Series A Convertible Preferred Stock Purchase Agreement - ChefExpress.net Inc.
ChefExpress.net, Inc.
Series A Convertible Preferred Stock
Purchase Agreement
This Agreement is made by and between ChefExpress.net, Inc., a Delaware
corporation ("Company") and Green Mountain Coffee Roasters ("Investor").
WHEREAS, Green Mountain Coffee Roasters is the holder of a Promissory
Note of the Company dated March 21, 2000, in the amount of $100,000; and
WHEREAS, on August 25, 2000 the Company made a written offer to redeem
its outstanding Notes by issuing to Green Mountain Coffee Roasters 207,189
shares of its Series A Convertible Preferred Stock and 50,000 warrants for its
Common Stock and on August 25, 2000 Investor accepted such offer. (Said
Agreement is incorporated herein by reference as if fully set forth.)
NOW, THEREFORE, in consideration of the mutual covenants, promises and
conditions herein set forth, the parties hereby agree as follows:
1. AUTHORIZATION OF SERIES A PREFERRED; USE OF PROCEEDS.
1.1 On or before the Closing Date (as defined below), Company
shall have duly adopted and filed with the Secretary of State a Certificate of
Designation (the "Designation") in the form attached to this Agreement as
Exhibit A, to create and authorize 4,000,000 shares of Series A Preferred having
the rights, privileges and preferences set forth in the Designation, and shall
have taken all necessary corporate action for authorizing the sale and issuance
of the Shares to Investor under this Agreement.
2. ISSUANCE OF SHARES AND WARRANTS. Subject to the terms and conditions
of this Agreement, the Company will issue the Shares and Warrants to Investor in
return for Investor canceling the above-described indebtedness. Investor shall
deliver to the Company the original Promissory Notes marked paid in full on or
before September 25, 2000. The Company shall deliver to the Investor a
certificate in the form duly authorized by the Company in the name of the
Investor representing the Shares. In addition, the Company and the Investor
shall each deliver to the other original, signed counterpart copies of the
Company's Shareholder Agreement (the "Shareholder Agreement") in the form
attached hereto as Exhibit B. The Company agrees that all purchasers of Series A
Preferred shall be required to enter into the Shareholder Agreement as a
condition of their purchase.
3. COMPANY'S REPRESENTATIONS. Company represents and warrants to
Investor, as of the date hereof and again as of the
Closing, which representations and warranties are each conditions to all of
Investor's obligations under this Agreement, as follows:
3.1 The consummation of the transactions contemplated hereby
will not result in any breach of, or constitute a default under, any indenture,
agreement or other instrument or obligation to which Company is a party or by
which Company may be bound.
3.2 Company has the full and unencumbered right, power and
authority to issue and sell the Shares to Investor hereunder, free and clear of
all mortgages, restrictions, liens, encumbrances and charges.
3.3 Company has not taken or omitted to take any action which
may have a material adverse effect on the financial condition or operations of
Company, that has not been heretofore disclosed to Investor.
3.4 None of the representations and warranties made by Company
herein contains any untrue statement of a material fact, or omit any material
fact the omission of which would be misleading.
4. INVESTOR'S REPRESENTATIONS. Investor represents and warrants
to Company, as of the date hereof and again as of the Closing, which
representations and warranties are each conditions to all of Company's
obligations under this Agreement, as follows:
4.1 All matters relating to Company, its business, financial
condition, results from operations and prospects and Investor's investment in
the Shares and the shares of Common Stock of Company issued on any conversion of
the Shares (the "Securities") have been explained to Investor to Investor's
satisfaction. Investor understands the speculative nature and risks involved in
Investor's investment and has been provided with all such information as
Investor has requested. Investor understands that Investor should in no manner
rely on the accuracy or validity of any financial information which may have
been provided to Investor in forming a decision to invest in the Securities.
Investor acknowledges that Company makes no representation as to the accuracy or
validity of any financial information provided to Investor.
4.2 Investor understands that the Securities are highly
speculative and that Investor's purchase of Securities is subject to a
significant number of risks associated with Company's lack of operating history,
including, but not limited to, the following: Company is very new having
incorporated on October 6, 1999, has never been profitable and will operate at a
loss, and has advised Investor that there can be no assurance that it will be
profitable in the future; there are no funds provided from operations, and
Company is depending on the proceeds from the Offering to provide substantially
all of its initial capital, and the proceeds of the Offering may be insufficient
to fund Company's ongoing operations and expansion; if Company has insufficient
funds, there can be no assurance that additional financing can be obtained on
acceptable terms, if at all; Company's results of operations may fluctuate
significantly from quarter to quarter; Company will depend upon a small number
of key executive officers and consultants; and Company may be unable to retain
the necessary personnel or acquire other resources necessary to implement its
business plan.
4.3 Investor understands that Investor's purchase of
Securities is subject to a significant number of additional risks associated
with Company's agreements with its business partners and the industry in which
it operates.
4.4 Investor understands that as part of Company's strategy to
attain a competitive position, Company will rely on outside consulting companies
and its ability in evaluating potential acquisitions of businesses, products,
and technologies. Investor understands that Company does not have any experience
in connection with entering into such transactions and that there can be no
assurance that suitable acquisitions will be identified, that any acquisitions
can be consummated or that any acquired businesses can be successfully
integrated into Company's operations. In addition, Investor understands that any
acquisitions may have a material adverse effect upon Company, particularly in
the fiscal quarters immediately following the consummation of such transactions
due to operational disruptions, unexpected expenses, and accounting charges
which may be associated with the integration of such acquisitions.
4.5 Investor understands that a major portion of the
information provided to Investor includes forward looking information as to
Company's future operations and results. Investor understands that this
information is based on assumptions as to events and conditions, many of which
are beyond the control of Company, and that there can be no assurance that such
events or conditions will occur, or that Company will achieve any positive
results.
4.6 Investor is not acting on the basis of any promotional
sales materials or representations and warranties with respect to Company, its
business and financial condition, other than those contained in this Agreement
or the other documents or written information furnished by Company upon
request by Investor or Investor's advisors.
4.7 Investor is acquiring the Securitie solely for
Investor's own account and not for distribution, transfer, or resale to others.
4.8 Investor must bear the economic risk of the acquisition of
the Securities for the foreseeable future because (a) the offer and sale of the
Securities has not been registered under the Securities Act of 1933, as amended
(the "Securities Act"), or applicable state securities laws, and (b) the
Securities may therefore not be sold, transferred, pledged, or otherwise
disposed of unless subsequently so registered or, in the opinion (satisfactory
to Company) of counsel (satisfactory to Company) that registration under the
Securities Act or any applicable state securities laws is not required.
4.9 Investor has been afforded the opportunity to ask
questions of, and receive answers from, Company and all of its executive
officers and directors and to obtain any additional information, to the extent
that Company possesses such information and has, in general, had access to all
information Investor has deemed material to an investment decision with respect
to Investor's acquisition of the Securities.
4.10 Investor has adequate means of providing for Investor's
current financial needs and possible personal contingencies and has no need for
liquidity in Investor's investment in Company.
4.11 Investor is able to bear the economic risks inherent in
Investor's investment in Company. Investor further acknowledges that an
important consideration bearing on Investor's ability to bear the economic risk
of Investor's acquisition of the Securities is whether Investor can afford a
complete loss of Investor's entire investment in Company, and Investor can
afford a complete loss of Investor's entire investment in Company.
4.12 Investor's overall commitment to investments that are not
readily marketable is not disproportionate to Investor's net worth, and
Investor's investment in Company will not cause such overall commitment to be
disproportionate.
4.13 Investor has such knowledge and experience in financial
and business matters that Investor is capable of evaluating the merits and risks
of an investment in Company and of making an informed investment decision.
4.14 If Investor is other than an individual, Investor has not
been organized or materially reorganized for the purpose of investing in
Company, although such investment is consistent with its purposes.
4.15 Investor is not aware of any advertisement or general
solicitation regarding an investment in Company.
4.16 Investor is not a foreign investor as define by the
United States Department of Commerce, and therefore Company shall not be
required to file any Form BE-13 with the Department of Commerce with respect to
this transaction.
4.17 None of the representations and warranties made by
Investor herein contains any untrue statement of a material fact, or omit any
material fact the omission of which would be misleading.
4.18 Investor acknowledges and agrees as follows:
(a) The Securities have not been registered
under the Securities Act or the securities laws of any state, and are being
offered and sold in reliance on exemptions from the registration requirements
of the Securities Act and such laws. The Securities have not been approved or
disapproved by the Securities and Exchange Commission, any state securities
commission or other regulatory authority, nor have any of the foregoing
authorities passed upon or endorsed the merits of this offering. Any
representation to the contrary is unlawful.
(b) The Securities are subject to restrictions
on transferability and resale and may not be transferred or resold except (i)
as permitted under the Securities Act and applicable state securities laws,
pursuant to registration or exemption therefrom; and (ii) in accordance with
the Shareholders Agreement. Investor is aware that Investor may be required
to bear the financial risks of this investment for an indefinite period of time.
4.19 Investor understands the meaning and legal consequences
of Investor's representations and warranties herein. Investor understands that
Company has relied and shall rely on Investor's representations and warranties,
including without limitation in determining whether to offer and sell the
Securities to Investor. Investor hereby agrees to indemnify and hold harmless
Company and its controlling persons from and against any and all loss, damage,
or liability due to or arising out of any misrepresentation or a breach of any
warranties contained herein.
5. CONDITIONS TO CLOSING.
5.1 Conditions to Investors' Obligations. The obligation of
Investor to purchase the Shares at the Closing is subject to the fulfillment on
or before the Closing Date of the following conditions, the waiver of which
shall not be effective unless Investor consents in writing to such waiver:
(a) The representations and warranties made by
Company in this Agreement shall be true and correct in all material respects
when made, and shall be true and correct on the Closing Date with the same force
and effect as if they had been made on and as of said date, subject to changes
contemplated by this Agreement. Company shall have performed all obligations
and conditions in this Agreement required to be performed by it on or before the
Closing Date.
(b) All authorizations, approvals, or permits of
any governmental authority required in connection with the lawful issuance and
sale of the Shares, the conversion of the Shares into Common, and the issuance
of Common on conversion shall have been duly obtained and shall be effective on
and as of the Closing date.
(c) The Designation shall have been filed with
the Secretary of State of the State of Delaware and shall be in full force and
effect on the Closing Date.
(d) At the time of the Closing, the purchase of
the Shares shall be legally permitted by all laws and regulations to which the
Investor and Company are subject.
(e) Company, Investor and each other shareholder
of Company shall have entered into the Shareholder Agreement.
(f) Company shall have delivered to Investor a
certificate representing the Shares to be purchased by such Investor, which
Shares shall be issued in Investor's name as set forth in this Agreement.
(g) All corporate and other proceedings in
connection with the transactions contemplated by this Agreement and all
documents and instruments incident to such transactions shall be reasonably
satisfactory in form and substance to Investor and Investor's counsel.
5.2 Conditions to Company's Obligations. Company's
obligation to sell and issue the Shares at the Closing is subject to the
fulfillment on or before the Closing Date of each of the following conditions:
(a) Investor's representations and warranties in
this Agreement shall be true and correct when made, and shall be true and
correct on the Closing Date with the same force and effect as if they had been
made on and as of said date, subject to changes, if any, contemplated by this
Agreement. Investor shall have performed all obligations and conditions in this
Agreement required to be performed by Investor on or before the Closing Date.
(b) All authorizations, approvals, or permits of
any governmental authority required in connection with the lawful issuance and
sale of the Shares shall have been duly obtained and shall be effective on and
as of the Closing Date.
(c) Investor shall have delivered the purchase
price specified in Section 2.
6. Notices. Any and all notices, demands or other communications
required or permitted to be given to a party hereunder (any of which, for
purposes of this provision, a "Notice") shall be validly given if served in
writing either personally, by facsimile, by deposit in the United States mail,
first class postage prepaid, or by a recognized courier service to any address
in the United States. Notices given (i) personally or by courier service shall
be conclusively deemed received at the time of delivery and receipt (or upon the
date of attempted delivery where receipt is refused); (ii) by facsimile shall be
conclusively deemed received upon the delivering party's written confirmation of
facsimile transmission; and (iii) by mail shall be conclusively deemed given
forty-eight (48) hours after the deposit thereof. Notices shall be addressed to
each party at the address set forth below the party's signature. Any party may
change its Notice address or may designate additional parties to receive Notices
by written notice given in the manner provided herein.
7. GENERAL PROVISIONS.
7.1 Severability. Nothing contained herein shall be construed
so as to require the commission of any act contrary to law, and wherever there
is any conflict between any provision contained herein (or any portion thereof)
and any present or future statute, law, ordinance or regulation contrary to
which the parties have no legal right to contract, the latter shall prevail but
the provision (or portion) which is affected shall be curtailed and limited only
to the extent necessary to bring it within the requirements of the law, and all
other provisions hereof shall remain in full force and effect.
7.2 Further Assurances. Each party shall use its best efforts
to cause any conditions to its obligations hereunder to be satisfied at or prior
to the time by which such conditions must be satisfied hereunder. Each of the
parties agrees to execute and deliver any and all further agreements, documents
or instruments necessary to effectuate the provisions hereof and the
transactions contemplated hereby or reasonably requested by the other party to
perfect or evidence such party's rights hereunder. Both parties shall use their
best efforts to complete the transactions contemplated hereby as promptly as
practicable. Each party shall promptly notify the other party of any information
delivered to or obtained by such party which would prevent the consummation of
the transactions contemplated hereby or would indicate a breach of any
representations or warranties of any of the parties hereto.
7.3 Attorneys' Fees. In the event any action, including but
not limited to any judicial reference or arbitration which may be provided
herein, be instituted by a party in connection herewith, including without
limitation any appeal of such action, any post-judgment actions (including but
not limited to any actions to enforce any such judgment), and any bankruptcy
proceedings related hereto, the prevailing party shall be entitled to its
attorneys' fees, costs and expenses incurred in connection therewith. The
provisions of the previous sentence shall survive and not be merged with any
judgment and shall be severable from all other provisions hereof.
7.4 Modifications or Amendments. No amendment, change or
modification hereto shall be valid unless in writing, stating that it is an
amendment, change or modification hereto, and signed by all of the parties
hereto.
7.5 Successors and Assigns. Except as assignment may be
otherwise expressly prohibited or restricted herein, all of the terms and
provisions contained herein shall inure to the benefit of and shall be binding
upon the parties and their respective heirs, personal representatives,
successors and assigns.
7.6 Terminology. Whenever the context requires herein, the
masculine, feminine and neuter genders, and the singular and plural numbers,
respectively, shall each include the others. As used in this Agreement, (i)
"and/or" means one or the other or both, or any one or all, or any combination
of the things or persons in connection with which the words are used; (ii)
"person" includes individuals, partnerships, corporations, limited liability
companies, business trusts and other entities of any kind or nature; (iii)
"shall" or "will" denotes a mandatory action, and "may" denotes an optional
action; and (iv) "herein", "hereof" and "hereunder" and similar terms refer to
this Agreement in its entirety and are not limited to any specific provisions.
7.7 Time of the Essence. Time is of the essence hereof
and of all the terms, provisions, covenants and conditions hereof.
7.8 Exhibits, Schedules and Other Documents. All
exhibits attached hereto and referred to herein are hereby incorporated herein
as though set forth at length.
7.9 Separate Counterparts. This document may be executed in
one or more separate counterparts, each of which, when so executed, shall be
deemed to be an original. Any executed original counterpart copy hereof,
together with the original signature pages of any other executed counterpart
copies hereof, shall constitute and be one and the same instrument.
7.10 Entire Agreement. This document, together with any
related documents referred to herein, constitutes the entire understanding and
agreement of the parties with respect to the subject matter hereof, and any and
all prior agreements, understandings or representations are hereby terminated
and cancelled in their entirety and are of no further force or effect.
7.11 Captions; Construction. The captions appearing at the
commencement of the paragraphs hereof are descriptive only and for convenience
in reference. Should there be any conflict between any such caption and the
paragraph at the head of which it appears, the paragraph and not such caption
shall control and govern in the construction of this document. This document has
been negotiated at arm's length and between persons (or their representatives)
sophisticated and knowledgeable in the matters dealt with herein. Accordingly,
any rule of law or legal decision that would require interpretation of any
ambiguities contained herein against the party that has drafted it is not
applicable and is waived. The provisions of this document shall be interpreted
in a reasonable manner to effect the purpose of the parties and this document.
7.12 No Obligation to Third Parties. The execution and
delivery of this document shall not be deemed to confer any rights upon, nor
obligate any of the parties hereto, to any person or entity other than each
other.
7.13 Applicable Law. This Agreement and the representations
herein shall be governed by and construed under the laws of the State of
Delaware and shall be binding upon and inure to the benefit Company's and
Investor's respective heirs, executors, administrators, legal representatives,
successors, and assigns.
The remainder of this page is intentionally blank.
<PAGE>
8. Investor represents and warrants to Company that Investor is an
"Accredited Investor" (as defined in Rule 501 of Regulation D promulgated under
the Securities Act), and Investor has initialed Investor's qualification below:
_____ A. Investor had an individual income in excess of $200,000 (or
joint income of $300,000 with Investor's spouse) for each of
1998 and 1999 and reasonably expect an income in excess of
$200,000 (or joint income of $300,000 with Investor's spouse)
for 2000.
_____ B As of the date of this Agreement, Investor (either
individually or with Investor's spouse) has a net worth in
excess of $1,000,000.
_____ C. Investor is an entity in which all of the equity owners are
"accredited investors."
__X__ D. Other - see the definitions on Exhibit C hereto for other
possible qualifications and provide the number of such
qualification here: __3__.
Note: The term "net worth" means the excess of total assets over total
liabilities. In computing net worth, your principal residence must be valued at
cost, including cost of improvements, or at a recently appraised value (net of
encumbrances) by an institutional lender making a secured loan.
IN WITNESS WHEREOF, this Agreement has been executed by the undersigned.
/s/ Robert D. Britt Date: 9/20/00
------------------- ---------------------------------------
Signature of Investor
Green Mountain Coffee Roasters, Inc. 03-0280558
------------------------------------ ---------------------------------------
Print Name Soc. Sec. No. or IRS Employer ID Number
____________________________________ Date:__________________________________
Signature of Co-investor
____________________________________
Print Name
Investment Amount: Number of Shares @ $0.50 per Share:
$103,594.50 207,189
------------------ ---------------------------------------
Address of Investor(s): Investment is made as (check one only):
33 Coffee Lane ____Individual
------------------------------------ ____Joint Tenants
Waterbury, VT 05676 ____Community Property
------------------------------------ ____Tenants in Common
Fax: _______________ __X_Other (state: Corporation)
------------------
Accepted by ChefExpress.net, Inc.:
Date: 9/20/2000 By: /s/ William Davis
---------- ------------------
Its: President
------------------
Address of Company:
1 ChefExpress Way
Waterbury, VT 05676
Fax: _______________
<PAGE>
EXHIBIT C
DEFINITION OF ACCREDITED INVESTOR
1) An individual having an individual net worth or a joint net
worth with spouse at the time of purchase in excess of $1,000,000;
2) An individual whose net income was in excess of $200,000 in each of the
two most recent years, or whose joint income with spouse was in excess
of $300,000 in each of those years, and who reasonably expects his net
income to reach such level in the current year;
3) A corporation, partnership, Massachusetts or similar business trust, or
organization described in Section 501(c)(3) of the Internal Revenue
Code of 1986, as amended (tax exempt organization), not formed for the
specific purpose of acquiring the Shares having total assets in excess
of $5,000,000;
4) Any director, executive officer or general partner of the issuer of the
Shares, or any director, executive officer or general partner of a
general partner of that issuer;
5) A bank, savings and loan association or other similar
institution (as defined in Sections 3(a)(2) and 3(a)(5)(A) of the
Securities Act);
6) An insurance company (as defined in Section 2(13) of the
Securities Act);
7) An investment company registered under the Investment Company
Act of 1940, as amended (the "Investment Company Act");
8) A business development company (as defined in Section 2(a)(48) of the
Investment Company Act) or a private business development company (as
defined in Section 202(a)(22) of the Investment Advisers Act of 1940);
9) A Small Business Investment Company licensed by the U.S. Small
Business Administration under Sections 301(c) or (d) of the Small
Business Investment Act of 1958;
10) A broker or dealer registered pursuant to Section 15 of the
Securities Exchange Act of 1934, as amended;
11) A plan established and maintained by a state, its political
subdivisions, or any agency or instrumentality of a state or its
political subdivisions for the benefit to its employees, which plan has
total assets in excess of $5,000,000;
12) An employee benefit plan within the meaning of the Employee Retirement
Income Security Act of 1974 ("ERISA"), if the investment decision is
made by a "Plan Fiduciary", as defined in Section 3(21) of ERISA, which
is either a bank, savings and loan association, insurance company or
registered investment adviser;
13) An employee benefit plan within the meaning of ERISA having
total assets in excess of $5,000,000;
14) A self-directed employee benefit plan within the meaning of ERISA, with
investment decisions made solely by persons who are accredited
investors as defined in Rule 501(a) of Regulation D;
15) A trust with total assets in excess of $5,000,000 not formed for the
specific purpose of acquiring Shares whose purchase is directed by a
sophisticated person (i.e., person who has such knowledge and
experience in financial and business matters that he is capable of
evaluating the merits and risks of any investment in the Shares); or
16) Any entity in which all of the equity owners are "accredited
investors."
The term "net worth" means the excess of total assets over total liabilities. In
computing net worth, your principal residence must be valued at cost, including
cost of improvements, or at a recently appraised value (net of encumbrances) by
an institutional lender making a secured loan.