STOCK PURCHASE, LOAN AND SECURITY AGREEMENT BY AND BETWEEN WATER CHEF, INC. AND SHAUL KOCHAN Dated as of April 16, 2008
Exhibit 99.5
BY
AND BETWEEN
WATER
CHEF, INC.
AND
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Dated
as of April 16, 2008
This
STOCK PURCHASE, LOAN AND SECURITY AGREEMENT (this “Agreement”), made as of April
16, 2008, by and between WATER CHEF, INC., a Delaware corporation (the “Company”), and ▇▇▇▇▇ ▇▇▇▇▇▇
(“Consultant”).
BACKGROUND
WHEREAS, Consultant wishes to
purchase from the Company, and the Company wishes to sell to Consultant, Four
Million (4,000,000) shares (the “Purchased Shares”) of common
stock of the Company (“Common
Stock”) for an aggregate purchase price of $337,200 (the “Purchase Price”), based on a
price per share of $0.0843, which represents the average closing price of the
Common Stock during the 30 trading days immediately preceding the date of this
Agreement, and Consultant wishes to borrow from the Company, and the Company
wishes to loan to Consultant, an amount equal to the Purchase Price, such loan
to be on a non-recourse basis and secured by a pledge of the Purchased Shares,
all on the terms set forth herein,
NOW, THEREFORE, in
consideration of the mutual promises and covenants set forth herein and other
good and valuable consideration, the parties hereto agree as
follows:
TERMS
1. Loan.
1.1. Loan. Subject
to the terms and conditions hereof, the Company is lending to Consultant the
aggregate principal amount of $337,200 (the “Loan”).
1.2. Purpose of
Loan. Consultant is using the proceeds of the Loan solely for
the purpose of purchasing the Purchased Shares pursuant to Section 2
hereof.
1.3. Promissory
Note. The obligation of Consultant to repay the Loan is
evidenced by Consultant’s non-recourse promissory note, substantially in the
form attached hereto as Exhibit A (the “Note”), in the original
principal amount of $337,200. The Note is dated April 16, 2008, the
date of the purchase of the Purchased Shares, shall mature and become due and
payable on the Maturity Date (as hereinafter defined) and shall bear interest as
set forth in Section 1.4(b).
1.4. Principal Payments;
Maturity; Interest Rate.
(a) Principal
Payments. Unless prepaid or accelerated as provided herein,
the principal amount of the Loan shall be due and payable in full on April 16,
2011, the third anniversary of the date of the Note (the “Maturity Date”).
(b) Interest Rate and
Payment. The principal amount of the Loan shall bear interest
from the date of the Note until the Maturity Date or earlier payment of the
principal amount at the rate of Six Percent (6.00%) per
annum. Interest shall be due and payable on the Maturity Date or the
date of earlier payment of the principal amount.
1.5. Prepayment. Consultant
shall have the right to prepay the Loan, in whole or in part, without penalty or
premium.
1.6. Non- Recourse
Provision. The Company shall look solely to the Pledged
Collateral (as defined below) and no other property of Consultant shall be
subject to levy, or execution for payment of the Loan.
1.7. Events of
Default. Each of the following shall constitute an event of
default (each, an “Event of
Default”) under this Agreement:
(a) the
failure of Consultant to pay when due any principal or interest or other amount
due hereunder or under the Note; or
(b) any
warranty or representation made by Consultant in this Agreement shall prove to
have been false or incorrect on the date as of which made; or
(c) either
Consultant or the Company shall give notice to the other of termination of
Consultant’s consulting relationship with the Company for any reason or no
reason; or
(d) Consultant
shall cease to be a consultant of the Company or any affiliate thereof for any
reason or no reason; or
(e) the
occurrence of any of the following with respect to Consultant:
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(i)
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he
shall apply for or consent to the appointment of a receiver, custodian,
trustee or liquidator of all or a substantial part of his
property;
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(ii)
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he
shall make a general assignment for the benefit of his
creditors;
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(iii)
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he
shall commence a voluntary case under the Federal Bankruptcy Code;
or
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(iv)
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he
shall file a petition to take advantage of any other law providing for the
relief of debtors.
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1.8. Remedies Upon
Default. Upon the occurrence and during the continuance of an
Event of Default, the principal amount of the Loan, together with accrued
interest thereon, shall, at the option of the Company, become immediately due
and payable and the Company may proceed against the Pledged Collateral (as
defined below) as provided in Sections 3.3(c), 3.6 and 3.8.
2. Purchase and Sale of Common
Stock.
2.1. Sale and
Purchase. Effective as of the date hereof, subject to and in
reliance upon the representations, warranties, terms and conditions of this
Agreement, the Company is issuing and selling to Consultant, and Consultant is
purchasing, the Purchased Shares for the Purchase Price.
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2.2. Payment of Purchase
Price. Effective as of the date hereof, Consultant is making
payment in full of the Purchase Price, receipt of which is hereby acknowledged
by the Company, and the Company is delivering to Consultant a stock certificate,
registered in the name of Consultant, representing the Purchased
Shares.
2.3. Lock-up. Consultant
agrees that, for a six-month period following the date of the issuance of the
Purchased Shares, Consultant shall not sell, transfer or otherwise dispose of
any of the Purchased Shares without the written consent of the
Company.
3. Collateral.
3.1. Pledged
Collateral. As security for the performance of Consultant’s
obligations under this Agreement and for the prompt and complete payment of the
Loan, together with accrued interest thereon, when due (whether at the Maturity
Date, by acceleration or otherwise), Consultant hereby grants to the Company a
security interest in the following property (collectively, the “Pledged
Collateral”):
(a) the
Purchased Shares and the certificates or instruments representing such stock and
all dividends, interest, cash, instruments, and other property from time to time
received, receivable, or otherwise distributed or distributable in respect of or
in exchange for any or all of such stock; and
(b) all
proceeds of the foregoing.
3.2. Delivery of Purchased
Shares. Effective as of the date hereof, Consultant is
delivering to the Company the stock certificate representing the Purchased
Shares, together with a stock power duly executed in blank by
Consultant.
3.3. Voting Rights, Dividends,
Etc.
(a) Consultant
shall be entitled to exercise any and all of Consultant’s voting and other
consensual rights pertaining to the Pledged Collateral or any part thereof for
any purpose not inconsistent with the terms of this Agreement and,
notwithstanding Section 3.1 but subject to Section 3.3(c), shall be
entitled to receive and retain, free and clear of the security interest of the
Company hereunder, any and all of such dividends, interest and other
distributions permitted to all other holders of the Company’s Common
Stock.
(b) The
Company shall execute and deliver (or cause to be executed and delivered) to
Consultant all such proxies and other instruments as Consultant may reasonably
request for the purpose of enabling Consultant to exercise the voting and other
rights that he is entitled to exercise pursuant to paragraph (a) above and
to receive the dividends, interest and other distributions that he is authorized
to receive and retain pursuant to paragraph (a) above.
(c) Upon
the occurrence and during the continuance of an Event of Default (i) all
rights of Consultant to exercise the voting and other consensual rights that he
would otherwise be entitled to exercise pursuant to Section 3.3(a) hereof
and to receive the dividends, interest and other distributions that he would
otherwise be authorized to receive and retain pursuant to Section 3.3(a)
hereof shall cease, and all such rights shall thereupon become vested in the
Company, which shall thereupon have the sole right to exercise such
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voting
and other consensual rights and to receive such dividends, interest, and other
distributions; and all dividends, interest and other distributions that are
received by Consultant contrary to the provisions of this paragraph shall be
received in trust for the benefit of the Company, shall be segregated from other
funds of Consultant, and shall be forthwith paid over to the Company in the same
form as so received (with any necessary endorsement).
3.4. Further
Assurances. Consultant agrees that at any time and from time
to time, at the expense of Consultant, Consultant will promptly execute and
deliver all further instruments and documents, and take all further action that
may be necessary, or that the Company may reasonably request, in order to
perfect and protect any security interest granted or purported to be granted
hereby or to enable the Company to exercise and enforce the rights and remedies
hereunder with respect to any of the Pledged Collateral.
3.5. Transfers and
Liens. Consultant will not (a) grant any option with
respect to any of the Pledged Collateral or (b) create or permit to exist
any lien, security interest, or other charge or encumbrance upon or with respect
to any of the Pledged Collateral.
3.6. Company Appointed
Attorney-in-Fact. Consultant hereby appoints the Company as
Consultant’s attorney-in-fact, with full authority in the place and stead of
Consultant and in the name of Consultant, from time to time in the Company’s
discretion to take any action and to execute any instrument which the Company
may deem necessary or advisable to accomplish the purposes of this Agreement,
including, without limitation, upon the occurrence and during the continuance of
an Event of Default to receive, endorse, and collect all instruments made
payable to Consultant representing any dividend, interest, or other distribution
in respect of the Pledged Collateral or any part thereof and to give full
discharge for the same. The Company shall not, in its capacity as
such attorney-in-fact, be liable for any acts or omissions, nor for any error of
judgment or mistake of fact or law, but only for bad faith, willful misconduct
or gross negligence. This power, being coupled with an interest, is
irrevocable until all obligations under the Note have been satisfied in
full.
3.7. Company’s
Duties. The powers conferred on the Company hereunder are
solely to protect its interests in the Pledged Collateral and shall not impose
any duty to exercise any such powers. Except for the safe custody of
any Pledged Collateral in its possession and the accounting for moneys actually
received by it hereunder, the Company shall not have any duty as to any Pledged
Collateral or as to the taking of any necessary steps to preserve rights against
any parties or any other rights pertaining to any Pledged
Collateral. Without limiting the generality of the foregoing, the
Company shall not have any responsibility for ascertaining or taking action with
respect to calls, conversions, exchanges, maturities, tenders, or other matters
relating to any Pledged Collateral, whether or not the Company has or is deemed
to have knowledge of such matters.
3.8. Transfer of
Title. After the occurrence and during the continuance of an
Event of Default, the Company shall have the right, at any time in its
discretion without further notice to Consultant, to transfer to or to register
in the name of the Company or its nominees, any or all of the Pledged
Collateral. In addition, upon the occurrence and during the
continuance of an Event of Default, the Company shall have the right at any time
to exchange certificates or instruments representing or evidencing Pledged
Collateral for certificates or instruments of smaller or larger
denominations.
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3.9. Termination. The
provisions of this Section 3 shall terminate upon payment in full of the
Loan, together with accrued interest thereon, at which time the Company shall
promptly deliver to Consultant stock certificates evidencing the Purchased
Shares remaining in its possession.
4. Representations and
Warranties of the Company. The Company hereby represents and
warrants to Consultant as follows:
4.1. Organization. The
Company (a) is a corporation duly incorporated, validly existing and in good
standing under the laws of the State of Delaware and (b) has all requisite
corporate power and authority to execute, deliver and perform this
Agreement.
4.2. Authorization of
Agreement. The execution, delivery and performance by the
Company of this Agreement have been duly authorized by all requisite corporate
action by the Company, and this Agreement constitutes the valid and binding
obligation of the Company.
4.3. Due Issuance of
Shares. The issuance, sale and delivery of the Purchased
Shares have been duly authorized by all requisite corporate action of the
Company, and when issued, sold and delivered in accordance with this Agreement,
the Purchased Shares will be validly issued and outstanding, fully paid and
non-assessable, and not subject to preemptive or any other similar rights of the
stockholders of the Company or others.
4.4. No Conflict with Other
Instruments. The execution and delivery of this Agreement and
the performance of and compliance with the terms and provisions hereof will not
conflict with, result in a breach of or constitute a default under any material
agreement or instrument to which the Company is a party or by which the Company
is bound, or violate any judicial or administrative order or decree applicable
to the Company.
5. Representations of
Consultant. Consultant represents, warrants and covenants to
the Company as follows:
5.1. Authority. Consultant
has the full power and authority and has full legal right to execute and deliver
this Agreement and the Note, to perform, observe and comply with all of his
agreements and obligations under each of this Agreement and the Note and to
obtain and apply the proceeds of the Loan contemplated by this
Agreement.
5.2. Due Execution and
Enforceability. Consultant has duly executed and delivered
each of this Agreement and the Note and each of this Agreement and the Note
constitutes the valid and binding obligation of Consultant, enforceable in
accordance with its terms, except as such enforceability may be limited by
bankruptcy, moratorium or similar laws affecting creditors’ rights or by general
principles of equity.
5.3. No Conflict with Other
Instruments. The execution and delivery of this Agreement and
the Note by Consultant and the performance of and compliance with the terms and
provisions thereof by Consultant will not conflict with, result in a breach of
or constitute a default under any material agreement or instrument to which
Consultant is a party or by which Consultant is bound, or, violate any judicial
or administrative order or decree applicable to Consultant.
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5.4. Acquisition for
Investment. Consultant is acquiring the Purchased Shares for
his own account, for investment and not with a view to the distribution thereof
within the meaning of the Securities Act.
5.5. Consultant’s
Status. Consultant is an “accredited investor” as that term is
defined in Rule 501(a) promulgated under the Securities Act of 1933, as amended
(the “Securities Act”),
and has such knowledge and experience in financial and business matters that he
is capable of evaluating the merits and risks of investing in the Purchased
Shares.
5.6. No
Registration. Consultant understands that the Purchased Shares
have not been and shall not be registered under the Securities Act or any state
securities law and any subsequent disposition thereof must be registered under
the Securities Act or must be exempt from registration.
5.7. Limitations of Exemption
from Registration. Consultant understands that (a) the
exemption from registration afforded by Rule 144 (the provisions of which are
known to him) promulgated under the Securities Act depends on the satisfaction
of various conditions, and that, if and when applicable, Rule 144 may only
afford the basis for sales in limited amounts and (b) the Company is under
no obligation to register the Purchased Shares on behalf of Consultant or to
assist Consultant in complying with any exemption from
registration.
6. Legend. The
certificate for the Purchased Shares shall bear the following
legend:
“THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT AND
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“SECURITIES ACT”), OR ANY STATE SECURITIES LAW. THESE SECURITIES MAY
NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION
THEREFROM AND, IF REQUESTED BY THE COMPANY, DELIVERY TO THE COMPANY OF AN
OPINION OF COUNSEL, WHICH OPINION AND COUNSEL SHALL BE REASONABLY SATISFACTORY
TO THE COMPANY, STATING THAT AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF
THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS IS
AVAILABLE.
7. Miscellaneous.
7.1. Amendments, Indulgences,
Etc. No amendment or waiver of any provision of this Agreement
nor consent to any departure by Consultant herefrom shall in any event be
effective unless the same shall be in writing and signed by the Company, and
then such waiver or consent shall be effective only in the specific instance and
for the specific purpose for which given. No failure or delay on the
part of the Company in the exercise of any right, power, or remedy under this
Agreement shall constitute a waiver thereof, or prevent the exercise thereof in
that or any other instance.
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7.2. Notices. Any
notice, demand, offer or other written instrument (“Notice”) required or permitted
to be given hereunder shall be in writing signed by the party giving such Notice
and shall be hand delivered or sent, postage prepaid, by certified or registered
mail, return receipt requested, or sent by recognized courier service, or sent
by electronic transmission such as facsimile or pdf, to the parties at the
addresses set forth on the signature page of this Agreement. Any
Notice to be given to the estate of any deceased person shall be addressed to
the personal representative of such deceased person at his address or, if there
be no personal representative or no address for such representative has been
furnished to the party giving notice, to the estate of the deceased person at
the address of the deceased person as set forth on the signature page of this
Agreement. Any party shall have the right to change the place to
which such Notice shall be sent or delivered by similar notice sent in like
manner to all other parties hereto. Notices shall be deemed given
hereunder on the earlier of actual receipt or: (i) in the case of Notices given
by mail, three (3) business days after mailing; (ii) in the case of Notices
given by courier service, one (1) business day after delivery to or pick up by
such service; and (iii) in the case of Notices given by electronic transmission,
on the date of dispatch provided a copy of such Notice is also sent
simultaneously by any other means referred to in clause (i) or (ii)
above.
7.3. Continuing Security
Interest. This Agreement creates a continuing security
interest in the Pledged Collateral and shall be binding upon Consultant, and his
heirs, executors, administrators, successors, and assigns and inure to the
benefit of the Company and its successors, transferees and
assigns. The execution and delivery of this Agreement shall in no
manner impair or affect any other security (by endorsement or otherwise) for the
payment or performance of the Note and no security taken hereafter as security
for payment or performance of the Note shall impair in any manner or affect this
Agreement or the security interest granted hereby, all such present and future
additional security to be considered as cumulative security. Any of
the Pledged Collateral may be released from this Agreement without altering,
varying, or diminishing in any way this Agreement or the security interest
granted hereby as to the Pledged Collateral not expressly released, and this
Agreement and such security interest shall continue in full force and effect as
to all of the Pledged Collateral not expressly released.
7.4. Governing Law, Consent to
Jurisdiction, Etc. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York applicable to
contracts made and wholly performed within New York. Consultant
consents to the jurisdiction of the courts of the State of New York and of the
United States sitting in New York County, New York in any litigation concerning
this Agreement, and Consultant waives any objection based on venue or
inconvenient forum. Unless otherwise defined herein, terms defined in
the Uniform Commercial Code as in effect in the State of New York on the date
hereof are used herein as therein defined as of such date.
7.5. Counterparts;
Copies. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original but all of which
together shall constitute but one instrument, which may be sufficiently
evidenced by any counterpart. This Agreement may be executed and
delivered by facsimile or pdf transmission of an executed counterpart of or
signature page to this Agreement and any photostatic, facsimile or pdf copy of
an executed counterpart of or signature page to this Agreement shall be given
the same effect as the original.
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7.6. Severability. The
provisions of this Agreement are independent of and separable from each other,
and no such provision, shall be altered or rendered invalid or unenforceable by
virtue of the fact that for any reason any other such provision may be invalid
or unenforceable in whole or in part.
7.7. Headings. The
Section headings of this Agreement are for convenience only, form no part
of this Agreement and shall not affect its interpretation.
7.8. Entire
Agreement. This Agreement sets forth all of the promises,
covenants, agreements, conditions and undertakings between the parties hereto
with respect to the subject matter hereof, and supersedes all prior and
contemporaneous agreements and understandings, inducements or conditions,
express or implied, oral or written.
[Signatures
appear on the following page.]
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IN
WITNESS WHEREOF, the undersigned, intending to be legally bound hereby, have
executed this Agreement as of the date first above written.
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WATER
CHEF, INC.
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By:
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Name:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Title: Chief
Executive Officer
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Address
for Notices:
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Water
Chef, Inc.
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Attn: Chief
Executive Officer
Facsimile
No: ▇▇▇-▇▇▇-▇▇▇▇
Email
address: ▇▇▇▇▇▇▇▇@▇▇▇▇▇.▇▇▇
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Address
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Baruch-Ram
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Email
address: ▇▇▇▇▇.▇▇▇▇▇▇@▇▇▇▇▇.▇▇▇
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9
Exhibit
A
NON-RECOURSE
PROMISSORY NOTE
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$337,200
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April
16, 2008
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The
Undersigned, for value received and intending to be legally bound, promises to
pay to the order of WATER CHEF, INC. (“Lender”), as and when due as
set forth in the Stock Purchase, Loan and Security Agreement dated the date
hereof between the Undersigned and Lender (as such agreement may be amended,
restated, modified or supplemented from time to time, the “Loan Agreement”), the
principal sum of Three Hundred Thirty Seven Thousand Two Hundred Dollars
($337,200). Capitalized terms used herein and not otherwise defined
shall have the meanings given such terms in the Loan Agreement.
The
undersigned further promises to pay to the order of Lender interest on the
unpaid principal amount of the Loan, from the date hereof until the principal
amount has been repaid in full, at the rate of Six Percent (6.00%) per
annum. Interest shall be due and payable on the Maturity Date or the
date of earlier payment of the principal amount.
This is
the Note mentioned in, and is entitled to the benefits of, the Loan
Agreement.
This Note
may be prepaid at any time, in whole or in part, without premium or
penalty. All payments in respect of this Note shall be applied first
to accrued interest and then to principal outstanding hereunder.
Lender
shall look solely to the Pledged Collateral and no other property of the
undersigned shall be subject to levy, or execution for payment of this
Note.
Upon the
occurrence and during the continuance of an Event of Default, the principal
amount of the Loan, together with accrued interest thereon, shall, at the option
of the Company, become immediately due and payable and the Company may proceed
against the Pledged Collateral as provided in the Loan Agreement.
This Note
shall be deemed to be a contract made under the laws of the State of New York
and shall be construed in accordance with the laws of said state without giving
effect to principles of conflicts of law.
This Note
shall be binding upon the undersigned and his heirs, executors, administrators,
transferees and assigns and the terms hereof shall inure to the benefit of
Lender and its successors and assigns, including subsequent holders
hereof.
The
undersigned hereby waives presentment, demand for payment, notice of dishonor or
acceleration, protest and notice of protest, and any and all other notices or
demands in connection with the delivery, acceptance, performance, default or
enforcement of this Note except any notice expressly required in the Loan
Agreement.
IN WITNESS WHEREOF, the
undersigned executes this Note as of the day and year first above
written.
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