SUBSCRIPTION AGREEMENT
ALL AMERICAN FOOD GROUP, INC.
THE SECURITIES WHICH ARE THE SUBJECT OF THIS SUBSCRIPTION AGREEMENT
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT") OR UNDER THE APPLICABLE SECURITIES LAWS OF ANY STATE AND WILL
BE OFFERED AND SOLD IN RELIANCE ON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS
OF THESE LAWS BY VIRTUE OF THE ALL AMERICAN FOOD GROUP, INC.'S INTENDED
COMPLIANCE WITH SECTIONS 3(b), 4(2) AND 4(6) OF THE SECURITIES ACT, THE
PROVISIONS OF REGULATION D UNDER SUCH ACT AND SIMILAR EXEMPTIONS UNDER STATE
LAW. THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION ("SEC"), ANY STATE SECURITIES COMMISSION OR ANY OTHER
REGULATORY AUTHORITY. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The undersigned purchaser (hereafter "the Undersigned" or "the
Purchaser") hereby offers to purchase certain Units (defined herein) of All
American Food Group, Inc. (the "Company"), a publicly held corporation formed
under the laws of the State of New Jersey. This offer to purchase may, for any
reason whatsoever, be revoked by the Undersigned or rejected by the Company
prior to acceptance of this offer by the Company.
Section 1.1 Purchase and Sale of Units. Upon the following terms and
conditions, the Company shall issue and sell to the Purchaser, and the Purchaser
shall purchase from the Company, Units of the Company (the "Units") having the
rights, designations and preferences set forth in Schedule I hereto. In
accordance with Schedule I, each Unit shall consist of one (1) share of Series D
Convertible Preferred Stock (referred to herein as a "Share" or collectively as
"Shares"), and one (1) warrant for the purchase of three hundred fifty (350)
shares of the Company's Common Stock (referred to herein as a "Warrant" or
collectively as "Warrants"). The form of the Warrant Agreement representing the
Warrants is attached hereto as Schedule II.
Section 1.2 Purchase Price. The purchase price for the Units (the
"Purchase Price") shall be $1,000 per Unit, to be issued in $50,000 increments.
Section 1.3 The Closing.
(a) The closing of the purchase and sale of the Units (the "Closing"),
shall take place at the offices of Lehman & Eilen, 50 Charles Lindbergh Blvd. --
Suite 505, Uniondale, NY 11553, at 5:00 p.m., local time on the later of the
following: (i) the date on which the last to be fulfilled or waived of the
conditions set forth in Section 4.1 and 4.2 hereof and applicable to the Closing
shall be fulfilled or waived in accordance herewith, or (ii) such other time and
place and/or on such other date as the Purchaser and the Company may agree. The
date on which the Closing occurs is referred to herein as the "Closing Date."
(b) On the Closing Date, the Company shall deliver to the Purchaser
certificates representing the Shares and the Warrants registered in the name of
the Purchaser (or deposit such Shares and Warrants into accounts designated by
the Purchaser), and the Purchaser shall deliver to the Company the Purchase
Price for all the Units by cashier's check or wire transfer in immediately
available funds to such account as shall be designated in writing by the
Company. In addition, each party shall deliver all documents, instruments and
writings required to be delivered by such party pursuant to this Agreement at or
prior to the Closing.
Section 1.4 Covenant to Register.
(a) For purposes of this Section, the following definitions shall
apply:
(i) The terms "register," "registered," and "registration"
refer to a registration under the Securities Act of 1933, as amended (the
"Act"), effected by preparing and filing a registration statement or similar
document in compliance with the Act, and the declaration or ordering of
effectiveness of such registration statement, document or amendment thereto.
(ii) The term "Registrable Securities" means the shares of
common stock of the Company issuable upon conversion of the Shares or the
Warrants comprising the Units, or upon conversion of any stock issued in payment
of dividends on the Shares, and any securities of the Company or securities of
any successor corporation issued as, or issuable upon the conversion or exercise
of any warrant, right or other security that is issued as a dividend or other
distribution with respect to, or in exchange for, or in replacement of, the
Shares or Warrants.
(iii) The term "holder of Registrable Securities" means the
Purchaser and any permitted assignee of registration rights pursuant to Section
1.4(h).
(b) (i) The Company shall no later than five (5) days following
the Closing amend its currently filed registration statement on Form SB-2 to
cover all the Registrable Securities, and shall use its best efforts to cause
such registration statement to become effective as soon as possible, but no
later than December 15, 1997 (the "Initial Registration"). In the event such
registration is not so declared effective or does not include all Registrable
Securities, holders of a majority of Registrable Securities, by giving notice in
writing, shall have the right to require that the Company register all or any
part of the Registrable Securities held by such holder (a "Demand Registration")
and the Company shall thereupon effect such registration in accordance herewith
(which may include adding such shares to an existing shelf registration). The
parties agree that if the holder of Registrable Securities demands registration
of less than all of the Registrable Securities, the Company, at its option, may
nevertheless file a registration statement covering all of the Registrable
Securities. If such registration statement is declared effective with respect to
all Registrable Securities and the Company is in compliance with its obligations
under Subsection (d) of this Section 1.4, the demand registration rights granted
pursuant to this Subsection (b)(i) shall cease, terminate and be of no further
force or effect. If such registration statement is not declared effective with
respect to all Registrable Securities or if the Company is not in compliance
with such obligations, the demand registration rights described herein shall
remain in effect. The Company shall provide holders of Registrable Securities
reasonable opportunity to review any such registration statement or amendment or
supplement thereto prior to the filing thereof.
(ii) The Company shall not be obligated to effect a Demand
Registration under Subsection (b)(i) above: (A) if all of the Registrable
Securities held by the holder of Registrable Securities which are demanded to be
covered by the Demand Registration are, at the time of such demand, included in
an effective registration statement and the Company is in compliance with its
obligations under Subsection (d) of this Section 1.4; (B) if all of the
Registrable Securities may be sold under Rule 144(k) of the Act and the
Company's transfer agent has accepted an instruction from the Company to such
effect; or (C) at any time after two (2) years from the Closing Date.
(iii) Subject to Subsection (iv)(B) hereof, the Company may
suspend the effectiveness of any such registration effected pursuant to this
Subsection (b) in the event and for such period of time as, such a suspension is
required by the rules and regulations of the Securities and Exchange Commission
("SEC"). The Company will use its best efforts to cause such suspension to
terminate at the earliest possible date.
(iv) (A) If a registration statement covering all
Registrable Securities is not effective by December 15, 1997 (the "Target
Date"), the Company shall pay Purchaser as liquidated damages an amount equal to
three percent (3%) of the total Purchase Price of the Units for each thirty (30)
day period following the Target Date until such time as the registration
statement is declared effective. The payment set forth above shall be pro-rated
daily as to any period of less than thirty (30) days. Such payment shall be made
to the Purchaser by cashier's check or wire transfer in immediately available
funds to such account as shall be designated in writing by the Purchaser and
shall be paid irrespective of the amount of Registrable Securities held by
Purchaser on the Target Date and thereafter.
(B) If, following effectiveness of a registration,
either the effectiveness of the registration statement is suspended or a current
prospectus meeting the requirements of Section 10 of the Act is not available
for delivery by the Purchaser (either referred to herein as a "suspension"), the
Company shall thereupon pay to Purchaser as liquidated damages an amount equal
to three percent (3%) of the Purchase Price of the Units for each thirty (30)
day period of the suspension. The payment set forth above shall be pro-rated
daily as to periods of less than thirty (30) days. Such payment shall be made to
the Purchaser by cashier's check or wire transfer in immediately available funds
to such account as shall be designated in writing by the Purchaser, and shall be
paid irrespective of the amount of Registrable Securities held by Purchaser on
or after the date following the suspension.
(C) Any amount payable and Penalty Warrants
deliverable pursuant to the foregoing provisions of this subsection (iv) shall
be delivered on or before the fifth (5th) day following the end of the calendar
month in which such payment or delivery obligation arose.
(D) The rights and remedies in this subsection shall
be in addition to the provisions of Section 7.2(a) hereof.
(c) If the Company proposes to register (including for this purpose a
registration effected by the Company for shareholders other than the Purchaser)
any of its common stock under the Act in connection with a public offering of
such securities (other than a registration on Form S-4, Form S-8 or other
limited purpose form) and all Registrable Securities have not theretofore been
included in a registration statement under Subsection (b) of this Section 1.4
which remains effective, the Company shall, at such time, promptly give all
holders of Registrable Securities written notice of such registration. Upon the
written request of any holder of Registrable Securities given within fifteen
(15) days after receipt of such notice by the holder of Registrable Securities,
the Company shall use its best efforts to cause to be registered under the Act
all Registrable Securities that such holder of Registrable Securities requests
to be registered. However, the Company shall have no obligation under this
Subsection (c) if (i) the Registrable Securities may be sold without
registration under Rule 144(k) and the Company's transfer agent has accepted an
instruction from the Company to such effect, (ii) the Registration Statement is
filed more than three years after the Closing Date, or (iii) to the extent that,
with respect to any underwritten offering initiated by the Company later than
one calendar year following the Closing, the managing underwriter of such
offering reasonably notifies such holder(s) in writing of its determination that
the Registrable Securities or a portion thereof shall be excluded therefrom.
(d) Whenever required under this Section 1.4 to effect the registration
of any Registrable Securities including, without limitation, the Initial
Registration, the Company shall, as expeditiously as reasonably possible:
(i) Prepare and file with the SEC a registration statement or
amendment thereto with respect to such Registrable Securities and use its best
efforts to cause such registration to become effective as provided in Section
1.4(b)(i) hereof, and keep such registration statement effective for so long as
any holder of Registrable Securities desires to dispose of the securities
covered by such registration statement; provided, however, that in no event
shall the Company be required to keep the Registration Statement effective for a
period greater than three (3) years from the Closing Date;
(ii) Prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in connection
with such registration statement as may be necessary to comply with the
provisions of the Act with respect to the disposition of all securities covered
by such registration statement and notify the holders of the filing and
effectiveness of such Registration Statement and any amendments or supplements;
(iii) Furnish to each holder of Registrable Securities such
numbers of copies of a current prospectus, including a preliminary prospectus,
conforming with the requirements of the Act, copies of the registration
statement any amendment or supplement to any thereof and any documents
incorporated by reference therein and such other documents as such holder of
Registrable Securities may reasonably require in order to facilitate the
disposition of Registrable Securities owned by such holder of Registrable
Securities;
(iv) Use its best efforts to register and qualify the
securities covered by such registration statement under such other securities or
"Blue Sky" laws of such jurisdictions as shall be reasonably requested by the
holder of Registrable Securities;
(v) Notify each holder of Registrable Securities immediately
of the happening of any event as a result of which the prospectus included in
such registration statement, as then in effect, includes an untrue statement of
material fact or omits to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in light of the
circumstances then existing, and use its best efforts to promptly update and/or
correct such prospectus;
(vi) Furnish, at the request of any holder of Registrable
Securities, (A) an opinion of counsel of the Company, dated the effective date
of the registration statement, in form and substance reasonably satisfactory to
the holder and its counsel and covering, without limitation, such matters as the
due authorization and issuance of the securities being registered and (B) a
"comfort" letter or letters of the Company's independent public accountants
provided at the Company's expense in form and substance reasonably satisfactory
to the holder and its counsel;
(vii) Use its best efforts to list the Registrable Securities
covered by such registration statement with any national market or securities
exchange on which such securities are then listed;
(viii) Make available for inspection by the holder of
Registrable Securities, upon request, all SEC Documents (as defined below) filed
subsequent to the Closing and require the Company's officers, directors and
employees to supply all information reasonably requested by any holder of
Registrable Securities in connection with such registration statement; and
(ix) Furnish to each holder of Registrable Securities prompt
notice of the commencement of any stop-order proceedings under the Act, together
with copies of all relevant documents in connection therewith, and use its best
efforts to obtain withdrawal of any such stop order as soon as possible.
(e) Upon request of the Company, each holder of Registrable Securities
will furnish to the Company in connection with any registration under this
Section such information regarding itself, the Registrable Securities and other
securities of the Company held by it, and the intended method of disposition of
such securities as shall be reasonably required to effect the registration of
the Registrable Securities held by such holder of Registrable Securities. The
intended method of disposition (Plan of Distribution) of such securities as so
provided by Purchaser shall be included without alteration in the Registration
Statement covering the Registrable Securities and shall not be changed without
written consent of the Purchaser.
(f) (i) To the fullest extent permitted by law, the Company shall
indemnify, defend and hold harmless each holder of Registrable Securities which
are included in a registration statement pursuant to the provisions of
Subsections (b) or (c) and each of its officers, directors, employees, agents,
partners or controlling persons (within the meaning of the Act) (each, an
"indemnified party") from and against, and shall reimburse such indemnified
party with respect to, any and all claims, suits, demands, causes of action,
losses, damages, liabilities, costs or expenses ("Liabilities") to which such
indemnified party may become subject under the Act or otherwise, arising from or
relating to (A) any untrue statement or alleged untrue statement of any material
fact contained in such registration statement, any prospectus contained therein
or any amendment or supplement thereto, or (B) the omission or alleged omission
to state therein a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances in which they were
made, not misleading; provided, however, that the Company shall not be liable in
any such case to the extent that any such Liability arises out of or is based
upon an untrue statement or omission so made in strict conformity with
information furnished by such indemnified party in writing specifically for use
in the registration statement.
(ii) In the event of any registration under the Act of
Registrable Securities pursuant to Subsections (b) or (c), each holder of such
Registrable Securities hereby severally agrees to indemnity, defend and hold
harmless the Company, and its officers, directors, employees, agents, partners,
or controlling persons (within the meaning of the Act) (each, an "indemnified
party") from and against, and shall reimburse such indemnified party with
respect to, any and all Liabilities to which such indemnified party may become
subject under the Act or otherwise, arising from or relating to (A) any untrue
statement or alleged untrue statement of any material fact contained in such
registration statement, any prospectus contained therein or any amendment or
supplement thereto, or (B) the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances in which they were made, not misleading;
provided, that such holders will be liable in any such case to the extent and
only to the extent, that any such Liability arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged omission
made in such registration statement, prospectus or amendment or supplement
thereto in reliance upon and in conformity with written information furnished by
such holder specifically for use in the preparation thereof.
(iii) Promptly after receipt by any indemnified party of
notice of the commencement of any action, such indemnified party shall, if a
claim in respect thereof is to be made against another party (the "indemnifying
party") hereunder, notify such party in writing thereof, but the omission so to
notify such party shall not relieve such party from any Liability which it may
have to the indemnified party other than under this Section and shall only
relieve it from any Liability which it may have to the indemnified party under
this Section if and to the extent an indemnifying party is materially prejudiced
by such omission. In case any such action shall be brought against any
indemnified party and such indemnified party shall notify an indemnifying party
of the commencement thereof, the indemnifying party shall be entitled to
participate in and, to the extent it shall wish, to assume and undertake the
defense thereof with counsel reasonably satisfactory to such indemnified party,
and, after notice from the indemnifying party to the indemnified party of its
election so to assume and undertake the defense thereof, the indemnifying party
shall not be liable to the indemnified party under this Section for any legal
expenses subsequently incurred by the indemnified party in connection with the
defense thereof other than reasonable costs of investigation and of liaison with
counsel so selected; provided, however, that if the defendants in any such
action include both parties and the indemnified party shall have reasonably
concluded that there may be reasonable defenses available to them which are
different from or additional to those available to the indemnifying party or if
the interests of the indemnified party reasonably may be deemed to conflict with
the interests of the indemnifying party, the indemnified party shall have the
right to select a separate counsel and to assume such legal defenses and
otherwise to participate in the defense of such action, with the reasonable
expenses and fees of one such separate counsel and other reasonable expenses
related to such participation to be reimbursed by the indemnifying party as
incurred.
(g) (i) With respect to the inclusion of Registrable Securities
in a registration statement pursuant to Subsections (b) or (c), all fees, costs
and expenses of and incidental to such registration, inclusion and public
offering shall be borne by the Company; provided, however, that any
securityholders participating in such registration shall bear their pro-rata
share of the underwriting discounts and commissions, if any, incurred by them in
connection with such registration.
(ii) The fees, costs and expenses of registration to be borne
by the Company as provided in this Subsection (g) shall include, without
limitation, all registration, filing and NASD fees, printing expenses, fees and
disbursements of counsel and accountants for the Company, and all legal fees and
disbursements and other expenses of complying with state securities or Blue Sky
laws of any jurisdiction or jurisdictions in which securities to be offered are
to be registered and qualified. Subject to appropriate agreements as to
confidentiality, the Company shall make available to the holders of Registrable
Securities and their counsel its documents and personnel for due diligence
purposes, and will pay the reasonable fees and expenses of counsel designated by
a majority in interest of the holders of Registrable Securities included in the
Registration Statement, if such counsel is so designated. Except as otherwise
provided herein, fees and disbursements of counsel and accountants for the
selling security holders shall be borne by the respective selling security
holders.
(h) The rights to cause the Company to register all or any portion of
Registrable Securities pursuant to this Section l.4 may be assigned by Purchaser
to a proper transferee or assignee as described herein. Within a reasonable time
after such transfer, the Purchaser shall notify the Company of the name and
address of such transferee or assignee, and the securities with respect to which
such registration rights are being assigned. Such assignment shall be effective
only if, (i) the Purchaser agrees in writing with the transferee or assignee to
assign such rights, and a copy of such agreement is furnished to the Company
within a reasonable time after such transfer or assignment (subject to the
purchase price of the being kept confidential by the Purchaser and such
transferee or assignee, (ii) the Company is, within a reasonable time after such
transfer or assignment, furnished with written notice of (A) the name and
address of such transferee or assignee, (B) the Registrable Securities with
respect to which such registration rights are being assigned, (iii) following
such transfer or assignment, the further disposition of the Registrable
Securities by the transferee or assignee is restricted under the Securities Act
and applicable state securities laws, (iv) at or before the time that the
Company receives the written notice contemplated by clause (ii) of this sentence
the transferee or assignee agrees in writing with the Company to be bound by all
of the provisions contained herein, and (v) such transfer shall have been made
in accordance with the applicable requirements of the purchase agreement
covering the transaction and (vi) such transferee shall be an "accredited
investor", as that term is defined in Rule 501 of Regulation D, promulgated
under the Securities Act.
(i) The Company shall not agree to allow the holders of any securities
of the Company to include any of their securities in any registration statement
filed by the Company pursuant to Subsection (b) unless such inclusion will not
reduce the amount of the Registrable Securities included therein.
Section 2.1 Representations and Warranties of the Purchaser. The
Purchaser makes the following representations and warranties to the Company.
(a) Accredited Investor. The Purchaser is an
"accredited investor", as such term is defined in Rule 501(a) of Regulation D,
promulgated under the Act.
(b) Speculative Investment. The Purchaser is aware
that an investment in the Units is highly speculative and subject to substantial
risks. The Undersigned is capable of bearing the high degree of economic risk
and the burden of this venture, including, but not limited to, the possibility
of complete loss of the Undersigned's investment in the Units and underlying
securities which make liquidation of this investment impossible for the
indefinite future.
(c) Disposition. The Purchaser understands that (i)
except as provided for in Section 1.4, the Units, Shares or Warrants and
underlying common stock of the Company (the "Securities"), have not been and are
not being registered under the Securities Act or any applicable state securities
laws, and may not be transferred unless (A) subsequently registered thereunder,
or (B) the Securities may be sold or transferred pursuant to an exemption from
securities registration under the Securities Act and any applicable state
securities laws or (C) sold pursuant to Rule 144, promulgated under the
Securities Act (or any successor Rule), or (ii) any sale of such Securities made
in reliance on Rule 144 may be made only in accordance with the terms of such
Rule and further, if such Rule is not applicable, any resale of such Securities
under circumstances in which the seller (or the person through whom the sale is
made) may be deemed to be an underwriter (as that term is defined in the
Securities Act) may require compliance with another exemption under the
Securities Act or the rules of the SEC thereunder.
(d) Privately Offered. The offer to acquire the Units
was directly communicated to the Undersigned in such manner that the Purchaser
and its advisors were able to ask questions of and receive what Purchaser
considers satisfactory answers concerning the terms and conditions of this
transaction. At no time was the Undersigned presented with or solicited by or
through any leaflet, public promotional meeting, television advertisement, or
any other form of general advertising.
(e) Purchase for Investment. The Securities are being
acquired solely for the Undersigned's own account, for investment, and are not
being purchased with view to the resale, distribution, subdivision or
fractionalization thereof without a valid registration with applicable
governmental authorities.
(f) Reliance on Exemptions. The Purchaser understands
that the Securities are being offered and sold to Purchaser in reliance upon
specific exemptions from the registration requirements of federal and state
securities laws and that the Company is relying upon the truth and accuracy of,
and the Purchaser's compliance with, the representations, warranties and
agreements of the Purchaser set forth herein in order to determine the
availability of such exemptions and the eligibility of the Purchaser to acquire
the Securities.
Section 2.2 Representations and Warranties of the Company. The Company
hereby makes the following representations and warranties to the Purchaser:
(a) Organization and Qualification. The Company is a
corporation duly incorporated and existing in good standing under the laws of
the State of New Jersey and has the requisite corporate power to own its
properties and to carry on its business as now being conducted. The Company and
each such subsidiary, if any, is duly qualified as a foreign corporation to do
business and is in good standing in every jurisdiction in which the nature of
the business conducted or property owned by it makes such qualification
necessary other than those in which the failure so to qualify would not have a
Material Adverse Effect. "Material Adverse Effect" means any adverse effect on
the business, operations, properties or financial condition of the entity with
respect to which such term is used and which is material to such entity and
other entities controlled by such entity taken as a whole.
(b) Authorization; Enforcement. (i) The Company has
the requisite corporate power and
authority to enter into and perform this Agreement and to issue the Units,
including the Shares and Warrants, in accordance with the terms hereof, (ii) the
execution and delivery of this Agreement by the Company and the consummation by
it of the transactions contemplated hereby have been duly authorized by all
necessary corporate action, and no further consent or authorization of the
Company or its Board of Directors or stockholders is required, (iii) this
Agreement has been duly executed and delivered by the Company, (iv) this
Agreement constitutes a 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) and (v) prior to the Closing Date, any necessary Certificate of
Amendment to the Company's Charter authorizing Company to issue all of the
Shares and Registerable Securities, in accordance with Schedule I, will have
been filed with the New Jersey Secretary of State and will be in full force and
effect, enforceable against the Company in accordance with its terms.
(c) Authorization; Enforcement Capitalization. The
authorized capital stock of the Company consists of 20,000,000 shares of Common
Stock and 4,000,000 shares of Preferred Stock; there are 5,897,339 shares of
Common Stock and 873,366 shares of such Preferred Stock issued and outstanding;
and, upon issuance of the Shares in accordance with the terms hereof, there will
be 5,897,339 shares of Common Stock and a maximum of 873,866 shares of Preferred
Stock issued and outstanding.
All of the outstanding shares of the Company's Common
Stock have been validly issued and are fully paid and nonassessable. Except as
set forth in the Company's Form SB-2 originally filed with the SEC and its
currently-filed Form SB-2, no shares of Common Stock are entitled to preemptive
rights or registration rights and there are no outstanding options, warrants,
scrip, rights to subscribe to, calls or commitments of any character whatsoever
relating to, or securities or rights convertible into, any shares of capital
stock of the Company, or contracts, commitments, understandings, or arrangements
by which the Company is or may become bound to issue additional shares of
capital stock of the Company or options, warrants, scrip, rights to subscribe
to, or commitments to purchase or acquire, any shares, or securities or rights
convertible into shares, of capital stock of the Company. The Company has
furnished to the Purchaser true and correct copies of the Company's Certificate
of Incorporation as in effect on the date hereof (the "Charter"), and the
Company's By-Laws, as in effect on the date hereof (the "By-Laws").
(d) Issuance of Shares. The issuance of the Units has
been duly authorized and, when paid for and issued in accordance with the terms
hereof, the Shares and Warrants underlying the Units shall be validly issued,
fully paid and non-assessable and entitled to the rights and preferences set
forth in Schedule I hereto. The Common Stock issuable upon conversion of the
Shares and Warrants will be duly authorized and reserved for issuance and, upon
conversion, will be validly issued, fully paid and non-assessable and the
holders shall be entitled to all rights and preferences accorded to a holder of
Common Stock.
(e) No Conflicts. The execution, delivery and
performance of this Agreement by the Company and the consummation by the Company
of the transactions contemplated hereby do not and will not (i) result in a
violation of the Company's Charter or By-Laws or (ii) conflict with, or
constitute a default (or an event which 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 of, any agreement, indenture or
instrument to which the Company or any of its subsidiaries is a party, or result
in a violation of any federal, state, local or foreign law, rule, regulation,
order, judgment or decree (including Federal and state securities laws and
regulations) applicable to the Company or any of its subsidiaries or by which
any property or assets of the Company or any of its subsidiaries is bound or
affected (except for such conflicts, defaults, terminations, amendments,
accelerations, cancellations and violations as would not, individually or in the
aggregate, have a Material Adverse Effect); provided that, for purposes of such
representation as to Federal, state, local or foreign law, rule or regulation,
no representation is made herein with respect to any of the same applicable
solely to the Purchaser and not to the Company. The business of the Company is
not being conducted in violation of any law, ordinance or regulations of any
governmental entity, except for violations which either singly or in the
aggregate do not and will not have a Material Adverse Effect. The Company is not
required under Federal, state or local law, rule or regulation in the United
States to obtain any consent, authorization or order of, or make any filing
(other than any filing of a Certificate of Amendment with the New Jersey
Secretary of State) or registration with, any court or governmental agency in
order for it to execute, deliver or perform any of its obligations under this
Agreement or issue and sell the Shares in accordance with the terms hereof
(other than any SEC, NASD or state securities filings which may be required to
be made by the Company subsequent to the Closing, and any registration statement
which may be filed pursuant
hereto); provided that, for purposes of the representation made in this
sentence, the Company is assuming and relying upon the accuracy of the relevant
representations and agreements of the Purchaser herein.
(f) SEC Documents, Financial Statements. The Common
Stock of the Company is registered pursuant to Section 12(g) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") and the Company has filed
on a timely basis all reports, schedules, forms, statements and other documents
required to be filed by it with the SEC pursuant to the reporting requirements
of the Exchange Act, including material filed pursuant to Section 13(a) or
15(d), in addition to one or more registration statements and amendments thereto
heretofore filed by the Company with the SEC under the Act (all of the foregoing
including filings incorporated by reference therein being referred to herein as
the "SEC Documents"). The Company, through its agent, has delivered to the
Purchaser true and complete copies of the SEC Documents (except for exhibits and
incorporated documents). The Company has not provided to the Purchaser any
information which, according to applicable law, rule or regulation, should have
been disclosed publicly by the Company but which has not been so disclosed,
other than with respect to the transactions contemplated by this Agreement.
As of their respective dates, the SEC Documents
complied in all material respects with the requirements of the Act or the
Exchange Act as the case may be and the rules and regulations of the SEC
promulgated thereunder and other federal, state and local laws, rules and
regulations applicable to such SEC Documents, and none of the SEC Documents
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. The financial statements of the Company included in the SEC
Documents comply as to form in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC or other
applicable rules and regulations with respect thereto. Such financial statements
have been prepared in accordance with generally accepted accounting principles
applied on a consistent basis during the periods involved (except (i) as may be
otherwise indicated in such financial statements or the notes thereto or (ii) in
the case of unaudited interim statements, to the extent they may not include
footnotes or may be condensed or summary statements) and fairly present in all
material respects the financial position of the Company as of 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 year-end audit
adjustments).
(g) No Material Adverse Change. Since the date
through which the most recent quarterly report of the Company on Form 10-Q has
been prepared and filed with the SEC, a copy of which is included in the SEC
Documents, no Material Adverse Effect has occurred or exists with respect to the
Company or any of its subsidiaries.
(h) No Undisclosed Liabilities. The Company and its
subsidiaries have no material liabilities or obligations not disclosed in the
SEC Documents, other than those incurred in the ordinary course of the Company's
or any of its subsidiaries' respective businesses since the date of the most
recently filed SEC Documents which, individually or in the aggregate, do not or
would not have a Material Adverse Effect on the Company or any of its
subsidiaries.
(i) No Undisclosed Events or Circumstances. No event
or circumstance has occurred or exists with respect to the Company or any of its
subsidiaries or their respective businesses, properties, prospects, operations
or financial condition which, under applicable law, rule or regulation, requires
public disclosure or announcement by the Company but which has not been so
publicly announced or disclosed.
(j) No General Solicitation. Neither the Company, nor
any of its affiliates, or, to its knowledge, any person acting on its or their
behalf, has engaged in any form of general solicitation or general advertising
(within the meaning of Regulation D under the Act) in connection with the offer
or sale of the Shares.
(k) No Integrated Offering. Neither the Company, nor
any of its affiliates, nor any person acting on its or their behalf has,
directly or indirectly, made any offers or sales of any security or solicited
any offers to buy any security, under circumstances that would require
registration of the Shares under the Act.
Section 3.1 Securities Compliance. The Company shall notify the SEC and
NASD, in accordance with their requirements, of the transactions contemplated by
this Agreement, and shall take all other necessary action and proceedings as may
be required and permitted by applicable law, rule and regulation, for the legal
and valid issuance of the Units, Shares and Warrants, and the common stock of
the Company issuable upon conversion thereof, to the Purchaser.
Section 3.2 Registration and Listing. Until at least two (2) years
after all Shares and Warrants have been converted into Common Stock, the Company
will cause its Common Stock to continue to be registered under Sections 12(b) or
12(g) of the Exchange Act, will comply in all respects with its reporting and
filing obligations under such Exchange Act, will comply with all requirements
related to any registration statement filed pursuant to this Agreement and will
not take any action or file any document (whether or not permitted by the Act or
the Exchange Act or the rules thereunder) to terminate or suspend such
registration or to terminate or suspend its reporting and filing obligations
under said Acts, except as permitted herein. Until at least two (2) years after
all Shares and Warrants have been converted into Common Stock, the Company will
take all action within its power to continue the listing or trading of its
Common Stock on the NASDAQ Small Cap Market and will comply in all respects with
the Company's reporting, filing and other obligations under the bylaws or rules
of the NASD and NASDAQ. The covenants set forth in this Section 3.2 shall not be
deemed to prohibit a merger, sale of all assets or other corporate
reorganization if the entity surviving or succeeding to the Company is bound by
this Agreement with respect to its securities issued in exchange for or in
replacement of the Units or Common Stock or the consideration received for or in
replacement of the Units or Common Stock is cash.
Section 4.1 Conditions Precedent to the Obligation of the Company to
Sell the Units. The obligation hereunder of the Company to issue and/or sell the
Units to the Purchaser is subject to the satisfaction, at or before the Closing,
of each of the conditions set forth below. These conditions may be waived by the
Company at any time in its sole discretion.
(a) Accuracy of the Purchaser's Representations and Warranties. The
representations and warranties of the Purchaser shall be true and correct in all
material respects as of the date when made and as of the Closing Date as though
made at that time (except for representations and warranties that speak as of a
particular date).
(b) Performance by the Purchaser. The Purchaser shall have performed
all agreements and satisfied all conditions required to be performed or
satisfied by the Purchaser at or prior to the Closing.
(c) No Injunction. No statute, rule, regulation, executive order,
decree, ruling or injunction shall have been enacted, entered, promulgated or
endorsed by any court or governmental authority of competent jurisdiction which
prohibits the consummation of any of the transactions contemplated by this
Agreement.
(d) Legal action. No legal action, suit or proceeding shall be pending
or threatened which seeks to restrain or prohibit the transactions contemplated
by this Agreement.
(e) Execution. The Purchaser shall have executed this Agreement, and
delivered such Agreement to the Company.
Section 4.2 Conditions Precedent to the Obligation of the Purchaser to
Purchase the Units. The obligation hereunder of the Purchaser to acquire and pay
for the Shares is subject to the satisfaction, at or before the Closing, of each
of the conditions set forth below. These conditions may be waived by the
Purchaser at any time in its sole discretion.
(a) Accuracy of the Company's Representations and Warranties. The
representations and warranties of the Company shall be true and correct in all
material respects as of the date when made and as of the Closing Date as though
made at that time (except for representations and warranties that speak as of a
particular date).
(b) Performance by the Company. The Company shall have performed all
agreements and satisfied all conditions required to be performed or satisfied by
the Company at or prior to the Closing.
(c) NASDAQ. From the date hereof to the Closing Date, trading in the
Company's Common Stock shall not
have been suspended by the SEC or the NASDAQ Small Cap Market (except for any
suspension of trading of limited duration agreed to between the Company and the
NASDAQ Small Cap Market solely to permit dissemination of material information
regarding the Company), and trading in securities generally as reported by
NASDAQ shall not have been suspended or limited or minimum prices shall not have
been established on securities whose trades are reported by NASDAQ.
(d) No Injunction. No statute, rule, regulation, executive order,
decree, ruling or injunction shall have been enacted, entered, promulgated or
endorsed by any court or governmental authority of competent jurisdiction which
prohibits the consummation of any of the transactions contemplated by this
Agreement.
(e) Opinion of Counsel, Etc. The Purchaser shall have received before
or at the Closing an opinion of counsel to the Company (covering, without
limitation, the matters set forth in Section 2.2(a) through (e)), in form and
substance reasonably satisfactory to the Purchaser and its counsel, and such
other certificates and documents as the Purchaser or its counsel shall
reasonably require incident to the Closing.
(e) Execution. The Company shall have executed this Agreement, and
delivered such Agreement to the Purchaser.
Section 5.1 Legend on Stock. Each certificate representing the Shares,
Warrants and, if necessary, Common Stock issued upon conversion thereof, shall
be stamped or otherwise imprinted with a legend substantially in the following
form:
THESE SECURITIES [AND THE SHARES OF COMMON STOCK ISSUABLE UPON THE
CONVERSION HEREOF] HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933 , AS AMENDED, OR ANY STATE SECURITIES LAWS. THEY MAY NOT BE SOLD
OR OFFERED FOR SALE UNLESS THERE IS AN EFFECTIVE REGISTRATION STATEMENT
UNDER SUCH ACT AND ANY APPLICABLE STATE SECURITIES LAW OR, IN THE
OPINION OF COUNSEL, REGISTRATION UNDER SUCH ACT OR APPLICABLE STATE
SECURITIES LAW IS NOT REQUIRED IN CONNECTION WITH SUCH SALE OR OFFER,
AND SUCH OPINION IS REASONABLY SATISFACTORY TO THE COMPANY.
The Company agrees to reissue certificates representing the Shares,
Warrants or, if applicable, the Common Stock issued upon conversion thereof
without the legend set forth above at such time as (a) the holder thereof is
permitted to dispose of such Shares (or securities issued upon conversion
thereof) pursuant to Rule 144(k) under the Act, (b) the securities are sold to a
purchaser or purchasers who (in the opinion of counsel to such purchasers, in
form and substance reasonably satisfactory to the Company and its counsel) are
able to dispose of such securities publicly without registration under the Act,
or (c) such securities are registered under the Act.
Section 6.1 Termination by Mutual Consent. This Agreement may be
terminated at any time prior to the Closing by the mutual written consent of the
Company and the Purchaser.
Section 6.2 Other Termination. This Agreement may be terminated by
action of the Board of Directors or other governing body of the Purchaser or the
Company at any time if the Closing shall not have been consummated by the fifth
(5th) business day following the date of this Agreement, provided that the party
seeking to terminate the Agreement is not in breach of the Agreement.
Section 6.3 Automatic Termination. This Agreement shall automatically
terminate without any further action of either party hereto if the Closing shall
not have occurred by the seventh (7th) business day following the date of this
Agreement, provided, however, that any such termination shall not terminate the
liability of any party which is then in breach of the Agreement.
Section 7.1 Fees and Expenses. Except as otherwise set forth in Section
1.4 hereof with respect to the registration of Registrable Securities, the
Company shall pay the fees, commissions and expenses of its advisers, brokers,
finders, counsel, accountants and other experts, if any, and all other expenses
associated therewith, and shall promptly upon Closing reimburse ProFutures
Special Equities Fund, L.P. up to $2,500 for the reasonable fees and expenses of
its counsel for the preparation, negotiation and coordination of this Agreement.
The Company shall pay all stamp and other taxes and duties levied in connection
with the issuance of the Units and Common Stock pursuant hereto.
Section 7.2 Specific Enforcement, Consent to Jurisdiction.
(a) The Company and the Purchaser acknowledge and agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent or cure breaches of the provisions of
this Agreement and to enforce specifically the terms and provisions hereof, this
being in addition to any other remedy to which either of them may be entitled by
law or equity.
(b) The Company and the Purchaser each (i) hereby irrevocably submits
to the jurisdiction of the United States District Court and other courts of the
United States sitting in Texas for the purposes of any suit, action or
proceeding arising out of or relating to this Agreement and (ii) hereby waives,
and agrees not to assert in any such suit, action or proceeding, any claim that
it is not personally subject to the jurisdiction of such court, that the suit,
action or proceeding is brought in an inconvenient forum or that the venue of
the suit, action or proceeding is improper. The Company and the Purchaser each
consents to process being served in any such suit, action or proceeding by
mailing a copy thereof to such party at the address in effect for notices to it
under this Agreement and agrees that such service shall constitute good and
sufficient service of process and notice thereof. Nothing in this paragraph
shall affect or limit any right to serve process in any other manner permitted
by law.
Section 7.3 Entire Agreement: Amendment. This Agreement contains the
entire understanding of the parties with respect to the matters covered hereby
and, except as specifically set forth herein, neither the Company nor the
Purchaser makes any representation, warranty, covenant or undertaking with
respect to such matters. No provision of this Agreement may be waived or amended
other than by a written instrument signed by the party against whom enforcement
of any such amendment or waiver is sought.
Section 7.4 Notices. Any notice or other communication required or
permitted to be given hereunder shall be in writing and shall be effective (a)
upon hand delivery or delivery by telex (with correct answer back received),
telecopy or facsimile at the address or number designated below (if delivered on
a business day during normal business hours where such notice is to be
received), or the first business day following such delivery (if delivered other
than on a business day during normal business hours where such notice is to be
received) or (b) on the second (2nd) business day following the date of mailing
by express courier service, fully prepaid, addressed to such address, or upon
actual receipt of such mailing, whichever shall first occur. The addresses for
such communications shall be:
to the Company: All American Food Group, Inc.
104 New Era
South Plainfield, New Jersey 07080
Attn: Andrew Thorburn, President and CEO
to the Purchaser: At the address set forth at the foot of this
Agreement or as specified in writing by Purchaser.
Any party hereto may from time to time change its address for notices by giving
at least ten (10) days' written notice of such changed address to the other
party hereto.
Section 7.5 Waivers. No waiver by either party of any default with
respect to any provision, condition or requirement of this Agreement shall be
deemed to be a continuing waiver in the future or a waiver of any other
provision, condition or requirement hereof, nor shall any delay or omission of
either party to exercise any right hereunder in any manner impair the exercise
of any such right accruing to it thereafter.
Section 7.6 Headings. The headings herein are for convenience only, do
not constitute a part of this Agreement and shall not be deemed to limit or
affect any of the provisions hereof.
Section 7.7 Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the internal laws of the State of
Texas without regard to such state's principles of conflict of laws.
Section 7.8 Survival. The representations and warranties of the Company
and the Purchaser contained in herein and the agreements and covenants set forth
in Sections 1.1 through 1.5, 3.1 and 3.2, and 7.1 through 7.16 shall survive the
Closing.
Section 7.9 Publicity. The Company agrees that it will not disclose,
and will not include in any public announcement, the name of the Purchaser
without its consent, unless and until such disclosure is required by law or
applicable regulation, and then only to the extent of such requirement.
Section 7.10 NASDAQ. The term "NASDAQ" or "NASDAQ Small Cap Market"
herein refers to the principal market on which the Common Stock of the Company
is traded. If the Common Stock is listed on a securities exchange, or if another
market becomes the principal market on which the Common Stock is traded or
through which price quotations for the Common Stock are reported, the term
"NASDAQ" or "NASDAQ Small Cap Market" shall be deemed to refer to such exchange
or other principal market.
Section 7.11 Acceptance Execution and delivery of this Agreement shall
constitute an offer to purchase the Units, which offer, unless previously
revoked by the Undersigned, may be accepted or rejected by the Company, in its
sole discretion for any cause or for no cause and without liability to the
Undersigned. The Company shall indicate acceptance of this Agreement by signing
as indicated on the signature page hereof.
Section 7.12 Binding Agreement Upon acceptance of this Agreement by the
Company, the Undersigned agrees that he may not cancel, terminate or revoke any
agreement of the Undersigned made hereunder, and that this Agreement shall
survive the death or disability of the Undersigned and shall be binding upon
heirs, successors, assigns, executors, administrators, guardians, conservators
or personal representatives of the Undersigned.
Section 7.13 Incorporation by Reference All information set forth on
the signature page is incorporated as integral terms of this Agreement.
Section 7.14 Counterparts. This Agreement may be signed in multiple
counterparts, which counterparts shall constitute one and the same original
instrument.
Section 7.15 Severability. If any portion of this Agreement shall be
held illegal, unenforceable, void or voidable by any court, each of the
remaining terms hereof shall nevertheless remain in full force and effect as a
separate contract.
Section 7.16 Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns.
THIS SPACE HAS BEEN LEFT BLANK INTENTIONALLY.
THE SIGNATURE PAGE FOLLOWS.
IN WITNESS WHEREOF, the Undersigned Purchaser has executed this Agreement on the
date set forth below.
For the purchase price of $1,000 per Unit, the Purchaser tenders herewith the
full purchase price of:
$_________________________________________ (Increments of $50,000 only)
The exact name(s) (Including correct, legible spelling) and the information
under which title to the Shares and Warrants will be taken is as follows (Please
print or type):
_______________________________________________________________________________
Address of Purchaser
_______________________________________________________________________________
Social Security or IRS Employer Identification Number(s):
Signature of Purchaser:
By: _____________________________________________ Dated: ____________________
Print Name
and Title (if applicable): ______________________
Accepted by:
ALL AMERICAN FOOD GROUP, INC., a New Jersey corporation
By: _____________________________________________
Name: ___________________________________________
Title: __________________________________________