Contract
This Loan
Agreement, dated as of November 17, 2008 (this “Agreement”), is by and between
Water Chef, Inc., a Delaware corporation with a principal place of business at
00 Xxxxxxxxx Xxxxxx, Xxxxx 000, Xxxxxxxxx, Xxx Xxxx 00000 (the "Company"), and
Xxxxx X. Xxxxx,
an individual residing at 00 Xxxxxx Xxxxx, Xxxxxxx, XX
11753(the "Lender").
W I T N E S S E T H :
WHEREAS, the Lender desires to
loan (the “Loan”) to the Company, and the Company desires to borrow from Lender,
$50,000 (the “Loan Amount”) all in accordance with the terms and conditions set
forth herein; and
WHEREAS, pursuant to the terms
and conditions hereinafter set forth, the Company desires to grant to the Lender
(1) the option to convert the Loan Amount, and all accrued and unpaid interest
due under the Note (as defined below), into shares (each, a “Share”) of the
common stock, par value $0.001 per share (the “Common Stock”) of the Company,
and (2) warrants (the “Warrants”) to purchase shares of Common Stock (the
“Warrant Shares”).
NOW, THEREFORE, in
consideration of the mutual premises and of the representations, warranties,
covenants and agreements hereinafter set forth, and for other good and valuable
consideration, the receipt and sufficiency of which each of the parties hereby
acknowledge, the parties hereto hereby agree as follows:
Section
1
Loan.
The Lender shall tender the Loan
Amount, in full, to the Company to an account designated by the
Company. For the purposes of this Agreement, the date on which funds
are received by the Company shall be referred to as the “Closing
Date.” The Loan Amount shall accrue interest at the rate of 10% per
annum. All accrued and unpaid amounts of interest and principal shall
be due by or on November 17, 2009 (the “Maturity Date”), provided, however, that the
Lender may, at its option and in lieu of conversion as set forth below, demand
repayment of the Loan Amount plus all accrued and unpaid interest as of the date
demand is received by the Company. In consideration of the payment by
the Lender to the Company of the Loan Amount:
(a) The
Company shall issue a promissory note (the “Note”) in the principal amount of
$50,000, substantially in form attached hereto as Exhibit
A. The Loan Amount, plus all accrued and unpaid interest due
under the Note, shall be convertible, at the sole option of the Lender, into
Shares by, or on, the Maturity Date. The number of Shares that the
Lender shall receive upon conversion of the Loan Amount (plus all accrued and
unpaid interest as of the date of conversion) shall be determined by dividing
the Loan Amount (plus all accrued and unpaid interest as of the date of
conversion) by the closing market price (the “Conversion Price”) of the Common
Stock as of the Closing Date.
(b) The
Company shall issue to the Lender a warrant certificate (the “Certificate”)
representing the Warrants. The Lender shall have 5 years from the
Closing Date to exercise the Warrants. The number of Warrant Shares
represented by the Certificate shall be in an amount equal to 20% of the number
derived by dividing the Loan Amount by the Conversion Price. The
per-share exercise price for the Warrant Shares shall be 20% greater than the
Conversion Price as of the Closing Date.
Section
2 Representations
and Warranties of the Company.
The Company hereby represents and
warrants to the Lender as follows:
(a) The
Company is duly organized, validly existing, and in good standing in the State
of Delaware and has full corporate power and authority to operate its business
as now being conducted, and to execute and perform this Agreement and the
transactions contemplated by this Agreement.
(b) If
the Lender elects to convert the outstanding Loan Amount (and any accrued and
unpaid interest thereon) into Shares, and/or if the Lender elects to exercise
its Warrants, then following the consummation of such transaction, the Lender
shall be the owner of such Shares and Warrant Shares, free of any encumbrances,
liens, claims, equities or liability of every nature.
(c) The
execution and delivery hereof, the fulfillment of the terms contained herein,
and the consummation of the transactions contemplated hereby, will not conflict
or contravene (i) the corporate laws governing the activities of the Company,
(ii) the restated certificate of incorporation or bylaws of the Company in
effect as of the date hereof, or (iii) any agreement or other instrument to
which the Company is a party or by which it is bound.
(d) All
action on the part of the Company and its directors or stockholders legally
required for the authorization, execution, delivery, and performance of this
Agreement by the Company and the consummation of the transactions contemplated
hereby, have been taken or will be taken by, or on, the Closing
Date.
(e) The
Company has not utilized the services of any broker, finder or other
intermediary with respect to this Agreement or the transactions contemplated
hereby, and no such person or entity is entitled to any commission or free in
connection herewith.
(f)
No representation or warranty of the
Company contained herein, or information with respect to the Company contained
herein or in any statement, certificate, exhibit or other document furnished or
to be furnished to the Lender by the Company or its representatives pursuant
hereto or in connection with the transactions contemplated hereby, contains or
will contain any untrue statement of fact or omits or will omit to state any
material fact necessary to make the statement herein or therein not false or
misleading.
2
Section
3
Representations
and Warranties of the Lender.
The Lender hereby represents to the
Company as follows:
(a) The
Lender has conducted his/her own independent review and analysis of the Company
and its respective assets and liabilities. In entering into this
Agreement, the Lender has relied, in part, upon his/her own investigation and
analysis.
(b) No
representation or warranty of the Lender contained herein, or information with
respect to the Lender contained herein or in any certificate, exhibit or other
document furnished or to be furnished to the Company by the Lender or the
Lender’s representatives pursuant hereto or in connection with the transactions
contemplated hereby, contains or will contain any untrue statement of fact or
omits or will omit to state any material fact necessary to make the statements
herein or therein not false or misleading.
Section
4 Miscellaneous.
(a) Fees and
Expenses. Each of the parties hereto shall pay its own legal
and accounting charges and other expenses incident to the execution of this
Agreement and the consummation of the transactions contemplated
hereby.
(b) Survival. All
agreements, representations and warranties and covenants contained herein or
made in writing by or on behalf of the parties hereto in connection with the
transactions contemplated hereby shall survive the execution of this Agreement
and the consummation of such transactions.
(c) Severability. Any
term or provision of this Agreement which is invalid or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such invalidity or unenforceability without rendering invalid or unenforceable
the remaining terms and provisions of this Agreement or affecting the validity
or enforceability of any of the terms or provisions of this Agreement in any
other jurisdiction.
(d) Modification or
Waiver. This Agreement may not be changed, modified or
rescinded orally. Any change, modification or rescission need be in
writing, signed by the party against whom enforcement of any change,
modification or rescission is sought. Any waiver of any of the
provisions of this Agreement, or of any inaccuracy in or non-fulfillment of any
of the representations, warranties or obligations hereunder or contemplated
hereby, shall not be effective unless made in a writing signed by the party
against whom the enforcement of any such waiver is sought. A waiver
given in any case shall only apply with respect to that particular act or
omission, and shall not be effective as to any further acts or omissions,
regardless of whether they be of the same or similar nature.
3
(e) Notices. Notices
or other communications required or permitted to be given hereunder shall be in
writing and shall be deemed duly given if (a) personal delivered, against
written receipt therefor, (b) forwarded by pre-paid certified or registered
mail, return receipt requested, or (c) forwarded via a nationally recognized
overnight courier service (e.g., Federal Express, USPS
Express Mail, UPS, DHL, etc.) to the parties to which such notice or other
communication is required by this Agreement to be given, at the address of such
parties as follows:
|
If
to the Lender:
|
Xxxxx X. Xxxxx
|
||
|
00 Xxxxxx Xxxxx, Xxxxxxx, XX
00000
|
|||
|
With
a copy to:
|
|||
|
Attn:
|
|||
|
If
to the Company:
|
Water
Chef, Inc.
|
||
|
00
Xxxxxxxxx Xxxxxx, Xxxxx 000
|
|||
|
Xxxxxxxxx,
Xxx Xxxx 00000
|
|||
|
Attn:
|
|||
|
With
a copy to:
|
Moritt
Xxxx Hamroff & Xxxxxxxx LLP
|
||
|
000
Xxxxxx Xxxx Xxxxx, Xxxxx 000
|
|||
|
Xxxxxx
Xxxx, Xxx Xxxx 00000
|
|||
|
Attn:
Xxxxx X. Xxxxx, Esq.
|
|||
or to
such other person or address as the Lender shall furnish to the Company or the
Company shall furnish to the Lender in writing. Notices delivered
personally shall be deemed communicated as of the date of actual receipt, mailed
notices shall be deemed communicated as of the date three business
days after mailing, and notices sent by courier shall be deemed communicated as
of the date two business days after pick-up.
(f)
Binding Effect;
Assignment. This Agreement and all of the provisions hereof
shall be binding upon and inure to the benefit of the parties hereto and their
respective administrators, successors and permitted assigns, but neither this
Agreement nor any of the rights, interests or obligations hereunder shall be
assigned or assignable by any of the parties hereto without the prior written
consent of the other party.
(g) Governing Law;
Jurisdiction. This Agreement and the rights and obligations of
the parties shall be interpreted under and governed by the laws of the State of
New York, without regard to its conflicts of laws principles. Any and
all matters of dispute of any nature whatsoever arising out of or in any way
connected with this Agreement or in any way connected with the relationship of
the parties to this Agreement, shall be subject to determination only by the
State courts sitting in the State of New York, County of Nassau, or the Federal
courts for the Eastern District of New York.
(h) Entire
Agreement. This Agreement sets forth the entire agreement and
understanding of the parties hereto in respect of the subject matter contained
herein, and supersedes all prior agreements, promises, understandings, letters
of intent, covenants, arrangements, communications, representations or
warranties, whether oral or written, by any party hereto or by any related or
unrelated third party. Any exhibits and schedules attached hereto,
and all certificates, documents and other instruments delivered or to be
delivered pursuant to the terms hereof are hereby expressly made a part of this
Agreement as fully as though set forth herein, and all references herein to the
terms "this Agreement," "hereunder," "herein," "hereby" or "hereto" shall be
deemed to refer to this Agreement and to all such writings.
4
(i)
Headings. The
headings of the sections of this Agreement are inserted for convenience only and
shall not constitute a part or affect in any way the meaning or interpretation
of this Agreement.
(j)
Counterparts. This
Agreement may be executed in one or more counterparts, each of which shall be
deemed an original, but all of which together shall constitute the same
instrument. This Agreement shall be binding upon the execution and
delivery by facsimile by all parties to this Agreement as if the same were
manually executed and delivered by such parties. The parties agree to
promptly deliver to each other original executed counterparts of this
Agreement.
IN WITNESS WHEREOF, the
parties hereto have caused this Agreement to be duly executed as of the day and
year first above written.
|
THE
COMPANY
|
|
|
WATER
CHEF, INC.
|
|
|
By:
|
/s/ Xxxxxx X. Xxxxxxx |
|
Name:
Xxxxxx X. Xxxxxxx
|
|
|
Title: Chief
Executive Officer
|
|
|
THE
LENDER
|
|
| /s/ Xxxxx X. Xxxxx | |
|
Name:
Xxxxx X.
Xxxxx
|
|
5
Exhibit
A
DEMAND
PROMISSORY NOTE
NEITHER
THIS NOTE NOR THE SHARES OF COMMON STOCK OR ANY OTHER SECURITIES ISSUABLE UPON
CONVERSION OF THIS NOTE HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED. THIS NOTE HAS BEEN ACQUIRED, AND ANY SHARES OF COMMON
STOCK OR ANY OTHER SECURITIES ISSUABLE UPON CONVERSION OF THE AMOUNTS
OUTSTANDING UNDER THIS NOTE ARE REQUIRED TO BE ACQUIRED, FOR INVESTMENT PURPOSES
AND NOT WITH A VIEW TO DISTRIBUTION OR RESALE, AND MAY NOT BE SOLD, ASSIGNED,
PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION
STATEMENT FOR THIS NOTE AND/OR SUCH SHARES OR OTHER SECURITIES UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND APPLICABLE STATE SECURITIES LAWS OR AN
OPINION OF COUNSEL SATISFACTORY TO THE ISSUER OF THIS NOTE AND SUCH SHARES OR
OTHER SECURITIES TO THE EFFECT THAT REGISTRATION IS NOT REQUIRED UNDER SUCH ACT
AND SUCH STATE SECURITIES LAWS.
Water
Chef, Inc.
10%
Convertible Promissory Note
|
Dated:
November 17, 2008
|
Principal
Amount: $50,000
|
|
Plainview,
New York
|
For Value Received, the
undersigned, Water Chef, Inc.
(together with its successors and assigns, the “Company”), a Delaware
corporation, hereby promises to pay to the order of Xxxxx X. Xxxxx (the “Lender”)
or registered assignees (Lender or such assignees shall be referred to herein
collectively as the “Holder”), the principal sum of Fifty Thousand Dollars
($50,000), together with interest as set forth below. This 10%
Convertible Promissory Note (this “Note”) is issued pursuant to, and is the
“Note” referred to in that certain Loan Agreement dated November 17, 2008 (the
“Agreement”) between the Company and the Lender, and is made subject to the
terms and conditions of the Agreement as if set forth in full in this
Note. Prior to the Maturity Date, the Company agrees to pay the
principal amount evidenced by this Note plus all unpaid interest due hereunder
not later than seven (7) days after written DEMAND is sent to the Company at the
address set forth herein by first class mail.
1.
Interest
Rate. Until an Event of Default shall have occurred, the
principal amount evidenced by this Note shall bear interest at the rate of 10%
per annum, computed on the basis of a 360-day year for the actual number of days
elapsed (the “Applicable Interest Rate”). Upon the occurrence of an
Event of Default, the outstanding principal amount and any accrued but unpaid
interest thereon shall bear interest until paid at the greater of (a) 16%, or
(b) the maximum legal rate of interest (the “Default Interest
Rate”).
6
2.
Payment Date; Payment
Method.
(a) Payment
Dates. Unless payment is made by the Company pursuant to a
written DEMAND received from Holder, the outstanding principal amount evidenced
by this Note (and any accrued but unpaid interest thereon) shall be paid by, or
on October 14, 2009 (the “Maturity Date”). Upon payment in full of
the principal evidenced by this Note (and any accrued but unpaid interest
thereon), Lender, by Lender’s acceptance of this Note, agrees to xxxx this Note
“CANCELLED” and return this Note as so marked to the Company within five
Business Days after such payment in full is received. For purposes of
this Note, the term “Business Day” shall mean any day other than a Saturday,
Sunday or a day on which banking institutions in the State of New York are
authorized or obligated by law or executive order to close. This Note
may be prepaid by the Company, and at the Company’s sole discretion, without
penalty in whole or in part at any time upon ten days’ prior written notice to
Holder, provided that such prepayment includes any accrued but unpaid interest
thereon through the date of prepayment.
(b) Payment
Method. Payment of the principal evidenced by this Note (and
any accrued but unpaid interest thereon) shall be made by check, subject to
collection, tendered to Holder, via postage-paid, first class mail, at the
address for the giving of notices as set forth in Section 10 of this
Note.
3.
Default;
Acceleration.
(a) Any
of the following shall constitute an “Event of Default” under this
Note:
(i)
the failure by the Company to pay any
amounts required to be paid under this Note on or before the date on which such
payment was due;
(ii) the
breach or noncompliance by the Company of any of its material representations,
warranties or covenants contained herein or in the Agreement;
(iii) the
Company shall
(A) apply
for or consent to the appointment of a receiver or trustee of the Company’s
assets,
(B) make
a general assignment for the benefit of creditors,
(C) file
a petition or other request no matter how denominated (“Petition”) seeking
relief under Title 11 of the United States Code or under any other federal or
state bankruptcy, reorganization, insolvency, readjustment of debt, dissolution
or liquidation law or statute (“Bankruptcy Statute”), or
(D) file
an answer admitting the material allegations of a Petition filed against it in
any proceeding under any Bankruptcy Statute;
(iv) there
shall have entered against the Company an order for relief under any Bankruptcy
Statute; or
(v) a
Petition seeking an order for relief under any Bankruptcy Statute is filed by
any one other than the Company and without the Company’s consent or agreement
which is not dismissed or stayed within 60 days after the date of such filing,
or such Petition is not dismissed upon the expiration of any stay
thereof.
7
(b) Upon
the occurrence of an Event of Default, the unpaid principal amount evidenced by
this Note (and any accrued but unpaid interest thereon) shall be immediately due
and payable.
(c) Until
the occurrence of an Event of Default, the principal amount evidenced by this
Note shall bear interest at the Applicable Interest Rate and upon an Event of
Default, any unpaid principal amount under this Note and any accrued but unpaid
interest through the date of effectiveness of such Event of Default shall bear
interest until paid at the Default Interest Rate.
4.
Conversion Right.
(a) Voluntary
Conversion. Provided that the Holder does not exercise its
right to DEMAND payment of the principal amount evidenced by this Note plus all
accrued and unpaid interest, the Holder of this Note has the right, at the
Holder’s option and at any time following the date of this Note and before the
Maturity Date, to convert the principal balance of this Note (plus all accrued
and unpaid interest under this Note), in accordance with the procedures
contained in Section 4(b) hereof, in whole or in part, into a number of fully
paid and nonassessable shares of the common stock, par value $0.001 per share
(the “Common Stock”), of the Company at the Conversion Price (as defined
below). The number of shares of Common Stock into which this Note may
be converted (“Conversion Shares”) pursuant to this Section 4(a) shall be
determined by dividing the aggregate principal amount together with all accrued
and unpaid interest thereon as of the date of conversion, by the Conversion
Price. “Conversion Price” shall mean $0.04 per share, subject to
adjustment as provided in Section 5.
(b) Conversion
Procedure. Before the Holder shall be entitled to convert this
Note into Conversion Shares, it shall surrender this Note at the office of the
Company and shall give written notice by mail, postage prepaid, to the Company
at its principal corporate office, of the election to convert the same pursuant
to Section 4(a), and shall state therein the name or names in which the
certificate or certificates for shares of Common Stock are to be
issued. The Company shall, as soon as practicable thereafter, issue
and deliver at such office to the Holder of this Note a certificate or
certificates for the number of shares of Common Stock to which the Holder of
this Note shall be entitled. Such conversion shall be deemed to have
been made immediately prior to the close of business on the date of such
surrender of this Note, and the person or persons entitled to receive the
Conversion Shares issuable upon such conversion shall be treated for all
purposes as the record holder or holders of the shares of Common Stock as of
such date.
(c) Fractional
Shares. No fractional shares of Common Stock shall be issued
upon conversion of indebtedness evidenced by this Note. Instead of
any fractional shares of Common Stock which would otherwise be issuable upon
conversion, the Company shall pay a cash adjustment in respect of such
fractional share in an amount equal to the product resulting from multiplying
(i) the Conversion Price by (ii) such fractional share.
(d) Liability for Taxes on Conversion
Shares. The Company shall pay all documentary, stamp and other
transactional taxes attributable to the issuance of Conversion Shares or other
securities issuable upon conversion of any portion of the principal and accrued
interest evidenced by this Note if issued in the name of Holder. In
all other cases, such taxes shall be paid by Holder.
8
(e) Reservation of Conversion
Shares. The Company shall reserve, free from preemptive
rights, out of its authorized but unissued shares of Common Stock a sufficient
number of shares of Common Stock for issuance as Conversion Shares.
(f) Status of Conversion
Shares. All Conversion Shares which may be issued in
connection with the conversion provisions set forth in this Section 4 will,
upon delivery by the Company, be duly and validly issued, fully paid and
non-assessable, with no personal liability attaching to the ownership of such
Conversion Shares, and free from all taxes, liens or charges with respect
thereto and not subject to any preemptive rights.
5.
Conversion Price Adjustments.
(a) Adjustments for Stock Splits and
Subdivisions. In the event the Company should at any time or
from time to time after the date of issuance hereof fix a record date for the
effectuation of a split or subdivision of the outstanding shares of Common Stock
or the determination of holders of Common Stock entitled to receive a dividend
or other distribution payable in additional shares of Common Stock or other
securities or rights convertible into, or entitling the holder thereof to
receive directly or indirectly, additional shares of Common Stock (hereinafter
referred to as “Common Stock Equivalents”) without payment of any consideration
by such holder for the additional shares of Common Stock or the Common Stock
Equivalents (including the additional shares of Common Stock issuable upon
conversion or exercise thereof), then, as of such record date (or the date of
such dividend distribution, split or subdivision if no record date is fixed),
the Conversion Price of this Note shall be appropriately decreased so that the
number of shares of Common Stock issuable upon conversion of this Note shall be
increased in proportion to such increase of outstanding shares.
(b) Adjustments for Reverse Stock
Splits. If the number of shares of Common Stock outstanding at
any time after the date hereof is decreased by a combination of the outstanding
shares of Common Stock, then, following the record date of such combination, the
Conversion Price for this Note shall be appropriately increased so that the
number of shares of Common Stock issuable on conversion hereof shall be
decreased in proportion to such decrease in outstanding shares.
(c) Adjustment for Certain Capital
Transactions. If any capital
reorganization or reclassification of the capital stock of the Company or
consolidation or merger of the Company with another corporation, or the sale of
all or substantially all of its assets to another corporation shall be effected
in such a way that holders of the Company’s Common Stock shall be entitled to
receive stock, securities or assets with respect to or in exchange for such
Common Stock, then, as a condition of such reorganization, reclassification,
consolidation, merger or sale, the Holder shall have the right to receive upon
the basis and upon the terms and conditions specified in this Note and in lieu
of the Conversion Shares immediately theretofore receivable upon the conversion
of this Note, such shares of stock, other securities or assets as would have
been issued or delivered to the Holder if Holder had converted this Note and had
received the Conversion Shares immediately prior to such reorganization,
reclassification, consolidation, merger or sale. The Company shall
not effect any such consolidation, merger or sale unless prior to the
consummation thereof the successor corporation (if other than the Company)
resulting from such consolidation or merger or the corporation purchasing such
assets shall assume by written instrument, executed and delivered to the Holder,
the obligation to deliver to the Holder such shares of stock, securities or
assets as, in accordance with the foregoing provisions, the Holder may be
entitled to purchase.
9
(d) Notices of Record Date,
etc. In the event of:
(i)
Any action taken by the Company of a record of the
holders of any class of securities of the Company for the purpose of determining
the holders thereof who are entitled to receive any dividend or other
distribution, or any right to subscribe for, purchase or otherwise acquire any
shares of stock of any class or any other securities or property, or to receive
any other right; or
(ii)
Any capital reorganization of the Company, any
reclassification or recapitalization of the capital stock of the Company or any
transfer of all or substantially all of the assets of the Company to any other
person or any consolidation or merger involving the Company; or
(iii) Any
voluntary or involuntary dissolution, liquidation or winding-up of the
Company;
the Company will mail to the holder of
this Note at least ten business days prior to the earliest date specified
therein, a notice specifying:
(x) The
date on which any such record is to be taken for the purpose of such dividend,
distribution or right, and the amount and character of such dividend,
distribution or right; and
(y)
The date on which any such reorganization, reclassification, transfer,
consolidation, merger, dissolution, liquidation or winding-up is expected to
become effective and the record date for determining shareholders entitled to
vote thereon.
6.
Assignment. This
Note is not assignable by the Company, and any purported assignment of this Note
shall be null and void and of no effect. This Note is not assignable
by the Holder except in compliance with applicable federal and state securities
laws.
7.
Waiver and
Amendment. Any provision of this Note may be amended, waived
or modified upon the written consent of the Company and the Holder.
8.
Usury. This Note is hereby
expressly limited so that in no event whatsoever, whether by reason of
acceleration of maturity of the loan evidenced hereby or otherwise, shall the
amount paid or agreed to be paid to the Holder hereunder for the loan, use,
forbearance or retention of money exceed that permissible under applicable
law. If at any time the performance of any provision of this Note or
of any other agreement or instrument entered into in connection with this Note
involves a payment exceeding the limit of the interest that may be validly
charged for the loan, use, forbearance or detention of money under applicable
law, then automatically and retroactively, ipso facto, the obligation to be
performed shall be reduced to such limit, it being the specific intent of the
Company and the Holder that all payments under this Note are to be credited
first to interest as permitted by law, but not in excess of (a) the agreed rate
of interest set forth herein or therein or (b) that permitted by law, whichever
is the lesser, and the balance toward the reduction of principal. The
provisions of this Section 8 shall never be superseded or waived and shall
control every other provision of this Note and all other agreements and
instruments between the Company and the Holder entered into in connection with
this Note.
10
9. Governing Law. This
Note and all rights and obligations hereunder shall be governed by and construed
in accordance with the laws of the State of New York applicable to agreements
made and be performed wholly within such State, without regard to such State’s
conflicts of laws principles.
10. Notices. All
requests, demands, notices and other communications required or otherwise given
under this Note shall be sufficiently given if (a) delivered by hand, against
written receipt therefor, (b) forwarded by overnight courier requiring
acknowledgment of receipt or (c) mailed by postage prepaid, registered or
certified mail, return receipt requested, addressed as follows:
|
If
to the Company, to:
|
Water
Chef, Inc.
|
|
00
Xxxxxxxxx Xxxxxx, Xxxxx 000
|
|
|
Xxxxxxxxx,
Xxx Xxxx 00000
|
|
|
Attn:
Xxxxxx X. Xxxxxxx, President
|
|
|
with
a copy to:
|
Moritt
Xxxx Hamroff & Xxxxxxxx LLP
|
|
000
Xxxxxx Xxxx Xxxxx, Xxxxx 000
|
|
|
Xxxxxx
Xxxx, Xxx Xxxx 00000
|
|
|
Attn:
Xxxxx X. Xxxxx, Esq.
|
|
|
If
to Holder, to:
|
Xxxxx X. Xxxxx
|
|
00 Xxxxxx Xxxxx, Xxxxxxx, XX
00000
|
or, in
the case of any of the parties hereto, at such other address as such party shall
have furnished in writing, in accordance with this Section 10, to the other
parties hereto. Each such request, demand, notice or other
communication shall be deemed given (a) on the date of delivery by hand, (b) on
the first business day following the date of delivery to an overnight courier or
(c) three business days following mailing by registered or certified
mail.
IN WITNESS WHEREOF, this Note
has been duly executed and delivered as of the date first above
written.
Water
Chef, Inc.
|
By:
|
/s/ Xxxxxx X. Xxxxxxx |
|
Name:
Xxxxxx X. Xxxxxxx
|
|
|
Title:
Chief Executive
Officer
|
|
11
Exhibit
B
THE
SECURITIES EVIDENCED BY THIS WARRANT CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933 OR THE LAWS OF ANY STATE. SUCH SECURITIES
AND ANY SECURITIES ISSUED HEREUNDER MAY NOT BE SOLD OR OTHERWISE TRANSFERRED
UNLESS THEY ARE REGISTERED UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS
OR AN EXEMPTION FROM REGISTRATION IS AVAILABLE.
250,000 Warrants
Xxxxx
X. Xxxxx
WARRANT
CERTIFICATE
This
warrant certificate ("Warrant Certificate") certifies that pursuant to the
certain Loan Agreement dated as of November 17,
2008 (the “Agreement”) by and between Water Chef, Inc. and Xxxxx X. Xxxxx or her
registered assigns (the "Holder") is the owner of the number of warrants
("Warrants") specified above, each of which entitles the Holder thereof to
purchase, at any time on or before the Expiration Date (hereinafter defined),
one fully paid and non-assessable share (each, a “Share”) of common stock,
$0.001 par value ("Common Stock"), of Water Chef, Inc., a Delaware corporation
(the "Company"), at a purchase price as determined pursuant to this Warrant
Certificate.
1.
Warrant; Purchase
Price
Each
Warrant shall entitle the Holder to purchase one Share and the purchase price
payable upon exercise of the Warrants shall initially be $0.048 per Share,
subject to adjustment as hereinafter provided (the "Purchase
Price"). The Purchase Price and number of Shares issuable upon
exercise of each Warrant are subject to adjustment as provided in Article
6. The Purchase Price shall be payable as hereinafter
provided.
2.
Exercise;
Expiration Date
2.1 The
Warrants are exercisable, at the option of the Holder, at any time after
issuance and on or before the Expiration Date, upon surrender of this Warrant
Certificate to the Company together with a duly completed Notice of Exercise, in
the form attached hereto as Exhibit A, and payment of an amount equal to the
Purchase Price times the number of Warrants to be exercised. In the
case of exercise of less than all the Warrants represented by this Warrant
Certificate, the Company shall cancel the Warrant Certificate upon the surrender
thereof and shall execute and deliver a new Warrant Certificate for the balance
of such Warrants.
12
2.2 The
Purchase Price shall be paid in cash or by bank or certified check or a
combination thereof.
2.3 The
term "Expiration Date" shall mean 5:00 p.m. New York time on the day which is
five years after the Closing Date of the Agreement, or if such date shall in the
State of New York be a holiday or a day on which banks are authorized to close,
then 5:00 p.m. New York time the next following date which in the State of New
York is not a holiday or a day on which banks are authorized to
close.
3.
Registration and Transfer on
Company Books
3.1 The
Company shall maintain books for the registration and transfer of the Warrants
and the registration and transfer of the shares of Common Stock issued upon
exercise of the Warrants. The Company may, by written notice to the Holder,
appoint an agent for the purpose of maintaining the register referred to in this
Section 3.1, issuing the Common Stock or other securities then issuable
upon the exercise of this Warrant, exchanging this Warrant, replacing this
Warrant, or any or all of the foregoing. Thereafter, any such
registration, issuance, exchange or replacement, as the case may be, shall be
made at the office of such agent.
3.2
Prior to due presentment for registration of
transfer of this Warrant Certificate, or the Shares of Common Stock issued upon
exercise of the Warrants, the Company may deem and treat the registered Holder
as the absolute owner thereof.
3.3
Neither this Warrant Certificate, nor the Warrants represented
hereby, may be sold, assigned, pledged or otherwise transferred by the Holder
without the consent of the Company. Any transfer shall be made only
if permitted by, and made only in accordance with, all applicable federal and
state securities laws. The Company shall register upon its books any
permitted transfer of a Warrant Certificate, upon surrender of same to the
Company with a written instrument of transfer duly executed by the registered
Holder or by a duly authorized attorney, and evidence of payment of all
applicable transfer taxes, if any. Upon any such registration of
transfer, new Warrant Certificate(s) shall be issued to the transferee(s) and
the surrendered Warrant Certificate shall be canceled by the
Company. A Warrant Certificate may also be exchanged, at the option
of the Holder, for new Warrant Certificates representing in the aggregate the
number of Warrants evidenced by the Warrant Certificate
surrendered.
4.
Reservation of
Shares
The
Company covenants that it will at all times reserve and keep available out of
its authorized Common Stock, solely for the purpose of issue upon exercise of
the Warrants, such number of Shares of Common Stock as shall then be issuable
upon the exercise of all outstanding Warrants. The Company covenants
that all Shares of Common Stock which shall be issuable upon exercise of the
Warrants shall be duly and validly issued and fully paid and non-assessable and
free from all taxes, liens and charges with respect to the issue thereof, and
that upon issuance such Shares shall be listed on each national securities
exchange, if any, on which the other shares of outstanding Common Stock of the
Company are then listed.
13
5. Loss or
Mutilation
Upon
receipt by the Company of reasonable evidence of the ownership of and the loss,
theft, destruction or mutilation of any Warrant Certificate and, in the case of
loss, theft or destruction, of indemnity reasonably satisfactory to the Company,
or, in the case of mutilation, upon surrender and cancellation of the mutilated
Warrant Certificate, the Company shall execute and deliver in lieu thereof a new
Warrant Certificate representing an equal number of Warrants.
6.
Adjustment of Purchase
Price and Number of Shares Deliverable
The
number of Shares of Common Stock purchasable upon the exercise of each Warrant
and the Purchase Price with respect to the Shares shall be subject to adjustment
as follows:
6.1
(a)
If the Company at any time divides the
outstanding shares of its Common Stock into a greater number of shares (whether
pursuant to a stock split, stock dividend or otherwise), and conversely, if the
outstanding shares of its Common Stock are combined into a smaller number of
shares, the Purchase Price in effect immediately prior to such division or
combination shall be proportionately adjusted to reflect the reduction or
increase in the value of each such Common Share.
(b)
If any capital reorganization or reclassification of the
capital stock of the Company or consolidation or merger of the Company with
another corporation, or the sale of all or substantially all of its assets to
another corporation shall be effected in such a way that holders of the Common
Stock shall be entitled to receive stock, securities or assets with respect to
or in exchange for such Common Stock, then, as a condition of such
reorganization, reclassification, consolidation, merger or sale, the Holder
shall have the right to purchase and receive upon the basis and upon the terms
and conditions specified in this warrant and in lieu of the Shares of the Common
Stock immediately theretofore purchasable and receivable upon the exercise of
the rights represented hereby, such shares of stock, other securities or assets
as would have been issued or delivered to the Holder if Holder had exercise this
Warrant Certificate and had received such Shares of Common Stock immediately
prior to such reorganization, reclassification, consolidation, merger or
sale. The Company shall not effect any such consolidation, merger or
sale unless prior to the consummation thereof the successor corporation (if
other than the Company) resulting from such consolidation or merger or the
corporation purchasing such assets shall assume by written instrument executed
and mailed to the Holder at the last address of the Holder appearing on the
books of the Company the obligation to deliver to the Holder such shares of
stock, securities or assets as, in accordance with the foregoing provisions, the
Holder may be entitled to purchase.
(c)
Upon each adjustment of the Purchase Price,
the Holder shall thereafter be entitled to purchase, at the Purchase Price
resulting from such adjustment, the number of Shares obtained by multiplying the
Purchase Price in effect immediately prior to such adjustment by the number of
Shares purchasable pursuant hereto immediately prior to such adjustment and
dividing the product thereof by the Purchase Price resulting from such
adjustment.
14
6.2
No adjustment in the number of Shares
purchasable under this Warrant Certificate, or in the Purchase Price with
respect to the Shares, shall be required unless such adjustment would require an
increase or decrease of at least 1% in the number of Shares issuable upon the
exercise of such Warrant, or in the Purchase Price thereof; provided, however, that any
adjustments which by reason of this Section 6.2 are not required to be made
shall be carried forward and taken into account in any subsequent
adjustment. All final results of adjustments to the number of Shares
and the Purchase Price thereof shall be rounded to the nearest one thousandth of
a share or the nearest cent, as the case may be. Anything in this
Section 6 to the contrary notwithstanding, the Company shall be entitled, but
shall not be required, to make such changes in the number of Shares purchasable
upon the exercise of each Warrant, or in the Purchase Price thereof, in addition
to those required by such Section, as it in its discretion shall determine to be
advisable in order that any dividend or distribution in shares of Common Stock,
subdivision, reclassification or combination of shares of Common Stock, issuance
of rights, warrants or options to purchase Common Stock, or distribution of
shares of stock other than Common Stock, evidences of indebtedness or assets
(other than distributions of cash out of retained earnings) or convertible or
exchangeable securities hereafter made by the Company to the holders of its
Common Stock shall not result in any tax to the holders of its Common Stock or
securities convertible into Common Stock.
6.3 Whenever
the number of Shares purchasable upon the exercise of each Warrant or the
Purchase Price of such Shares is adjusted, as herein provided, the Company shall
mail to the Holder, at the address of the Holder shown on the books of the
Company, a notice of such adjustment or adjustments, prepared and signed by the
Chief Financial Officer or Secretary of the Company, which sets forth the number
of Shares purchasable upon the exercise of each Warrant and the Purchase Price
of such Shares after such adjustment, a brief statement of the facts requiring
such adjustment and the computation by which such adjustment was
made.
6.4 The
form of Warrant Certificate need not be changed because of any change in the
Purchase Price, the number of Shares issuable upon the exercise of a Warrant or
the number of Warrants outstanding pursuant to this Section 6, and Warrant
Certificates issued before or after such change may state the same Purchase
Price, the same number of Warrants, and the same number of Shares issuable upon
exercise of Warrants as are stated in the Warrant Certificates theretofore
issued pursuant to this Agreement. The Company may, however, at any
time, in its sole discretion, make any change in the form of Warrant Certificate
that it may deem appropriate and that does not affect the substance thereof, and
any Warrant Certificates thereafter issued or countersigned, whether in exchange
or substitution for an outstanding Warrant Certificate or otherwise, may be in
the form as so changed.
7.
Voluntary Adjustment by the
Company.
The
Company may, at its option, at any time during the term of the Warrants, reduce
the then current Purchase Price to any amount deemed appropriate by the Board of
Directors of the Company and/or extend the date of the expiration of the
Warrants.
15
8.
Fractional Shares and
Warrants.
Anything
contained herein to the contrary notwithstanding, the Company shall not be
required to issue any fraction of a share of Common Stock in connection with the
exercise of Warrants. Warrants may not be exercised in such number as
would result (except for the provisions of this paragraph) in the issuance of a
fraction of a share of Common Stock unless the Holder is exercising all Warrants
then owned by the Holder. In such event, the Company shall, upon the
exercise of all of such Warrants, issue to the Holder the largest aggregate
whole number of Shares of Common Stock called for thereby upon receipt of the
Purchase Price for all of such Warrants and pay a sum in cash equal to the
remaining fraction of a Share multiplied by its exercise price as of the last
business day preceding the date on which the Warrants are presented for
exercise.
9.
Governing
Law
This
Warrant Certificate shall be governed by and construed in accordance with the
laws of the State of New York.
10. Registration
Rights
10.1 Notice of
Registration. If at any time or from
time to time the Company shall determine to register any of its securities,
either for its own account or the account of a security holder or holders, other
than (i) a registration relating solely to employee benefit plans, or (ii) a
registration relating solely to a Commission Rule 145 transaction, the Company
will:
(a) promptly give to
Holder written notice thereof; and
(b) include in such registration
(and any related qualification under blue sky laws or other compliance), and in
any underwriting involved therein, all Shares underlying this Warrant
Certificate in a written request or requests, made within 20 days after receipt
of such written notice from the Company, by the Holder.
10.02 Underwriting. If
the registration of which the Company gives notice is for a registered public
offering involving an underwriting, the Company shall so advise the Holder as a
part of the written notice given pursuant to Section 10.01. In such
event the right of the Holder to registration pursuant to Section 10.01 shall be
conditioned upon Holder's participation in such underwriting and the inclusion
of Shares in the underwriting to the extent provided herein. The
Holder proposing to distribute its securities through such underwriting shall
(together with the Company and the other holders distributing their securities
through such underwriting) enter into an underwriting agreement in customary
form with the managing underwriter selected for such underwriting by the
Company. Notwithstanding any other provision of this Article 10, if
the managing underwriter determines that marketing factors require a limitation
of the number of shares of Common Stock to be underwritten, the managing
underwriter may limit the number of Shares to be included in such registration
and underwriting to not less than 50% of the registration. In such
event, the Company shall advise the Holder of Shares which would otherwise be
registered and underwritten pursuant hereto, and the number of Shares that may
be included in the registration and underwriting shall be allocated among all
Holders in proportion, as nearly as practicable, to the respective amounts of
Shares held by such Holders. If the Holder disapproves of the terms
of any such underwriting, it may elect to withdraw therefrom by written notice
to the Company and the managing underwriter. Any securities excluded
or withdrawn from such underwriting shall be withdrawn from such registration,
and shall not be transferred in a public distribution prior to 120 days after
the effective date of the registration statement relating thereto, or such other
shorter period of time as the underwriters may require.
16
IN
WITNESS WHEREOF, the Company has caused this Warrant Certificate to be duly
executed by its officers thereunto duly authorized and its corporate seal to be
affixed hereon, as of November 17, 2008.
|
WATER
CHEF, INC.
|
||
|
By:
|
/s/ Xxxxxx X. Xxxxxxx | |
|
Name:
Xxxxxx X. Xxxxxxx
|
||
|
Title: Chief
Executive
Officer
|
||
17
EXHIBIT
A
NOTICE OF
EXERCISE
The
undersigned hereby irrevocably elects to exercise, pursuant to Section 2 of the
Warrant Certificate accompanying this Notice of Exercise, _______ Warrants of
the total number of Warrants owned by the undersigned pursuant to the
accompanying Warrant Certificate, and herewith makes payment of the Purchase
Price of such shares in full.
|
Name
of Holder
|
|
|
Signature
|
|
