SECURITIES PURCHASE AGREEMENT
Securities
Purchase Agreement dated as of August 30, 2007 (this
“Agreement”) by and between Platina Energy Group, Inc., a
Delaware corporation, with principal executive offices located at 0000 Xxxxxxx
Xxxxxx, Xxxxx 000-X, Xxxxxxxx, Xxxxxxx, 00000 (the “Company”),
and La Jolla Cove Investors, Inc. (“Holder”).
WHEREAS,
Holder desires to purchase from the Company, and the Company desires to issue
and sell to Holder, upon the terms and subject to the conditions of this
Agreement, a Convertible
Debenture of the Company in the aggregate principal amount of $300,000 (the
“Debenture”);
WHEREAS,
in conjunction with the Debenture, the Company is to issue a Warrant to Purchase
Common Stock to the Holder (the “Warrant” or the
“Conversion Warrant”); and
WHEREAS,
upon the terms and subject to the conditions set forth in the Debenture and
the
Warrant, the Debenture and Warrant are convertible and exercisable,
respectively, into shares of the Company’s Common Stock (the “Common
Stock”).
NOW,
THEREFORE, in consideration of the premises and the mutual covenants contained
herein, the parties hereto, intending to be legally bound, hereby agree as
follows:
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I.
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PURCHASE
AND SALE OF DEBENTURE
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A. Transaction. Holder
hereby agrees to purchase from the Company, and the Company has offered and
hereby agrees to issue and sell to Holder in a transaction exempt from the
registration and prospectus delivery requirements of the Securities Act of
1933,
as amended (the “Securities Act”), the Debenture.
B. Purchase
Price; Form of Payment. The purchase price for the Debenture
to be purchased by Holder hereunder shall be $300,000 (the “Purchase
Price”). Simultaneously with the execution of this
Agreement, Holder shall pay the Purchase Price by wire transfer of immediately
available funds to the Company. Simultaneously with the execution of
this Agreement, the Company shall deliver the Debenture and the Warrant (which
shall have been duly authorized, issued and executed I/N/O Holder or, if the
Company otherwise has been notified, I/N/O Holder’s nominee).
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II.
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HOLDER’S
REPRESENTATIONS AND
WARRANTIES
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Holder
represents and warrants to and covenants and agrees with the Company as
follows:
1. Holder
is
purchasing the Debenture and the Common Stock issuable upon conversion or
redemption of the Debenture (the “Conversion Shares” and,
collectively with the Debenture, the Warrant and the Warrant Shares (as defined
below), the “Securities”) for its own account, for investment
purposes only and not with a view towards or in connection with the public
sale
or distribution thereof in violation of the Securities Act. The
“Warrant Shares” as referred to herein means the Common Stock
issuable upon exercise of the Warrant.
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2. Holder
is
(i) an “accredited investor” within the meaning of Rule 501 of Regulation D
under the Securities Act, (ii) experienced in making investments of the kind
contemplated by this Agreement, (iii) capable, by reason of its business and
financial experience, of evaluating the relative merits and risks of an
investment in the Securities, and (iv) able to afford the loss of its investment
in the Securities.
3. Holder
understands that the Securities are being offered and sold by the Company in
reliance on an exemption from the registration requirements of the Securities
Act and equivalent state securities and “blue sky” laws, and that the Company is
relying upon the accuracy of, and Holder’s compliance with, Holder’s
representations, warranties and covenants set forth in this Agreement to
determine the availability of such exemption and the eligibility of Holder
to
purchase the Securities;
4. Holder
understands that the Securities have not been approved or disapproved by the
Securities and Exchange Commission (the “Commission”) or any
state or provincial securities commission.
5. This
Agreement has been duly and validly authorized, executed and delivered by Holder
and is a valid and binding agreement of Holder enforceable against it in
accordance with its terms, subject to applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and similar laws affecting
creditors’ rights and remedies generally and except as rights to indemnity and
contribution may be limited by federal or state securities laws or the public
policy underlying such laws.
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III.
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THE
COMPANY’S REPRESENTATIONS
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The
Company represents and warrants as of the date hereof to the Holder that, except
as set forth on Schedule III attached hereto, the statements contained in this
Section 3 are complete and accurate as of the date of this
Agreement. As used in this Section 3, the term “Knowledge” shall mean
the knowledge of the members of the board of directors of the Company and/or
the
officers or employees of the Company after reasonable
investigation.
A. Capitalization.
1. The
authorized capital stock of the Company consists of 100,000,000 shares of Common
Stock, 70,000 shares of Series A Preferred Stock, 100,000 shares of Series
B
Preferred Stock, and 10,000 shares of Series C Preferred Stock, of which
40,539,158 shares, 61,091 shares (610,910 shares of Common Stock upon
conversion), 96,464 shares (9,646,400 shares of Common Stock upon conversion)
and 3,600 shares (360,000 shares of Common Stock upon conversion), respectively,
are issued and outstanding as of the date hereof and are fully paid and
nonassessable. The amount, exercise, conversion or subscription price
and expiration date for each outstanding option and other security or agreement
to purchase shares of Common Stock is accurately set forth on Schedule
III.A.1.
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2. The
Conversion Shares and the Warrant Shares have been duly and validly authorized
and reserved for issuance by the Company, and, when issued by the Company upon
conversion of the Debenture, will be duly and validly issued, fully paid and
nonassessable and will not subject the holder thereof to personal liability
by
reason of being such holder.
3. Except
as
disclosed on Schedule III.A.3., there are no preemptive,
subscription, “call,” right of first refusal or other similar rights to acquire
any capital stock of the Company or other voting securities of the Company
that
have been issued or granted to any person and no other obligations of the
Company to issue, grant, extend or enter into any security, option, warrant,
“call,” right, commitment, agreement, arrangement or undertaking with respect to
any of their respective capital stock.
B. Organization;
Reporting Company Status.
1. The
Company is a corporation duly organized, validly existing and in good standing
under the laws of the state or jurisdiction in which it is incorporated and
is
duly qualified as a foreign corporation in all jurisdictions in which the
failure so to qualify would reasonably be expected to have a material adverse
effect on the business, properties, prospects, condition (financial or
otherwise) or results of operations of the Company or on the consummation of
any
of the transactions contemplated by this Agreement (a “Material Adverse
Effect”).
2. The
Company is subject to the reporting requirements of the Securities Exchange
Act
of 1934, as amended (the “Exchange Act”). The Common
Stock is traded on the OTC Bulletin Board service of the National Association
of
Securities Dealers, Inc. (“OTCBB”) and the Company has not
received any notice regarding, and to its Knowledge there is no threat of,
the
termination or discontinuance of the eligibility of the Common Stock for such
trading.
C. Authorization. The
Company (i) has duly and validly authorized and reserved for issuance shares
of
Common Stock, which is a number sufficient for the conversion of the Debenture
and the exercise of the Warrant and (ii) at all times from and after the date
hereof shall have a sufficient number of shares of Common Stock duly and validly
authorized and reserved for issuance to satisfy the conversion of the Debenture
in full and the exercise of the Warrant. The Company understands and
acknowledges the potentially dilutive effect on the Common Stock of the issuance
of the Conversion Shares and the Warrant Shares. The Company further
acknowledges that its obligation to issue Conversion Shares upon conversion
of
the Debenture and the exercise of the Warrant in accordance with this Agreement
is absolute and unconditional regardless of the dilutive effect that such
issuance may have on the ownership interests of other stockholders of the
Company and notwithstanding the commencement of any case under 11 U.S.C.
§ 101 et seq. (the “Bankruptcy
Code”). In the event the Company is a debtor under the
Bankruptcy Code, the Company hereby waives to the fullest extent permitted
any
rights to relief it may have under 11 U.S.C. § 362 in respect of the
conversion of the Debenture. The Company agrees, without cost or
expense to Holder, to take or consent to any and all action necessary to
effectuate relief under 11 U.S.C. § 362.
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D. Authority;
Validity and Enforceability. The Company has the requisite
corporate power and authority to enter into the Documents (as such term is
hereinafter defined) and to perform all of its obligations hereunder and
thereunder (including the issuance, sale and delivery to Holder of the
Securities). The execution, delivery and performance by the Company
of the Documents and the consummation by the Company of the transactions
contemplated hereby and thereby (including, without limitation, the issuance
of
the Debenture and the issuance and reservation for issuance of the Conversion
Shares) have been duly and validly authorized by all necessary corporate action
on the part of the Company. Each of the Documents has been duly and
validly executed and delivered by the Company and each Document constitutes
a
valid and binding obligation of the Company enforceable against it in accordance
with its terms, subject to applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and similar laws affecting creditors’
rights and remedies generally and except as rights to indemnity and contribution
may be limited by federal or state securities laws or the public policy
underlying such laws. The Securities have been duly and validly
authorized for issuance by the Company and, when executed and delivered by
the
Company, will be valid and binding obligations of the Company enforceable
against it in accordance with their respective terms, subject to applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
similar laws affecting creditors’ rights and remedies generally. For
purposes of this Agreement, the term “Documents” means (i) this
Agreement; (ii) the Debenture; and (iii) the Warrant.
E. Validity
of Issuance of the Securities. The Debenture, the Conversion
Shares upon their issuance in accordance with the Debenture, the Warrant and
the
Warrant Shares upon their issuance in accordance with the Warrant will be
validly issued and outstanding, fully paid and nonassessable, and not subject
to
any preemptive rights, rights of first refusal, tag-along rights, drag-along
rights or other similar rights.
F. Non-contravention. The
execution and delivery by the Company of the Documents, the issuance of the
Securities, and the consummation by the Company of the other transactions
contemplated hereby and thereby do not, and compliance with the provisions
of
this Agreement and other Documents will not, conflict with, or result in any
violation of, or default (with or without notice or lapse of time, or both)
under, or give rise to a right of termination, cancellation or acceleration
of
any obligation or loss of a material benefit under, or result in the creation
of
any Lien (as such term is hereinafter defined) upon any of the properties or
assets of the Company or any of its Subsidiaries under, or result in the
termination of, or require that any consent be obtained or any notice be given
with respect to (i) the Articles or Certificate of Incorporation or By-Laws
of
the Company or the comparable charter or organizational documents of any of
its
Subsidiaries, in each case as amended to the date of this Agreement, (ii) any
loan or credit agreement, debenture, bond, mortgage, indenture, lease, contract
or other agreement, instrument or permit applicable to the Company or any of
its
Subsidiaries or their respective properties or assets or (iii) any statute,
law,
rule or regulation applicable to, or any judgment, decree or order of any court
or government body having jurisdiction over, the Company or any of its
Subsidiaries or any of their respective properties or assets. A
“Lien” means any assignment, transfer, pledge, mortgage,
security interest or other encumbrance of any
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nature,
or an agreement to do so, or the ownership or acquisition or agreement to
acquire any asset or property of any character subject to any of the foregoing
encumbrances (including any conditional sale contract or other title retention
agreement).
G. Approvals. No
authorization, approval or consent of any court or public or governmental
authority is required to be obtained by the Company for the issuance and sale
of
the Securities to Holder as contemplated by this Agreement, except such
authorizations, approvals and consents as have been obtained by the Company
prior to the date hereof.
H. Commission
Filings. The Company has properly and timely filed with the
Commission all reports, proxy statements, forms and other documents required
to
be filed with the Commission under the Securities Act and the Exchange Act
since
becoming subject to such Acts (the “Commission
Filings”). As of their respective dates, (i) the Commission
Filings complied in all material respects with the requirements of the
Securities Act or the Exchange Act, as the case may be, and the rules and
regulations of the Commission promulgated thereunder applicable to such
Commission Filings and (ii) none of the Commission Filings contained at the
time
of its filing 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 Commission Filings, as of the dates of such documents, were true and
complete in all material respects and complied with applicable accounting
requirements and the published rules and regulations of the Commission with
respect thereto, were prepared in accordance with generally accepted accounting
principles in the United States (“GAAP”) (except in the case of
unaudited statements permitted by Form 10-QSB under the Exchange Act) applied
on
a consistent basis during the periods involved (except as may be indicated
in
the notes thereto) and fairly presented the consolidated financial position
of
the Company and its Subsidiaries as of the dates thereof and the consolidated
results of their operations and cash flows for the periods then ended (subject,
in the case of unaudited statements, to normal year-end audit adjustments that
in the aggregate are not material and to any other adjustment described
therein).
I. Full
Disclosure. There is no fact known to the Company (other
than general economic or industry conditions known to the public generally)
that
has not been fully disclosed in the Commission Filings that (i) reasonably
could
be expected to have a Material Adverse Effect or (ii) reasonably could be
expected to materially and adversely affect the ability of the Company to
perform its obligations pursuant to the Documents.
J. Absence
of Events of Default. No “Event of Default”
(as defined in any agreement or instrument to which
the Company is a party) and
no event which, with notice, lapse of time or both, would constitute an Event
of
Default (as so defined), has occurred and is continuing.
K. Securities
Law Matters. Assuming the accuracy of the representations
and warranties of Holder set forth in Article II, the offer and sale by the
Company of the Securities is exempt from (i) the registration and prospectus
delivery requirements of the Securities Act and the rules and regulations of
the
Commission thereunder and (ii) the registration and/or
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qualification
provisions of all applicable state and provincial securities and “blue sky”
laws. The Company shall not directly or indirectly take, and shall
not permit any of its directors, officers or Affiliates directly or indirectly
to take, any action (including, without limitation, any offering or sale to
any
person or entity of any security similar to the Debenture) which will make
unavailable the exemption from Securities Act registration being relied upon
by
the Company for the offer and sale to Holder of the Debenture, the Conversion
Shares, the Warrant and the Warrant Shares as contemplated by this
Agreement. No form of general solicitation or advertising has been
used or authorized by the Company or any of its officers, directors or
Affiliates in connection with the offer or sale of the Debenture (and the
Conversion Shares) and/or the Warrant (and the Warrant Shares) as contemplated
by this Agreement or any other agreement to which the Company is a
party. As used in the Documents, “Affiliate” has the
meaning ascribed to such term in Rule 12b-2 under the Exchange Act.
L. Registration
Rights. Except as set forth on Schedule III.L.,
no Person has, and as of the Closing (as such term is hereinafter defined),
no
Person shall have, any demand, “piggy-back” or other rights to cause the Company
to file any registration statement under the Securities Act relating to any
of
its securities or to participate in any such registration
statement.
M. Interest. The
timely payment of interest on the Debenture is not prohibited by the Articles
or
Certificate of Incorporation or By-Laws of the Company, in each case as amended
to the date of this Agreement, or any agreement, contract, document or other
undertaking to which the Company is a party.
N. No
Misrepresentation. No representation or warranty of the
Company contained in this Agreement or any of the other Documents, any schedule,
annex or exhibit hereto or thereto or any agreement, instrument or certificate
furnished by the Company to Holder pursuant to this Agreement contains any
untrue statement of a material fact or omits to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading.
O. Finder’s
Fee. There is no finder’s fee, brokerage commission or like
payment in connection with the transactions contemplated by this Agreement
for
which Holder is liable or responsible.
P. Subsidiaries. Other
than the Subsidiaries, the Company does not presently own or control, directly
or indirectly, any interest in any other corporation, association, or other
business entity. The Company is not a participant in any joint
venture, partnership, or similar arrangement.
Q. Litigation. Other
than as disclosed in the Commission Filings, there is no action, suit,
proceeding or investigation pending or, to the Company’s knowledge, currently
threatened against the Company or its Subsidiaries that questions the validity
of this Agreement, the Documents, or the right of the Company to enter into
such
agreements, or to consummate the transactions contemplated hereby or thereby,
or
that might result, either individually or in the aggregate, in any material
adverse changes in the business, assets or condition of the Company and its
Subsidiaries, taken as a whole, financially or otherwise, or any change in
the
current equity ownership of the Company or its Subsidiaries. Neither
the Company nor its Subsidiaries
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are
parties or subject to the provisions of any order, writ, injunction, judgment
or
decree of any court or government agency or instrumentality. There is
no action, suit, proceeding or investigation by the Company or its Subsidiaries
currently pending or that the Company or its Subsidiaries intends to
initiate.
R. Agreements. Except
for agreements explicitly contemplated hereby, or disclosed in the Commission
Filings, there are no agreements, understandings or proposed transactions
between the Company and any of its officers, directors, Affiliates, or any
affiliate thereof.
S. Tax
Returns. The Company and each of its Subsidiaries has made
and filed all federal and state income and all other tax returns, reports and
declarations required by any jurisdiction to which it is subject and (unless
and
only to the extent that the Company and each of its Subsidiaries has set aside
on its books provisions reasonably adequate for the payment of all unpaid and
unreported taxes) has paid all taxes and other governmental assessments and
charges that are material in amount, shown or determined to be due on such
returns, reports and declarations, except those being contested in good faith
and has set aside on its books provision reasonably adequate for the payment
of
all taxes for periods subsequent to the periods to which such returns, reports
or declarations apply. There are no unpaid taxes in any material amount claimed
to be due by the taxing authority of any jurisdiction, and the officers of
the
Company know of no basis for any such claim.
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IV.
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CERTAIN
COVENANTS AND
ACKNOWLEDGMENTS
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A. Filings. The
Company shall make all necessary Commission Filings and “blue sky” filings
required to be made by the Company in connection with the sale of the Securities
to Holder as required by all applicable laws, and shall provide a copy thereof
to Holder promptly after such filing.
B. Reporting
Status. So long as Holder beneficially owns any of the
Securities, the Company shall timely file all reports required to be filed
by it
with the Commission pursuant to Section 13 or 15(d) of the Exchange
Act.
C. Listing. Except
to the extent the Company lists its Common Stock on The New York Stock Exchange,
The American Stock Exchange or The Nasdaq Stock Market, the Company shall use
its best efforts to maintain its listing of the Common Stock on
OTCBB. If the Common Stock is delisted from OTCBB, the Company will
use its best efforts to list the Common Stock on the most liquid national
securities exchange or quotation system that the Common Stock is qualified
to be
listed on.
D. Reserved
Conversion Common Stock. The Company at all times from and
after the date hereof shall have such number of shares of Common Stock duly
and
validly authorized and reserved for issuance as shall be sufficient for the
conversion in full of the Debenture and the exercise in full of the
Warrant.
E. Information. Each
of the parties hereto acknowledges and agrees that Holder shall not be provided
with, nor be given access to, any material non-public information relating
to
the Company.
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F. Accounting
and Reserves. The Company shall maintain a standard and
uniform system of accounting and shall keep proper books and records and
accounts in which full, true, and correct entries shall be made of its
transactions, all in accordance with GAAP applied on consistent basis through
all periods, and shall set aside on such books for each fiscal year all such
reserves for depreciation, obsolescence, amortization, bad debts and other
purposes in connection with its operations as are required by such principles
so
applied.
G. Transactions
with Affiliates. So long as the Debenture is outstanding,
neither the Company nor any of its Subsidiaries shall, directly or indirectly,
enter into any material transaction or agreement with any stockholder, officer,
director or Affiliate of the Company or family member of any officer, director
or Affiliate of the Company, unless the transaction or agreement is
(i) reviewed and approved by a majority of Disinterested Directors (as such
term is hereinafter defined) and (ii) on terms no less favorable to the
Company or the applicable Subsidiary than those obtainable from a nonaffiliated
person. A “Subsidiary” means any entity of which
securities or other ownership interests having ordinary voting power to elect
a
majority of the board of directors or other persons performing similar functions
are owned directly or indirectly by the Company. A
“Disinterested Director” shall mean a director of the Company
who is not and has not been an officer or employee of the Company and who is
not
a member of the family of, controlled by or under common control with, any
such
officer or employee.
H. Certain
Restrictions. So long as the Debenture is outstanding, no
dividends shall be declared or paid or set apart for payment nor shall any
other
distribution be declared or made upon any capital stock of the Company, nor
shall any capital stock of the Company be redeemed, purchased or otherwise
acquired (other than a redemption, purchase or other acquisition of shares
of
Common Stock made for purposes of an employee incentive or benefit plan
(including a stock option plan) of the Company or pursuant to any of the
security agreements listed on Schedule IV.H) for any consideration by the
Company, directly or indirectly, nor shall any moneys be paid to or made
available for a sinking fund for the redemption of any Common
Stock.
I. Short
Selling. So
long as the Debenture is outstanding, Holder agrees and covenants on its behalf
and on behalf of its affiliates that neither Holder nor its affiliates shall
at
any time engage in any short sales with respect to the Company’s Common Stock,
or sell put options or similar instruments with respect to the Company’s Common
Stock. The parties acknowledge that Holder shall be entitled to sell the Common
Stock from each Debenture conversion immediately upon submission of the
applicable Debenture Conversion Notice, and payment of the purchase price,
to
the Company for such Common Stock.
J. Use
of Proceeds. The Company shall not use any portion of the
Purchase Price received by the Company to satisfy or otherwise deliver any
payment in connection with any outstanding or accrued compensation obligations
or liabilities of the Company that exist as of the date hereof. If
the Company shall breach the covenant set forth in this Section IV.J. through
the use of any portion of the Purchase Price to satisfy or otherwise deliver
any
payment in connection with any outstanding or accrued compensation obligations
or liabilities of the
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Company
that exist as of the date hereof, then the Company shall pay to Holder, in
cash,
as liquidated damages and not as a penalty, an amount equal to
$300,000. Any such liquidated damages shall be due to Holder within
ten days of the occurrence of the event that gave rise to the imposition of
such
liquidated damages. Nothing herein shall limit a Holder's right to
pursue actual damages or declare an Event of Default under the Debenture or
this
Agreement and Holder shall have the right to pursue all remedies available
to it
hereunder, at law or in equity including, without limitation, a decree of
specific performance and/or injunctive relief. The exercise of any
such rights shall not prohibit Holder from seeking to enforce damages pursuant
to any other Section hereof or under applicable law.
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V.
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ISSUANCE
OF COMMON STOCK
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A. The
Company undertakes and agrees that no instruction other than the instructions
referred to in this Article V shall be given to its transfer agent for the
Conversion Shares and the Warrant Shares and that the Conversion Shares and
the
Warrant Shares shall otherwise be freely transferable on the books and records
of the Company as and to the extent provided in this Agreement and applicable
law. Nothing contained in this Section V.A. shall affect in any way
Holder’s obligations and agreement to comply with all applicable securities laws
upon resale of such Common Stock.
X. Xxxxxx
shall have the right to convert the Debenture and exercise the Warrant by
telecopying an executed and completed Conversion Notice (as such term is defined
in the Debenture) or Warrant Notice of Exercise (as such term is defined in
the
Warrant) to the Company. Each date on which a Conversion Notice or
Warrant Notice of Exercise is telecopied to and received by the Company in
accordance with the provisions hereof shall be deemed a Conversion Date (as
such
term is defined in the Debenture). The Company shall cause the
transfer agent to transmit the certificates evidencing the Common Stock issuable
upon conversion of the Debenture (together with a new debenture, if any,
representing the principal amount of the Debenture not being so converted)
or
exercise of the Warrant (together with a new Warrant, if any, representing
the
amount of the Warrant not being so exercised) to Holder via express courier,
or
if a Registration Statement covering the Common Stock has been declared
effective by the SEC by electronic transfer, within two (2) business days after
receipt by the Company of the Conversion Notice or Warrant Notice of Exercise,
as applicable (the “Delivery Date”).
C. Upon
the
conversion of the Debenture or exercise of the Warrant or respective part
thereof, the Company shall, at its own cost and expense, take all necessary
action (including the issuance of an opinion of counsel) to assure that the
Company's transfer agent shall issue stock certificates in the name of Holder
(or its nominee) or such other persons as designated by Holder and in such
denominations to be specified at conversion or exercise representing the number
of shares of common stock issuable upon such conversion or exercise. The Company
warrants that the Conversion Shares and Warrant Shares will be unlegended,
free-trading, and freely transferable, and will not contain a legend restricting
the resale or transferability of the Company Common Stock provided the
Conversion Shares and Warrant Shares, as applicable, are being sold pursuant
to
an effective registration statement covering the Common Stock to be sold or
is
otherwise exempt from registration when sold.
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D. The
Company understands that a delay in the delivery of the Common Stock in the
form
required pursuant to this section, or the Mandatory Redemption Amount described
in Section E hereof, beyond the Delivery Date or Mandatory Redemption Payment
Date (as hereinafter defined) could result in economic loss to the Holder.
As
compensation to the Holder for such loss, the Company agrees to pay late
payments to the Holder for late issuance of Common Stock in the form required
pursuant to Section E hereof upon Conversion of the Debenture or late payment
of
the Mandatory Redemption Amount, in the amount of $100 per business day after
the Delivery Date or Mandatory Redemption Payment Date, as the case may be,
for
each $10,000 of Debenture principal amount being converted or redeemed. The
Company shall pay any payments incurred under this Section in immediately
available funds upon demand. Furthermore, in addition to any other remedies
which may be available to the Holder, in the event that the Company fails for
any reason to effect delivery of the Common Stock by the Delivery Date or make
payment by the Mandatory Redemption Payment Date, the Holder will be entitled
to
revoke all or part of the relevant Notice of Conversion or rescind all or part
of the notice of Mandatory Redemption by delivery of a notice to such effect
to
the Company whereupon the Company and the Holder shall each be restored to
their
respective positions immediately prior to the delivery of such notice, except
that late payment charges described above shall be payable through the date
notice of revocation or rescission is given to the Company.
E. Mandatory
Redemption. In the event the Company is prohibited from issuing Common
Stock, or fails to timely deliver Common Stock on a Delivery Date, or upon
the
occurrence of an Event of Default (as defined in the Debenture) or for any
reason other than pursuant to the limitations set forth herein, then at the
Holder's election, the Company must pay to the Holder ten (10) business days
after request by the Holder or on the Delivery Date (if requested by the Holder)
a sum of money determined by multiplying up to the outstanding principal amount
of the Debenture designated by the Holder by 120%, together with accrued but
unpaid interest thereon ("Mandatory Redemption Payment"). The Mandatory
Redemption Payment must be received by the Holder on the same date as the
Company Common Stock otherwise deliverable or within ten (10) business days
after request, whichever is sooner ("Mandatory Redemption Payment
Date"). Upon receipt of the Mandatory Redemption Payment, the
corresponding Debenture principal and interest will be deemed paid and no longer
outstanding.
F. Buy-In.
In addition to any other rights available to the Holder, if the Company fails
to
deliver to the Holder such Common Stock issuable upon conversion of a Debenture
or exercise of a Warrant by the Delivery Date and if ten (10) days after the
Delivery Date the Holder purchases (in an open market transaction or otherwise)
shares of Common Stock to deliver in satisfaction of a sale by the Holder of
the
Common Stock which the Holder anticipated receiving upon such conversion (a
"Buy-In"), then the Company shall pay in cash to the Holder (in
addition to any remedies available to or elected by the Holder) the amount
by
which (A) the Holder's total purchase price (including brokerage commissions,
if
any) for the shares of Common Stock so purchased exceeds (B) the aggregate
principal and/or interest amount of the Debenture or exercise price of the
Warrant for which such conversion or exercise was not timely
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honored,
together with interest thereon at a rate of 15% per annum, accruing until such
amount and any accrued interest thereon is paid in full (which amount shall
be
paid as liquidated damages and not as a penalty). For example, if the Holder
purchases shares of Common Stock having a total purchase price of $11,000 to
cover a Buy-In with respect to an attempted conversion of $10,000 of Debenture
principal and/or interest or the exercise of $10,000 of Warrant Shares, the
Company shall be required to pay the Holder $1,000, plus interest. The Holder
shall provide the Company written notice indicating the amounts payable to
the
Holder in respect of the Buy-In.
G. The
Securities shall be delivered by the Company to the Holder pursuant to Section
I.B. hereof on a “delivery-against-payment basis” at the Closing.
H. Redemption
by the Company. Notwithstanding any other provision in this
Article V, otherwise in this Agreement or in the Debenture, at any time during
the period that commences on the Closing Date and terminates on the six month
anniversary of the Closing Date, the Company shall have the right to prepay
all
remaining outstanding principal and accrued and unpaid interest by paying an
amount equal to one hundred twenty percent (120%) of such outstanding principal
and accrued and unpaid interest (the “Prepayment
Amount”). To affect this redemption by the Company, the
Company shall provide the Holder with ten (10) days prior written notice of
such
redemption and upon receipt of such notice, the right of Conversion by the
Holder shall terminate unless the Holder fails to receive the Prepayment Amount
prior to the date that is twelve (12) days from the date of Holder’s receipt of
notice of such redemption.
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VI.
|
CLOSING
DATE
|
The
“Closing” shall occur by the delivery: (i) to the Holder of the
documents evidencing the Debenture and all other Documents, and (ii) to the
Company the Purchase Price, and the date on which the Closing occurs shall
be
referred to herein as the “Closing Date”.
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VII.
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CONDITIONS
TO THE COMPANY’S
OBLIGATIONS
|
Holder
understands that the Company’s obligation to sell the Debenture on the Closing
Date to Holder pursuant to this Agreement is conditioned upon:
A. Delivery
by Holder to the Company of the Purchase Price;
B. The
accuracy on the Closing Date of the representations and warranties of Holder
contained in this Agreement as if made on the Closing Date (except for
representations and warranties which, by their express terms, speak as of and
relate to a specified date, in which case such accuracy shall be measured as
of
such specified date) and the performance by Holder in all material respects
on
or before the Closing Date of all covenants and agreements of Holder required
to
be performed by it pursuant to this Agreement on or before the Closing Date;
and
C. There
shall not be in effect any law or order, ruling, judgment or writ of any court
or public or governmental authority restraining, enjoining or otherwise
prohibiting any of the transactions contemplated by this
Agreement.
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VIII.
|
CONDITIONS
TO HOLDER’S OBLIGATIONS
|
The
Company understands that Holder’s obligation to purchase the Securities on the
Closing Date pursuant to this Agreement is conditioned upon:
A. Delivery
by the Company of the Debenture and the Warrant (I/N/O Holder or I/N/O Holder’s
nominee);
B. The
accuracy on the Closing Date of the representations and warranties of the
Company contained in this Agreement as if made on the Closing Date (except
for
representations and warranties which, by their express terms, speak as of and
relate to a specified date, in which case such accuracy shall be measured as
of
such specified date) and the performance by the Company in all respects on
or
before the Closing Date of all covenants and agreements of the Company required
to be performed by it pursuant to this Agreement on or before the Closing Date,
all of which shall be confirmed to Holder by delivery of the certificate of
the
chief executive officer of the Company to that effect;
C. The
Company shall have delivered to the Holder a certificate of the Company executed
by an officer of the Company, dated as of the Closing, certifying
the resolutions adopted by the Company’s board of directors authorizing the
execution of the Documents, the issuance of the Securities, and the transactions
contemplated hereby, and copies of any required third party consents, approvals
and filings required in connection with the consummation of the transactions
contemplated by this Agreement;
D. There
not
having occurred (i) any general suspension of trading in, or limitation on
prices listed for, the Common Stock on the OTCBB/Pink Sheet, (ii) the
declaration of a banking moratorium or any suspension of payments in respect
of
banks in the United States, (iii) the commencement of a war, armed hostilities
or other international or national calamity directly or indirectly involving
the
United States or any of its territories, protectorates or possessions or
(iv) in the case of the foregoing existing at the date of this Agreement, a
material acceleration or worsening thereof;
E. There
not
having occurred any event or development, and there being in existence no
condition, having or which reasonably and foreseeably could have a Material
Adverse Effect;
F. There
shall not be in effect any law, order, ruling, judgment or writ of any court
or
public or governmental authority restraining, enjoining or otherwise prohibiting
any of the transactions contemplated by this Agreement;
F. The
Company shall have obtained all consents, approvals or waivers from governmental
authorities and third persons necessary for the execution, delivery and
performance of the Documents and the transactions contemplated thereby, all
without material cost to the Company;
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X. Xxxxxx
shall have received such additional documents, certificates, payment,
assignments, transfers and other deliveries as it or its legal counsel may
reasonably request and as are customary to effect a closing of the matters
herein contemplated;
H. Delivery
by the Company of an enforceability opinion with respect to this Agreement
and
the transactions contemplated hereunder from its outside counsel in form and
substance satisfactory to Holder; and
I. Delivery
by the Company of a valid waiver of any preemptive rights held by the
individuals and/or parties listed on Schedule III.A.3 hereto in form and
substance satisfactory to Holder.
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IX.
|
SURVIVAL;
INDEMNIFICATION
|
A. The
representations, warranties and covenants made by each of the Company and Holder
in this Agreement, the annexes, schedules and exhibits hereto and in each
instrument, agreement and certificate entered into and delivered by them
pursuant to this Agreement shall survive the Closing and the consummation of
the
transactions contemplated hereby. In the event of a breach or
violation of any of such representations, warranties or covenants, the party
to
whom such representations, warranties or covenants have been made shall have
all
rights and remedies for such breach or violation available to it under the
provisions of this Agreement or otherwise, whether at law or in equity,
irrespective of any investigation made by or on behalf of such party on or
prior
to the Closing Date.
B. The
Company hereby agrees to indemnify and hold harmless Holder, its affiliates
and
their respective officers, directors, employees, consultants, partners and
members (collectively, the “Holder Indemnitees”) from and
against any and all losses, claims, damages, judgments, penalties, liabilities
and deficiencies (collectively, “Losses”) and agrees to
reimburse Holder Indemnitees for all reasonable out-of-pocket expenses
(including the reasonable fees and expenses of legal counsel), in each case
promptly as incurred by Holder Indemnitees and to the extent arising out of
or
in connection with:
1. any
misrepresentation, omission of fact or breach of any of the Company’s
representations or warranties contained in this Agreement or the other
Documents, or the annexes, schedules or exhibits hereto or thereto or any
instrument, agreement or certificate entered into or delivered by the Company
pursuant to this Agreement or the other Documents;
2. any
failure by the Company to perform any of its covenants, agreements, undertakings
or obligations set forth in this Agreement or the other Documents or any
instrument, certificate or agreement entered into or delivered by the Company
pursuant to this Agreement or the other Documents;
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3. the
issuance of shares of Common Stock upon conversion of the Debenture, the payment
of interest on the Debenture, the issuance of the Warrant Shares, the use of
any
of the proceeds of the Purchase Price by the Company, the performance by the
parties hereto of their respective obligations hereunder and under the Documents
or any claim, litigation, investigation, proceedings or governmental action
relating to any of the foregoing, whether or not Holder is a party thereto;
or
4. resales
of the Common Stock by Holder in the manner and as contemplated by this
Agreement and the Documents.
C. Promptly
after receipt by either party hereto seeking indemnification pursuant to this
Article VIII (an “Indemnified Party”) of written notice of
any investigation, claim, proceeding or other action in respect of which
indemnification is being sought (each, a “Claim”), the
Indemnified Party promptly shall notify the party against whom indemnification
pursuant to this Article VIII is being sought (the “Indemnifying
Party”) of the commencement thereof, but the omission so to notify the
Indemnifying Party shall not relieve it from any liability that it otherwise
may
have to the Indemnified Party except to the extent that the Indemnifying Party
is materially prejudiced and forfeits substantive rights or defenses by reason
of such failure. In connection with any Claim as to which both the
Indemnifying Party and the Indemnified Party are parties, the Indemnifying
Party
shall be entitled to assume the defense thereof. Notwithstanding the
assumption of the defense of any Claim by the Indemnifying Party, the
Indemnified Party shall have the right to employ separate legal counsel and
to
participate in the defense of such Claim, and the Indemnifying Party shall
bear
the reasonable fees, out-of-pocket costs and expenses of such separate legal
counsel to the Indemnified Party if (and only if): (x) the Indemnifying
Party shall have agreed to pay such fees, out-of-pocket costs and expenses,
(y) the Indemnified Party and the Indemnifying Party reasonably shall have
concluded that representation of the Indemnified Party and the Indemnifying
Party by the same legal counsel would not be appropriate due to actual or,
as
reasonably determined by legal counsel to the Indemnified Party, potentially
differing interests between such parties in the conduct of the defense of such
Claim, or if there may be legal defenses available to the Indemnified Party
that
are in addition to or disparate from those available to the Indemnifying Party
or (z) the Indemnifying Party shall have failed to employ legal counsel
reasonably satisfactory to the Indemnified Party within a reasonable period
of
time after notice of the commencement of such Claim. If the
Indemnified Party employs separate legal counsel in circumstances other than
as
described in clauses (x), (y) or (z) above, the fees, costs and expenses of
such
legal counsel shall be borne exclusively by the Indemnified
Party. Except as provided above, the Indemnifying Party shall not, in
connection with any Claim in the same jurisdiction, be liable for the fees
and
expenses of more than one firm of legal counsel for the Indemnified Party
(together with appropriate local counsel). The Indemnifying Party
shall not, without the prior written consent of the Indemnified Party (which
consent shall not unreasonably be withheld), settle or compromise any Claim
or
consent to the entry of any judgment that does not include an unconditional
release of the Indemnified Party from all liabilities with respect to such
Claim
or judgment.
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D. In
the
event one party hereunder should have a claim for indemnification that does
not
involve a claim or demand being asserted by a third party, the Indemnified
Party
promptly shall deliver notice of such claim to the Indemnifying
Party. If the Indemnified Party disputes the claim, such dispute
shall be resolved by mutual agreement of the Indemnified Party and the
Indemnifying Party or by binding arbitration conducted in accordance with the
procedures and rules of the American Arbitration
Association. Judgment upon any award rendered by any arbitrators may
be entered in any court having competent jurisdiction thereof.
|
X.
|
GOVERNING
LAW
|
This
Agreement shall be governed by and interpreted in accordance with the laws
of
the State of California, without regard to the conflicts of law principles
of
such state.
|
XI.
|
SUBMISSION
TO JURISDICTION
|
Each
of
the parties hereto consents to the exclusive jurisdiction of the federal courts
whose districts encompass any part of the City of San Diego or the state courts
of the State of California sitting in the City of San Diego in connection with
any dispute arising under this Agreement and the other
Documents. Each party hereto hereby irrevocably and unconditionally
waives, to the fullest extent it may effectively do so, any defense of an
inconvenient forum or improper venue to the maintenance of such action or
proceeding in any such court and any right of jurisdiction on account of its
place of residence or domicile. Each party hereto irrevocably and
unconditionally consents to the service of any and all process in any such
action or proceeding in such courts by the mailing of copies of such process
by
registered or certified mail (return receipt requested), postage prepaid, at
its
address specified in Article XVII. Each party hereto agrees that a
final judgment in any such action or proceeding shall be conclusive and may
be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law.
|
XII.
|
WAIVER
OF JURY TRIAL
|
TO
THE FULLEST EXTENT PERMITTED BY LAW, EACH OF THE PARTIES HERETO HEREBY
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ITS RESPECTIVE RIGHTS TO A
JURY
TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS
AGREEMENT OR ANY OTHER DOCUMENT OR ANY DEALINGS BETWEEN THEM RELATING TO THE
SUBJECT MATTER OF THIS AGREEMENT AND OTHER DOCUMENTS. EACH PARTY
HERETO (i) CERTIFIES THAT NEITHER OF THEIR RESPECTIVE REPRESENTATIVES, AGENTS
OR
ATTORNEYS HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH PARTY WOULD NOT,
IN
THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVERS AND (ii)
ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG
OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS
HEREIN.
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|
XIII.
|
COUNTERPARTS;
EXECUTION
|
This
Agreement may be executed in counterparts, each of which when so executed and
delivered shall be an original, but both of which counterparts shall together
constitute one and the same instrument. A facsimile transmission of
this signed Agreement shall be legal and binding on both parties
hereto.
|
XIV.
|
HEADINGS
|
The
headings of this Agreement are for convenience of reference and shall not form
part of, or affect the interpretation of, this Agreement.
|
XV.
|
SEVERABILITY
|
In
the
event any one or more of the provisions contained in this Agreement or in the
other Documents should be held invalid, illegal or unenforceable in any respect,
the validity, legality and enforceability of the remaining provisions contained
herein or therein shall not in any way be affected or impaired
thereby. The parties shall endeavor in good-faith negotiations to
replace the invalid, illegal or unenforceable provisions with valid provisions,
the economic effect of which comes as close as possible to that of the invalid,
illegal or unenforceable provisions.
|
XVI.
|
ENTIRE
AGREEMENT; REMEDIES, AMENDMENTS AND
WAIVERS
|
This
Agreement and the Documents constitute the entire agreement between the parties
hereto pertaining to the subject matter hereof and supersede all prior
agreements, understandings, negotiations and discussions, whether oral or
written, of such parties. No supplement, modification or waiver of
this Agreement shall be binding unless executed in writing by both
parties. No waiver of any of the provisions of this Agreement shall
be deemed or shall constitute a waiver of any other provision hereof (whether
or
not similar), nor shall such waiver constitute a continuing waiver unless
otherwise expressly provided.
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XVII.
|
NOTICES
|
Except
as
may be otherwise provided herein, any notice or other communication or delivery
required or permitted hereunder shall be in writing and shall be delivered
personally, or sent by telecopier machine or by a nationally recognized
overnight courier service, and shall be deemed given when so delivered
personally, or by telecopier machine or overnight courier service as
follows:
A. If
to the
Company, to:
0000 Xxxxxxx Xxxxxx, Xxxxx 000-X
Xxxxxxxx, Xxxxxxx 00000
Telephone: 000-000-0000
Facsimile: 000-000-0000
B.
If
to
Holder, to:
La Jolla Cove Investors, Inc.
0000 Xxxxxxxx Xxxxxx, Xxxxx 000
Xx Xxxxx, Xxxxxxxxxx 00000
Telephone: 000-000-0000
Facsimile: 000-000-0000
The
Company or Holder may change the foregoing address by notice given pursuant
to
this Article XVII.
|
XVIII.
|
CONFIDENTIALITY
|
Each
of
the Company and Holder agrees to keep confidential and not to disclose to or
use
for the benefit of any third party the terms of this Agreement or any other
information which at any time is communicated by the other party as being
confidential without the prior written approval of the other party; provide,
however, that this provision shall not apply to information which, at the time
of disclosure, is already part of the public domain (except by breach of this
Agreement) and information which is required to be disclosed by law (including,
without limitation, pursuant to Item 601(b)(10) of Regulation S-K under the
Securities Act and the Exchange Act).
|
XIX.
|
ASSIGNMENT
|
This
Agreement shall not be assignable by the Company without the prior written
consent of the Holder. The Holder may assign this Agreement upon 10
days prior written notice to the Company.
IN
WITNESS WHEREOF, the parties hereto have duly caused this Agreement to be
executed and delivered on the date first above written.
| Platina Energy Group, Inc. |
La Jolla Cove Investors, Inc. |
|
| By: |
By: |
|
|
/s/
Xxxxx Xxxxxxx Xxxxx Xxxxxxx, CEO & President |
/s/
Xxxxxx X. Xxxx |
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SCHEDULE
III.A.1
Options
to purchase 3,200,000 shares of Common Stock are outstanding with an exercise
price of $0.09 per share for 3,000,000 shares and $0.10 per
share for 200,000 shares per share and an expiration date for all options of
March 31, 2012.
Warrants
to purchase 1,425,000 shares of Common Stock are outstanding with an exercise
price of $0.50 per shares and an expiration date of December 31,
2007.
Warrants
to purchase 1,425,000 shares of Common Stock are outstanding with an exercise
price of $1.00 per shares and an expiration date of December 31,
2007.
Retirement
of convertible debenture for 28,833,444 shares of five year restricted Common
Stock, $.09 per share floor, maximum of 9.9% of Company.
The
right of Xxxxx Xxxxxxx to convert
loans including accrued interest that as of June 30, 2007 totaled $303,121
under
various loan obligations into shares of the Company’s Common Stock at a price
per share equal to the average of the bid price of the Company’s common stock
for the thirty day trading period prior to the written notice of
conversion
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SCHEDULE
III.A.3
PREEMPTIVE
RIGHTS
No
preemptive rights exist.
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SCHEDULE
III.L.
REGISTRATION
RIGHTS
Warrants
to purchase 1,425,000 shares of Common Stock are outstanding with an exercise
price of $0.50 per shares and an expiration date of December 31, 2007 with
the
shares having piggyback rights.
Warrants
to purchase 1,425,000 shares of Common Stock are outstanding with an exercise
price of $1.00 per shares and an expiration date of December 31, 2007 with
the
shares having piggyback rights.
Crescent
Fund LLC – 750,000 Shares of Common Stock Issued 0/0/0000
Xxxx
Xxxxxx Direct – 1,250,000 Shares of Common Stock Issued 11/29/2006
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SCHEDULE
III.H.
SECURITY
AGREEMENTS
No
Security Agreements exist.
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