)), (ii) engages in any dealings or transactions prohibited by Section
2 of such executive order, or is otherwise associated with any such Person
in any manner violative of Section 2 of such executive order, or (iii) is a
Person on the list of Specially Designated Nationals and Blocked Persons or
subject to the
12
limitations or prohibitions under any other U.S. Department of Treasury's
Office of Foreign Assets Control regulation or executive order.
(aa) Patriot Act. To the extent applicable, both the Company and
its Subsidiaries are in compliance, in all material respects, with the (i)
Trading with the Enemy Act, as amended, and each of the foreign assets
control regulations of the United States Treasury Department (31 CFR,
Subtitle B, Chapter V, as amended) and any other enabling legislation or
executive order relating thereto, and (ii) Uniting and Strengthening
America by Providing Appropriate Tools Required to Intercept and Obstruct
Terrorism (USA Patriot Act of 2001).
(bb) Indebtedness. Except as disclosed in Schedule 3.1(bb), neither
the Company nor any of its Subsidiaries (i) has any outstanding
Indebtedness (as defined below), (ii) is in violation of any term of or in
default under any contract, agreement or instrument relating to any
Indebtedness, except where such violations and defaults would not result,
individually or in the aggregate, in a Material Adverse Effect, or (iii) is
a party to any contract, agreement or instrument relating to any
Indebtedness, the performance of which, in the judgment of the Company's
officers, has or is expected to have a Material Adverse Effect. For
purposes of this Agreement: (x) "Indebtedness" of any Person means,
without duplication (A) all indebtedness for borrowed money, (B) all
obligations issued, undertaken or assumed as the deferred purchase price of
property or services (other than trade payables entered into in the
ordinary course of business), (C) all reimbursement or payment obligations
with respect to letters of credit, surety bonds and other similar
instruments, (D) all obligations evidenced by notes, bonds, debentures or
similar instruments, including obligations so evidenced incurred in
connection with the acquisition of property, assets or businesses, (E) all
indebtedness created or arising under any conditional sale or other title
retention agreement, or incurred as financing, in either case with respect
to any property or assets acquired with the proceeds of such indebtedness
(even though the rights and remedies of the seller or bank under such
agreement in the event of default are limited to repossession or sale of
such property), (F) all monetary obligations under any leasing or similar
arrangement which, in connection with generally accepted accounting
principles, consistently applied for the periods covered thereby, is
classified as a capital lease, (G) all indebtedness referred to in clauses
(A) through (F) above secured by (or for which the holder of such
Indebtedness has an existing right, contingent or otherwise, to be secured
by) any mortgage, lien, pledge, charge, security interest or other
encumbrance upon or in any property or assets (including accounts and
contract rights) owned by any Person, even though the Person which owns
such assets or property has not assumed or become liable for the payment of
such indebtedness, and (H) all Contingent Obligations in respect of
indebtedness or obligations of others of the kinds referred to in clauses
(A) through (G) above; (y) "Contingent Obligation" means, as to any Person,
any direct or indirect liability, contingent or otherwise, of that Person
with respect to any indebtedness, lease, dividend or other obligation of
another Person if the primary purpose or intent of the Person incurring
such liability, or the primary effect thereof, is to provide assurance to
the obligee of such liability that such liability will be paid or
discharged, or that any agreements relating thereto will be complied with,
or that the holders of such liability will be protected (in whole or in
part) against loss with respect thereto; and (z) "Person" means an
individual, a limited liability company, a partnership, a joint venture, a
corporation, a trust, an unincorporated organization and a government or
any department or agency thereof.
13
(cc) Employee Relations. Neither Company nor any of its
Subsidiaries is a party to any collective bargaining agreement or employs
any member of a union. The Company and its Subsidiaries believe that their
relations with their employees are good. No executive officer of the
Company or any of its Subsidiaries (as defined in Rule 501(f) of the
Securities Act) has notified the Company or any such Subsidiary that such
officer intends to leave the Company or any such Subsidiary or otherwise
terminate such officer's employment with the Company or any such
Subsidiary. No executive officer of the Company or any of its
Subsidiaries, to the knowledge of the Company or any such Subsidiary, is
now, or expects to be, in violation of any material term of any employment
contract, confidentiality, disclosure or proprietary information agreement,
non-competition agreement, or any other contract, agreement or any
restrictive covenant, and the continued employment of each such executive
officer does not subject the Company or any such Subsidiary to any
liability with respect to any of the foregoing matters. The Company and
its Subsidiaries are in compliance with all federal, state, local and
foreign laws and regulations respecting labor, employment and employment
practices and benefits, terms and conditions of employment and wages and
hours, except where failure to be in compliance would not, either
individually or in the aggregate, reasonably be expected to result in a
Material Adverse Effect. There are no material complaints or charges
against the Company or its Subsidiaries pending or, to the knowledge of the
Company and its Subsidiaries, threatened to be filed with any Governmental
Authority or arbitrator based on, arising out of, in connection with, or
otherwise relating to the employment or termination of employment by the
Company or its Subsidiaries of any individual.
(dd) Environmental Laws. The Company and its Subsidiaries (i) are
in compliance with any and all Environmental Laws (as hereinafter defined),
(ii) have received all permits, licenses or other approvals required of
them under applicable Environmental Laws to conduct their respective
businesses and (iii) are in compliance with all terms and conditions of any
such permit, license or approval where, in each of the foregoing clauses
(i), (ii) and (iii), the failure to so comply could be reasonably expected
to have, individually or in the aggregate, a Material Adverse Effect. The
term "Environmental Laws" means all federal, state, local or foreign laws
relating to pollution or protection of human health or the environment
(including, without limitation, ambient air, surface water, groundwater,
land surface or subsurface strata), including, without limitation, laws
relating to emissions, discharges, releases or threatened releases of
chemicals, pollutants, contaminants, or toxic or hazardous substances or
wastes (collectively, "Hazardous Materials") into the environment, or
otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of Hazardous Materials,
as well as all authorizations, codes, decrees, demands or demand letters,
injunctions, judgments, licenses, notices or notice letters, orders,
permits, plans or regulations issued, entered, promulgated or approved
thereunder.
(ee) Subsidiary Rights. Except as set forth in Schedule 3.1(ee),
the Company or one of its Subsidiaries has the unrestricted right to vote,
and (subject to limitations imposed by applicable law) to receive dividends
and distributions on, all capital securities of its Subsidiaries as owned
by the Company or such Subsidiary.
(ff) Tax Status. The Company and each of its Subsidiaries (i) has
made or filed all foreign, federal and state income and all other tax
returns, reports and declarations required by any jurisdiction to which it
is subject, (ii) has paid all taxes and other governmental assessments and
charges that are material in amount, shown to be due on such returns,
reports and declarations,
14
except those being contested in good faith and (iii) has set aside on its
books provision reasonably adequate for the payment of all taxes for
periods subsequent to the periods to which such returns, reports or
declarations apply. There are no unpaid taxes in any material amount
claimed to be due by the taxing authority of any jurisdiction.
(gg) Manipulation of Price. The Company has not, and to its
knowledge no one acting on its behalf has taken, directly or indirectly,
any action designed to cause or to result in the stabilization or
manipulation of the price of any security of the Company or to facilitate
the sale or resale of any of the Securities. From and after January 1,
2004, except for transactions undertaken with the Placement Agent with
respect to the transactions contemplated hereby, the Company has not, and
to its knowledge no one acting on its behalf has (i) sold, bid for,
purchased, or paid any compensation for soliciting purchases of, any of the
Securities, or (ii) paid or agreed to pay to any person any compensation
for soliciting another to purchase any other securities of the Company.
3.2 Representations and Warranties of the Investors. Each Investor
hereby, as to itself only and for no other Investor, represents and
warrants to the Company as follows:
(a) Organization; Authority. Such Investor is an entity duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization with the requisite corporate or
partnership power and authority to enter into and to consummate the
transactions contemplated by the Transaction Documents and otherwise to
carry out its obligations hereunder and thereunder. The purchase by such
Investor of the Securities hereunder has been duly authorized by all
necessary action on the part of such Investor. This Agreement has been
duly executed and delivered by such Investor and constitutes the valid and
binding obligation of such Investor, enforceable against it in accordance
with its terms, except as may be limited by (i) applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance or other laws
of general application relating to or affecting the enforcement of
creditors' rights generally, and (ii) the effect of rules of law governing
the availability of specific performance and other equitable remedies.
(b) No Public Sale or Distribution; Investment Intent. Such
Investor is (i) acquiring the Common Shares and the Warrants and (ii) upon
exercise of the Warrants will acquire the Warrant Shares issuable upon
exercise thereof, in the ordinary course of business for its own account
and not with a view towards, or for resale in connection with, the public
sale or distribution thereof, except pursuant to sales registered under the
Securities Act or under an exemption from such registration and in
compliance with applicable federal and state securities laws, and such
Investor does not have a present arrangement to effect any distribution of
the Securities to or through any person or entity; provided, however, that
by making the representations herein, such Investor does not agree to hold
any of the Securities for any minimum or other specific term and reserves
the right to dispose of the Securities at any time in accordance with or
pursuant to a registration statement or an exemption under the Securities
Act.
(c) Investor Status. At the time such Investor was offered the
Securities, it was, and at the date hereof it is, an "accredited investor"
as defined in Rule 501(a) under the Securities Act.
15
(d) Experience of such Investor. Such Investor, either alone or
together with its representatives has such knowledge, sophistication and
experience in business and financial matters so as to be capable of
evaluating the merits and risks of the prospective investment in the
Securities, and has so evaluated the merits and risks of such investment.
Such Investor is able to bear the economic risk of an investment in the
Securities and, at the present time, is able to afford a complete loss of
such investment.
(e) Access to Information. Such Investor acknowledges that it has
reviewed the Disclosure Materials and has been afforded: (i) the
opportunity to ask such questions as it has deemed necessary of, and to
receive answers from, representatives of the Company concerning the terms
and conditions of the offering of the Securities and the merits and risks
of investing in the Securities; (ii) access to information (other than
material non-public information) about the Company and the Subsidiaries and
their respective financial condition, results of operations, business,
properties, management and prospects sufficient to enable it to evaluate
its investment; and (iii) the opportunity to obtain such additional
information that the Company possesses or can acquire without unreasonable
effort or expense that is necessary to make an informed investment decision
with respect to the investment. Neither such inquiries nor any other
investigation conducted by or on behalf of such Investor or its
representatives or counsel shall modify, amend or affect such Investor's
right to rely on the truth, accuracy and completeness of the Disclosure
Materials and the Company's representations and warranties contained in the
Transaction Documents.
(f) No Governmental Review. Such Investor understands that no
United States federal or state agency or any other government or
governmental agency has passed on or made any recommendation or endorsement
of the Securities or the fairness or suitability of the investment in the
Securities nor have such authorities passed upon or endorsed the merits of
the offering of the Securities.
(g) No Conflicts. The execution, delivery and performance by such
Investor of this Agreement and the consummation by such Investor of the
transactions contemplated hereby will not (i) result in a violation of the
organizational documents of such Investor or (ii) conflict with, or
constitute a default (or an event which 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 of, any agreement,
indenture or instrument to which such Investor is a party, or (iii) result
in a violation of any law, rule, regulation, order, judgment or decree
(including federal and state securities laws) applicable to such Investor,
except in the case of clauses (ii) and (iii) above, for such that are not
material and do not otherwise affect the ability of such Investor to
consummate the transactions contemplated hereby.
(h) Illegal Transactions. Such Investor has not directly or
indirectly, nor has any Person acting on behalf of or pursuant to any
understanding with such Investor, engaged in any transactions in the
securities of the Company (including, without limitation, any Short Sales
involving any of the Company's securities) since the time that such
Investor was first contacted by the Company, a Placement Agent or any other
Person regarding an investment in the Company. Such Investor covenants
that neither it nor any Person acting on its behalf or pursuant to any
understanding with it will, directly or indirectly, engage in any
transactions in the securities of the Company (including, without
limitation, any Short Sales) prior to the time that the transactions
16
contemplated by this Agreement are publicly disclosed. "Short Sales" 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, short sales, swaps and
similar arrangements (including on a total return basis), and sales and
other transactions through non-U.S. broker-dealers or foreign regulated
brokers.
(i) No Broker. Such Investor has not used the services of any
broker, investment banker, placement agreement or advisor who will seek
compensation from the Company with respect to the purchase of the
Securities and/or any of the transactions contemplated hereby.
(j) No Legal, Tax or Investment Advice. Such Investor understands
that nothing in this Agreement or any other materials presented by or on
behalf of the Company to the Investor in connection with the purchase of
the Securities constitutes legal, tax or investment advice. Such Investor
has consulted such legal, tax and investment advisors as it, in its sole
discretion, has deemed necessary or appropriate in connection with its
purchase of the Securities. Such Investor understands that the Placement
Agent has acted solely as the agent of the Company in this placement of the
Securities, and that the Placement Agent makes no representation or
warranty with regard to the merits of this transaction or as to the
accuracy of any information such Investor may have received in connection
therewith. Such Investor acknowledges that he has not relied on any
information or advice furnished by or on behalf of the Placement Agent.
(k) Patriot Act. To the extent applicable, such Investor is in
compliance, in all material respects, with the (i) Trading with the Enemy
Act, as amended, and each of the foreign assets control regulations of the
United States Treasury Department (31 CFR, Subtitle B, Chapter V, as
amended) and any other enabling legislation or executive order relating
thereto, and (ii) Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism (USA Patriot
Act of 2001).
ARTICLE IV
OTHER AGREEMENTS OF THE PARTIES
4.1 Transfer Restrictions.
(a) The Investors covenant that the Securities will only be disposed
of pursuant to an effective registration statement under, and in compliance
with the requirements of, the Securities Act or pursuant to an available
exemption from the registration requirements of the Securities Act, and in
compliance with any applicable state securities laws. In connection with
any transfer of Securities, other than pursuant to an effective
registration statement or to the Company, or pursuant to Rule 144(k) except
as otherwise set forth herein, the Company requires the transferor to
provide to the Company an opinion of counsel selected by the transferor,
who shall be reasonably acceptable to the Company and the Transfer Agent,
the form, substance and scope of which opinion shall be reasonably
satisfactory to the Company, to the effect that such transfer does not
require registration under the Securities Act. Notwithstanding the
foregoing, the Company hereby consents to and agrees to register on the
books of the Company and with its transfer agent, without any such legal
opinion, except to the extent that the transfer agent requests such legal
opinion, any transfer of Securities by an Investor to an Affiliate of such
Investor, provided that the transferee certifies to the
17
Company that it is an "accredited investor" as defined in Rule 501(a) under
the Securities Act and provided that such Affiliate does not request any
removal of any existing legends on any certificate evidencing the
Securities.
(b) The Investors agree to the imprinting, so long as is required by
this Section 4.1(b), of the following legend on any certificate evidencing
Securities:
THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND
EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN
RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT
BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE
EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN COMPLIANCE WITH APPLICABLE
STATE SECURITIES LAWS OR BLUE SKY LAWS.
Certificates evidencing Securities shall not be required to contain such
legend or any other legend (i) if the Securities are registered for resale
under the Securities Act or any sale of such Securities pursuant to Rule
144, (ii) if such Securities are eligible for sale under Rule 144(k), or
(iii) if such legend is not required under applicable requirements of the
Securities Act (including controlling judicial interpretations and
pronouncements issued by the Staff of the SEC). The Company shall cause
its counsel to issue the legal opinion included in the Transfer Agent
Instructions to the Transfer Agent on the Effective Date. Following the
Effective Date or at such earlier time as a legend is no longer required
for certain Securities, the Company will no later than three (3) Trading
Days following the delivery by an Investor to the Transfer Agent of a
legended certificate representing such Securities or an exercise notice
pursuant to a Warrant, deliver or cause to be delivered to such Investor a
certificate representing such Securities that is free from all restrictive
and other legends. The Company may not make any notation on its records or
give instructions to the Transfer Agent that enlarge the restrictions on
transfer set forth in this Section.
If within three (3) Trading Days after the Transfer Agent's receipt of a
legended certificate representing such Securities or an exercise notice
pursuant to a Warrant, the Company's Transfer Agent shall fail to issue and
deliver to such Investor a certificate representing such Securities that is
free from all restrictive and other legends, and if on or after such
Trading Day the Investor purchases (in an open market transaction or
otherwise) shares of Common Stock to deliver in satisfaction of a sale by
the Investor of shares of Common Stock that the Investor anticipated
receiving from the Company without any restrictive legend (a "Buy-In"),
then the Company shall, within three (3) Trading Days after the Investor's
request and in the Investor's discretion, either (i) pay cash to the
Investor in an amount equal to the Investor's total purchase price
(including brokerage commissions, if any) for the shares of Common Stock so
purchased (the "Buy-In Price"), at which point the Company's obligation to
deliver such certificate shall terminate, or (ii) promptly honor its
obligation to deliver to the Investor a certificate or certificates
representing such shares of Common Stock and pay cash to the Investor in an
amount equal to the excess (if any) of the Buy-In Price over the
18
product of (A) such number of shares of Common Stock, times (B) the closing
bid price on the date of delivery of such legended certificate.
(c) The Company will not object to and shall permit (except as
prohibited by law) an Investor to pledge or grant a security interest in
some or all of the Securities in connection with a bona fide margin
agreement or other loan or financing arrangement secured by the Securities,
and if required under the terms of such agreement, loan or arrangement, the
Company will not object to and shall permit (except as prohibited by law)
such Investor to transfer pledged or secured Securities to the pledges or
secured parties. Except as required by law, such a pledge or transfer
would not be subject to approval of the Company, no legal opinion of the
pledgee, secured party or pledgor shall be required in connection
therewith, and no notice shall be required of such pledge. Each Investor
acknowledges that the Company shall not be responsible for any pledges
relating to, or the grant of any security interest in, any of the
Securities or for any agreement, understanding or arrangement between any
Investor and its pledgee or secured party. 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. Provided that the Company is in compliance with the terms of
this Section 4.1(c), the Company's indemnification obligations pursuant to
Section 6.4 shall not extend to any Proceeding or Losses arising out of or
related to this Section 4.1(c).
4.2 Furnishing of Information. As long as any Investor owns
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. Upon the reasonable request of any Investor, the Company
shall deliver to such Investor a written certification of a duly authorized
officer as to whether it has complied with the preceding sentence.
4.3 Integration. The Company shall not, and shall use its
commercially reasonably efforts to ensure that no Affiliate thereof 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 Investors or that would be integrated with
the offer or sale of the Securities for purposes of the rules and
regulations of any Trading Market.
4.4 Reservation of Securities. The Company shall maintain a reserve
from its duly authorized shares of Common Stock for issuance pursuant to
the Transaction Documents in such amount as may be required to fulfill its
obligations in full under the Transaction Documents. In the event that at
any time the then authorized shares of Common Stock are insufficient for
the Company to satisfy its obligations in full under the Transaction
Documents, the Company shall promptly take such actions as may be required
to increase the number of authorized shares.
4.5 Securities Laws Disclosure; Publicity. The Company shall, on or
before 8:30 a.m., New York time, on the first Trading Day following
execution of this Agreement, issue a press release acceptable to the
Investors disclosing all material terms of the transactions contemplated
19
hereby. On the Closing Date, the Company shall file a Current Report on
Form 8-K with the SEC (the "8-K Filing") describing the terms of the
transactions contemplated by the Transaction Documents and including as
exhibits to such Current Report on Form 8-K this Agreement and the form of
Warrants, in the form required by the Exchange Act. Thereafter, the
Company shall timely file any filings and notices required by the SEC or
applicable law with respect to the transactions contemplated hereby and
provide copies thereof to the Investors promptly after filing. Except with
respect to the 8-K Filing and the press release referenced above (a copy of
which will be provided to the Investors for their review as early as
practicable prior to its filing), the Company shall, at least two (2)
Trading Days prior to the filing or dissemination of any disclosure
required by this paragraph that references any Investor or the transactions
contemplated hereby, provide a copy thereof to each such Investor for their
review. The Company shall consult with each Investor in issuing any press
releases or otherwise making public statements or filings and other
communications with the SEC or any regulatory agency or Trading Market with
respect to the transactions contemplated hereby, and the Company shall not
issue any such press release or otherwise make any such public statement,
filing or other communication that references any Investor or the
transactions contemplated hereby without the prior consent of each such
Investor, except if such disclosure is required by law, in which case the
disclosing party shall promptly provide the other party with prior notice
of such public statement, filing or other communication. Each Investor
shall consult with the Company in issuing any press releases or otherwise
making public statements or filings and other communications with the SEC
or any regulatory agency or Trading Market with respect to the transactions
contemplated hereby, and no Investor shall issue any such press release or
otherwise make any such public statement, filing or other communication
that references the Company or the transactions contemplated hereby without
the prior consent of the Company, except if such disclosure is required by
law, in which case the disclosing party shall promptly provide the other
party with prior notice of such public statement, filing or other
communication. Notwithstanding the foregoing, neither the Company nor any
Investor shall publicly disclose the name of any other Investor, or include
the name of any other Investor in any press release without the prior
written consent of such Investor. The Company shall not, and shall cause
each of its Subsidiaries and its each of their respective officers,
directors, employees and agents not to, provide any Investor with any
material nonpublic information regarding the Company or any of its
Subsidiaries from and after the issuance of the above referenced press
release without the express written consent of such Investor.
4.6 Use of Proceeds. The Company may only use the net proceeds from
the sale of the Securities as contemplated in Schedule 4.6.
ARTICLE V
CONDITIONS
5.1 Conditions Precedent to the Obligations of the Investors. The
obligation of each Investor to acquire Securities at the Closing is subject
to the satisfaction or waiver by such Investor, at or before the Closing,
of each of the following conditions:
(a) Representations and Warranties. The representations and
warranties of the Company shall be true and correct in all material
respects (except for those representations and warranties that are
qualified by materiality or Material Adverse Effect, which shall be true
and
20
correct in all respects) as of the date when made and as of the Closing
Date as though made at that time (except for representations and warranties
that speak as of a specific date) and the Company shall have performed,
satisfied and complied in all material respects with the covenants,
agreements and conditions required by the Transaction Documents to be
performed, satisfied or complied with by the Company at or prior to the
Closing Date. Such Investor shall have received a certificate, executed by
the Chief Executive Officer of the Company, dated as of the Closing Date,
to the foregoing effect and as to such other matters as may be reasonably
requested by such Investor in the form attached hereto as Exhibit G and
(b) Performance. The Company and each other 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 it at or prior to the
Closing.
(c) The Company shall have delivered to such Investor a certificate
evidencing the formation and good standing of the Company and each of its
Subsidiaries in each such entity's jurisdiction of formation issued by the
Secretary of State (or comparable office) of such jurisdiction, as of a
date within 10 days of the Closing Date.
(d) The Company shall have delivered to such Investor a certificate
evidencing the Company's qualification as a foreign corporation and good
standing issued by the Secretary of State (or comparable office) of
Florida, the only jurisdiction in which the Company is required to be so
qualified, except where the failure to be so qualified and in good standing
could not reasonably be expected to cause a Material Adverse Effect as of a
date within 10 days of the Closing Date.
(e) The Company shall have delivered to such Investor a certified
copy of the Articles of Incorporation of the Company as certified by the
Secretary of State of its state of incorporation within ten (10) days of
the Closing Date.
(f) The Company shall have delivered to such Investor a certificate,
executed by the Secretary of the Company dated as of the Closing Date, as
to (i) the resolutions consistent with Section 3.1(c) as adopted by the
Company's Board of Directors in a form reasonably acceptable to such
Investor, (ii) the Articles of Incorporation, as in effect at the Closing
and (iii) the Bylaws, as in effect at the Closing, in the form attached
hereto as Exhibit H
(g) The Company shall have delivered to such Investor a letter from
the Company's transfer agent certifying the number of shares of Common
Stock outstanding as of a date within five days of the Closing Date.
(h) The Common Shares (i) shall be included for trading on the
Trading Market and (ii) shall not have been suspended, as of the Closing
Date, by the SEC or the Trading Market from trading on the Trading Market
nor shall suspension by the SEC or the Trading Market have been threatened,
as of the Closing Date, (A) in writing by the SEC or the Trading Market or
(B) by failing to meet the requirements of inclusion for trading of the
Trading Market.
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(i) The Company shall have obtained all governmental, regulatory or
third party consents and approvals, if any, necessary for the sale of the
Securities.
(j) each Investor shall have purchased and paid for the Common
Shares and Warrants being purchased by it on the Closing Date, and the
aggregate purchase price paid by all of the Investors for the Common Shares
and Warrants being purchased by them on the Closing Date shall be at least
$20,000,000; and
(k) The Company shall have delivered to such Investor such other
documents relating to the transactions contemplated by this Agreement as
such Investor or its counsel may reasonably request.
5.2 Conditions Precedent to the Obligations of the Company. The
obligation of the Company to sell the 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 Investors 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; and
(b) Performance. The Investors 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 the Investors at or prior to the Closing.
(c) The Investors shall have executed each of the Transaction
Documents to which it is a party and delivered the same to the Company.
(d) The Investors shall have delivered to the Company the Purchase
Price set forth opposite each Investor's name on Exhibit A hereto (less, in
the case of Magnetar Capital Master Fund, Ltd., the amounts withheld
pursuant to Section 7.2) for the Common Shares and Warrant Shares being
purchased by the Investors at the Closing by wire transfer of immediately
available funds pursuant to the wire instructions provided by the Company.
(e) The Investors, in the aggregate, shall have purchased and paid
for the Common Shares and Warrants being purchased by them on the Closing
Date, and the aggregate purchase price paid by all of the Investors for the
Common Shares and Warrants being purchased by them on the Closing Date
shall be at least $20,000,000;
ARTICLE VI
REGISTRATION RIGHTS
6.1 Registration.
(a) As promptly as possible, and in any event on or prior to the
Filing Date, the Company shall prepare and file with the SEC a Registration
Statement covering the resale of all
22
Registrable Securities for an offering to be made on a continuous basis
pursuant to Rule 415. The Registration Statement shall be on Form SB-2
(except if the Company is not then eligible to register for resale the
Registrable Securities on Form SB-2, in which case such registration shall
be on another appropriate form in accordance with the Securities Act and
the Exchange Act and as consented to by the Investors) and shall contain
(except if otherwise directed by the Investors or the SEC) the "Plan of
Distribution" attached hereto as Exhibit D. In the event that Form S-3 is
not available for the registration of the resale of Registrable Securities
hereunder, the Company shall (i) register the resale of the Registrable
Securities on another appropriate form reasonably acceptable to the
Required Holders and (ii) undertake to register the Registrable Securities
on Form S-3 as soon as either such form is available, provided that the
Company shall maintain the effectiveness of the Registration Statement then
in effect until such time as a Registration Statement on Form SB-2 covering
the Registrable Securities has been declared effective by the SEC or the
Company is no longer obligated to maintain a registration statement for the
Registrable Securities pursuant to the terms hereof.
(b) The Company shall use its reasonable best efforts to cause the
Registration Statement to be declared effective by the SEC as promptly as
possible after the filing thereof, but in any event prior to the Required
Effectiveness Date, and shall use its reasonable best efforts to keep the
Registration Statement continuously effective under the Securities Act
until the earlier of the date that all Registrable Securities covered by
such Registration Statement have been sold or can be sold publicly under
Rule 144(k) (the "Effectiveness Period").
(c) The Company shall notify the Investors in writing promptly (and
in any event within three (3) Business Days) after receiving notification
from the SEC that the Registration Statement has been declared effective.
(d) Should an Event (as defined below) occur, then upon the
occurrence of such Event, and on the earlier of the first monthly
anniversary thereof and the date the applicable Event is cured, as partial
relief for the damages suffered therefrom by the Investors (which remedy
shall not be exclusive of any other remedies available under this
Agreement, at law or in equity), the Company shall pay to each Investor an
amount in cash, as liquidated damages and not as a penalty, equal to 4.0%
of (i) the number of Securities held by such Investor as of the date of
such Event, multiplied by (ii) the purchase price paid by such Investor for
such Securities then held. For each monthly anniversary after the first
monthly anniversary of such Event until the applicable Event is cured, as
partial relief for the damages suffered therefrom by the Investors (which
remedy shall not be exclusive of any other remedies available under this
Agreement, at law or in equity), the Company shall pay to each Investor an
amount in cash, as liquidated damages and not as a penalty, equal to 3.0%
of (i) the number of Securities held by such Investor as of the date of
such Event, multiplied by (ii) the purchase price paid by such Investor for
such Securities then held. The payments to which an Investor shall be
entitled pursuant to this Section 6.1(d) are referred to herein as "Event
Payments". Any Event Payments payable pursuant to the terms hereof shall
apply on a pro-rata basis for any portion of a month prior to the cure of
an Event. In the event the Company fails to make Event Payments in a
timely manner, such Event Payments shall bear interest at the rate of 1.0%
per month (prorated for partial months) until paid in full. All pro rated
calculations made pursuant to this paragraph shall be based upon the actual
number of days in such pro rated month.
23
For such purposes, each of the following shall constitute an "Event":
(i) the Registration Statement is not filed on or prior to the
Filing Date (if the Company files a Registration Statement without
affording the Investors the opportunity to review and comment on the same
as required herein, the Company shall not be deemed to have satisfied this
requirement) or is not declared effective on or prior to the Required
Effectiveness Date;
(ii) except (A) as provided for in Section 6.1(e), (B) if the
Company is involved in a "Rule 13e-3 transaction" as defined in Rule 13e-3
under the Exchange Act, or (C) a merger or consolidation of the Company or
a sale of more than one-half of the assets of the Company in one or a
series of related transactions, unless following such transaction or series
of transactions, the holders of the Company's securities prior to the first
such transaction continue to hold at least 50% of the voting rights and
equity interests of the surviving entity or acquirer (clauses (B) and (C),
collectively, the "Excluded Events"), after the Effective Date, an Investor
is not permitted to sell Registrable Securities under the Registration
Statement (or a subsequent Registration Statement filed in replacement
thereof) for any reason (other than the fault of such Investor) for five or
more Trading Days (whether or not consecutive);
(iii) except as a result of the Excluded Events, the Common
Stock is not listed or quoted, or is suspended from trading, on an Eligible
Market for a period of three Trading Days (which need not be consecutive
Trading Days) during the Effectiveness Period;
(iv) the Company fails for any reason to deliver a certificate
evidencing any Securities to an Investor within three Trading Days after
delivery of such certificate is required pursuant to any Transaction
Document or the exercise rights of the Investors pursuant to the Warrants
are otherwise suspended for any reason; or
(v) the Company fails to have available a sufficient number of
authorized but unissued and otherwise unreserved shares of Common Stock
available to issue Warrant Shares upon any exercise of the Warrants or,
except as a result of the Excluded Events, during the Effectiveness Period,
any Shares or Warrant Shares are not listed on an Eligible Market.
(e) Notwithstanding anything in this Agreement to the contrary,
after sixty (60) consecutive Trading Days of continuous effectiveness of
the initial Registration Statement filed and declared effective pursuant to
this Agreement, the Company may, by written notice to the Investors,
suspend sales under a Registration Statement after the Effective Date
thereof and/or require that the Investors immediately cease the sale of
shares of Common Stock pursuant thereto and/or defer the filing of any
subsequent Registration Statement if the Company is engaged in a material
merger, acquisition or sale and the Board of Directors determines in good
faith, by appropriate resolutions, that, as a result of such activity, (A)
it would be materially detrimental to the Company (other than as relating
solely to the price of the Common Stock) to maintain a Registration
Statement at such time and (B) it is in the best interests of the Company
to defer proceeding with such registration at such time. Notwithstanding
the foregoing, the Company shall not provide the Investors with any
material non-public information about the foregoing merger, sale or
acquisition unless the Investors so request to receive such information.
Upon receipt of such notice, each Investor shall immediately discontinue
any sales of Registrable Securities pursuant to such registration until
such Investor has
24
received copies of a supplemented or amended Prospectus or until such
Investor is advised in writing by the Company that the then-current
Prospectus may be used and has received copies of any additional or
supplemental filings that are incorporated or deemed incorporated by
reference in such Prospectus. In no event, however, shall this right be
exercised to suspend sales beyond the period during which (in the good
faith determination of the Company's Board of Directors) the failure to
require such suspension would be materially detrimental to the Company.
The Company's rights under this Section 6(e) may be exercised for a period
of no more than twenty (20) days at a time and not more than three times in
any twelve-month period, without such suspension being considered as part
of an Event Payment determination. Immediately after the end of any
suspension period under this Section 6(e), the Company shall take all
necessary actions (including filing any required supplemental prospectus)
to restore the effectiveness of the applicable Registration Statement and
the ability of the Investors to publicly resell their Registrable
Securities pursuant to such effective Registration Statement.
(f) The Company shall not, from the date hereof until the Effective
Date of the Registration Statement, prepare and file with the SEC a
registration statement relating to an offering for its own account or the
account of others under the Securities Act of any of its equity securities,
except for stock option plans on Form S-8.
6.2 Registration Procedures. In connection with the Company's
registration obligations hereunder, the Company shall:
(a) Not less than three Trading Days prior to the filing of a
Registration Statement or any related Prospectus or any amendment or
supplement thereto (including any document that would be incorporated or
deemed to be incorporated therein by reference), furnish to Lead Investor
Counsel copies of all such documents proposed to be filed, which documents
(other than those incorporated or deemed to be incorporated by reference)
will be subject to the review of such Investors and Investor Counsel. The
Company shall reflect in each such document when so filed with the SEC such
comments as Lead Investor Counsel may reasonably and promptly propose.
(b) (i) Subject to Section 6.1(e), prepare and file with the SEC
such amendments, including post-effective amendments, to each Registration
Statement and the Prospectus used in connection therewith as may be
necessary to keep the Registration Statement continuously effective, as to
the applicable Registrable Securities for the Effectiveness Period; (ii)
cause the related Prospectus to be amended or supplemented by any required
Prospectus supplement, and as so supplemented or amended to be filed
pursuant to Rule 424; (iii) respond as promptly as reasonably possible,
(except to the extent that the Company reasonably requires additional time
to respond to accounting comments), to any comments received from the SEC
with respect to the Registration Statement or any amendment thereto and as
promptly as reasonably possible provide the Lead Investor Counsel true and
complete copies of all correspondence from and to the SEC relating to the
Registration Statement; and (iv) comply in all material respects with the
provisions of the Securities Act and the Exchange Act with respect to the
disposition of all Registrable Securities covered by the Registration
Statement during the applicable period in accordance with the intended
methods of disposition by the Investors thereof set forth in the
Registration Statement as so amended or in such Prospectus as so
supplemented.
25
(c) Notify the Lead Investor Counsel as promptly as reasonably
possible of any of the following events: (i) the SEC notifies the Company
whether there will be a "review" of any Registration Statement; (ii) the
SEC comments in writing on any Registration Statement (in which case the
Company shall deliver to the Lead Investor Counsel a copy of such comments
and of all written responses thereto); (iii) any Registration Statement or
any post-effective amendment is declared effective; (iv) the SEC or any
other Federal or state governmental authority requests any amendment or
supplement to any Registration Statement or Prospectus or requests
additional information related thereto; (v) the SEC issues any stop order
suspending the effectiveness of any Registration Statement or initiates any
Proceedings for that purpose; (vi) the Company receives notice of any
suspension of the qualification or exemption from qualification of any
Registrable Securities for sale in any jurisdiction, or the initiation or
threat of any Proceeding for such purpose; or (vii) the financial
statements included in any Registration Statement become ineligible for
inclusion therein or any statement made in any Registration Statement or
Prospectus or any document incorporated or deemed to be incorporated
therein by reference is untrue in any material respect or any revision to a
Registration Statement, Prospectus or other document is required so that it
will not contain 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 therein, in the light of the circumstances under which they were
made, not misleading.
(d) Use its reasonable best efforts to avoid the issuance of or, if
issued, obtain the withdrawal of (i) any order suspending the effectiveness
of any Registration Statement, or (ii) any suspension of the qualification
(or exemption from qualification) of any of the Registrable Securities for
sale in any jurisdiction, as soon as possible.
(e) If requested by an Investor, provide such Investor with without
charge, at least one conformed copy of each Registration Statement and each
amendment thereto, including financial statements and schedules, and all
exhibits to the extent requested by such Person (including those previously
furnished or incorporated by reference) promptly after the filing of such
documents with the SEC.
(f) Promptly deliver to each Investor and Lead Investor Counsel,
without charge, as many copies of the Prospectus or Prospectuses (including
each form of prospectus) and each amendment or supplement thereto as such
Persons may reasonably request. The Company hereby consents to the use of
such Prospectus and each amendment or supplement thereto by each of the
selling Investors in connection with the offering and sale of the
Registrable Securities covered by such Prospectus and any amendment or
supplement thereto to the extent permitted by federal and state securities
laws and regulations.
(g) (i) In the time and manner required by each Trading Market,
prepare and file with such Trading Market an additional shares listing
application covering all of the Registrable Securities; (ii) take all steps
necessary to cause such Registrable Securities to be approved for listing
on each Trading Market as soon as reasonably possible thereafter; (iii)
provide to Investor Counsel evidence of such listing; and (iv) except as a
result of the Excluded Events, during the Effectiveness Period, maintain
the listing of such Registrable Securities on each such Trading Market or
another Eligible Market.
26
(h) Prior to any public offering of Registrable Securities, use its
reasonable best efforts to register or qualify or cooperate with the
selling Investors and Lead Investor Counsel in connection with the
registration or qualification (or exemption from such registration or
qualification) of such Registrable Securities for offer and sale under the
securities or Blue Sky laws of such jurisdictions within the United States
as any Investor requests in writing, to keep each such registration or
qualification (or exemption therefrom) effective for so long as required,
but not to exceed the duration of the Effectiveness Period, and to do any
and all other acts or things reasonably necessary or advisable to enable
the disposition in such jurisdictions of the Registrable Securities covered
by a Registration Statement; provided, however, that the Company shall not
be obligated to file any general consent to service of process or to
qualify as a foreign corporation or as a dealer in securities in any
jurisdiction in which it is not so qualified or to subject itself to
taxation in respect of doing business in any jurisdiction in which it is
not otherwise so subject.
(i) Cooperate with the Investors to facilitate the timely
preparation and delivery of certificates representing Registrable
Securities to be delivered to a transferee pursuant to a Registration
Statement, which certificates shall be free, to the extent permitted by
this Agreement and under law, of all restrictive legends, and to enable
such Registrable Securities to be in such denominations and registered in
such names as any such Investors may reasonably request.
(j) Upon the occurrence of any event described in Section
6.2(c)(vii), as promptly as reasonably possible, prepare a supplement or
amendment, including a post-effective amendment, to the Registration
Statement or a supplement to the related Prospectus or any document
incorporated or deemed to be incorporated therein by reference, and file
any other required document so that, as thereafter delivered, neither the
Registration Statement nor such Prospectus will contain an untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(k) Cooperate with any reasonable due diligence investigation
undertaken by the Investors in connection with the sale of Registrable
Securities, including, without limitation, by making available documents
and information; provided that the Company will not deliver or make
available to any Investor material, nonpublic information unless such
Investor specifically requests in advance to receive material, nonpublic
information in writing.
(l) Comply with all rules and regulations of the SEC applicable to
the registration of the Securities.
(m) To the extent any Investor is deemed, or be deemed, to be an
underwriter, at the reasonable request of any Investor, the Company shall
furnish to such Investor, on the date of the effectiveness of the
Registration Statement and thereafter from time to time on such dates as an
Investor may reasonably request (i) a letter, dated such date, from the
Company's independent certified public accountants in form and substance as
is customarily given by independent certified public accountants to
underwriters in an underwritten public offering, addressed to the
Investors, and (ii) an opinion, dated as of such date, of counsel
representing the Company for purposes of such Registration Statement, in
form, scope and substance as is, at the time requested, customarily given
by counsel to an issuer in an underwritten public offering, addressed to
the Investors.
27
(n) To the extent any Investor is deemed, or may be deemed, to be an
underwriter, the Company shall make available for inspection by (i) any
Investor, (ii) Legal Counsel and (iii) one firm of accountants or other
agents retained by the Investors (collectively, the "Inspectors"), all
pertinent financial and other records, and pertinent corporate documents
and properties of the Company (collectively, the "Records"), as shall be
reasonably deemed necessary by each Inspector, and cause the Company's
officers, directors and employees to supply all information which any
Inspector may reasonably request; provided, however, that each Inspector
shall agree to hold in strict confidence and shall not make any disclosure
(except to an Investor) or use of any Record or other information which the
Company determines in good faith to be confidential, and of which
determination the Inspectors are so notified, unless (a) the disclosure of
such Records is necessary to avoid or correct a misstatement or omission in
any Registration Statement or is otherwise required under the Securities
Act, (b) the release of such Records is ordered pursuant to a final, non-
appealable subpoena or order from a court or government body of competent
jurisdiction, or (c) the information in such Records has been made
generally available to the public other than by disclosure in violation of
this or any other agreement of which the Inspector has knowledge. Each
Investor agrees that it shall, upon learning that disclosure of such
Records is sought in or by a court or governmental body of competent
jurisdiction or through other means, give prompt notice to the Company and
allow the Company, at its expense, to undertake appropriate action to
prevent disclosure of, or to obtain a protective order for, the Records
deemed confidential. Nothing herein (or in any other confidentiality
agreement between the Company and any Investor) shall be deemed to limit
the Investors' ability to sell Registrable Securities in a manner which is
otherwise consistent with applicable laws and regulations.
6.3 Registration Expenses. The Company shall pay all fees and
expenses incident to the performance of or compliance with Article VI of
this Agreement by the Company, including, without limitation, the
following: (a) all registration and filing fees and expenses, including
without limitation those related to filings with the SEC, any Trading
Market and in connection with applicable state securities or Blue Sky laws,
(b) messenger, telephone and delivery expenses (c) printing expenses
(including, without limitation, expenses of printing certificates for
Registrable Securities), (d) fees and disbursements of counsel for the
Company and up to $10,000 for fees and disbursements of Lead Investor
Counsel; provided, that such amount shall be limited to $5,000 if the SEC
does not review the Registration Statement, (e) fees and expenses of all
other Persons retained by the Company in connection with the consummation
of the transactions contemplated by this Agreement, and (f) all listing
fees to be paid by the Company to the Trading Market, to the extent
applicable.
6.4 Indemnification
(a) Indemnification by the Company. The Company shall,
notwithstanding any termination of this Agreement, indemnify and hold
harmless each Investor, the officers, directors, partners, members, agents
and employees of each of them, each Person who controls any such Investor
(within the meaning of Section 15 of the Securities Act or Section 20 of
the Exchange Act) and the officers, directors, partners, members, agents
and employees of each such controlling Person, to the fullest extent
permitted by applicable law, from and against any and all Losses, as
incurred, arising out of or relating to (i) any misrepresentation or breach
of any representation or warranty made by the Company in the Transaction
Documents or any other certificate, instrument or
28
document furnished hereunder or thereunder, (ii) any breach of any
covenant, agreement or obligation of the Company contained in the
Transaction Documents or any other certificate, instrument or document
furnished hereunder or thereunder, (iii) any cause of action, suit or claim
brought or made against such Indemnified Party (as defined in Section
6.4(c) below) by a third party (including for these purposes a derivative
action brought on behalf of the Company), arising out of or resulting from
(x) execution, delivery, performance or enforcement of the Transaction
Documents or any other certificate, instrument or document furnished
hereunder or thereunder, (y) any transaction financed or to be financed in
whole or in part, directly or indirectly, with the proceeds of the issuance
of the Securities, or (z) the status of Indemnified Party as holder of the
Securities or (iv) any untrue or alleged untrue statement of a material
fact contained in the Registration Statement, any Prospectus or any form of
Company prospectus or in any amendment or supplement thereto or in any
Company preliminary prospectus, or arising out of or relating to any
omission or alleged omission of a material fact required to be stated
therein or necessary to make the statements therein (in the case of any
Prospectus or form of prospectus or supplement thereto, in the light of the
circumstances under which they were made) not misleading, except to the
extent, but only to the extent, that (A) such untrue statements, alleged
untrue statements, omissions or alleged omissions are based solely upon
information regarding such Investor furnished in writing to the Company by
such Investor for use therein, or to the extent that such information
relates to such Investor or such Investor's proposed method of distribution
of Registrable Securities, or (B) in the case of an occurrence of an event
of the type specified in Section 6.2(c)(v)-(vii), the use by such Investor
of an outdated or defective Prospectus after the Company has timely
notified such Investor in writing that the Prospectus is outdated or
defective and prior to the receipt by such Investor of the Advice
contemplated in Section 6.5. The Company shall notify the Investors
promptly of the institution, threat or assertion of any Proceeding,
investigation or partial proceeding (such as a disposition), whether
commenced or threatened in writing (each, an "Indemnification Proceeding"),
of which the Company is aware in connection with the transactions
contemplated by this Agreement.
(b) Indemnification by Investors. Each Investor shall, severally
and not jointly, indemnify and hold harmless the Company to the fullest
extent permitted by applicable law, from and against all Losses (as
determined by a court of competent jurisdiction in a final judgment not
subject to appeal or review) arising solely out of any untrue statement of
a material fact contained in the Registration Statement, any Prospectus, or
any form of prospectus, or in any amendment or supplement thereto, or
arising solely out of any omission of a material fact required to be stated
therein or necessary to make the statements therein (in the case of any
Prospectus or form of prospectus or supplement thereto, in the light of the
circumstances under which they were made) not misleading to the extent, but
only to the extent, that such untrue statement or omission is contained in
any information so furnished by such Investor to the Company specifically
for inclusion in such Registration Statement or such Prospectus or to the
extent that (i) such untrue statements or omissions are based solely upon
information regarding such Investor furnished to the Company by such
Investor expressly for use therein, or to the extent that such information
relates to such Investor or such Investor's proposed method of distribution
of Registrable Securities and was reviewed and expressly approved in
writing by such Investor expressly for use in the Registration Statement,
such Prospectus or such form of Prospectus or in any amendment or
supplement thereto or (ii) in the case of an occurrence of an event of the
type specified in Section 6.2(c)(v)-(vii), the use by such Investor of an
outdated or defective Prospectus after the Company has notified such
Investor in writing that the Prospectus is outdated or defective and prior
to the receipt by such Investor of the Advice
29
contemplated in Section 6.5. In no event shall the liability of any
selling Investor hereunder be greater in amount than the dollar amount of
the net proceeds received by such Investor upon the sale of the Registrable
Securities giving rise to such indemnification obligation.
(c) Conduct of Indemnification Proceedings. If any Indemnification
Proceeding shall be brought or asserted against any Person entitled to
indemnity hereunder (an "Indemnified Party"), such Indemnified Party shall
promptly notify the Person from whom indemnity is sought (the "Indemnifying
Party") in writing, and the Indemnifying Party shall assume the defense
thereof, including the employment of counsel reasonably satisfactory to the
Indemnified Party and the payment of all fees and expenses incurred in
connection with defense thereof; provided, that the failure of any
Indemnified Party to give such notice shall not relieve the Indemnifying
Party of its obligations or liabilities pursuant to this Agreement, except
(and only) to the extent that it shall be finally determined by a court of
competent jurisdiction (which determination is not subject to appeal or
further review) that such failure shall have proximately and materially
adversely prejudiced the Indemnifying Party.
An Indemnified Party shall have the right to employ separate counsel
in any such Indemnification Proceeding, and to participate in the defense
thereof, but the fees and expenses of such counsel shall be at the expense
of such Indemnified Party or Parties unless: (i) the Indemnifying Party
has agreed in writing to pay such fees and expenses; or (ii) the
Indemnifying Party shall have failed promptly to assume the defense of such
Indemnification Proceeding and to employ counsel reasonably satisfactory to
such Indemnified Party in any such Indemnification Proceeding or (iii) the
named parties to any such Indemnification Proceeding (including any
impleaded parties) include both such Indemnified Party and the Indemnifying
Party, and such Indemnified Party shall have been advised by its counsel
that a conflict of interest is likely to exist if the same counsel were to
represent such Indemnified Party and the Indemnifying Party (in which case,
if such Indemnified Party notifies the Indemnifying Party in writing that
it elects to employ separate counsel at the expense of the Indemnifying
Party, the Indemnifying Party shall not have the right to assume the
defense thereof and such counsel shall be at the expense of the
Indemnifying Party). It being understood, however, that the Indemnifying
Party shall not, in connection with any one such Indemnification Proceeding
be liable for the fees and expenses of more than one separate firm of
attorneys at any time for all Indemnified Parties, which firm shall be
appointed by a majority of the Indemnified Parties; provided, however, that
in the case a single firm of attorneys would be inappropriate due to actual
or potential differing interests of conflicts between such Indemnified
Parties and any other party represented by such counsel in such
Indemnification Proceeding, or otherwise, then the Indemnifying Party shall
be liable for the fees and expenses of one additional firm of attorneys
with respect to such Indemnified Parties. The Indemnifying Party shall not
be liable for any settlement of any such Indemnification Proceeding
effected without its written consent, which consent shall not be
unreasonably withheld. No Indemnifying Party shall, without the prior
written consent of the Indemnified Party, effect any settlement of any
pending Indemnification Proceeding in respect of which any Indemnified
Party is a party, unless such settlement includes an unconditional release
of such Indemnified Party from all liability on claims that are the subject
matter of such Indemnification Proceeding.
All out-of-pocket fees and expenses of the Indemnified Party
(including reasonable out-of-pocket fees and expenses to the extent
incurred in connection with investigating or preparing to
30
defend such Indemnification Proceeding in a manner not inconsistent with
this Section) shall be paid to the Indemnified Party, as incurred, within
thirty (30) days of written notice thereof to the Indemnifying Party
(regardless of whether it is ultimately determined that an Indemnified
Party is not entitled to indemnification hereunder; provided, that the
Indemnifying Party may require such Indemnified Party to undertake to
reimburse all such fees and expenses to the extent it is finally judicially
determined that such Indemnified Party is not entitled to indemnification
hereunder).
6.5 Dispositions. Each Investor agrees that it will comply with the
prospectus delivery requirements of the Securities Act as applicable to it
in connection with sales of Registrable Securities pursuant to the
Registration Statement. Each Investor further agrees that, upon receipt of
a notice from the Company of the occurrence of any event of the kind
described in Sections 6.2(c)(v), (vi) or (vii), such Investor will
discontinue disposition of such Registrable Securities under the
Registration Statement until such Investor's receipt of the copies of the
supplemented Prospectus and/or amended Registration Statement contemplated
by Section 6.2(j), or until it is advised in writing (the "Advice") by the
Company that the use of the applicable Prospectus may be resumed, and, in
either case, has received copies of any additional or supplemental filings
that are incorporated or deemed to be incorporated by reference in such
Prospectus or Registration Statement. The Company may provide appropriate
stop orders to enforce the provisions of this paragraph.
6.6 No Piggyback on Registrations. Neither the Company nor any of
its security holders (other than the Investors in such capacity pursuant
hereto) may include securities of the Company in the Registration Statement
other than the Registrable Securities, and the Company shall not after the
date hereof enter into any agreement providing any such right to any of its
security holders.
6.7 Piggy-Back Registrations. If at any time during the
Effectiveness Period there is not an effective Registration Statement
covering all of the Registrable Securities and the Company shall determine
to prepare and file with the SEC a registration statement relating to an
offering for its own account or the account of others under the Securities
Act of any of its equity securities, other than on Form S-4 or Form S-8
(each as promulgated under the Securities Act) or their then equivalents
relating to equity securities to be issued solely in connection with any
acquisition of any entity or business or equity securities issuable in
connection with stock option or other employee benefit plans, then the
Company shall send to each Investor written notice of such determination
and if, within ten days after receipt of such notice, any such Investor
shall so request in writing, the Company shall include in such registration
statement all or any part of such Registrable Securities such Investor
requests to be registered.
ARTICLE VII
MISCELLANEOUS
7.1 Termination. This Agreement may be terminated by the Company or
any Investor, by written notice to the other parties, if the Closing has
not been consummated by the third Business Day following the date of this
Agreement; provided that no such termination will affect the right of any
party to xxx for any breach by the other party (or parties).
31
7.2 Fees and Expenses. At the Closing, the Company shall pay to the
Lead Investor an aggregate of $50,000 for the Lead Investor Counsel legal
fees and expenses incurred in connection with its due diligence and the
preparation and negotiation of the Transaction Documents. In lieu of the
foregoing payment, the Lead Investor may retain such amount at the Closing
or require the Company to pay such amount directly to Lead Investor
Counsel. Except as expressly set forth in the Transaction Documents to the
contrary, 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 this Agreement. The Company shall pay all
Transfer Agent fees, stamp taxes and other taxes and duties levied in
connection with the sale and issuance of their applicable Securities.
7.3 Entire Agreement. The Transaction Documents, together with the
Exhibits and Schedules thereto and the Contribution Agreement dated the
date hereof by and among the Company and each of the investors signatory
thereto, contain the entire understanding of the parties with respect to
the subject matter hereof and supersede all prior agreements and
understandings, oral or written, with respect to such matters, which the
parties acknowledge have been merged into such documents, exhibits and
schedules. At or after the Closing, and without further consideration, the
Company and the Investor will execute and deliver such further documents as
may be reasonably requested in writing by the other party hereto in order
to give practical effect to the intention of the parties under the
Transaction Documents.
7.4 Notices. Any and all notices or other communications or
deliveries required or permitted to be provided hereunder shall be in
writing and shall be deemed given and effective on the earliest of (a) the
date of transmission, if such notice or communication is delivered via
facsimile at the facsimile number specified in this Section prior to 5:30
p.m. (New York City time) on a Trading Day, (b) the next Trading Day after
the date of transmission, if such notice or communication is delivered via
facsimile at the facsimile number specified in this Section on a day that
is not a Trading Day or later than 5:30 p.m. (New York City time) on any
Trading Day, (c) the Trading Day following the date of deposit with a
nationally recognized overnight courier service, or (d) upon actual receipt
by the party to whom such notice is required to be given. The addresses
and facsimile numbers for such notices and communications are those set
forth on the signature pages hereof, or such other address or facsimile
number as may be designated in writing hereafter, in the same manner, by
any such Person.
7.5 Amendments; Waivers. No provision of this Agreement may be
waived or amended except in a written instrument signed, in the case of an
amendment, by the Company and the holders of at least a majority of the
Registrable Securities. Investors or, in the case of a waiver, by the
party against whom enforcement of any such waiver is sought. 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.
7.6 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
32
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.
7.7 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 Investors.
Any Investor may assign its rights under this Agreement to any Person to
whom such Investor assigns or transfers any Securities in compliance with
all applicable securities laws and regulations, provided such transferee
agrees in writing to be bound, with respect to the transferred Securities,
by the provisions hereof that apply to the "Investors." Notwithstanding
anything to the contrary herein, Securities may be assigned to any Person
in connection with a bona fide margin account or other loan or financing
arrangement secured by such Securities.
7.8 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 that each Indemnified Party
is an intended third party beneficiary of Section 6.4 and (in each case)
may enforce the provisions of said Section directly against the parties
with obligations thereunder.
7.9 Governing Law; Venue; Waiver of Jury Trial. THE CORPORATE LAWS
OF THE STATE OF NEW YORK SHALL GOVERN ALL ISSUES CONCERNING THE RELATIVE
RIGHTS OF THE COMPANY AND ITS STOCKHOLDERS. ALL QUESTIONS CONCERNING THE
CONSTRUCTION, VALIDITY, ENFORCEMENT AND INTERPRETATION OF THIS AGREEMENT
SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS
OF THE STATE OF NEW YORK. THE COMPANY AND EACH OF THE INVESTORS HEREBY
IRREVOCABLY SUBMIT TO THE EXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL
COURTS SITTING IN THE CITY OF NEW YORK, BOROUGH OF MANHATTAN FOR THE
ADJUDICATION OF ANY DISPUTE BROUGHT BY THE COMPANY OR ANY INVESTOR
HEREUNDER, IN CONNECTION HEREWITH OR WITH ANY TRANSACTION CONTEMPLATED
HEREBY OR DISCUSSED HEREIN (INCLUDING WITH RESPECT TO THE ENFORCEMENT OF
ANY OF THE TRANSACTION DOCUMENTS), AND HEREBY IRREVOCABLY WAIVE, AND AGREE
NOT TO ASSERT IN ANY SUIT, ACTION OR PROCEEDING BROUGHT BY THE COMPANY OR
ANY INVESTOR, ANY CLAIM THAT IT IS NOT PERSONALLY SUBJECT TO THE
JURISDICTION OF ANY SUCH COURT, OR THAT SUCH SUIT, ACTION OR PROCEEDING IS
IMPROPER. EACH PARTY HEREBY IRREVOCABLY WAIVES PERSONAL SERVICE OF PROCESS
AND CONSENTS TO PROCESS BEING SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING
BY MAILING A COPY THEREOF VIA REGISTERED OR CERTIFIED MAIL OR OVERNIGHT
DELIVERY (WITH EVIDENCE OF DELIVERY) TO SUCH PARTY AT THE ADDRESS IN EFFECT
FOR NOTICES TO IT UNDER THIS AGREEMENT AND AGREES THAT SUCH SERVICE SHALL
CONSTITUTE GOOD AND SUFFICIENT SERVICE OF PROCESS AND NOTICE THEREOF.
NOTHING CONTAINED HEREIN SHALL BE DEEMED TO LIMIT IN ANY WAY ANY RIGHT TO
SERVE PROCESS IN ANY MANNER PERMITTED BY LAW. THE COMPANY AND EACH OF THE
INVESTORS HEREBY WAIVE ALL RIGHTS TO A TRIAL BY JURY WITH RESPECT TO ANY
SUCH SUIT, ACTION OR PROCEEDING.
33
7.10 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 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 signature page were an original thereof.
7.11 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.
7.12 Rescission and Withdrawal Right. Notwithstanding anything to
the contrary contained in (and without limiting any similar provisions of)
the Transaction Documents, whenever any Investor exercises a right,
election, demand or option owed to such Investor by the Company under a
Transaction Document and the Company does not timely perform its related
obligations within the periods therein provided, then, prior to the
performance by the Company of the Company's related obligation, such
Investor may rescind or withdraw, in its sole discretion from time to time
upon written notice to such Seller, any relevant notice, demand or election
in whole or in part without prejudice to its future actions and rights.
7.13 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 the
execution by the holder thereof of a customary lost certificate affidavit
of that fact and an agreement to indemnify and hold harmless the Company
for any losses in connection therewith. The Person requesting a new
certificate or instrument under such circumstances shall also pay any
reasonable third-party costs associated with the issuance of such
replacement Securities.
7.14 Remedies. In addition to being entitled to exercise all rights
provided herein or granted by law, including recovery of damages, each of
the Investors and the Company will be entitled to seek 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
(other than in connection with any action for temporary restraining order)
the defense that a remedy at law would be adequate.
34
7.15 Payment Set Aside. To the extent that the Company makes a
payment or payments to any Investor hereunder or any Investor enforces or
exercises its rights hereunder or 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 by 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.
7.16 Independent Nature of Investors' Obligations and Rights. The
obligations of each Investor under any Transaction Document are several and
not joint with the obligations of any other Investor, and no Investor shall
be responsible in any way for the performance of the obligations of any
other Investor under any Transaction Document. The decision of each
Investor to purchase Securities pursuant to this Agreement has been made by
such Investor independently of any other Investor and independently of any
information, materials, statements or opinions as to the business, affairs,
operations, assets, properties, liabilities, results of operations,
condition (financial or otherwise) or prospects of the Company or of any
Subsidiary which may have been made or given by any other Investor or by
any agent or employee of any other Investor, and no Investor or any of its
agents or employees shall have any liability to any other Investor (or any
other person) relating to or arising from any such information, materials,
statements or opinions. Nothing contained herein or in any Transaction
Document, and no action taken by any Investor pursuant thereto, shall be
deemed to constitute the Investors as a partnership, an association, a
joint venture or any other kind of entity, or create a presumption that the
Investors are in any way acting in concert or as a group with respect to
such obligations or the transactions contemplated by the Transaction
Document. Each Investor acknowledges that no other Investor has acted as
agent for such Investor in connection with making its investment hereunder
and that no other Investor will be acting as agent of such Investor in
connection with monitoring its investment hereunder. Each Investor shall
be entitled to independently protect and enforce its rights, including
without limitation the rights arising out of this Agreement or out of the
other Transaction Documents, and it shall not be necessary for any other
Investor to be joined as an additional party in any proceeding for such
purpose.
[SIGNATURE PAGES TO FOLLOW]
35
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.
BRAVO! FOODS INTERNATIONAL CORP.
By: _______________________________
Name:
Title:
Address for Notice:
____________________________________
____________________________________
Facsimile No.:
with a copy to:
____________________________________
____________________________________
____________________________________
Facsimile No.:
Investor Signature Page
-----------------------
By its execution and delivery of this signature page, the undersigned
Investor hereby joins in and agrees to be bound by the terms and conditions
of the Securities Purchase Agreement dated as of __________, 2005 (the
"Purchase Agreement") by and among Bravo! Foods International Corp. and the
Investors (as defined therein), as to the number of shares of Common Stock
and Warrants set forth below, and authorizes this signature page to be
attached to the Purchase Agreement or counterparts thereof.
Name of Investor:
____________________________________
By: _______________________________
Name:
Title:
Address: __________________________
____________________________________
____________________________________
Telephone No.: ____________________
Facsimile No.: ____________________
Number of Shares: _________________
Number of Warrants: _______________
Aggregate Purchase Price: $ ________
Agreed to and accepted this
___ day of ________, 2005
BRAVO! FOODS INTERNATIONAL CORP.
By: _________________________
Name:
Title:
Exhibits:
A Schedule of Investors
B Instruction Sheet for Investors
B-1 Stock Certificate Questionnaire
X-0 Xxxxxxxxxxxx Xxxxxxxxx Xxxxxxxxxxxxx
X-0 Certificate for Corporate, Partnership, Trust, Foundation and Joint
Investors
C Opinion of Company Counsel
D Plan of Distribution
E Company Transfer Agent Instructions
F Form of Warrant
G Form of Officer's Certificate
H Form of Secretary's Certificate
Exhibit A
Schedule of Investors
---------------------
Investor Common Shares Warrant Shares Purchase Price
---------------------------------- ------------- -------------- --------------
Lombard Odier Darier Xxxxxxx & Cie 12,000,000 4,500,000 $ 6,000,000
Magnetar Capital Master Fund, Ltd. 10,000,000 3,750,000 $ 5,000,000
Kings Road Investments Ltd. 5,500,000 2,062,500 $ 2,750,000
Radcliffe SPC, Ltd. 5,500,000 2,062,500 $ 2,750,000
Lagunitas Partners LP 1,256,316 471,119 $ 628,158
Xxxxxx & XxXxxxx International 343,684 128,881 $ 171,842
Xxx D and Xxxxx X Xxxxxx Trust 400,000 150,000 $ 200,000
JMG Triton Offshore Fund, Ltd. 800,000 300,000 $ 400,000
JMG Capital Partners, LP 800,000 300,000 $ 400,000
Capital Ventures International 1,200,000 450,000 $ 600,000
UBS X'Xxxxxx LLC PIPES Corporate
Strategies Master Limited 1,200,000 450,000 $ 600,000
Whalehaven Capital Fund Limited 1,000,000 375,000 $ 500,000
Alpha Capital 500,000 187,500 $ 250,000
---------- ---------- -----------
TOTAL 40,500,000 15,187,500 $20,250,000
Exhibit B
INSTRUCTION SHEET FOR INVESTOR
------------------------------
(to be read in conjunction with the entire Securities Purchase Agreement)
A. Complete the following items in the Securities Purchase Agreement:
1. Complete and execute the Investor Signature Page. The
Agreement must be executed by an individual authorized to bind
the Investor.
2. Exhibit B-1 - Stock Certificate Questionnaire:
Provide the information requested by the Stock Certificate
Questionnaire;
3. Exhibit B-2 - Registration Statement Questionnaire:
Provide the information requested by the Registration Statement
Questionnaire.
4. Exhibit B-3 /B-4 - Investor Certificate:
Provide the information requested by the Certificate for Individual
Investors (B-3) or the Certificate for Corporate, Partnership, Trust,
Foundation and Joint Investors (B-4), as applicable.
5. Return, via facsimile, the signed Securities Purchase Agreement
including the properly completed Exhibits B-1 through B-4, to:
Facsimile:
Telephone:
Attn:
6. After completing instruction number five (5) above, deliver the
original signed Securities Purchase Agreement including the
properly completed Exhibits B-1 through B-4 to:
Facsimile:
Telephone:
Attn:
B. Instructions regarding the transfer of funds for the purchase of
[Shares] will be telecopied to the Investor by the Company at a later
date.
C. Upon the resale of any Shares by the Investor after the Registration
Statement covering any Shares is effective, as described in the
Purchase Agreement, the Investor must deliver a current prospectus,
and annual and quarterly reports of the Company to the buyer
(prospectuses, and annual and quarterly reports may be obtained from
the Company at the Investor's request).
2
Exhibit B-1
BRAVO! FOODS INTERNATIONAL CORP.
--------------------------------
STOCK CERTIFICATE QUESTIONNAIRE
-------------------------------
Please provide us with the following information:
1. The exact name that the Securities are to be
registered in (this is the name that will appear
on the stock certificate(s)). You may use a
nominee name if appropriate: ___________________
2. The relationship between the Investor of the
Securities and the Registered Holder listed in
response to item 1 above: ___________________
3. The mailing address, telephone and telecopy
number of the Registered Holder listed in
response to item 1 above: ___________________
___________________
___________________
___________________
___________________
4. The Tax Identification Number of the
Registered Holder listed in response to
item 1 above: ___________________
Exhibit B-2
BRAVO! FOODS INTERNATIONAL CORP.
--------------------------------
REGISTRATION STATEMENT QUESTIONNAIRE
------------------------------------
In connection with the Registration Statement, please provide us with
the following information regarding the Investor.
1. Please state your organization's name exactly as it should appear
in the Registration Statement:
2. Have you or your organization had any position, office or other
material relationship within the past three years with the Company or its
affiliates?
______ Yes ______ No
If yes, please indicate the nature of any such relationship below:
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
3. Are you the beneficial owner of any other securities of the
Company?
______ Yes ______ No
If yes, please describe the nature and amount of such ownership.
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
4. Have you made or are you aware of any arrangements relating to the
distribution of the shares of the Company pursuant to the Registration
Statement?
______ Yes ______ No
If yes, please describe the nature and amount of such arrangements.
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
2
Exhibit B-3
BRAVO! FOODS INTERNATIONAL CORP.
--------------------------------
CERTIFICATE FOR CORPORATE, PARTNERSHIP,
---------------------------------------
TRUST, FOUNDATION AND JOINT INVESTORS
-------------------------------------
If the investor is a corporation, partnership, trust, pension plan,
foundation, joint Investor (other than a married couple) or other entity,
an authorized officer, partner, or trustee must complete, date and sign
this Certificate.
CERTIFICATE
-----------
The undersigned certifies that the representations and responses
below are true and accurate:
(a) The investor has been duly formed and is validly existing and
has full power and authority to invest in the Company. The person signing
on behalf of the undersigned has the authority to execute and deliver the
Securities Purchase Agreement on behalf of the Investor and to take other
actions with respect thereto.
(b) Indicate the form of entity of the undersigned:
____ Limited Partnership
____ General Partnership
____ Corporation
____ Revocable Trust (identify each grantor and indicate under
what circumstances the trust is revocable by the grantor): ________________
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
(Continue on a separate piece of paper, if necessary.)
____ Other type of Trust (indicate type of trust and, for
trusts other than pension trusts, name the grantors and beneficiaries): ___
___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
(Continue on a separate piece of paper, if necessary.)
____ Other form of organization (indicate form of organization
(________________________________________________________________________).
(c) Indicate the approximate date the undersigned entity was
formed: _________________________________.
(d) In order for the Company to offer and sell the Units in
conformance with state and federal securities laws, the following
information must be obtained regarding your investor status. Please
initial each category applicable to you as an investor in the Company.
___ 1. A bank as defined in Section 3(a)(2) of the Securities
Act, or any savings and loan association or other institution as defined in
Section 3(a)(5)(A) of the Securities Act whether acting in its individual
or fiduciary capacity;
___ 2. A broker or dealer registered pursuant to Section 15 of
the Securities Exchange Act of 1934;
___ 3. An insurance company as defined in Section 2(13) of the
Securities Act;
___ 4. An investment company registered under the Investment
Company Act of 1940 or a business development company as defined in Section
2(a)(48) of that Act;
___ 5. A Small Business Investment Company licensed by the
U.S. Small Business Administration under Section 301(c) or (d) of the
Small Business Investment Act of 1958;
___ 6. A plan established and maintained by a state, its
political subdivisions, or any agency or instrumentality of a state or its
political subdivisions, for the benefit of its employees, if such plan has
total assets in excess of $5,000,000;
___ 7. An employee benefit plan within the meaning of the
Employee Retirement Income Security Act of 1974, if the investment decision
is made by a plan fiduciary, as defined in Section 3(21) of such Act, which
is either a bank, savings and loan association, insurance company, or
registered investment advisor, or if the employee benefit plan has total
assets in excess of $5,000,000 or, if a self-directed plan, with investment
decisions made solely by persons that are accredited investors;
___ 8. A private business development company as defined in
Section 202(a)(22) of the Investment Advisers Act of 1940;
___ 9. An organization described in Section 501(c)(3) of the
Internal Revenue Code, corporation, Massachusetts or similar business
trust, or partnership, not formed for the specific purpose of acquiring the
Shares, with total assets in excess of $5,000,000;
2
___ 10. A trust, with total assets in excess of $5,000,000,
not formed for the specific purpose of acquiring the Shares, whose purchase
is directed by a sophisticated person as described in Rule 506(b)(2)(ii)
of the Exchange Act;
___ 11. An entity in which all of the equity owners qualify
under any of the above subparagraphs. If the undersigned belongs to this
investor category only, list the equity owners of the undersigned, and the
investor category which each such equity owner satisfies: _________________
_______________________________________________________________
_______________________________________________________________
_______________________________________________________________
(Continue on a separate piece of paper, if necessary.)
Please set forth in the space provided below the (i) states, if any,
in the U.S. in which you maintained your principal office during the past
two years and the dates during which you maintained your office in each
state, (ii) state(s), if any, in which you are incorporated or otherwise
organized and (iii) state(s), if any, in which you pay income taxes.
_______________________________________________________________
_______________________________________________________________
_______________________________________________________________
Dated: __________________________, 2005
_________________________________
Name of investor
_________________________________
Signature and title of authorized officer, partner or trustee
