Exhibit
10.4
JAVO BEVERAGE COMPANY,
INC.
FORM OF SECURITIES PURCHASE
AGREEMENT
This Securities Purchase Agreement (this “
Agreement ”) is made as of the effective date set
forth on the signature page, by and among Javo Beverage Company, a
Delaware corporation (the “ Company ”), and each
of the parties listed on Schedule I attached hereto (the
parties listed on Schedule I being referred to individually
as an “ Investor ” and collectively as the
“ Investors ”).
RECITALS
WHEREAS, the Company in connection with the
Company’s confidential private placement memorandum dated
December 9, 2008, (the “Offering”) has authorized the
issuance and sale to the Investors, in accordance with the terms
hereof, of units (“ Units ”), with each Unit
consisting of (i) a promissory note in the principal amount of
$100,000, to be issued in substantially the form set forth as
Exhibit A hereto (each a “ Note ” and
collectively, the “ Notes ”), and (ii) 500,000
shares (the “ Shares ”) of the Company’s
Common Stock, par value $0.001 per share (the “ Common
Stock ”);
WHEREAS, the Company desires to issue and sell,
and the Investors desire to purchase, the Units on the terms and
subject to the conditions set forth herein;
AGREEMENT
NOW, THEREFORE, in consideration of the
foregoing recitals and mutual promises, representations, warranties
and covenants hereinafter set forth and for other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereby agree as follows:
1.1
Sale and Issuance of Units . Subject to the terms
and conditions of this Agreement, each Investor agrees, severally
and not jointly, to purchase at the closing (the “
Closing ”), and the Company agrees to issue and sell
to each Investor at the Closing, that number of Units set forth on
Schedule I , at a purchase price of $100,000 per full Unit
(the “ Purchase Price ”). The Company
may sell partial Units.
1.2
Closing Date . The purchase and sale of the Units
to the Investors shall take place at the offices of the Company at
1311 Specialty Drive, Vista, California at 10:00 a.m. (local time),
on the fifth business day following the date of this Agreement (the
“Closing Date”), or at such other time and place as the
Company and the Investors mutually agree upon, orally or in
writing. The Closing need not occur at the same time
with respect to all Investors participating in the Offering of the
Units by the Company and references in this Agreement to the
Closing Date shall refer to the date of Closing for each particular
Investor, as determined pursuant to this Section 1.2.
1.3
Payment; Delivery . On or about the Closing Date,
the Company shall deliver to each Investor a Note and a certificate
or certificates representing that number of Shares being purchased
by such Investor at the Closing, against payment of the Purchase
Price by check payable to the Company or wire transfer of
immediately available funds. The Company shall send such
Note and certificate or certificates to such Investor at the
address furnished to the Company for that purpose.
2.
Representations, Warranties, and Covenants of the Investors
. Each Investor, severally and not jointly, hereby
represents, warrants, covenants with respect to its purchase of
Units at the Closing that:
2.1
Validity; Enforcement . Such Investor has full
power and authority and has taken all required action necessary to
permit it to execute and deliver and to carry out the terms of this
Agreement, the Note and all other documents or instruments required
hereby and thereby, and each Agreement and Note, assuming due
execution and delivery thereof by the Company, constitutes a valid
and legally binding obligation of such Investor, enforceable
against such Investor in accordance with its terms, except
(i) as limited by applicable bankruptcy, insolvency,
reorganization, moratorium, and other laws of general application
affecting enforcement of creditors’ rights generally and
(ii) as limited by laws relating to the availability of
specific performance, injunctive relief, or other equitable
remedies.
2.2
Purchase Entirely for Own Account . This
Agreement is made with such Investor in reliance upon such
Investor’s representation to the Company, which by such
Investor’s execution of this Agreement such Investor hereby
confirms, that the Note and Shares to be received by such Investor
will be acquired for investment for such Investor’s own
account, not as a nominee or agent, and not with a view to the
distribution of any part thereof, and that such Investor has no
present intention of selling, granting any participation in, or
otherwise distributing the same. By executing this
Agreement, such Investor further represents that such Investor does
not have any contract, undertaking, agreement or arrangement with
any person to sell, transfer or grant participations to such person
or to any third person, with respect to the Note or any of the
Shares.
2.3
Residency . Such Investor, if a natural person,
is a resident of that state or country specified in its address on
Schedule I attached hereto.
2.4
Disclosure of Information . Such Investor
believes it has received all the information it considers necessary
or appropriate for deciding whether to purchase the
Units. Such Investor further represents that it has had
an opportunity to ask questions and receive answers from the
Company regarding the terms and conditions of the Offering of the
Units and the business, properties, prospects and financial
condition of the Company and to obtain any additional information
of the same kind that is specified in Rule 502 of
Regulation D of the Securities Act, or that is necessary to
verify the accuracy of the other information obtained. The Investor
acknowledges that it has received such information as it deems
necessary to enable it to make its investment decision.
2.5
No Governmental Review . Such Investor
understands that no United States federal or state agency or any
other government or governmental agency has passed on or made any
recommendation or endorsement of the Units or the fairness or
suitability of the investment in the Units nor have such
authorities passed upon or endorsed the merits of the offering of
the Units.
2.6
Legal, Tax or Investment Advice . Such Investor
understands that nothing in this Agreement or any other materials
presented to such Investor in connection with the purchase and sale
of the Units constitutes legal, tax or investment
advice. Such Investor has consulted such legal, tax and
investment advisors as it, in its sole discretion, has deemed
necessary or appropriate in connection with its purchase of
Units.
2.7
Investment Experience . Such Investor
acknowledges that it currently has, and had immediately prior to
its receipt of the offer of sale from the Company, such knowledge
and experience in financial and business matters that it is capable
of evaluating the merits and risks of this investment and further
acknowledges that it is able to bear the economic risk of this
investment.
2.8
Accredited Investor . Such Investor is an
“accredited investor” as defined by the rules and
regulations of the Securities and Exchange Commission (the
“SEC”) pursuant to the Securities Act of 1933, as
amended (the “Securities Act”). The
“accredited investor” standards are attached hereto as
Annex A.
2.9
Restricted Securities . Such Investor understands
that the Notes and the Shares will be characterized as
“restricted securities” under the federal securities
laws inasmuch as they are being acquired from the Company in a
transaction not involving a public offering and that under such
laws and applicable regulations such securities may be resold
without registration under the Act, only in certain limited
circumstances. Such Investor represents that it is
familiar with SEC Rule 144, as presently in effect, and understands
the resale limitations imposed thereby and by the Act.
2.10
Legends . It is understood that the Notes and the
certificates evidencing the Shares may bear one or all of the
following legends:
(a) “THESE
SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED. THEY MAY NOT BE SOLD, OFFERED FOR
SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF A REGISTRATION
STATEMENT IN EFFECT WITH RESPECT TO THE SECURITIES UNDER SUCH ACT
OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH
REGISTRATION IS NOT REQUIRED OR UNLESS SOLD PURSUANT TO RULE 144 OF
SUCH ACT.”
“THE
INDEBTEDNESS EVIDENCED BY THIS SENIOR SUBORDINATED NOTE IS
SUBORDINATED TO THE PRIOR PAYMENT AND SATISFACTION OF ALL SENIOR
DEBT, EXISTING PROMISSORY NOTES AND CERTAIN OTHER PERMITTED
INDEBTEDNESS AS DESCRIBED MORE FULLY IN THE SECURITIES
PURCHASE AGREEMENT DATED [DECEMBER __, 2008,] AS THE SAME MAY
BE AMENDED, MODIFIED, RESTATED OR SUPPLEMENTED FROM TIME TO TIME TO
THE EXTENT, AND IN THE MANNER
PROVIDED THEREIN.”
(b) Any
legend required by the securities laws of the State of California
or by any other securities laws of other states in which the
Company and Investor must comply in order to distribute the Units
pursuant to this Agreement.
2.11
Exculpation Among Investors . Each Investor
acknowledges that it is not relying upon any person, firm or
corporation, other than the Company and its officers and directors,
in making its investment or decision to invest in the
Company. Each Investor agrees that no Investor nor the
respective controlling persons, officers, directors, partners,
agents, or employees of any Investor shall be liable to any other
Investor for any action heretofore or hereafter taken or omitted to
be taken by any of them in connection with the purchase of the
Units.
2.12
Senior Subordinated Notes Subordinate to Senior Indebtedness
. The holder of the Senior Subordinated Note, by its
acceptance of a Senior Subordinated Note, covenants and agrees (i)
that the obligations represented by the Senior Subordinated Notes
and the payment of the principal of and interest on the Senior
Subordinated Notes are hereby expressly made subordinate and
subject to Existing Promissory Notes, capital leases, Senior Debt
and other customary permitted indebtedness and (ii) to the extent
required by any such senior lender, shall enter into an
intercreditor or subordination agreement on such terms and
conditions that would be reasonably acceptable to a senior
subordinated lender.
Senior Debt means (i) an unsecured credit
facility or a series of related credit facilities or other
unsecured financing entered into following the issuance of the
Senior Subordinated Notes in the minimum original principal amount
(including commitments to lend, whether or not funded) of $500,000
or more that by its terms is senior in payment to the Senior
Subordinated Notes and (ii) a secured credit facility or a series
of related secured credit facilities entered into prior to or
following the issuance of the Senior Subordinated Notes that by its
terms is senior in payment to the Senior Subordinated Notes and
that, in each case, is incurred in connection with any (a) capital
expenditures and related expenses, including without limitation
those relating to the purchase and installation of beverage
dispensing equipment or plant infrastructure, (b) refinancing of
indebtedness, (c) revolving line of credit or (d) strategic
acquisition or transaction approved by the Company’s board of
directors.
Existing Promissory Notes means those certain
five-year promissory notes that were entered into by the Company
from 2002 to 2005 pursuant to private placement offerings and that
have currently outstanding principal that does not exceed $400,000
in the aggregate.
3.
Further Limitations on Disposition . Without in
any way limiting the representations set forth in Section 2 above,
each Investor further agrees not to make any disposition of all or
any portion of the Notes or the Shares unless and until the
transferee has agreed in writing for the benefit of the Company and
the other Investors to be bound by this Agreement and the terms of
the Notes and the Shares to be transferred to such transferee
and:
(a) There
is then in effect a registration statement under the Securities Act
covering such proposed disposition and such disposition is made in
accordance with such registration statement; or
(b) Such
Investor shall have notified the Company of the proposed
disposition and shall have furnished the Company with a detailed
statement of the circumstances surrounding the proposed
disposition, and if reasonably requested by the Company, such
Investor shall have furnished the Company with an opinion of
counsel reasonably satisfactory to the Company that such
disposition will not require registration of such securities under
the Act. It is agreed that the Company will not require
opinions of counsel for transactions made pursuant to Rule 144 or
Rule 144A, except in unusual circumstances. In the event
that any transfer agent or similar third party shall require an
opinion of counsel in connection with a transfer made pursuant to
Rule 144 or Rule 144A, the Company’s counsel will issue such
opinion, at the Company’s expense; provided that the Investor
making such transfer shall provide any and all documentation and/or
back-up certificates reasonably necessary for such counsel to issue
such opinion.
Notwithstanding the provisions of paragraphs (a)
and (b) above, no such registration statement or opinion of counsel
shall be necessary for a transfer for no new consideration by any
Investor to an affiliate of such Investor (including entities
controlled by such affiliates and employees, advisors and/or
respective family members of such affiliates), to a parent or a
subsidiary corporation, or, in the case of an Investor that is a
partnership, to a partner of the partnership or a retired partner
of such partnership who retires after the date hereof, or to the
estate of any such partner or retired partner or the transfer by
gift, will or intestate succession of any partner to his spouse or
to the siblings, lineal descendants or ancestors of such partner or
spouse, if the transferee agrees in writing to be subject to the
terms hereof and if the Note or the Shares are so transferred to
the same extent as if he were an original Investor hereunder and
the original holder thereof.
Unless and until the Notes have been repaid in
full and subject to applicable securities laws, the Investors agree
to not engage in short sales of the Company’s Common
Stock.
4.
Representations and Warranties of the Company.
The Company hereby represents and warrants to each
Investor that:
4.1
Organization, Good Standing and Qualification.
The Company is duly organized and validly existing in
good standing under the laws of the State of Delaware and has full
power and authority to conduct its business as presently conducted
and as described in the documents filed by the Company under the
Securities Exchange Act of 1934 (the “Exchange Act”),
since January 1, 2008 through the date hereof, including, without
limitation, its most recent Annual Report on Form 10-K (as amended)
and subsequent quarterly reports on Form 10-Q, each as filed with
the SEC (the “Exchange Act Documents”). The
Company is registered or qualified to do business and in good
standing in each jurisdiction in which the nature of the business
conducted by it or the location of the properties owned or leased
by it requires such qualification and where the failure to be so
qualified would have a material adverse effect upon the condition
(financial or otherwise), earnings, or business (such business
being as described in the Exchange Act Documents), properties or
operations of the Company and its subsidiaries, considered as one
enterprise, or impair the Company’s ability to perform on a
timely basis its obligations under this Agreement (any of the
foregoing, a “Material Adverse Effect”). No
proceeding has been instituted in any such jurisdiction, revoking,
limiting or curtailing, or seeking to revoke, limit or curtail,
such power and authority or qualification.
4.2
Due Authorization and Valid Issuance . The
Company has all requisite power and authority to execute, deliver
and perform its obligations under this Agreement and the Notes, and
this Agreement and the Notes have been duly authorized and validly
executed and delivered by the Company and, assuming due execution
and delivery hereof by the Investors, shall constitute the legal,
valid and binding agreements of the Company enforceable against the
Company in accordance with their terms, except (i) as limited
by applicable bankruptcy, insolvency, reorganization, moratorium
and other laws of general application affecting enforcement of
creditors’ rights generally and (ii) as limited by laws
relating to the availability of specific performance, injunctive
relief or other equitable remedies. The Notes and the
Shares being purchased by the Investors hereunder will, upon
issuance and payment therefore pursuant to the terms hereof, be
duly authorized, validly issued, fully-paid and
nonassessable.
4.3
Non-Contravention . The execution and
del
