SECURED PROMISSORY NOTE AND
CONVERTIBLE PREFERRED STOCK
This Secured Promissory Note and Convertible
Preferred Stock Purchase Agreement (this "Agreement"), is made this 12th day of January, 2012, by and between
(i) Urban Ag. Corp., a Delaware corporation (the "Company") and (ii) Peter S. Johnson, Esq. as Trustee of the
Magliochetti Family 2009 Trust DTD 1/12/09 (the "Investor").
WHEREAS, the Company has agreed to sell, and
the Investor has agreed to purchase a secured promissory note in connection with a financing by the Investor of the Company;
WHEREAS, in connection
with the financing described in the foregoing paragraph, the Company has agreed to issue certain shares of the Company's Series
A Convertible Preferred Stock, $0.0001 par value per share (the "Series A Preferred Stock"), on
the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the mutual
promises and covenants contained in this Agreement, and for other valuable consideration, the parties hereto agree as follows:
and Note. The Investor agrees to lend to the Company $1,000,000.00 (the "Loan"). For purposes of this Agreement,
the date the Loan is made shall be referred to as the "Closing Date". To evidence its obligation to repay such
Loan, the Company has authorized the issuance to the Investor of a Secured Promissory Note (the "Note"), which Note shall
be issued to the Investor on the Closing Date in substantially' he form attached hereto as Exhibit A.
A Preferred Stock.
The Company covenants and agrees that within three (3) Business Days of the Closing Date, it shall issue 10,000,000 shares (the
"Shares") of Series A Convertible Preferred Stock ("Series A Preferred Stock") to the Investor having
the terms set forth on Exhibit B pursuant to a Certificate of Designation in form and substance acceptable to the Investor and
will otherwise take all steps necessary and desirable to amend its Certificate of Incorporation to increase the number of authorized
shares of Common Stock such that a sufficient number of such shares of Common Stock shall be reserved for issuance upon conversion
of the Shares.
of Price. The $1,000,000 of funds loaned hereunder by the Investor to the Company shall constitute the purchase by the Investor
of the Note for a purchase price of $950,000 and the Shares for a purchase price of $50,000. This allocation shall apply for allr.
The Company agrees that for reporting purposes, there will be no "original issue discount" or constructive dividends
with respect to the Shares, as such terms are commonly used. Other than as expressly stated, no portion of consideration given
by the Company pursuant to the transactions contemplated by this Agreement shall be considered to be compensation for services
or a fee.
3. Representations and Warranties; Covenants
of the Company. The Company hereby represents and warrants to, covenants to and agrees with the Investor that, as of the date
and Good Standing. The Company is a duly organized and validly existing corporation organized under the laws of the State
of Delaware and has the power to own its properties and to carry on its business as now conducted and as proposed to be conducted.
The Company is duly qualified to do business and is in good standing as a foreign Company in the Commonwealth of Massachusetts
and all other jurisdictions in which the character of the properties owned or leased by it or the nature of its activities makes
such qualification necessary, other than any jurisdictions in which the failure so to qualify or be in good standing would not,
either, in any case or in the aggregate, have a material adverse effect upon the business, operations, assets, condition (financial
or otherwise) or prospects of the Company (a "Material Adverse Effect").
The execution, issuance, delivery and performance by the Company of this Agreement, the Note, the Shares and the Certificate
of Designation (as defined in Section 8(b)(i)) (i) are within the Company's corporate power and authority, (ii) have been duly
authorized by all necessary corporate and shareholder proceedings, and (iii) do not conflict with or result in any breach of any
provision of, or result in the creation of any lien, security interest or other encumbrance upon, any of the property of the Company,
or require any consent or approval pursuant to its charter, bylaws or any law, regulation, order, judgment, writ, injunction,
license, permit, document, agreement or instrument binding upon the Company or upon any of its properties or assets (except as
required by applicable federal securities and state "blue sky" laws) and to authorize a sufficient number of Shares
(and Common Stock issuable upon conversion thereof).
The execution, issuance and delivery of this Agreement, the Note and the Shares constitute legally binding obligations of
the Company, enforceable against it in accordance with the respective terms and provisions hereof and thereof.
Approvals. The execution, issuance and delivery, and the performance by the Company of its obligations under this Agreement,
the Note and the Shares do not, and will not, require the approval or consent of, or any filing with, any governmental authority
or agency, other than filings required pursuant to applicable federal and state securities laws.
the date hereof (after giving effect to the transactions contemplated by Section 2 hereof) the authorized capital
stock of the Company consists of: (A) 15,000,000 shares of Common Stock, $0.0001 par value per share, of which 11,477,184
shares have been issued and are outstanding, 10,000,000 shares are reserved for issuance upon conversion of the Series A
Preferred Stock, 1,403,000 shares are reserved for issuance upon exercise of warrants to purchase Common Stock and 400,000
shares are reserved for issuance to officers and employees of the Company pursuant
to stock options currently outstanding or subsequently approved by a majority of the Board of Directors of the Company; and (B)
10,000,000 shares of Series A Convertible Preferred Stock, $0.0001 par value per share, all of which are outstanding. All of such
outstanding shares are duly authorized, validly issued, fully paid and non-assessable and have been issued in compliance with all
applicable federal and state securities laws, and the designations, powers, preferences, rights, qualifications, limitations and
restrictions in respect of each class and series of authorized capital stock of the Company are as set forth in the Company's Certificate
of Incorporation, as amended.
as set forth on Schedule 1, no adjustment will be required to be made as a result of the Company's issuance of the Note
and the Shares (or upon the issuance of Common Stock upon conversion of the Shares) to the rate at which shares of any class of
capital stock or other securities of the Company are convertible into or exercisable for shares of Common Stock, whether directly
or indirectly, by reason of any "anti-dilution" provisions or agreements. Full and irrevocable waivers need not be or
have been obtained from the holders of capital stock or other securities of the Company in respect of any adjustment because of
the issuance and sale of the Note and the Shares (including the issuance of Common Stock upon conversion of the Shares (collectively,
the "Conversion Stock"))
than as set forth on Schedule 1 hereto and as contemplated by this Agreement, the Company has no outstanding rights (either
pre-emptive or other) or options, calls, commitments or agreements to subscribe for or purchase from the Company, or any warrants
or other agreements providing for or requiring the issuance by the Company of any capital stock or other equity interest, or any
securities convertible into or exchangeable for or representing the right to subscribe for, purchase or otherwise acquire its capital
stock or other equity interest. Other than as set forth on Schedule 1 hereto, the execution, delivery and issuance of the
Note and the Shares (including the Conversion Stock) do not and will not trigger, and do not and will not require, the waiver or
consent of the holders of any rights (either pre-emptive or other) or options to subscribe for or purchase from the Company, or
any warrants or other agreements providing for or requiring the issuance by the Company of any capital stock or other equity interest,
or any securities convertible into or exchangeable for its capital stock or other equity interest.
as set forth in Schedule 1, the Company (A) has no outstanding obligations, contractual or otherwise, to repurchase, redeem,
or otherwise acquire any shares of capital stock or other equity securities of the Company, (B) is not a party to or bound
by, and has no knowledge of, any agreement or instrument relating to the voting of any of its securities, and (C) is not a party
to or bound by any agreement or instrument under which any person has the right to require it to effect, or to include any securities
held by such person in, any registration under the Securities Act of 1933, as amended (the "Securities Act").
There are no other agreements, contracts, instruments or documents to which the Company is a party except as set forth in Schedule
1, which govern or affect in any way the rights of the holders of securities, including any class of capital stock, of the
Issuance. The Note and the Shares will be duly authorized and validly issued when issued, sold and delivered in
accordance with the terms of this Agreement and the Conversion Stock, when issued, sold and delivered in accordance with the
terms of this Agreement for the consideration provided for herein and therein, will be duly and validly issued, fully paid
and nonassessable and shall be issued in compliance with all applicable federal and state securities laws.
Except as set forth in Schedule 1, the Company does not have any subsidiaries, does not own or hold of record and/or beneficially
any shares of any class in the capital of any other corporation and does not own any legal and/or beneficial interests in any partnerships,
limited liability companies, business trusts or joint ventures or in any other unincorporated trade or business enterprises.
No representation, warranty or statement made by the Company in this Agreement, or in any certificate, statement or document
furnished by or on behalf of the Company in connection herewith, contains any untrue statement of material fact or omits to state
a material fact necessary in order to make the statements contained herein or therein, in light of the circumstances in which
they were made, not misleading.
Except as set forth on Schedule 1, the Company is not in default under, nor will the consummation of the transactions contemplated
under this Agreement or the Note result in a default under any provisions of any franchise, contract, agreement, lease or other
instrument to which it is a party or by which it or its property is bound or in violation of any provision of the Company's Certificate
of Incorporation, as amended, or By-Laws or of any law, judgment, decree or governmental order, rule or regulations which in any
case would have a Material Adverse Effect on the Company.
Regulations. The Company is not a "holding company", or a "subsidiary company" of a "holding company"
or an "affiliate" of a "holding company", as such terms are defined in the Public Utility Holding Company Act
of 1935; nor is the Company a "registered investment company", or an "affiliated person" or a "principal
underwriter" of a "registered investment company", as such terms are defined in the Investment Company Act of 1940,
to Properties. Except as set forth on Schedule 1, the Company has (i) good and
marketable title to all of the material assets and properties owned by it, free and clear of all Liens (as hereinafter defined),
(ii) valid title to the lessee interest in all material assets and properties leased by them as lessee, free and clear of all
Liens, and (iii) full right to hold and use all of its assets and properties necessary to its businesses and operations, in each
case all free and clear of all Liens, and in each case subject to applicable laws and the terms of any lease under which the Company
leases such assets or properties as lessee. All such assets and properties are in good condition and repair, reasonable wear and
tear excepted, and are adequate and sufficient to carry on the businesses of the Company as presently conducted and as proposed
to be conducted. "Liens" means, for purposes of this paragraph, any and all liens, claims, mortgages, security
interests, charges, encumbrances and restrictions on transfer of any kind, except (A) taxes not yet due and payable, (B) any lien
in favor of any landlord for unpaid rent, additional rent or other changes, which lien is created by statute or under any lease
under which the Company is lessee and (C) minor imperfections of title, if any, not material in nature or amount and not materially
detracting from the value or impairing the use of the property subject thereto or impairing the operations or proposed operations
of the Company.
and Waivers. The Company has, as of the date hereof, obtained all of the waivers and
consents as are required (or reasonably requested by the Investor) with respect to the issuance of the Note, the Shares and the
Conversion Stock and the transactions contemplated by this Agreement.
No litigation, arbitration, action, suit, claim, demand, proceeding or investigation (whether conducted by or before any judicial
or regulatory body, arbitrator, commission or other person) is pending or, to the Company's knowledge, threatened, against the
Company, which questions the validity of this Agreement, the Note or the Shares, nor is there any basis therefor known to the Company.
and Warranties of the Investor. The Investor represents and warrants as follows:
(a) The Investor
confirms that it has full power and authority and has taken all required action necessary to permit it to execute and deliver and
to carry out the terms of this Agreement and all other documents or instruments required hereby.
(b) The Investor
represents that it is its present intention to acquire the Note and Shares for its own account and that the Note, the Shares, and
the Conversion Stock (together, the "Securities") are being or will be acquired by it for the purpose of investment and
not with a view to distribution. The Investor agrees that it will not sell or transfer any of the Securities without registration
under applicable federal and state securities laws, or the availability of exemptions therefrom. The Investor agrees that the documents
evidencing the Securities will each bear a restrictive legend stating that the Securities represented thereby have not been registered
under applicable federal and state securities laws and referring to restrictions on their transferability and sale.
Investor acknowledges that it currently has, and had immediately prior to its receipt of the offer of sale from the Company, such
knowledge and experience in financial and business matters that it is capable of evaluating the merits and risks of this investment
and further acknowledges that it is able to bear the economic risk of this investment. During the course of this transaction and
prior to the sale to the Investor of the Note and Shares hereunder, the Investor acknowledges that it has had the opportunity to
ask questions of, and receive answers from, management of the Company concerning the terms and conditions of this investment and
to obtain any additional information of the same kind that is specified in Rule 502 of Regulation D of the Securities Act, or that
is necessary to verify the accuracy of the other information obtained. The Investor acknowledges that it has received such information
as it deems necessary to enable it to make its investment decision.
Investor represents that it is an "accredited investor" as defined by the rules and regulations of the Securities
and Exchange Commission pursuant to the Securities Act.
to the Parties' Obligations.
(a) The obligations
of the Investor to consummate the transactions contemplated hereby are subject to the satisfaction or written waiver by the Investor,
on or before the Closing Date, of each of the following conditions:
(i) The Company shall caused its subsidiaries
to execute and deliver a Subsidiary Guaranty, in form and substance acceptable to the Investor.
(ii) The Company shall caused its subsidiaries
to execute and deliver a Lockbox Agreement, in form and substance acceptable to the Investor.
Waivers, Etc. Neither this Agreement nor the Note, nor any term or provision hereof or thereof, may be amended, waived, discharged
or terminated unless by a written instrument signed by the Company and the Investor.
of Law. It is the intention of the parties that the internal laws, and not the laws of conflicts, of the Commonwealth of Massachusetts
should govern the enforceability and validity of this Agreement, the construction of its terms and the interpretation of the rights
and duties of the parties pursuant to the relationships among them contemplated herein, whether or not such rights and duties arise
directly under this Agreement. The parties to this Agreement submit themselves to the jurisdiction of courts located in the Commonwealth
12. Legal Fees.
The Company agrees to pay the reasonably substantiated fees and expenses incurred by counsel to the Investor in connection with
the transactions contemplated herein.
in Interest. The terms and provisions of this Agreement shall be binding upon and inure to the benefit of, and be enforceable
by, the respective successors and assigns of the parties hereto. This Agreement shall not run to the benefit of or be enforceable
by any person other than a party to this Agreement and its successors and assigns.
of Representations and Warranties. All representations and warranties made in this Agreement and the Note and any other instrument
or document delivered in connection herewith or therewith, shall survive the execution and delivery hereof or thereof.
The invalidity or unenforceability of any provision hereof shall in no way affect the validity or enforceability of any other provision.
The headings of the sections and paragraphs of this Agreement have been inserted for convenience and reference only and do not
constitute a part of this Agreement.
All notices, requests, demands and other communications provided for hereunder shall be in writing (including telegraphic or facsimile
communication) and mailed, telegraphed, faxed or delivered:
If to the Investor:
Peter S. Johnson, Esq. as Trustee
of the Magliochetti Family 2009 Trust DTD 1/12/09
c/o Nixon Peabody
100 Summer Street
a copy to:
Peabody LLP 100 Summer Street
Boston, Massachusetts 02110
Christopher P. Keefe, Esq.
If to the Company: to the address set forth
below, or to such other address as shall be designated by the Company in a written notice to the other parties complying as to
delivery with the terms hereof:
99 Rosewood Drive, Suite 280 Danvers, MA 01923
Chief Executive Officer
a copy to:
The Lang Legal Group LLC
1800 Century Place, Suite 570
Atlanta, Georgia 30345
Eric Lang, Esq.
Fax: (404) 320-0908
notices, requests, demands and other communications shall, when mailed (registered mail, return receipt requested, postage prepaid),
telegraphed or faxed, be effective when deposited in the mails, delivered to the telegraph company or upon acknowledgment by the
receiving telecopier, respectively, addressed as aforesaid, unless otherwise provided herein.
Agreements. This Agreement constitutes the entire agreement between the parties and supersedes any other prior understandings
or agreements concerning the subject matter hereof.
This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, with the
same effect as if all parties had signed the same document. All such counterparts shall be deemed an original, shall be construed
together and shall constitute one and the same instrument. Counterparts delivered electronically or by facsimile shall be considered
Adjustments. Notwithstanding anything contained herein, all references herein to per share amounts, including number of shares
and price per share of a certain class or series of stock, whether in a dollar ($) amount or otherwise (e.g., "original issue
price" or "lowest price per share"), shall be subject to proportionate adjustment in the case of recapitalization,
stock splits, stock dividends and combinations affecting such class or series of stock.
[Remainder of Page Intentionally Left Blank]
IN WITNESS WHEREOF, the undersigned have executed this
Secured Promissory Note and Convertible Preferred Stock Purchase Agreement as of the date first above written.
||URBAN AG. CORP.|
||PETER S. JOHNSON, ESQ., AS TRUSTEE OF THE MAGLIOCHETTI FAMILY 2009 TRUST DTD 1/12/09|