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EXHIBIT 10.2
NOTE AND WARRANT PURCHASE AGREEMENT
This
Note and Warrant Purchase Agreement, dated as of June 1, 2008,
(this “
Agreement ”)
is entered into by and among Organic To Go Food Corporation, a
Delaware corporation (the “
Company ”),
and W.Health L.P., a limited partnership organized under the laws
of the Bahamas (the “
Investor ”).
RECITALS
On
the terms and subject to the conditions set forth herein, the
Investor is willing to purchase from the Company, and the
Company is willing to sell to the Investor, one or more
convertible promissory notes in the aggregate principal amount
of up to $10,000,000, together with one or more related
warrants to acquire shares of the Company’s common
stock, par value $0.001 per share (the
“Common Stock” ).
AGREEMENT
NOW
THEREFORE, in consideration of the foregoing, and the
representations, warranties, and conditions set forth below,
the parties hereto, intending to be legally bound, hereby
agree as follows:
1.
The Notes and Warrants
.
(a)
Issuance of Notes .
At the Closings (as defined below), the Company agrees to issue and
sell to the Investor, and, subject to all of the terms and
conditions hereof, the Investor agrees to purchase one or more
convertible promissory notes in the form of
Exhibit A hereto
(each, a “
Note ”
and, collectively, the “
Notes ”)
in the aggregate principal amount of up to
$10,000,000.
2.
Procedure
. The
initial Closing (the
“Initial Closing” )
shall occur within seven (7) Business Days (as defined below)
following the date of this Agreement (the
“Initial Closing Date” ),
upon which date the Company shall deliver to the Investor a Note in
a principal amount of $5,000,000 and a Warrant (as defined below)
to purchase 625,000 shares of Common Stock, and the Investor shall
deliver to the Company the Purchase Price (as defined below) of
$5,000,000. At any time during the nine months following the
Initial Closing Date and so long as no Event of Default (as defined
below) shall have occurred and be continuing and
there has been no event, occurrence or development that has had or
that could reasonably be expected to result in a Material Adverse
Effect (as defined below) ,
the Company shall have the right and option, in its sole
discretion, to issue and sell a Note to the Investor and, subject
to all of the terms and conditions hereof, obligate the Investor to
purchase such Note, by delivering a written notice (the
“Notice” )
to the Investor which specifies: (i) a Closing Date (as defined
below) within ten (10) Business Days following the date the
Investor
receives
the Notice and (ii) the principal amount of such Note, which
shall be at least $1,000,000 and shall not, when aggregated
with the principal amounts of all of the Notes previously
issued under this Agreement, exceed $10,000,000.
“Business Day” means
any day except Saturday, Sunday and any day which is a federal
legal holiday in the United States or in Switzerland, or a day on
which banking institutions in the State of New York are authorized
or required by law or other governmental action to close.
“
Event of Default ”
shall mean the occurrence of any of the following: (a)
Voluntary Bankruptcy or Insolvency Proceedings
.
The
Company shall (i) apply for or consent to the appointment of a
receiver, trustee, liquidator or custodian of itself or of all or a
substantial part of its property, (ii) be unable, or admit in
writing its inability, to pay its debts generally as they mature,
(iii) make a general assignment for the benefit of its or any
of its creditors, (iv) be dissolved or liquidated,
(v) become insolvent (as such term may be defined or
interpreted under any applicable statute), (vi) commence a
voluntary case or other proceeding seeking liquidation,
reorganization or other relief with respect to itself or its debts
under any bankruptcy, insolvency or other similar law now or
hereafter in effect or consent to any such relief or to the
appointment of or taking possession of its property by any official
in an involuntary case or other proceeding commenced against it, or
(vii) take any action for the purpose of effecting any of the
foregoing; or (b)
Involuntary Bankruptcy or Insolvency Proceedings.
Proceedings
for the appointment of a receiver, trustee, liquidator or custodian
of the Company or of all or a substantial part of the property
thereof, or an involuntary case or other proceedings seeking
liquidation, reorganization or other relief with respect to the
Company or the debts thereof under any bankruptcy, insolvency or
other similar law now or hereafter in effect shall be commenced and
an order for relief entered or such proceeding shall not be
dismissed or discharged within 60 days of commencement; or
(c)
Material Breach .
The Company shall breach any term of this Agreement, any of the
Transaction Documents or any other agreement or instrument executed
in connection therewith, which, individually or in the aggregate,
materially and adversely affects any of the Investor’s rights
under this Agreement or any of the Transaction Documents,
and
as
to any breach that is capable of cure, the Company fails to cure
such breach within fifteen (15) days after the Investor provides
written notice to the Company of such breach.
(a)
Issuance of Warrants. In
consideration for the purchase by the Investor of each Note, the
Company will issue to the Investor one five (5) year warrant in the
form attached hereto as
Exhibit B (each,
a “
Warrant ”
and, collectively, the “
Warrants ”)
to purchase, at an exercise price of $3.00 per share, such number
of shares of Common Stock as determined by dividing the principal
amount of such Note by $10,000,000 and multiplying such amount by
1,250,000 shares of Common Stock; provided that the number of
shares of Common Stock subject to each Warrant and the exercise
price of each Warrant shall be subject to adjustment in accordance
with Section 9 of the form of Warrant attached hereto as
Exhibit B. For
example, for a Note with a principal amount of $5,000,000, the
Company shall issue to the Investor a Warrant to purchase 625,000
shares of Common Stock calculated as follows:
|
Investment
amount
|
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$
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5,000,000
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|
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Divided
by $10MM
|
|
$
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10,000,000
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|
|
Percent
of total maximum investment
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50
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%
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Multiplied
by total warrants for $10MM
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|
|
1,250,000
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|
|
Warrants
issued for $5MM investment
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|
|
625,000
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(b)
Delivery .
The sale and purchase of each Note and Warrant shall take place at
a closing (the “
Closing ”).
Each Closing, other than the Initial Closing, shall be held on the
date specified in the Notice, which shall be a Business Day (the
“
Closing Date ”).
At each Closing, the Company will deliver to the Investor the Note
and Warrant to be purchased by the Investor, against receipt by the
Company of the corresponding purchase price which shall be equal to
the principal amount of such Note (the h!
“Purchase Price” ),
in United States dollars and in immediately available funds, by
wire transfer to an account designated in writing by the Company.
Each Note and Warrant will be registered in the Investor’s
name in the Company’s records.
(c)
Use of Proceeds .
The proceeds of the sale and issuance of the Notes shall be used
solely to fund acquisitions by the Company and for general working
capital approved by the Company’s Board of
Directors.
3.
Representations and Warranties of the
Company .
The Company hereby makes the following representations and
warranties to the Investor:
(a)
Subsidiaries .
The Company has no direct or indirect Subsidiaries (as defined
below) other than as specified in all reports required to be filed
by it under the Securities Act of 1933, as amended (the
“Securities Act” ),
and the Securities Exchange Act of 1934, as amended (the
“Exchange Act” ),
including pursuant to Section 13(a) or 15(d) thereof, for the
twelve months preceding the date hereof (or such shorter period as
the Company was required by law to file such reports) (the
foregoing materials being collectively referred to herein as
the
“SEC Reports” ).
Except as disclosed in
Schedule 2(a) ,
the Company owns, directly or indirectly, all of the capital stock
of each Subsidiary free and clear of any and all Liens (as defined
below), and all the issued and outstanding shares of capital stock
of each Subsidiary are validly issued and are fully paid,
non-assessable and free of preemptive and similar rights.
“Lien” means
any lien, charge, encumbrance, security interest, right of first
refusal or other restrictions of any kind.
“Subsidiary” means
any “significant subsidiary” as defined in Rule 1-02(w)
of the Regulation S-X promulgated by the Commission under the
Exchange Act.
(b)
Organization and Qualification .
The Company and each Subsidiary are duly incorporated or otherwise
organized, validly existing and in good standing under the laws of
the jurisdiction of its incorporation or organization (as
applicable), with the requisite power and authority to own and use
its properties and assets and to carry on its business as currently
conducted. Neither the Company nor any Subsidiary is in violation
of any of the provisions of its respective certificate or articles
of incorporation, bylaws or other organizational or charter
documents. The Company and each Subsidiary are duly qualified to
conduct its respective businesses and are in good standing as a
foreign corporation or other entity in each jurisdiction in which
the nature of the business conducted or property owned by it makes
such qualification necessary, except where the failure to be so
qualified or in good standing, as the case may be, could not,
individually or in the aggregate, have or reasonably be expected to
result in a Material Adverse Effect.
“Material Adverse Effect” means
any of (i) a material and adverse effect on the legality, validity
or enforceability of any Transaction Document, (ii) a material and
adverse effect on the results of operations, assets, prospects,
business or condition (financial or otherwise) of the Company and
the
Subsidiaries,
taken as a whole, or (iii) an adverse impairment to the
Company’s ability to perform on a timely basis its
obligations under any Transaction Document (as defined
below).
(c)
Authorization; Enforcement .
The Company has the requisite corporate power and authority to
enter into and to consummate the transactions contemplated by each
of the Transaction Documents and otherwise to carry out its
obligations thereunder. The execution and delivery of each of the
Transaction Documents by the Company and the consummation by it of
the transactions contemplated thereby have been duly authorized by
all necessary action on the part of the Company and no further
action is required by the Company in connection therewith. Each
Transaction Document has been (or upon delivery will have been)
duly executed by the Company and, when delivered in accordance with
the terms hereof, will constitute the valid and binding obligation
of the Company enforceable against the Company in accordance with
its terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium,
liquidation or similar laws relating to, or affecting generally the
enforcement of, creditors’ rights and remedies or by other
equitable principles of general application.
(d)
No Conflicts .
The execution, delivery and performance of the Transaction
Documents by the Company and the consummation by the Company of the
transactions contemplated thereby do not and will not (i) conflict
with or violate any provision of the Company’s or any
Subsidiary’s certificate or articles of incorporation, bylaws
or other organizational or charter documents, or (ii) conflict
with, or constitute a default (or an event that with notice or
lapse of time or both would become a default) under, or give to
others any rights of termination, amendment, acceleration or
cancellation (with or without notice, lapse of time or both) of,
any agreement, credit facility, debt or other instrument
(evidencing a Company or Subsidiary debt or otherwise) or other
understanding to which the Company or any Subsidiary is a party or
by which any property or asset of the Company or any Subsidiary is
bound or affected, or (iii) result in a violation of any law, rule,
regulation, order, judgment, injunction, decree or other
restriction of any court or governmental authority to which the
Company or a Subsidiary is subject (including federal and state
securities laws and regulations), or by which any property or asset
of the Company or a Subsidiary is bound or affected; except in the
case of each of clauses (ii) and (iii), such as could not,
individually or in the aggregate, have or reasonably be expected to
result in a Material Adverse Effect.
(e)
Filings, Consents and Approvals .
Neither the Company nor any Subsidiary is required to obtain any
consent, waiver, authorization or order of, give any notice to, or
make any filing or registration with, any court or other federal,
state, local or other governmental authority or other Person in
connection with the execution, delivery and performance by the
Company of the Transaction Documents, other than (i) the filing
with the Securities and Exchange Commission (the
“SEC” )
of one or more registration statements in accordance with the
requirements of the Note Registration Rights Agreement (as defined
below) and the Warrant Registration Rights Agreement (as defined
below), (ii) filings required by state securities laws, (iii)
filings required in accordance with Section 5(f) and (iv) those
that have been made or obtained prior to the date of this
Agreement.
(f)
Issuance of the Securities .
The Securities (as defined below) have been duly authorized and,
when issued and paid for in accordance with the Transaction
Documents, will be
duly
and validly issued, fully paid and nonassessable, free and
clear of all Liens. The Company has reserved from its duly
authorized capital stock the shares of Common Stock issuable
upon conversion of the Notes or the exercise of the
Warrants.
“Securities” means
the Notes, the Warrants, the shares of Common Stock issuable upon
conversion of the Notes and the shares of Common Stock issuable
upon exercise of the Warrants.
(g)
Capitalization .
The number of shares and type of all authorized, issued and
outstanding capital stock of the Company, and all shares of Common
Stock reserved for issuance under the Company’s various
option and incentive plans, is specified in the SEC Reports. Except
as specified in the SEC Reports and as disclosed in
Schedule 2(g) ,
no securities of the Company are entitled to preemptive or similar
rights, and no Person (as defined below) has any right of first
refusal, preemptive right, right of participation, or any similar
right to participate in the transactions contemplated by the
Transaction Documents. Except as specified in the SEC
Reports and
except as set forth on
Schedule 2(g) ,
there are no outstanding options, warrants, scrip rights to
subscribe to, calls or commitments of any character whatsoever
relating to, or securities, rights or obligations convertible into
or exchangeable for, or giving any Person any right to subscribe
for or acquire, any shares of Common Stock, or contracts,
commitments, understandings or arrangements by which the Company or
any Subsidiary is or may become bound to issue additional shares of
Common Stock, or securities or rights convertible or exchangeable
into shares of Common Stock. Except
with respect to 2,229,430 warrants to purchase Common Stock,
the issue
and sale of the Securities will not, immediately or with the
passage of time, obligate the Company or any Subsidiary to issue
shares of Common Stock or other securities to any Person (other
than the Investor) and will not result in a right of any holder of
Company or Subsidiary securities to adjust the exercise,
conversion, exchange or reset price under such securities.
“Person” means
an individual or corporation, partnership, trust, incorporated or
unincorporated association, joint venture, limited liability
company, joint stock company, government (or an agency or
subdivision thereof) or other entity of any kind.
(h)
SEC Reports; Financial Statements .
Except
as set forth on
Schedule 2(h) ,
the
Company
has filed all SEC Reports required to be filed by it on a timely
basis or has timely filed a valid extension of such time of filing
and has filed any such SEC Reports prior to the expiration of any
such extension. As of their respective dates, the SEC Reports
complied in all material respects with the requirements of the
Securities Act and the Exchange Act and the rules and regulations
of the SEC promulgated thereunder, and none of the SEC Reports,
when filed, contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. Since
February 13, 2007, the Company has not received any material
correspondence from the SEC or any Trading Market (as defined
below) concerning the SEC Reports. The financial statements of the
Company and any Subsidiary included in the SEC Reports comply in
all material respects with applicable accounting requirements and
the rules and regulations of the Commission with respect thereto as
in effect at the time of filing. Such financial statements have
been prepared in accordance with U.S. generally accepted accounting
principles (
“GAAP” )
applied on a consistent basis during the periods involved, except
as may be otherwise specified in such financial statements or the
notes thereto, and fairly present in all material respects the
financial position of the Company and its consolidated Subsidiaries
as of and for the dates thereof and the results of operations and
cash flows for the periods then ended, subject, in the case
of
unaudited
statements, to normal, immaterial, year-end audit
adjustments.
“Trading Market” means
whichever of the New York Stock Exchange, the American Stock
Exchange, the NASDAQ Global Select Market, the NASDAQ Global
Market, the NASDAQ Capital Market or OTC Bulletin Board on which
the Common Stock is listed or quoted for trading on the date in
question.
(i)
Press Releases .
The press relea ses
disseminated by the Company since February
13, 2007 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 make the statements therein, in light of the
circumstances under which they were made and when made, not
misleading.
(j)
Material Changes .
Since
the date of the latest audited financial statements included within
the SEC Reports, except as specifica lly
disclosed in the SEC Reports and
except as disclosed on
Schedule 2(j) ,
(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) neither the Company nor any Subsidiary has entered
into any material contract, agreement or other transaction that is
not in the ordinary course of business, (iii) neither the Company
nor any Subsidiary has incurred any liabilities or obligations
(contingent or otherwise) other than (A) trade payables, accrued
expenses and other liabilities incurred in the ordinary course of
business consistent with past practice, (B) liabilities not
required to be reflected in the Company’s financial
statements pursuant to GAAP or required to be disclosed in filings
made with the SEC, and (C) liabilities not exceeding in the
aggregate $200,000; (iv) neither the Company nor any Subsidiary has
altered its method of accounting or the identity of its auditors,
(v) neither the Company nor any Subsidiary has 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 redeem any shares of its capital stock, and (vi)
neither the Company nor any Subsidiary has issued any equity
securities to any officer, director or Affiliate (as defined
below), except pursuant to existing stock option plans. The Company
does not have pending before the Commission any request for
confidential treatment of information.
“Affiliate” means
any Person that, directly or indirectly through one or more
intermediaries, controls or is controlled by or is under common
control with a Person, as such terms are used in and construed
under Rule 144.
(k)
Litigation .
Except as set forth on
Schedule 2(k) ,
there is no Action (as defined below) which (i) adversely affects
or challenges the legality, validity or enforceability of any of
the Transaction Documents or the Securities or (ii) except as
specifically disclosed in the SEC Reports, could, if there were an
unfavorable decision, individually or in the aggregate, have or
reasonably be expected to result in a Material Adverse Effect.
Neither the Company nor any Subsidiary, nor any director or officer
thereof (in his or her capacity as such), is or has been the
subject of any Action involving a claim of violation of or
liability under federal or state securities laws or a claim of
breach of fiduciary duty, except as specifically disclosed in the
SEC Reports. There has not been, and to the knowledge of the
Company, there is not pending any investigation by the SEC
involving the Company, any Subsidiary or any current or former
director or officer of the Company (in his or her capacity as
such). The SEC has not issued any stop order or other order
suspending the effectiveness of any registration statement filed by
the Company or any Subsidiary under the Exchange Act or the
Securities Act.
“Action” means
any action, suit, inquiry, notice of violation, proceeding
(including
any
partial proceeding such as a deposition) or investigation
pending or threatened in writing against or affecting the
Company, any Subsidiary or any of their respective properties
before or by any court, arbitrator, governmental or
administrative agency, regulatory authority (federal, state,
county, local or foreign), stock market, stock exchange or
trading facility.
(l)
Labor Relations .
Except as set forth on
Schedule 2(l) ,
no material labor dispute exists or, to the knowledge of the
Company, is imminent with respect to any of the employees of the
Company or any Subsidiary.
(m)
Compliance .
Except as set forth on
Schedule 2(m) ,
neither the Company nor any Subsidiary (i) is in default under or
in violation of (and no event has occurred that has not been waived
that, with notice or lapse of time or both, would result in a
default by the Company or any Subsidiary under), nor has the
Company or any Subsidiary received notice of a claim that it is in
default under or that it is in violation of, any indenture, loan or
credit agreement or any other agreement or instrument to which it
is a party or by which it or any of its properties is bound
(whether or not such default or violation has been waived), (ii) is
in violation of any order of any court, arbitrator or governmental
body, or (iii) is or has been in violation of any statute, rule or
regulation of any governmental authority, including without
limitation all foreign, federal, state and local laws relating to
taxes, environmental protection, occupational health and safety,
product quality and safety and employment and labor matters, except
in each case as could not, individually or in the aggregate, have
or reasonably be expected to result in a Material Adverse Effect.
The Company is in compliance with all effective requirements of the
Sarbanes-Oxley Act of 2002, as amended, and the rules and
regulations thereunder, that are applicable to it, except where
such noncompliance could not have or reasonably be expected to
result in a Material Adverse Effect.
(n)
Regulatory Permits .
The Company and the Subsidiaries possess all certificates,
authorizations and permits issued by the appropriate federal,
state, local or foreign regulatory authorities necessary to conduct
their respective businesses as described in the SEC Reports, except
where the failure to possess such permits could not, individually
or in the aggregate, have or reasonably be expected to result in a
Material Adverse Effect, and neither the Company nor any Subsidiary
has received any notice of proceedings relating to the revocation
or modification of any such permits.
(o)
Title to Assets .
Except as set forth on
Schedule 2(o) ,
the Company and the Subsidiaries have good and marketable title in
fee simple to all real property owned by them that is material to
their respective businesses and good and marketable title in all
personal property owned by them that is material to their
respective businesses, in each case free and clear of all Liens,
except for Liens as do not materially affect the value of such
property and do not materially interfere with the use made and
proposed to be made of such property by the Company and the
Subsidiaries. Any real property and facilities held under lease by
the Company and the Subsidiaries are held by them under valid,
subsisting and enforceable leases of which the Company and the
Subsidiaries are in compliance, except as could not, individually
or in the aggregate, have or reasonably be expected to result in a
Material Adverse Effect.
(p)
Patents and Trademarks .
The Company and the Subsidiaries have, or have rights to use, all
patents, patent applications, trademarks, trademark applications,
service marks, trade names, copyrights, licenses and other similar
rights that are necessary or material for use in connection with
their respective businesses as described in the SEC Reports and
which the failure to so have could, individually or in the
aggregate, have or reasonably be expected to result in a Material
Adverse Effect (collectively, the
“Intellectual Property Rights”
).
Except as set forth on
Schedule 2(p) ,
neither the Company nor any Subsidiary has received a written
notice that the Intellectual Property Rights used by the Company or
any Subsidiary violates or infringes upon the rights of any Person.
Except as set forth in the SEC Reports, 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.
(q)
Insurance .
The Company and the Subsidiaries are insured by insurers of
recognized financial responsibility against such losses and risks
and in such amounts as are prudent and customary in the businesses
in which the Company and the Subsidiaries are engaged. The Company
is the named beneficiary of a key-man life insurance policy with
respect to its Chief Executive Officer for a coverage amount of no
less than $1,000,000. The Company has a directors and officers
liability insurance policy with respect to the Company’s
Board of Directors for a coverage amount of no less than
$5,000,000. The Company has no reason to believe that it will not
be able to renew its and the Subsidiaries’ existing insurance
coverage as and when such coverage expires or to obtain similar
coverage from similar insurers as may be necessary to continue its
business on terms consistent with market for the Company’s
and such Subsidiaries’ respective lines of
business.
(r)
Transactions With Affiliates and Employees .
Except as set forth in or otherwise not required to be disclosed in
the SEC Reports, none of the officers or directors of the Company
and, to the knowledge of the Company, none of the employees of the
Company or any Subsidiary is presently a party to any transaction
with the Company or any Subsidiary (other than for services as
employees, officers and directors), including any contract,
agreement or other arrangement providing for the furnishing of
services to or by, providing for rental of real or personal
property to or from, or otherwise requiring payments to or from any
officer, director or such employee or, to the knowledge of the
Company, any entity in which any officer, director, or any such
employee has a substantial interest or is an officer, director,
trustee or partner.
(s)
Internal Accounting Controls .
The Company and the Subsidiaries maintain a system of internal
accounting controls sufficient to provide reasonable assurance that
(i) transactions are executed in accordance with management’s
general or specific authorizations, (ii) transactions are recorded
as necessary to permit preparation of financial statements in
conformity with GAAP and to maintain asset accountability, (iii)
access to assets is permitted only in accordance with
management’s general or specific authorization, and (iv) the
recorded accountability for assets is compared with the existing
assets at reasonable intervals and appropriate action is taken with
respect to any differences. The Company has established disclosure
controls and procedures (as defined in Exchange Act Rules 13a-15(e)
and 15d-15(e)) for the Company and designed such disclosure
controls and procedures to ensure that material information
relating to the Company, including its Subsidiaries, is made known
to the certifying officers by others within those entities,
particularly
during
the period in which the Company’s Form 10-K or 10-Q, as
the case may be, is being prepared. The Company’s
certifying officers have evaluated the effectiveness of the
Company’s controls and procedures in accordance with
Item 307 of Regulation S-K under the Exchange Act for the
Company’s most recently ended fiscal quarter or fiscal
year-end (such date, the
“Evaluation Date” ).
The Company presented in its most recently filed Form 10-K or Form
10-Q the conclusions of the certifying officers about the
effectiveness of the disclosure controls and procedures based on
their evaluations as of the Evaluation Date. Since the Evaluation
Date, there have been no significant changes in the Company’s
internal controls (as such term is defined in Item 308T of
Regulation S-K under the Exchange Act) or, to the Company’s
knowledge, in other factors that could significantly affect the
Company’s internal controls.
(t)
Solvency .
Based on the financial condition of the Company and each Subsidiary
as of the Closing Date (and assuming that the Closing shall have
occurred), (i) the Company’s and each Subsidiary’s fair
saleable value of its assets exceeds the amount that will be
required to be paid on or in respect of the Company’s and
each Subsidiary’s existing debts and other liabilities
(including known contingent liabilities) as they mature, (ii) the
Company’s and each Subsidiary’s assets do not
constitute unreasonably small capital to carry on its business for
the current fiscal year as now conducted and as proposed to be
conducted including its capital needs taking into account the
particular capital requirements of the business conducted by the
Company and each Subsidiary, and projected capital requirements and
capital availability thereof, and (iii) the current cash flow of
the Company and each Subsidiary, together with the proceeds the
Company and each Subsidiary would receive, were it to liquidate all
of its assets, after taking into account all anticipated uses of
the cash, would be sufficient to pay all amounts on or in respect
of its debt when such amounts are required to be paid. The Company
and each Subsidiary does not intend to incur debts beyond its
ability to pay such debts as they mature (taking into account the
timing and amounts of cash to be payable on or in respect of its
debt).
(u)
Certain Fees .
Except as described in
Schedule 2(u) ,
no brokerage or finder’s fees or commissions are or will be
payable by the Company or any Subsidiary to any broker, financial
advisor or consultant, finder, placement agent, investment banker,
bank or other Person with respect to the transactions contemplated
by this Agreement. The Investor shall have no obligation with
respect to any fees or with respect to any claims (other than such
fees or commissions owed by the Investor pursuant to written
agreements executed by the Investor which fees or commissions shall
be the sole responsibility of the Investor) made by or on behalf of
other Person for fees of a type contemplated in this Section 3(u)
that may be due in connection with the transactions contemplated by
this Agreement.
(v)
Certain Registration Matters .
Assuming the accuracy of the Investor’s representations and
warranties set forth in Section 4, no registration under the
Securities Act is required for the offer and sale of the Securities
by the Company to the Investor under the Transaction Documents. The
Company is eligible to register its Common Stock for resale by the
Investor under Form S-1 promulgated under the Securities Act.
Except as specified in the SEC Reports and except as set forth
on
Schedule 2(v) ,
neither the Company nor any Subsidiary has granted or agreed to
grant to any Person any rights (including “piggy-back”
registration rights) to
have
any securities of the Company registered with the SEC or any
other governmental authority that have not been
satisfied.
(w)
Listing and Maintenance Requirements .
Except as specified in the SEC Reports, the Company has not, since
February 13, 2007, received notice from any Trading Market to the
effect that the Company is not in compliance with the listing,
quoting or maintenance requirements thereof. The Company is, and
has no reason to believe that it will not in the foreseeable future
continue to be, in compliance with the listing, quoting or
maintenance requirements for continued listing or quoting of the
Common Stock on the Trading Market on which the Common Stock is
currently listed or quoted. The issuance and sale of the Securities
under the Transaction Documents does not contravene the rules and
regulations of the Trading Market on which the Common Stock is
currently listed or quoted, and no approval of the stockholders of
the Company thereunder is required for the Company to issue and
deliver to the Investor the Securities contemplated by Transaction
Documents.
(x)
Investment Company .
The Company and each Subsidiary is not, and is not an Affiliate of,
and immediately following the Closing will not have become, an
“investment company” within the meaning of the
Investment Company Act of 1940,
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