Exhibit 10.1
EXECUTION VERSION
SECURITIES PURCHASE AGREEMENT
THIS SECURITIES PURCHASE AGREEMENT (the "AGREEMENT") is made as of the 3rd
day of March, 2014 by and between Stevia Corp., a Nevada corporation (the
"COMPANY"), and Nomis Bay Ltd., a Bermuda company (the "Investor").
WHEREAS, the Company and the Investor are executing and delivering this
Agreement in reliance upon the exemption from securities registration afforded
by Section 4(a)(2) of the Securities Act of 1933, as amended (the "1933 ACT"),
and Rule 506 of Regulation D ("REGULATION D") as promulgated by the United
States Securities and Exchange Commission (the "COMMISSION") under the 1933 Act
(without limiting any other such exemption which may apply to the transactions
contemplated by this Agreement);
WHEREAS, the Company has authorized the issuance of senior convertible
notes, in the aggregate original principal amount of $1,100,000, in the form
attached hereto as Exhibit A (the "NOTES"), which Notes shall be convertible
into shares of the Company's common stock, $0.001 par value per share (the
"COMMON STOCK"), in accordance with the terms of the Notes;
WHEREAS, Investor wishes to purchase, and the Company wishes to sell at the
Initial Closing (as defined below), upon the terms and conditions stated in this
Agreement, a Note in the aggregate original principal amount as set forth in
column (3) on Schedule I hereto (the "INITIAL NOTE") (and the Common Stock
issuable upon conversion thereof, collectively, the "INITIAL CONVERSION
SHARES");
WHEREAS, subject to the terms and conditions set forth in this Agreement,
the Company may require the Investor to participate in an Additional Closing (as
defined below) for the purchase by the Investor, and the sale by the Company, of
a Note in an original principal amount as set forth in column (4) on Schedule I
hereto (the "ADDITIONAL NOTE") (and the Common Stock issuable upon conversion
thereof, collectively, the "ADDITIONAL CONVERSION SHARES" and, collectively with
the Initial Conversion Shares, the "CONVERSION SHARES");
WHEREAS, the Notes, together with the Conversion Shares, are referred to
herein as the "SECURITIES" and the offering contemplated hereby is referred to
herein as the "OFFERING";
WHEREAS, the parties have agreed that the obligation to repay the Notes
shall be an unsecured obligation of the Company; and
WHEREAS, at the Initial Closing, the parties hereto shall execute and
deliver a Registration Rights Agreement, in the form attached hereto as Exhibit
B (the "REGISTRATION RIGHTS AGREEMENT"), pursuant to which the Company has
agreed to provide certain registration rights with respect to the Registrable
Securities (as defined in the Registration Rights Agreement), under the 1933 Act
and the rules and regulations promulgated thereunder, and applicable state
securities laws.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and in consideration of the
premises and the mutual agreements, representations and warranties, provisions
and covenants contained herein, the parties hereto, intending to be legally
bound hereby, agree as follows:
1. Purchase and Sale of Notes.
1.1 Purchase and Sale of Initial Notes. Subject to the satisfaction (or,
where legally permissible, the waiver) of the conditions set forth in Sections
4.1, the Company shall issue and sell to the Investor, and the Investor shall
purchase from the Company on the Initial Closing Date (as defined below), an
Initial Note in the aggregate original principal amount as set forth in column
(3) on Schedule I hereto (the "INITIAL CLOSING").
1.2 Purchase and Sale of Additional Notes. Subject to the satisfaction (or,
where legally permissible, the waiver) of the conditions set forth in Sections
3.2(b) and 4.1 below, the Company shall issue and sell to the Investor, and the
Investor shall purchase from the Company on the Additional Closing Date (as
defined below), an Additional Note in the aggregate original principal amount as
set forth in column (4) on Schedule I hereto (the "ADDITIONAL CLOSING").
1.3 Form of Payment.
(a) On the Initial Closing Date, (i) the Investor shall pay the Initial
Purchase Price (as defined below) (less the amounts withheld pursuant to Section
10.12) to the Company for the Initial Note to be issued and sold to the Investor
at the Initial Closing, by wire transfer of immediately available funds in
accordance with the Company's written wire instructions and (ii) the Company
shall deliver to the Investor an Initial Note in the aggregate original
principal amount as set forth in column (3) on Schedule I hereto, duly executed
on behalf of the Company and registered in the name of the Investor or its
designee.
(b) On the Additional Closing Date, (i) the Investor shall pay the
Additional Purchase Price (as defined below) (less the amounts withheld pursuant
to Section 10.12) to the Company for the Additional Note to be issued and sold
to the Investor at the Additional Closing, by wire transfer of immediately
available funds in accordance with the Company's written wire instructions and
(ii) the Company shall deliver to the Investor an Additional Note in the
aggregate original principal amount as set forth in column (4) on Schedule I
hereto, duly executed on behalf of the Company and registered in the name of the
Investor or its designee.
(c) Rank. The parties hereto acknowledge that the Initial Note and the
Additional Note shall be part of a single series of notes and shall rank PARI
PASSU with each other.
2. Purchase Price. The purchase price for the Initial Note to be purchased
by the Investor (the "INITIAL PURCHASE PRICE") shall be the amount as set forth
in column (5) on Schedule I hereto. The purchase price for the Additional Note
to be purchased by the Investor (the "ADDITIONAL PURCHASE PRICE", and together
with the Initial Purchase Price, each, a "PURCHASE PRICE") shall be the amount
as set forth in column (6) on Schedule I hereto. The Initial Note will be issued
with an original issue discount of approximately 32.0%.
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3. Closings. The Initial Closing and the Additional Closing are each
sometimes referred to in this Agreement as a "CLOSING". Each Closing shall occur
at the offices of Xxxxxxxxx Xxxxxxx, LLP, MetLife Building, 000 Xxxx Xxxxxx, Xxx
Xxxx, XX 00000.
3.1 Initial Closing. The date and time of the Initial Closing (the "INITIAL
CLOSING DATE") shall be 10:00 a.m. (New York City time), on the first (1st)
Trading Day (as defined below) (and including the date hereof if a Trading Day)
on which the conditions to the Initial Closing set forth in Section 4.1 below
are satisfied or waived.
3.2 Additional Closing.
(a) Additional Closing Date. If the Company delivers an Additional Closing
Notice (as defined below), the date and time of the Additional Closing shall be
10:00 a.m. (New York City time), on a date that is no later than the tenth
(10th) Trading Day after the Effective Date (the "ADDITIONAL CLOSING DATE," and
the Initial Closing Date and the Additional Closing Date are each sometimes
referred to in this Agreement as a "CLOSING DATE").
(b) Additional Closing Mechanics. Subject to the satisfaction (or waiver)
of the conditions set forth in this Section 3.2(b) and Section 4.2 below, the
Company shall have the right to require the Investor to purchase the Additional
Note on the Additional Closing Date by delivering to the Investor on the
Effective Date, by facsimile and overnight courier at its address set forth in
Section 10.4 hereof, an irrevocable written notice that the Company has
exercised its right to require the Investor to purchase the Additional Note (the
"ADDITIONAL CLOSING NOTICE", and such date, the "ADDITIONAL CLOSING NOTICE
DATE"). For the avoidance of doubt, the Company shall not be entitled to effect
an Additional Closing if there shall exist an Additional Note Conditions Failure
(as defined below). Notwithstanding anything herein to the contrary, if the
Additional Closing does not occur by August 31, 2014, the Company's right to
effect an Additional Closing hereunder shall automatically terminate.
4. Closing Conditions; Certain Covenants.
4.1 Conditions to the Initial Closing.
(a) Conditions of the Company to the Initial Closing. The obligation of the
Company to sell and issue the Initial Note to the Investor at the Initial
Closing is subject to the fulfillment, to the Company's reasonable satisfaction,
prior to or at the Initial Closing, of each of the following conditions:
(i) Representations and Warranties. The representations and warranties of
the Investor contained in this Agreement (x) that are not qualified by
"materiality" shall have been true and correct in all material respects when
made and shall be true and correct in all material respects as of the Initial
Closing Date with the same force and effect as if made on such dates, except to
the extent such representations and warranties are as of another date, in which
case, such representations and warranties shall be true and correct in all
material respects as of such other date and (y) that are qualified by
"materiality" shall have been true and correct when made and shall be true and
correct as of the Initial Closing Date with the same force and effect as if made
on such dates, except to the extent such representations and warranties are as
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of another date, in which case, such representations and warranties shall be
true and correct as of such other date.
(ii) Initial Purchase Price. At the Initial Closing, the Investor shall
have tendered to the Company the Initial Purchase Price (less the amounts
withheld pursuant to Section 10.12) by wire transfer of immediately available
funds to the account specified in writing by the Company prior to the date
hereof.
(iii) Registration Rights Agreement. The Investor shall have duly executed
and delivered the Registration Rights Agreement to the Company.
(iv) No Injunction. No statute, regulation, order, decree, writ, ruling or
injunction shall have been enacted, entered, promulgated, threatened or endorsed
by any court or governmental authority of competent jurisdiction which prohibits
the consummation of or which would materially modify or delay any of the
transactions contemplated by the Transaction Documents.
(b) Conditions to the Investor to the Initial Closing. The obligation of
the Investor to purchase the Initial Note to be issued to the Investor at the
Initial Closing is subject to the satisfaction, or (where legally permissible)
the waiver by the Investor, on the Initial Closing Date, of each of the
following conditions:
(i) Representations and Warranties. The representations and warranties of
the Company contained in this Agreement (x) that are not qualified by
"materiality" or "Material Adverse Effect" shall have been true and correct in
all material respects when made and shall be true and correct in all material
respects as of the Initial Closing Date with the same force and effect as if
made on such dates, except to the extent such representations and warranties are
as of another date, in which case, such representations and warranties shall be
true and correct in all material respects as of such other date and (y) that are
qualified by "materiality" or "Material Adverse Effect" shall have been true and
correct when made and shall be true and correct as of the Initial Closing Date
with the same force and effect as if made on such dates, except to the extent
such representations and warranties are as of another date, in which case, such
representations and warranties shall be true and correct as of such other date.
(ii) Performance of the Company. The Company shall have performed,
satisfied and complied in all material respects with all covenants, agreements
and conditions required by this Agreement and the Registration Rights Agreement
to be performed, satisfied or complied with by the Company at or prior to the
Initial Closing Date. The Company shall have delivered to the Investor on the
Initial Closing Date a written certification by an executive officer of the
Company to the foregoing substantially in the form attached hereto as Exhibit C.
(iii) No Suspension of Trading in or Notice of Delisting of Common Stock.
Trading in the Common Stock shall not have been suspended by the Commission, the
Trading Market or the FINRA (except for any suspension of trading of less than
fourteen (14) days, which suspension shall be terminated prior to the Initial
Closing Notice Date), the Company shall not have received any final and
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non-appealable notice that the listing or quotation of the Common Stock on the
Trading Market shall be terminated on a date certain (unless, prior to such date
certain, the Common Stock is listed or quoted on any other Trading Market),
trading in securities generally as reported on the Trading Market shall not have
been suspended or limited, nor shall a banking moratorium have been declared
either by the U.S. or New York State authorities (except for any suspension,
limitation or moratorium which shall be terminated prior to the Initial Closing
Notice Date), there shall not have been imposed any suspension of electronic
trading or settlement services by the Depository Trust Company ("DTC") with
respect to the Common Stock that is continuing, the Company shall not have
received any notice from DTC to the effect that a suspension of electronic
trading or settlement services by DTC with respect to the Common Stock is being
imposed or is contemplated (unless, prior to such suspension, DTC shall have
notified the Company in writing that DTC has determined not to impose any such
suspension), nor shall there have occurred any material outbreak or escalation
of hostilities or other national or international calamity or crisis that has
had or would reasonably be expected to have a material adverse change in any
U.S. financial, credit or securities market that is continuing.
(iv) Compliance with Laws. The Company shall have complied with all
applicable federal, state and local governmental laws, rules, regulations and
ordinances in connection with the execution, delivery and performance of this
Agreement and the other Transaction Documents (as defined below) to which it is
a party and the consummation of the transactions contemplated hereby and
thereby, including, without limitation, the Company shall have obtained all
permits and qualifications required by any applicable state securities or "Blue
Sky" laws for the offer and sale of the Securities by the Company to the
Investor).
(v) No Injunction. No statute, regulation, order, decree, writ, ruling or
injunction shall have been enacted, entered, promulgated, threatened or endorsed
by any court or governmental authority of competent jurisdiction which prohibits
the consummation of or which would materially modify or delay any of the
transactions contemplated by the Transaction Documents.
(vi) No Proceedings or Litigation. No action, suit or proceeding before any
arbitrator or any court or governmental authority shall have been commenced or
threatened, and no inquiry or investigation by any governmental authority shall
have been commenced or threatened, against the Company or any Subsidiary, or any
of the officers, directors or affiliates of the Company or any Subsidiary,
seeking to restrain, prevent or change the transactions contemplated by the
Transaction Documents, or seeking material damages in connection with such
transactions.
(vii) Listing of Securities. All of the Conversion Shares that may be
issued pursuant to the Notes shall have been approved for listing or quotation
on the Trading Market as of the Initial Closing Date, subject only to notice of
issuance.
(viii) No Material Adverse Effect. No condition, occurrence, state of facts
or event constituting a Material Adverse Effect shall have occurred and be
continuing.
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(ix) Initial Note. At the Initial Closing, the Company shall have tendered
to the Investor the Initial Note.
(x) Registration Rights Agreement. The Company shall have duly executed and
delivered the Registration Rights Agreement to the Investor.
(xi) Current Public Information. All reports, schedules, registrations,
forms, statements, information and other documents required to have been filed
by the Company with the Commission pursuant to the reporting requirements of the
1934 Act, including all material required to have been filed pursuant to Section
13(a) or 15(d) of the 1934 Act, shall have been filed with the Commission under
the 0000 Xxx.
4.2 Conditions to the Additional Closing.
(a) Conditions of the Company to the Additional Closing. The obligation of
the Company to sell and issue the Additional Note to the Investor at the
Additional Closing is subject to the fulfillment, to the Company's reasonable
satisfaction, prior to or at the Additional Closing, of each of the following
conditions:
(i) Representations and Warranties. The representations and warranties of
the Investor contained in this Agreement (x) that are not qualified by
"materiality" shall have been true and correct in all material respects when
made and shall be true and correct in all material respects as of the Additional
Closing Date with the same force and effect as if made on such dates, except to
the extent such representations and warranties are as of another date, in which
case, such representations and warranties shall be true and correct in all
material respects as of such other date and (y) that are qualified by
"materiality" shall have been true and correct when made and shall be true and
correct as of the Additional Closing Date with the same force and effect as if
made on such dates, except to the extent such representations and warranties are
as of another date, in which case, such representations and warranties shall be
true and correct as of such other date.
(ii) No Injunction. No statute, regulation, order, decree, writ, ruling or
injunction shall have been enacted, entered, promulgated, threatened or endorsed
by any court or governmental authority of competent jurisdiction which prohibits
the consummation of or which would materially modify or delay any of the
transactions contemplated by the Transaction Documents.
(b) Conditions of the Investor to the Additional Closing. The obligation of
the Investor to purchase the Additional Note to be issued to the Investor at the
Additional Closing is subject to the satisfaction, or (where legally
permissible) the waiver by the Investor, on the Additional Closing Date, of each
of the following conditions:
(i) Representations and Warranties. The representations and warranties of
the Company contained in this Agreement (x) that are not qualified by
"materiality" or "Material Adverse Effect" shall have been true and correct in
all material respects when made and shall be true and correct in all material
respects as of the Additional Closing Notice Date and the Additional Closing
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Date with the same force and effect as if made on such dates, except to the
extent such representations and warranties are as of another date, in which
case, such representations and warranties shall be true and correct in all
material respects as of such other date and (y) that are qualified by
"materiality" or "Material Adverse Effect" shall have been true and correct when
made and shall be true and correct as of the Additional Closing Notice Date and
the Additional Closing Date with the same force and effect as if made on such
dates, except to the extent such representations and warranties are as of
another date, in which case, such representations and warranties shall be true
and correct as of such other date.
(ii) Performance of the Company. The Company shall have performed,
satisfied and complied in all material respects with all covenants, agreements
and conditions required by this Agreement, the Initial Note and the Registration
Rights Agreement to be performed, satisfied or complied with by the Company at
or prior to the Additional Closing Notice Date and the Additional Closing Date
(as applicable). The Company shall have delivered to the Investor on the
Additional Closing Date a written certification by an executive officer of the
Company to the foregoing substantially in the form attached hereto as Exhibit C.
(iii) Registration Statement Effective. The Initial Registration Statement
(as defined in the Registration Rights Agreement) covering the resale by the
Investor of the Registrable Securities covered thereby shall have been declared
effective under the Securities Act by the Commission and shall remain effective,
and the Investor shall be permitted to utilize the Prospectus therein to resell
such Registrable Securities.
(iv) No Material Notices. None of the following events shall have occurred
and be continuing: (a) receipt of any request by the Commission or any other
federal or state governmental authority for any additional information relating
to the Registration Statement, the Prospectus (as defined in the Registration
Rights Agreement) or any supplement to the Prospectus (each, a "PROSPECTUS
SUPPLEMENT"), or for any amendment of or supplement to the Registration
Statement, the Prospectus, or any Prospectus Supplement; (b) the issuance by the
Commission or any other federal or state governmental authority of any stop
order suspending the effectiveness of the Registration Statement or prohibiting
or suspending the use of the Prospectus or any Prospectus Supplement, or of the
suspension of qualification or exemption from qualification of the Securities
for offering or sale in any jurisdiction, or the initiation or contemplated
initiation of any proceeding for such purpose; or (c) the occurrence of any
event or the existence of any condition or state of facts, which makes any
statement of a material fact made in the Registration Statement, the Prospectus
or any Prospectus Supplement untrue or which requires the making of any
additions to or changes to the statements then made in the Registration
Statement, the Prospectus or any Prospectus Supplement in order to state a
material fact required by the Securities Act to be stated therein or necessary
in order to make the statements then made therein (in the case of the Prospectus
or any Prospectus Supplement, in light of the circumstances under which they
were made) not misleading, or which requires an amendment to the Registration
Statement or a supplement to the Prospectus or any Prospectus Supplement to
comply with the Securities Act or any other law (other than the transactions
contemplated by the Additional Closing Notice and the settlement thereof). The
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Company shall have no knowledge of any event that could reasonably be expected
to have the effect of causing the suspension of the effectiveness of the
Registration Statement or the prohibition or suspension of the use of the
Prospectus or any Prospectus Supplement in connection with the resale of the
Registrable Securities by the Investor.
(v) No Suspension of Trading in or Notice of Delisting of Common Stock.
Trading in the Common Stock shall not have been suspended by the Commission, the
Trading Market or the FINRA (except for any suspension of trading of less than
fourteen (14) days, which suspension shall be terminated prior to the Additional
Closing Notice Date), the Company shall not have received any final and
non-appealable notice that the listing or quotation of the Common Stock on the
Trading Market shall be terminated on a date certain (unless, prior to such date
certain, the Common Stock is listed or quoted on any other Trading Market),
trading in securities generally as reported on the Trading Market shall not have
been suspended or limited, nor shall a banking moratorium have been declared
either by the U.S. or New York State authorities (except for any suspension,
limitation or moratorium which shall be terminated prior to the Additional
Closing Notice Date), there shall not have been imposed any suspension of
electronic trading or settlement services by DTC with respect to the Common
Stock that is continuing, the Company shall not have received any notice from
DTC to the effect that a suspension of electronic trading or settlement services
by DTC with respect to the Common Stock is being imposed or is contemplated
(unless, prior to such suspension, DTC shall have notified the Company in
writing that DTC has determined not to impose any such suspension), nor shall
there have occurred any material outbreak or escalation of hostilities or other
national or international calamity or crisis that has had or would reasonably be
expected to have a material adverse change in any U.S. financial, credit or
securities market that is continuing.
(vi) Compliance with Laws. The Company shall have complied with all
applicable federal, state and local governmental laws, rules, regulations and
ordinances in connection with the execution, delivery and performance of this
Agreement and the other Transaction Documents to which it is a party and the
consummation of the transactions contemplated hereby and thereby, including,
without limitation, the Company shall have obtained all permits and
qualifications required by any applicable state securities or "Blue Sky" laws
for the offer and sale of the Securities by the Company to the Investor and the
subsequent resale of the Registrable Securities by the Investor (or shall have
the availability of exemptions therefrom).
(vii) No Injunction. No statute, regulation, order, decree, writ, ruling or
injunction shall have been enacted, entered, promulgated, threatened or endorsed
by any court or governmental authority of competent jurisdiction which prohibits
the consummation of or which would materially modify or delay any of the
transactions contemplated by the Transaction Documents.
(viii) No Proceedings or Litigation. No action, suit or proceeding before
any arbitrator or any court or governmental authority shall have been commenced
or threatened, and no inquiry or investigation by any governmental authority
shall have been commenced or threatened, against the Company or any Subsidiary,
or any of the officers, directors or affiliates of the Company or any
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Subsidiary, seeking to restrain, prevent or change the transactions contemplated
by the Transaction Documents, or seeking material damages in connection with
such transactions.
(ix) Listing of Securities. All of the Conversion Shares that may be issued
pursuant to the Notes shall have been approved for listing or quotation on the
Trading Market as of the Closing Date, subject only to notice of issuance.
(x) No Material Adverse Effect. No condition, occurrence, state of facts or
event constituting a Material Adverse Effect shall have occurred and be
continuing.
(xi) Delivery of Initial Conversion Shares. The Company shall have
delivered on a timely basis all of the Initial Conversion Shares issuable upon
any conversion of the Initial Note by the Investor, as applicable.
(xii) Opinion of Counsel. On the Additional Closing Date, the Investor
shall have received an opinion from outside counsel to the Company, dated the
Additional Closing Date, in the form mutually agreed to by the parties hereto
prior to the date hereof.
(xiii) Additional Note. At the Additional Closing, the Company shall have
tendered to the Investor the Additional Note.
(xiv) Current Public Information. The Current Report (as defined below)
shall have been filed with the Commission as required pursuant to Section 4.3,
and the Initial Press Release and the Additional Press Release (each as defined
below) shall have been issued by the Company in accordance with Section 4.3. All
reports, schedules, registrations, forms, statements, information and other
documents required to have been filed by the Company with the Commission
pursuant to the reporting requirements of the 1934 Act, including all material
required to have been filed pursuant to Section 13(a) or 15(d) of the 1934 Act,
shall have been filed with the Commission under the 1934 Act.
(xv) No Additional Note Conditions Failure. No Additional Note Conditions
Failure shall exist.
4.3 Securities Law Disclosure; Publicity. The Company shall (a) by 9:00
a.m. (New York City time) on the Trading Day immediately following the Initial
Closing Date, issue a press release in form and substance reasonably acceptable
to the Investor disclosing the material terms of the transactions contemplated
hereby (the "INITIAL PRESS RELEASE") and (b) issue a Current Report on Form 8-K
(the "CURRENT REPORT") disclosing the material terms of the transactions
contemplated hereby, and including the Transaction Documents as exhibits
thereto, within the time required by the 1934 Act. From and after the issuance
of the Initial Press Release, the Company represents to the Investor that the
Company shall have publicly disclosed all material, non-public information
delivered to the Investor as of such time by the Company or any of its
subsidiaries, or any of their respective officers, directors, employees or
agents in connection with the transactions contemplated by the Transaction
Documents. The Company shall, on or before 9:00 a.m. (New York City time) on the
Trading Day immediately following the Additional Closing Notice Date, issue a
press release in form and substance reasonably acceptable to the Investor
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disclosing that the Company has elected to deliver an Additional Closing Notice
to the Investor (the "ADDITIONAL PRESS RELEASE"). From and after the issuance of
the Additional Press Release, the Company represents to the Investor that the
Company shall have publicly disclosed all material, non-public information
delivered to the Investor as of such time by the Company or any of its
subsidiaries, or any of their respective officers, directors, employees or
agents in connection with the transactions contemplated by the Transaction
Documents. The Company shall afford the Investor and its counsel with a
reasonable opportunity to review and comment upon, shall consult with the
Investor and its counsel on the form and substance of, and shall give due
consideration to all such comments from the Investor or its counsel on, any
press release, Commission filing or any other public disclosure made by or on
behalf of the Company relating to the Investor, its purchases hereunder or any
aspect of the Transaction Documents or the transactions contemplated thereby,
prior to the issuance, filing or public disclosure thereof, and the Company
shall not issue, file or publicly disclose any such information to which the
Investor shall object. For the avoidance of doubt, the Company shall not be
required to submit for review any such disclosure contained in periodic reports
filed with the Commission under the Exchange Act if it shall have previously
provided the same disclosure for review in connection with a previous filing.
4.4 Legends. The Securities may only be disposed of in compliance with
state and federal securities laws. In connection with any transfer of Securities
other than pursuant to an effective registration statement or Rule 144 (as
defined below), to the Company or to an affiliate of the Investor or in
connection with a pledge, the Company may require the transferor thereof to
provide to the Company an opinion of counsel selected by the transferor and
reasonably acceptable to the Company, the form and substance of which opinion
shall be reasonably satisfactory to the Company, to the effect that such
transfer does not require registration of such transferred Securities under the
1933 Act. The Investor understands that the certificate or other instrument
representing the Notes and the stock certificates representing the Conversion
Shares, except as set forth below, shall bear any legends as required by
applicable state securities or "Blue Sky" laws in addition to a restrictive
legend in substantially the following form (and a stop-transfer order may be
placed against transfer of such stock certificates):
[NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED
BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE
SECURITIES ARE CONVERTIBLE HAVE BEEN] [THE SECURITIES REPRESENTED
BY THIS CERTIFICATE HAVE NOT BEEN] REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE
SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE,
SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN
EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL
TO THE HOLDER (IF REQUESTED BY THE COMPANY), IN A FORM REASONABLY
ACCEPTABLE TO THE COMPANY, THAT REGISTRATION IS NOT REQUIRED
UNDER SAID ACT OR (II) UNLESS SOLD OR ELIGIBLE TO BE SOLD
PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING
THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A
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BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT
SECURED BY THE SECURITIES.
The Company shall use its reasonable best efforts to cause its transfer
agent to remove the legend set forth above and to issue a certificate without
such legend to the holder of the Securities upon which it is stamped, or to
issue to such holder by electronic delivery at the applicable balance account at
DTC, unless otherwise required by state securities or "blue sky" laws, at such
time as (i) such Securities are registered for resale under the 1933 Act, (ii)
in connection with a sale, assignment or other transfer, such holder provides
the Company with an opinion of counsel, in a form generally acceptable to the
Company's legal counsel, to the effect that such sale, assignment or transfer of
the Securities may be made without registration under the 1933 Act, or (iii)
such holder provides the Company and its legal counsel with reasonable assurance
in writing that the Securities can be sold, assigned or transferred pursuant to
Rule 144 or Rule 144A. In furtherance of the foregoing, the Company agrees that,
following the Effective Date or at such time as such legend is not required
pursuant to this Section 4.4, the Company shall, no later than three Trading
Days following the delivery by the Investor to the Company or the Transfer Agent
of a certificate representing Conversion Shares issued with a restrictive legend
(such third Trading Day, the "LEGEND REMOVAL DATE"), either: (A) issue and
deliver (or cause to be issued and delivered) to the Investor a certificate
representing such Conversion Shares, as applicable, that is free from all
restrictive and other legends or (B) cause the Transfer Agent to credit the
Investor's or its designee's account at DTC through its Deposit/Withdrawal at
Custodian (DWAC) system with a number of shares of Common Stock equal to the
number of Conversion Shares, as applicable, represented by the certificate so
delivered by the Investor. If the Company fails on or prior to the Legend
Removal Date to either (i) issue and deliver (or cause to be issued and
delivered) to the Investor a certificate representing the Conversion Shares, as
applicable, that is free from all restrictive and other legends or (ii) cause
the Transfer Agent to credit the balance account of the Investor or its designee
at DTC through its Deposit/Withdrawal at Custodian (DWAC) system with a number
of shares of Common Stock equal to the number of the Conversion Shares, as
applicable, represented by the certificate delivered by the Investor pursuant
hereto, and if on or after the Legend Removal Date 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,
then the Company shall, within three Trading Days after the Investor's request,
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, at which point the Company's obligation to deliver a certificate
or credit the Investor's or its designee's account at DTC for such shares of
Common Stock shall terminate and such shares shall be cancelled.
4.5 Short Sales. So long as the Notes remain outstanding, neither the
Investor nor any of its affiliates nor any entity managed or controlled by the
Investor (collectively, the "RESTRICTED PERSONS" and each of the foregoing is
referred to herein as a "RESTRICTED PERSON") shall, directly or indirectly,
engage in any Short Sales involving the Company's securities. Notwithstanding
the foregoing, it is expressly understood and agreed that nothing contained
herein shall (without implication that the contrary would otherwise be true)
prohibit any Restricted Person from: (1) selling "long" (as defined under Rule
200 promulgated under Regulation SHO) the Securities; or (2) selling a number of
shares of Common Stock equal to the number of Conversion Shares that such
11
Restricted Person is entitled to receive under a pending Conversion Notice (as
defined in the Notes) but has not yet taken possession of so long as such
Restricted Person delivers the Conversion Shares purchased pursuant to such
Conversion Notice to the purchaser thereof; provided, however, such Restricted
Person shall not be required to so deliver any such Conversion Shares subject to
such Conversion Notice if the Company fails for any reason to deliver such
Conversion Shares to the Investor on the applicable settlement date upon the
terms and subject to the provisions of the Notes.
5. Representations and Warranties of the Company. Except as set forth in
the Disclosure Schedules, which Disclosure Schedules shall be deemed a part
hereof and shall qualify any representation or otherwise made herein to the
extent of the disclosure contained in the corresponding section of the
Disclosure Schedules, the Company hereby makes the following representations and
warranties to the Investors as of the Initial Closing Date, the Additional
Closing Notice Date and the Additional Closing Date (each a "REPRESENTATION
DATE"):
5.1 Organization, Good Standing and Qualification. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Nevada. The Company is duly qualified to transact business and
is in good standing in each jurisdiction in which the failure to so qualify
would have a Material Adverse Effect.
5.2 Capitalization and Voting Rights. The authorized capital stock of the
Company and the shares thereof issued and outstanding were as set forth in the
Public Reports as of the dates reflected therein. All of the outstanding shares
of Common Stock have been duly authorized and validly issued, and are fully paid
and nonassessable. Except as set forth in the Public Reports, this Agreement and
the Registration Rights Agreement, there are no agreements or arrangements under
which the Company is obligated to register the sale of any securities under the
Securities Act. Except as set forth in the Public Reports, no shares of Common
Stock are entitled to preemptive rights and there are no outstanding debt
securities and no contracts, commitments, understandings, or arrangements by
which the Company is or may become bound to issue additional shares of the
capital stock of the Company or options, warrants, scrip, rights to subscribe
to, calls or commitments of any character whatsoever relating to, or securities
or rights convertible into or exchangeable for, any shares of capital stock of
the Company other than those issued or granted in the ordinary course of
business pursuant to the Company's equity incentive and/or compensatory plans or
arrangements. Except for customary transfer restrictions contained in agreements
entered into by the Company to sell restricted securities or as set forth in the
Public Reports, the Company is not a party to, and it has no knowledge of, any
agreement restricting the voting or transfer of any shares of the capital stock
of the Company. Except as set forth in the Public Reports, the offer and sale of
all capital stock, convertible or exchangeable securities, rights, warrants or
options of the Company issued prior to the applicable Representation Date
complied with all applicable federal and state securities laws, and no
stockholder has any right of rescission or damages or any "put" or similar right
with respect thereto that would have a Material Adverse Effect. Except as set
forth in the Public Reports, there are no securities or instruments containing
anti-dilution or similar provisions that will be triggered by the Notes, this
Agreement or the Registration Rights Agreement or the consummation of the
transactions described herein or therein.
5.3 Authorization; Enforcement. All corporate action on the part of the
Company, its officers, directors and stockholders necessary for the
12
authorization, execution and delivery of this Agreement, the Notes, the
Registration Rights Agreement (the "TRANSACTION DOCUMENTS") and the performance
of all obligations of the Company hereunder and thereunder, and the
authorization (or reservation for issuance), sale and issuance of the Notes, and
the Common Stock into which the Notes is convertible or exercisable, have been
taken on or prior to the date hereof. Each of the Transaction Documents has been
duly executed by the Company and, when delivered in accordance with the terms
hereof and thereof, will constitute the valid and binding obligation of the
Company enforceable against the Company in accordance with its terms, except:
(i) as limited by general equitable principles and applicable bankruptcy,
insolvency, reorganization, moratorium and other laws of general application
affecting enforcement of creditors' rights generally, (ii) as limited by laws
relating to the availability of specific performance, injunctive relief or other
equitable remedies and (iii) insofar as indemnification and contribution
provisions may be limited by applicable law.
5.4 Valid Issuance of the Conversion Shares; Reservation of Shares. Each of
the Notes has been duly authorized and, when issued and paid for in accordance
with this Agreement, will be duly and validly issued, fully paid and
nonassessable, and free and clear of all Liens imposed by the Company other than
restrictions on transfer under this Agreement and under applicable state and
federal securities laws. The Conversion Shares when issued and delivered in
accordance with the terms of this Agreement and the Notes, as applicable, for
the consideration expressed herein and therein, will be duly and validly issued,
fully paid and non-assessable and free and clear of all Liens imposed by the
Company other than restrictions on transfer under this Agreement and under
applicable state and federal securities laws. The Company has reserved from its
duly authorized capital stock a sufficient number of shares of Common Stock for
issuance of the Conversion Shares as required by Section 8 of the Notes.
5.5 Offering. Subject to the truth and accuracy of the Investor's
representations set forth in Section 6 of this Agreement, the offer and issuance
of the Securities as contemplated by this Agreement are exempt from the
registration requirements of the Securities Act of 1933, as amended (the "1933
ACT"), and the qualification or registration requirements of state securities
laws or other applicable blue sky laws. Neither the Company nor any authorized
agent acting on its behalf will take any action hereafter that would cause the
loss of such exemptions.
5.6 Public Reports. The Company is current in its filing obligations under
the 1934 Act, including without limitation as to its filings of Annual Reports
on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K
(collectively, the "PUBLIC REPORTS"). The Public Reports do not contain any
untrue statement of a material fact or omit to state any fact necessary to make
any statement therein not misleading. The financial statements included within
the Public Reports for the fiscal year ended March 31, 2013 and for each
quarterly period thereafter (the "FINANCIAL STATEMENTS") have been prepared in
accordance with generally accepted accounting principles ("GAAP") applied on a
consistent basis throughout the periods indicated and with each other, except
that unaudited Financial Statements may not contain all footnote required by
generally accepted accounting principles. The Financial Statements fairly
present, in all material respects, the financial condition and operating results
of the Company as of the dates, and for the periods, indicated therein, subject
in the case of unaudited Financial Statements to normal year-end audit
adjustments.
13
5.7 Compliance With Laws. The Company has not violated any law or any
governmental regulation or requirement which violation has had or would
reasonably be expected to have a Material Adverse Effect on its business and the
Company has not received written notice of any such violation.
5.8 Violations. The consummation of the transactions contemplated by the
Transaction Documents and all other documents and instruments required to be
delivered in connection therewith will not result in or constitute any of the
following: (a) a violation of any provision of the certificate of incorporation,
bylaws or other governing documents of the Company; (b) a violation of any
provisions of any applicable law or of any writ or decree of any court or
governmental instrumentality; (c) a default or an event that, with notice or
lapse of time or both, would be a default, breach, or violation of a lease,
license, promissory note, conditional sales contract, commitment, indenture,
mortgage, deed of trust, or other agreement, instrument, or arrangement to which
the Company is a party or by which the Company or its property is bound; (d) an
event that would permit any party to terminate any agreement or to accelerate
the maturity of any indebtedness or other obligation of the Company; or (e) the
creation or imposition of any lien, pledge, option, security agreement, equity,
claim, charge, encumbrance or other restriction or limitation on the capital
stock or on any of the properties or assets of the Company.
5.9 Consents; Waivers. No consent, waiver, approval or authority of any
nature, or other formal action, by any person, firm or corporation, or any
agency, bureau or department of any government or any subdivision thereof, not
already obtained, is required in connection with the execution and delivery of
the Transaction Documents by the Company or the consummation by the Company of
the transactions provided for herein and therein.
5.10 Xxxxxxxx-Xxxxx Act. The Company is in compliance with any and all
applicable requirements of the Xxxxxxxx-Xxxxx Act of 2002 that are effective as
of the date hereof, and any and all applicable rules and regulations promulgated
by the Commission thereunder that are effective as of the date hereof.
5.11 Absence of Litigation. There is no action, suit, proceeding, inquiry
or investigation before or by any court, public board, government agency,
self-regulatory organization or body pending or, to the knowledge of the
Company, threatened against or affecting the Company, the Common Stock or any of
the Company's officers or directors in their capacities as such.
5.12 Material Changes; Undisclosed Events, Liabilities or Developments.
Since the date of the latest audited financial statements included within the
Public Reports, except as specifically disclosed in a subsequent Public Report
filed prior to the date hereof: (i) there has been no event, occurrence or
development that has had or that could reasonably be expected to result in a
Material Adverse Effect, (ii) the Company has not incurred any liabilities
(contingent or otherwise) 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 disclosed in filings made with the Commission,
(iii) the Company has not altered its method of accounting, (iv) the Company has
not declared or made any dividend or distribution of cash or other property to
its stockholders or purchased, redeemed or made any agreements to purchase or
14
redeem any shares of its capital stock and (v) the Company has not issued any
equity securities to any officer, director or affiliate, except pursuant to
existing Company stock option plans. The Company does not have pending before
the Commission any request for confidential treatment of information. Except for
the issuance of the Securities contemplated by this Agreement, no event,
liability, fact, circumstance, occurrence or development has occurred or exists
or is reasonably expected to occur or exist with respect to the Company or its
Subsidiaries or their respective businesses, properties, operations, assets or
financial condition, that would be required to be disclosed by the Company under
applicable securities laws at the time this representation is made or deemed
made that has not been publicly disclosed at least one Trading Day prior to the
date that this representation is made.
5.13 Intellectual Property. The Company has, or has rights to use, all
patents, patent applications, trademarks, trademark applications, service marks,
trade names, trade secrets, inventions, copyrights, licenses and other
intellectual property rights and similar rights as described in the Public
Reports as necessary or required for use in connection with their respective
businesses and which the failure to so have could have a Material Adverse Effect
(collectively, the "INTELLECTUAL PROPERTY RIGHTS"). None of, and the Company has
not received a notice (written or otherwise) that any of, the Intellectual
Property Rights has expired, terminated or been abandoned, or is expected to
expire or terminate or be abandoned, within two (2) years from the date of this
Agreement. The Company has not received, since the date of the latest audited
financial statements included within the Public Reports, a written notice of a
claim or otherwise has any knowledge that the Intellectual Property Rights
violate or infringe upon the rights of any Person, except as could not have or
reasonably be expected to not have a Material Adverse Effect. To the knowledge
of the Company, all such Intellectual Property Rights are enforceable and there
is no existing infringement by another Person of any of the Intellectual
Property Rights. The Company has taken reasonable security measures to protect
the secrecy, confidentiality and value of all of their intellectual properties,
except where failure to do so could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.
5.14 Registration Rights. Other than the Investor or as set forth in the
Public Reports, no person has any right to cause the Company to effect the
registration under the 1933 Act of any securities of the Company.
5.15 Disclosure. Except with respect to the material terms and conditions
of the transactions contemplated by the Transaction Documents, the Company
confirms that neither it nor any other Person acting on its behalf has provided
the Investor or its agents or counsel with any information that it believes
constitutes or might constitute material, non-public information. The Company
understands and confirms that the Investor will rely on the foregoing
representation in effecting transactions in securities of the Company. All of
the disclosure furnished by or on behalf of the Company to the Investor
regarding the Company and its Subsidiaries, their respective businesses and the
transactions contemplated hereby, including the Disclosure Schedules to this
Agreement, is true and correct in all material respects and does not contain any
untrue statement of a material fact or omit to state any material fact necessary
in order to make the statements made therein, in light of the circumstances
under which they were made, not misleading. The press releases disseminated by
the Company during the twelve months preceding the date of this Agreement taken
as a whole do not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary in order to
15
make the statements therein, in light of the circumstances under which they were
made and when made, not misleading. The Company acknowledges and agrees that the
Investor does not make nor has made any representations or warranties with
respect to the transactions contemplated hereby other than those specifically
set forth in Section 6 hereof.
5.16 No Integrated Offering. Assuming the accuracy of the Investor's
representations and warranties set forth in Section 6, neither the Company, nor
any of its affiliates, nor any Person acting on its or their behalf has,
directly or indirectly, made any offers or sales of any security or solicited
any offers to buy any security, under circumstances that would cause this
offering of the Securities to be integrated with prior offerings by the Company
for purposes of (i) the 1933 Act which would require the registration of any
such securities under the 1933 Act, or (ii) any applicable shareholder approval
provisions of any Trading Market on which any of the securities of the Company
are listed or designated.
5.17 Seniority. As of the applicable Representation Date, no Indebtedness
or other claim against the Company is senior to the Notes in right of payment,
whether with respect to interest or upon liquidation or dissolution, or
otherwise, other than indebtedness secured by purchase money security interests
(which is senior only as to underlying assets covered thereby) and capital lease
obligations (which is senior only as to the property covered thereby).
5.18 Bankruptcy Status; Indebtedness. The Company has no current intention
or expectation to file for reorganization or liquidation under the bankruptcy or
reorganization laws of any jurisdiction within one year from the applicable
Representation Date. Schedule 5.18 sets forth as of the date hereof all
outstanding secured and unsecured Indebtedness (as defined below) of the Company
or any Subsidiary, or for which the Company or any Subsidiary has commitments.
For the purposes of this Agreement, "INDEBTEDNESS" means (x) any liabilities for
borrowed money or amounts owed in excess of $100,000 (other than trade accounts
payable incurred in the ordinary course of business), (y) all guaranties,
endorsements and other contingent obligations in respect of indebtedness of
others, whether or not the same are or should be reflected in the Company's
consolidated balance sheet (or the notes thereto), except guaranties by
endorsement of negotiable instruments for deposit or collection or similar
transactions in the ordinary course of business; and (z) the present value of
any lease payments in excess of $100,000 due under leases required to be
capitalized in accordance with GAAP. The Company is not in default with respect
to any Indebtedness, except the convertible notes set forth in Schedule 5.18.
5.19 Regulation M Compliance. The Company has not, and to its knowledge no
one acting on its behalf has, (i) 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 to facilitate the sale or resale of any of the
Securities, (ii) sold, bid for, purchased, or paid any compensation for
soliciting purchases of, any of the Securities, or (iii) paid or agreed to pay
to any Person any compensation for soliciting another to purchase any other
securities of the Company, other than, in the case of clauses (ii) and (iii),
compensation paid to Garden State Securities in connection with the placement of
the Securities.
5.20 No Disqualification Events. None of the Company, any of its
predecessors, any affiliated issuer, any director, executive officer, other
officer of the Company participating in the offering contemplated hereby, any
beneficial owner of 20% or more of the Company's outstanding voting equity
16
securities, calculated on the basis of voting power, nor any promoter (as that
term is defined in Rule 405 under the 0000 Xxx) connected with the Company in
any capacity at the time of sale (each, an "ISSUER COVERED PERSON") is subject
to any of the "Bad Actor" disqualifications described in Rule 506(d)(1)(i) to
(viii) under the 1933 Act (a "DISQUALIFICATION EVENT"), except for a
Disqualification Event covered by Rule 506(d)(2) or (d)(3). The Company has
exercised reasonable care to determine whether any Issuer Covered Person is
subject to a Disqualification Event.
6. Representations and Warranties of the Investor. The Investor hereby
represents, warrants and covenants that:
6.1 Authorization. The Investor has full power and authority to enter into
this Agreement, to perform its obligations hereunder and to consummate the
transactions contemplated hereby and has taken all action necessary to authorize
the execution and delivery of this Agreement and the Registration Rights
Agreement, the performance of its obligations hereunder and thereunder and the
consummation of the transactions contemplated hereby and thereby.
6.2 No Public Sale or Distribution. The Investor is (i) acquiring the Notes
and (ii) upon conversion of the Notes will acquire the Conversion Shares for its
own account, not as a nominee or agent, and not with a view towards, or for
resale in connection with, the public sale or distribution of any part thereof,
except pursuant to sales registered or exempted under the 0000 Xxx. The Investor
is acquiring the Securities hereunder in the ordinary course of its business.
The Investor does not presently have any contract, agreement, undertaking,
arrangement or understanding, directly or indirectly, with any 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 (a "PERSON") to sell, transfer, pledge, assign or otherwise
distribute any of the Securities.
6.3 Accredited Investor Status; Investment Experience. The Investor is an
"accredited investor" as that term is defined in Rule 501(a) of Regulation D.
The Investor can bear the economic risk of its investment in the Securities, and
has such knowledge and experience in financial and business matters that it is
capable of evaluating the merits and risks of an investment in the Securities.
6.4 Reliance on Exemptions. The Investor understands that the Securities
are being offered and sold to it in reliance on specific exemptions from the
registration requirements of United States federal and state securities laws and
that the Company is relying in part upon the truth and accuracy of, and the
Investor's compliance with, the representations, warranties, agreements,
acknowledgments and understandings of the Investor set forth herein in order to
determine the availability of such exemptions and the eligibility of the
Investor to acquire the Securities.
6.5 Information. The Investor and its advisors, if any, have been furnished
with all materials relating to the business, finances and operations of the
Company and materials relating to the offer and sale of the Securities which
have been requested by the Investor. The Investor and its advisors, if any, have
been afforded the opportunity to ask questions of the Company. Neither such
inquiries nor any other due diligence investigations conducted by the Investor
17
or its advisors, if any, or its representatives shall modify, amend or affect
the Investor's right to rely on the Company's representations and warranties
contained herein. The Investor understands that its investment in the Securities
involves a high degree of risk. The Investor has sought such accounting, legal
and tax advice as it has considered necessary to make an informed investment
decision with respect to its acquisition of the Securities. The Investor is
relying solely on its own accounting, legal and tax advisors, and not on any
statements of the Company or any of its agents or representatives, for such
accounting, legal and tax advice with respect to its acquisition of the
Securities and the transactions contemplated by this Agreement.
6.6 No Governmental Review. The 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.
6.7 Validity; Enforcement; No Conflicts. This Agreement and each
Transaction Document to which the Investor is a party have been duly and validly
authorized, executed and delivered on behalf of the Investor and shall
constitute the legal, valid and binding obligations of the Investor enforceable
against the Investor in accordance with their respective terms, except as such
enforceability may be limited by general principles of equity or to applicable
bankruptcy, insolvency, reorganization, moratorium, liquidation and other
similar laws relating to, or affecting generally, the enforcement of applicable
creditors' rights and remedies. The execution, delivery and performance by the
Investor of this Agreement and each Transaction Document to which the Investor
is a party and the consummation by the Investor of the transactions contemplated
hereby and thereby will not (i) result in a violation of the organizational
documents of the 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 the Investor is
a party, or (iii) result in a violation of any law, rule, regulation, order,
judgment or decree (including federal and state securities or "Blue Sky" laws)
applicable to the Investor, except in the case of clause (ii) above, for such
conflicts, defaults or rights which would not, individually or in the aggregate,
reasonably be expected to have a material adverse effect on the ability of the
Investor to perform its obligations hereunder.
6.8 Organization and Standing. The Investor is a limited liability company
duly organized, validly existing and in good standing under the laws of the
State of New York.
6.9 Brokers or Finders. The Investor represents and warrants, to the best
of its knowledge, that no finder, broker, agent, financial advisor or other
intermediary, nor any purchaser representative or any broker-dealer acting as a
broker, is entitled to any compensation in connection with the transactions
contemplated by this Agreement or the transactions contemplated hereby.
6.10 Ability to Perform. There are no actions, suits, proceedings or
investigations pending against Investor or Investor's assets before any court or
governmental agency (nor is there any threat thereof) which would impair in any
way Investor's ability to enter into and fully perform its commitments and
obligations under this Agreement or the transactions contemplated hereby.
18
7. Use of Proceeds. The Investor acknowledges that the Company will use the
proceeds received from the purchase of the Notes for, among other things, (i)
costs and expenses relating to the sale of the Notes to the Investor and (ii)
general working capital purposes.
8. Rule 144 Availability; Public Information. At all times during the
period commencing on the six (6) month anniversary of the Initial Closing Date
and ending at such time that all of the Securities can be sold without the
requirement to be in compliance with Rule 144(c)(1) under the 1933 Act and
otherwise without restriction or limitation pursuant to Rule 144 under the 1933
Act, the Company shall use its reasonable best efforts to ensure the
availability of Rule 144 under the 1933 Act to the Investor with regard to the
Conversion Shares, including compliance with Rule 144(c)(1) under the 1933 Act.
If, (i) at any time during the period commencing from the six (6) month
anniversary of the Initial Closing Date and ending on the first anniversary of
the Additional Closing Date, the Company shall fail for any reason to satisfy
the current public information requirement under Rule 144(c) under the 1933 Act
(a "PUBLIC INFORMATION FAILURE"), or (ii) the Company shall fail to take such
action as is reasonably requested by the Investor to enable the Investor to sell
the Conversion Shares pursuant to Rule 144 under the 1933 Act (including,
without limitation, delivering all such legal opinions, consents, certificates,
resolutions and instructions to the Company's transfer agent as may be
reasonably requested from time to time by the Investor and otherwise fully
cooperate with Investor and Investor's broker to effect such sale of securities
pursuant to Rule 144 under the 1933 Act), then, in either case, in addition to
the Investor's other available remedies, the Company shall pay to a Investor, in
cash, as liquidated damages and not as a penalty, by reason of any such delay in
or reduction of its ability to sell the Securities, an amount in cash equal to
two percent (2.0%) of the aggregate Purchase Price of the Investor's Securities
on the day of a Public Information Failure or Process Failure, as applicable,
and on every thirtieth (30th) day (pro rated for periods totaling less than
thirty days) thereafter until (a) in the case of a Process Failure, the date
such Process Failure is cured, or (b) in the case of a Public Information
Failure, the earlier of (1) the date such Public Information Failure is cured
and (b) such time that such public information is no longer required for the
Investor to transfer the Conversion Shares pursuant to Rule 144 under the 1933
Act. The payments to which the Investor shall be entitled pursuant to this
Section 8 are referred to herein as "RULE 144 FAILURE PAYMENTS." Rule 144
Failure Payments shall be paid on the earlier of (i) the last day of the
calendar month during which such Rule 144 Failure Payments are incurred and (ii)
the third (3rd) Trading Day after the event or failure giving rise to the Rule
144 Failure Payments is cured.
9. Indemnification. The Company agrees to indemnify, hold harmless,
reimburse and defend the Investor, and its officers, directors, agents,
affiliates, members, managers, control persons, and principal shareholders,
against any claim, cost, expense, liability, obligation, loss or damage
(including reasonable legal fees) of any nature, incurred by or imposed upon the
Investor or any such person which results, arises out of or is based upon (i)
any material misrepresentation by Company or breach of any representation or
warranty by Company in this Agreement or in any exhibits or schedules attached
hereto, or other agreement delivered pursuant hereto; or (ii) after any
applicable notice and/or cure periods, any breach or default in performance by
the Company of any covenant or undertaking to be performed by the Company
hereunder, or any other agreement entered into by the Company and the Investor
relating hereto. Notwithstanding anything herein to the contrary, in no event
shall the Company be liable to the Investor (in the aggregate) for more than the
Purchase Price paid by the Investor.
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10. Miscellaneous
10.1 Successors and Assigns. Except as otherwise provided herein, the terms
and conditions of this Agreement shall inure to the benefit of and be binding
upon the respective successors and assigns of the parties (including transferees
of the Securities). Nothing in this Agreement, express or implied, is intended
to confer upon any party, other than the parties hereto or their respective
successors and assigns, any rights, remedies, obligations or liabilities under
or by reason of this Agreement, except as expressly provided in this Agreement.
10.2 Governing Law; Jurisdiction; Jury Trial. All questions concerning the
construction, validity, enforcement and interpretation of this Agreement shall
be governed by the internal laws of the State of Illinois, without giving effect
to any choice of law or conflict of law provision or rule (whether of the State
of Illinois or any other jurisdictions) that would cause the application of the
laws of any jurisdictions other than the State of Illinois. The Company hereby
irrevocably submits to the exclusive jurisdiction of the state and federal
courts sitting in Chicago, Illinois, for the adjudication of any dispute
hereunder or in connection herewith or with any transaction contemplated hereby
or discussed herein, and hereby irrevocably waives, and agrees not to assert in
any suit, action or proceeding, any claim that it is not personally subject to
the jurisdiction of any such court, that such suit, action or proceeding is
brought in an inconvenient forum or that the venue of 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 to such party at the address for such
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. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY
HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY
DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT OR ANY
TRANSACTION CONTEMPLATED HEREBY.
10.3 Titles and Subtitles. The titles and subtitles used in this Agreement
are used for convenience only and are not to be considered in construing or
interpreting this Agreement.
10.4 Notices. All notices required or permitted hereunder shall be in
writing and shall be deemed effectively given: (a) upon personal delivery to the
party to be notified, (b) when sent by confirmed telex or facsimile if sent
during normal business hours of the recipient; if not, then on the next Trading
Day, (c) five (5) Trading Days after having been sent by registered or certified
mail, return receipt requested, postage prepaid, or (d) one (1) day after
deposit with a nationally recognized overnight courier, specifying next day
delivery, with written verification of receipt. All communications shall be sent
to (a) in the case of the Company, to Stevia Corp., 0000 XX 00 X, Xxxxxxxxxxxx,
Xxxxxxx 00000, Telephone Number (000) 000-0000, Fax: (000) 000-0000, Attention:
Xxxxxx Xxxxxxxxxxxx, President, or (b) in the case of the Investor, to Nomis Bay
Ltd., a Bermuda company, Pennboss Building, 00 Xxxxxxxxxx Xxxxxx, Xxxxxxxx XX00
Xxxxxxx, Telephone Number: (000) 000-0000, Attention: Xxxxx Xxxxx, with a copy
(which shall not constitute notice) to Xxxxxxxxx Traurig, LLP, The MetLife
Building, 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Telephone Number (212)
000-0000, Fax: (000) 000-0000, Attention: Xxxxxxx X. Xxxxxxx, Esq.
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10.5 Finder's Fees. Except for the Placement Agent Fees (as defined below)
payable to Garden State Securities, each party represents that it neither is nor
will be obligated for any finders' fee or commission in connection with this
transaction. The Company shall indemnify and hold harmless each Investor from
any liability for any commission or compensation in the nature of a finders' fee
(and the costs and expenses of defending against such liability or asserted
liability) for which the Company or any of its officers, employees or
representatives is responsible.
10.6 Amendments and Waivers. No provision of this Agreement may be amended
other than by a written instrument signed by both parties hereto. No provision
of this Agreement may be waived other than in a written instrument signed by the
party against whom enforcement of such waiver is sought. No failure or delay in
the exercise of any power, right or privilege hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such power,
right or privilege preclude other or further exercises thereof or of any other
right, power or privilege.
10.7 Severability. If one or more provisions of this Agreement are held to
be unenforceable under applicable law, such provision shall be excluded from
this Agreement and the balance of the Agreement shall be interpreted as if such
provision were so excluded and shall be enforceable in accordance with its
terms.
10.8 Entire Agreement. This Agreement and the documents referred to herein
constitute the entire agreement among the parties and no party shall be liable
or bound to any other party in any manner by any warranties, representations or
covenants except as specifically set forth herein or therein.
10.9 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
10.10 Interpretation. Unless the context of this Agreement clearly requires
otherwise, (a) references to the plural include the singular, the singular the
plural, the part the whole, (b) references to any gender include all genders,
(c) "including" has the inclusive meaning frequently identified with the phrase
"but not limited to" and (d) references to "hereunder" or "herein" relate to
this Agreement.
10.11 Remedies. In addition to being entitled to exercise all rights
provided herein or granted by law, including recovery of damages, the Investor
and the Company will be entitled to specific performance under the Transaction
Documents. The parties agree that monetary damages may not be adequate
compensation for any loss incurred by reason of any breach of obligations
contained in the Transaction Documents and hereby agree to waive and not to
assert in any action for specific performance of any such obligation the defense
that a remedy at law would be adequate.
10.12 Fees and Expenses. Each party shall bear its own fees and expenses
related to the transactions contemplated by the Transaction Documents; provided,
however, that (i) $40,000 shall be withheld by the Investor from its applicable
Initial Purchase Price at the Initial Closing as a non-accountable and
non-refundable document preparation fee (the "DOCUMENT PREPARATION FEE") in
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connection with the preparation, negotiation, execution and delivery of the
Transaction Documents and legal due diligence of the Company, and shall be paid
directly to the Investor's counsel on the Initial Closing Date by wire transfer
of immediately available funds; (ii) $20,400 shall be withheld by the Investor
from its applicable Initial Purchase Price at the Initial Closing and shall be
paid directly to Garden State Securities by wire transfer of immediately
available funds on the Initial Closing Date for its services in acting as
placement agent in connection with the transaction; and (iii) $36,000 shall be
withheld by the Investor from its applicable Additional Purchase Price at the
Additional Closing and shall be paid directly to Garden State Securities by wire
transfer of immediately available funds on the Additional Closing Date for its
services in acting as placement agent in connection with the transaction (all
such fees paid to Garden State Securities collectively referred to as the
"PLACEMENT AGENT FEES"). For the avoidance of doubt, the Document Preparation
Fee and the Placement Agent Fees (and any portion thereof) shall be
non-refundable when paid. The Company shall pay all transfer agent fees
(including, without limitation, any fees required for same-day processing of any
instruction letter delivered by the Company and any conversion or exercise
notice delivered by a Investor), stamp taxes and other taxes and duties levied
in connection with the delivery of any Securities to the Investor.
11. Additional Defined Terms. In addition to the terms defined elsewhere in
this Agreement, the Notes, the following terms have the meanings set forth in
this Section 11:
11.1 "1934 ACT" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated thereunder.
11.2 "COMMISSION" means the United States Securities and Exchange
Commission.
11.3 "COMMON STOCK EQUIVALENTS" means any securities of the Company or the
Subsidiaries which would entitle the holder thereof to acquire at any time
Common Stock, including, without limitation, any Convertible Security, Option or
other instrument that is at any time convertible into or exercisable or
exchangeable for, or otherwise entitles the holder thereof to receive, Common
Stock.
11.4 "EFFECTIVE DATE" means the date that the Initial Registration
Statement (as defined in the Registration Rights Agreement) filed pursuant to
the Registration Rights Agreement has been declared effective by the Commission.
11.5 "ADDITIONAL NOTE CONDITIONS" means: (i) all the Conversion Shares may
be issued in full without violating the rules or regulations of the Trading
Market on which the Common Stock is then listed or designated for quotation (as
applicable); (ii) no public announcement of a pending, proposed or intended
Fundamental Transaction shall have occurred which has not been abandoned,
terminated or consummated; (iii) the Company shall have no knowledge of any fact
that would reasonably be expected to cause any Registration Statement required
to be filed pursuant to the Registration Rights Agreement to not be effective or
the prospectus contained therein to not be available for the resale of all of
the Registrable Securities in accordance with the terms of the Registration
Rights Agreement; (iv) the Investor shall not be in possession of any material,
non-public information provided to any of them by the Company, any of its
affiliates or any of their respective employees, officers, representatives,
22
agents or the like; and (v) there shall not have occurred an Event of Default
(as defined in the Initial Note) or an event that with the passage of time or
giving of notice would constitute an Event of Default (as defined in the Initial
Note).
11.6 "EQUITY CONDITIONS FAILURE" means that on any day during the period
commencing on the Additional Closing Notice Date through the Additional Closing
Date, the Equity Conditions have not been satisfied (or waived in writing by the
Investor).
11.7 "LIENS" means a lien, charge pledge, security interest, encumbrance,
right of first refusal, preemptive right or other restriction.
11.8 "MATERIAL ADVERSE EFFECT" means (i) a material adverse effect on the
legality, validity or enforceability of any Transaction Document, (ii) a
material adverse effect on the results of operations, assets, business,
prospects or condition (financial or otherwise) of the Company and the
Subsidiaries, taken as a whole, or (iii) a material adverse effect on the
Company's ability to perform in any material respect on a timely basis its
obligations under any Transaction Document.
11.9 "REGISTRABLE SECURITIES" shall have the meaning set forth in the
Registration Rights Agreement.
11.10 "SHORT SALES" shall mean "short sales" as defined in Rule 200
promulgated under Regulation SHO under the 0000 Xxx.
11.11 "TRADING DAY" means any day on which the Common Stock is traded on
the Trading Market, provided that "TRADING DAY" shall not include any day on
which the Common Stock is scheduled to trade on the Trading Market for less than
4.5 hours or any day that the Common Stock is suspended from trading during the
final hour of trading on the Trading Market (or if the Trading Market does not
designate in advance the closing time of trading on the Trading Market, then
during the hour ending at 4:00:00 p.m., New York City time) unless such day is
otherwise designated as a Trading Day in writing by the Investor.
11.12 "TRADING MARKET" means any of the following markets or exchanges on
which the Common Stock is listed or quoted for trading on the date in question:
the OTC Bulletin Board, The NASDAQ Global Market, The NASDAQ Global Select
Market, The NASDAQ Capital Market, the New York Stock Exchange, NYSE Arca, the
NYSE MKT, or the OTCQX Marketplace or the OTCQB Marketplace operated by OTC
Markets Group Inc. (or any successor to any of the foregoing).
11.13 "VWAP" means the volume weighted average price (the aggregate sales
price of all trades of Common Stock during a Trading Day divided by the total
number of shares of Common Stock traded during such Trading Day) of the Common
Stock during a Trading Day as reported by Bloomberg L.P. using the AQR function.
[SIGNATURES ON THE FOLLOWING PAGE]
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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered as of the date provided above.
THE COMPANY
STEVIA CORP.
By:
--------------------------------------------
Name:
Title:
24
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered as of the date provided above.
THE INVESTOR:
NOMIS BAY LTD.
By:
--------------------------------------------
Name:
Title:
25
