THIS
NOTE AND THE SECURITIES ISSUABLE UPON THE CONVERSION HEREOF HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE “SECURITIES ACT”), AND MAY NOT BE SOLD,
TRANSFERRED, ASSIGNED, PLEDGED OR HYPOTHECATED EXCEPT IN ACCORDANCE
WITH THE PROVISIONS OF REGULATION S PROMULGATED UNDER THE
SECURITIES ACT, PURSUANT TO REGISTRATION UNDER THE SECURITIES ACT
OR PURSUANT TO AN AVAILABLE EXEMPTION FROM REGISTRATION. HEDGING
TRANSACTIONS INVOLVING THE SECURITIES REPRESENTED HEREBY MAY NOT BE
CONDUCTED UNLESS IN COMPLIANCE WITH THE SECURITIES ACT. THIS NOTE
MUST BE SURRENDERED TO THE COMPANY OR ITS TRANSFER AGENT AS A
CONDITION PRECEDENT TO THE SALE, PLEDGE, HYPOTHECATION OR ANY OTHER
TRANSFER OF ANY INTEREST IN ANY OF THE SECURITIES REPRESENTED BY
THIS NOTE.
ORGANIC TO GO FOOD
CORPORATION
CONVERTIBLE PROMISSORY
NOTE
|
$3,000,000.00
|
October 3,
2008
|
|
|
Seattle, Washington
|
FOR VALUE RECEIVED, Organic To Go Food
Corporation, a Delaware corporation (the “
Company ”) promises to pay to W.Health L.P.,
a limited partnership organized under the laws of the Bahamas
(“ Investor ”), or its registered
assigns, in lawful money of the United States of America the
principal sum of Three Million Dollars ($3,000,000.00), payable in
shares of common stock, par value $0.001 (“ Common
Stock ”), of the Company on March 17, 2010 (the
“ Maturity Date ”) in accordance with
the terms hereof. This Note is one of the “Notes”
issued pursuant to the Note and Warrant Purchase Agreement, dated
as of June 1, 2008 (as amended, modified or supplemented, the
“ Note and Warrant Purchase Agreement
”) between the Company and the Investor (as defined in the
Note and Warrant Purchase Agreement).
Capitalized terms not otherwise defined herein
shall have the meaning set forth in the Note and Warrant Purchase
Agreement.
The following is a statement of the rights of
Investor and the conditions to which this Note is subject, and to
which Investor, by the acceptance of this Note, agrees:
1.
Definitions
. As used in this Note, the
following capitalized terms have the following meanings:
(a)
“Adjusted
Closing Price” has the meaning given in
Section 2(c)(ii).
(b)
“Base
Amount” has the meaning given in
Section 2(c)(i).
(c)
“Change in
Control” shall
mean: (1) the consummation of the sale, transfer,
conveyance or other disposition (including any merger,
reorganization or consolidation) in one or a series of related
transactions of the voting equity securities of the Company or a
similar transaction (or transactions) such that immediately
following such transaction (or transactions) any
“person” or related “group” of
“persons” (as such terms are used in Sections
13(d) and 14(d)(2) of the Exchange Act) (other than the
Company or an Affiliate of the Company) beneficially owns more than
fifty percent (50%) of the total voting equity securities of the
Company outstanding immediately after such transaction;
(2) the sale or transfer of all or substantially all of the
assets of the Company to another entity which is not an Affiliate
of the Company; or (3) the consummation of a merger or
consolidation of the Company with any other entity that is not an
Affiliate of the Company, other than a merger or consolidation
which would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into voting
securities of the surviving entity or its parent) at least fifty
percent (50%) of the total voting power of the voting securities of
the Company or such surviving entity or its parent outstanding
immediately after such merger or consolidation.
(d)
“Pre-Sale Trading
Price” has the
meaning given in Section
2(f)(iii)
(e)
“Trading
Day” means
(i) a day on which the Common Stock is traded on a Trading Market
(other than the OTC Bulletin Board), or (ii) if the Common Stock is
not listed on a Trading Market (other than the OTC Bulletin Board),
a day on which the Common Stock is traded in the over-the-counter
market, as reported by the OTC Bulletin Board, or (iii) if the
Common Stock is not quoted on any Trading Market, a day on which
the Common Stock is quoted in the over-the-counter market as
reported by the Pink Sheets LLC (or any similar organization or
agency succeeding to its functions of reporting prices); provided,
that in the event that the Common Stock is not listed or quoted as
set forth in (i), (ii) and (iii) hereof, then Trading Day shall
mean a Business Day.
(a)
Automatic
Conversion. The
outstanding principal amount of this Note shall automatically
convert into shares of Common Stock upon the earliest to occur of
the following:
(i) the Maturity Date; or
(ii) subject to Section 2(f) below,
the date upon which the closing price of the Common Stock on the
Trading Market it is listed or quoted on is and has been $3.00 per
share (subject to adjustments in accordance with Section
3 ) or more on each Trading Day during a period of 60
consecutive calendar days preceding such date.
Upon such
conversion of this Note, the Investor hereby agrees to deliver the
original of this Note (or a notice to the effect that the original
Note has been lost, stolen or destroyed and an agreement acceptable
to the Company whereby the holder agrees to indemnify the Company
from any loss incurred by it in connection with this Note) for
cancellation; provided, however , that upon satisfaction
of the conditions set forth in this
Section 2(a) , this Note shall be deemed
converted and of no further force and effect, whether or not it is
delivered for cancellation as set forth in this
sentence.
(b)
Optional Conversion.
Subject to Sections 2(d) and
2(e) below, if this Note has not been converted pursuant
to Section 2(a) , then all, but not less than all,
of the outstanding principal amount of this Note shall be
convertible into shares of Common Stock at the option of the
Investor any time before the Maturity Date. Before the Investor
shall be entitled to convert this Note into shares of Common Stock
under this Section 2(b) , the Investor shall
surrender this Note, duly endorsed, at the office of the Company
and shall give written notice to the Company at its principal
corporate office, of the election to convert the same pursuant to
this Section 2(b) , and shall state the name in
which the certificate for shares of Common Stock are to be issued.
The Company shall, as soon as practicable thereafter, issue and
deliver at such office to Investor a certificate for the number of
shares of Common Stock to which Investor shall be entitled upon
conversion (bearing such lege
