Exhibit 10.7
Additional Investment Right
NEITHER THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS
EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION
OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR
REASONABLY ACCEPTABLE TO THE COMPANY TO SUCH EFFECT, THE SUBSTANCE OF WHICH
SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. THIS SECURITY MAY BE PLEDGED IN
CONNECTION WITH A BONA FIDE MARGIN ACCOUNT WITH A REGISTERED BROKER-DEALER OR
OTHER LOAN WITH A FINANCIAL INSTITUTION THAT IS AN "ACCREDITED INVESTOR" AS
DEFINED IN RULE 501(a) UNDER THE SECURITIES ACT.
ADDITIONAL INVESTMENT RIGHT
To Purchase 6% Senior Secured Convertible Notes Due 2008 of
CONSOLIDATED ENERGY, INC.
THIS ADDITIONAL INVESTMENT RIGHT (this "Additional Investment Right")
CERTIFIES that, for value received, _____________ (the "Holder") is entitled,
upon the terms and subject to the limitations on exercise and the conditions
hereinafter set forth, at any time on or after the date of issuance of this
Additional Investment Right (the "Initial Exercise Date") and on or prior to
the later to occur of (i) the earlier to occur of (a) the 14th day following
the date that the Company first executes a second coal supply contract with
American Electric Power, and (b) the 90th calendar day following the date that
the Registration Statement is declared effective by the Commission, and (ii)
May 25, 2005 (either (i) or (ii) above, the "Termination Date"), but not
thereafter, to subscribe for and purchase from Consolidated Energy, Inc., a
Wyoming corporation (the "Company"), up to $_________ original principal
amount of the Company's 6% Senior Secured Convertible Notes Due 2008 (the
"Notes"), each such Note to be in the form of Exhibit B attached to the
Securities Purchase Agreement (each such Note, an "Additional Investment Right
Note" and all such Notes, the "Additional Investment Right Notes"), at a price
of $________ (the "Exercise Price"). Capitalized terms used and not otherwise
defined herein shall have the meanings set forth in that certain Securities
Purchase Agreement (the "Securities Purchase Agreement"), dated February __,
2005, among the Company and the Purchasers signatory thereto. The Company
covenants and agrees to provide the Holder with prompt written notice of its
execution of the second coal supply contract with American Electric Power.
1. Title to the Additional Investment Right. Prior to the Termination Date
and subject to compliance with applicable laws and Section 6 of this
Additional Investment Right, this Additional Investment Right and all rights
hereunder are transferable, in whole or in part, at the office or agency of
the Company by the Holder in person or by duly authorized attorney, upon
surrender of this Additional Investment Right together with the Assignment
Form annexed hereto properly endorsed. The transferee shall sign an investment
letter in form and substance reasonably satisfactory to the Company.
2. Authorization of Notes. The Company covenants that all Additional
Investment Right Notes which may be issued upon the exercise of the purchase
rights represented by this Additional Investment Right will, upon exercise of
the purchase rights represented by this Additional Investment Right, be duly
authorized, validly issued, fully paid and nonassessable and free from all
taxes, liens and charges in respect of the issue thereof (other than taxes in
respect of any transfer occurring contemporaneously with such issue).
3. Exercise of Additional Investment Right.
(a) Exercise of the purchase rights represented by this Additional Investment
Right may be made at any time or times on or after the Initial Exercise Date
and on or before the Termination Date by delivery to the Company of a duly
executed facsimile copy of the Notice of Exercise Form annexed hereto (or
such other office or agency of the Company as it may designate by notice in
writing to the registered Holder at the address of such Holder appearing on
the books of the Company); provided, however, within 5 Business Days of the
date said Notice of Exercise is delivered to the Company, the Holder shall
have surrendered this Additional Investment Right to the Company and the
Company shall have received payment of the aggregate Exercise Price of the
shares thereby purchased by wire transfer or cashier's check drawn on a United
States bank. The original Additional Investment Right Notes purchased
hereunder shall be delivered to the Holder within 5 Business Days from the
delivery to the Company of the Notice of Exercise Form, surrender of this
Additional Investment Right and payment of the aggregate Exercise Price as set
forth above. This Additional Investment Right shall be deemed to have been
exercised on the later of the date the Notice of Exercise is delivered to the
Company by facsimile copy and the date the Exercise Price is received by the
Company. The Additional Investment Right Notes shall be deemed to have been
issued, and the Holder or any other person so designated to be named therein
shall be deemed to have become a holder of record of such Notes for all
purposes, as of the date the Additional Investment Right has been exercised by
payment to the Company of the Exercise Price and all taxes required to be paid
by the Holder, if any, pursuant to Section 4 prior to the issuance of such
Notes, have been paid.
(b) If this Additional Investment Right shall have been exercised in part, the
Company shall, at the time of delivery of the original Additional Investment
Right Notes, deliver to Holder a new Additional Investment Right evidencing
the rights of Holder to purchase the unpurchased Additional Investment Right
Notes called for by this Additional Investment Right, which new Additional
Investment Right shall in all other respects be identical to this Additional
Investment Right.
4. Charges, Taxes and Expenses. Issuance of the original Additional Investment
Right Notes shall be made without charge to the Holder for any issue or
transfer tax or other incidental expense in respect of the issuance of such
Notes, all of which taxes and expenses shall be paid by the Company, and such
Notes shall be issued in the name of the Holder or in such name or names as
may be directed by the Holder; provided, however, that in the event the
Additional Investment Right Notes are to be issued in a name other than the
name of the Holder, this Additional Investment Right when surrendered for
exercise shall be accompanied by the Assignment Form attached hereto duly
executed by the Holder; and the Company may require, as a condition thereto,
the payment of a sum sufficient to reimburse it for any transfer tax
incidental thereto.
5. Transfer, Division and Combination.
(a) Subject to compliance with any applicable securities laws and the
conditions set forth herein and in the Securities Purchase Agreement, this
Additional Investment Right and all rights hereunder are transferable, in
whole or in part, upon surrender of this Additional Investment Right at the
principal office of the Company, together with a written assignment of this
Additional Investment Right substantially in the form attached hereto duly
executed by the Holder or its agent or attorney and funds sufficient to pay
any transfer taxes payable upon the making of such transfer. Upon such
surrender and, if required, such payment, the Company shall execute and
deliver a new Additional Investment Right or Additional Investment Rights in
the name of the assignee or assignees and in the denomination or denominations
specified in such instrument of assignment, and shall issue to the assignor a
new Additional Investment Right evidencing the portion of this Additional
Investment Right not so assigned, and this Additional Investment Right shall
promptly be cancelled. An Additional Investment Right, if properly assigned,
may be exercised by a new holder for the purchase of Additional Investment
Right Notes without having a new Additional Investment Right issued.
(b) This Additional Investment Right may be divided or combined with other
Additional Investment Rights upon presentation hereof at the aforesaid office
of the Company, together with a written notice specifying the names and
denominations in which new Additional Investment Rights are to be issued,
signed by the Holder or its agent or attorney. Subject to compliance with
Section 5(a), as to any transfer which may be involved in such division or
combination, the Company shall execute and deliver a new Additional Investment
Right or Additional Investment Rights in exchange for the Additional
Investment Right or Additional Investment Rights to be divided or combined in
accordance with such notice.
(c) The Company shall prepare, issue and deliver at its own expense (other
than transfer taxes) the new Additional Investment Right or Additional
Investment Rights under this Section 5.
(d) The Company agrees to maintain, at its aforesaid office, books for the
registration and the registration of transfer of the Additional Investment
Rights.
(e) If, at the time of the surrender of this Additional Investment Right in
connection with any transfer of this Additional Investment Right, the transfer
of this Additional Investment Right shall not be registered pursuant to an
effective registration statement under the Securities Act and under applicable
state securities or blue sky laws, the Company may require, as a condition of
allowing such transfer (i) that the Holder or transferee of this Additional
Investment Right, as the case may be, furnish to the Company a written opinion
of counsel (which opinion shall be in form, substance and scope customary for
opinions of counsel in comparable transactions) to the effect that such
transfer may be made without registration under the Securities Act and under
applicable state securities or blue sky laws, (ii) that the holder or
transferee execute and deliver to the Company an investment letter in form and
substance acceptable to the Company and (iii) that the transferee be an
"accredited investor" as defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7), or
(a)(8) promulgated under the Securities Act or a qualified institutional buyer
as defined in Rule 144A(a) under the Securities Act.
6. Loss, Theft, Destruction or Mutilation of Additional Investment Right. The
Company covenants that upon receipt by the Company of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of this
Additional Investment Right or any Additional Investment Right Note, and in
case of loss, theft or destruction, of indemnity or security reasonably
satisfactory to it (which, in the case of the Additional Investment Right,
shall not include the posting of any bond), and upon surrender and
cancellation of such Additional Investment Right or certificate, if mutilated,
the Company will make and deliver a new Additional Investment Right or
certificate of like tenor and dated as of such cancellation, in lieu of such
Additional Investment Right or certificate.
7. Saturdays, Sundays, Holidays, etc. If the last or appointed day for the
taking of any action or the expiration of any right required or granted herein
shall be a Saturday, Sunday or a legal holiday, then such action may be taken
or such right may be exercised on the next succeeding day not a Saturday,
Sunday or legal holiday.
8. Miscellaneous.
(a) Jurisdiction. All questions concerning the construction, validity,
enforcement and interpretation of this Additional Investment Right shall be
determined in accordance with the provisions of the Securities Purchase
Agreement.
(b) Restrictions. The Holder acknowledges that the Additional Investment
Right Notes acquired upon the exercise of this Additional Investment Right, if
not registered, will have restrictions upon resale imposed by state and
federal securities laws.
(c) Nonwaiver and Expenses. No course of dealing or any delay or failure to
exercise any right hereunder on the part of Holder shall operate as a waiver
of such right or otherwise prejudice Xxxxxx's rights, powers or remedies,
notwithstanding all rights hereunder terminate on the Termination Date. If the
Company willfully and knowingly fails to comply with any provision of this
Additional Investment Right, which results in any material damages to the
Holder, the Company shall pay to Holder such amounts as shall be sufficient to
cover any costs and expenses including, but not limited to, reasonable
attorneys' fees, including those of appellate proceedings, incurred by Holder
in collecting any amounts due pursuant hereto or in otherwise enforcing any of
its rights, powers or remedies hereunder.
(d) Notices. Any notice, request or other document required or permitted to
be given or delivered to the Holder by the Company shall be delivered in
accordance with the notice provisions of the Securities Purchase Agreement.
(e) Limitation of Liability. No provision hereof, in the absence of any
affirmative action by Xxxxxx to exercise this Additional Investment Right or
purchase Additional Investment Right Notes, and no enumeration herein of the
rights or privileges of Holder, shall give rise to any liability of Holder for
the purchase price of any Common Stock or as a stockholder of the Company,
whether such liability is asserted by the Company or by creditors of the
Company.
(f) Remedies. Holder, in addition to being entitled to exercise all rights
granted by law, including recovery of damages, will be entitled to specific
performance of its rights under this Additional Investment Right. The Company
agrees that monetary damages would not be adequate compensation for any loss
incurred by reason of a breach by it of the provisions of this Additional
Investment Right and hereby agrees to waive the defense in any action for
specific performance that a remedy at law would be adequate.
(g) Successors and Assigns. Subject to applicable securities laws, this
Additional Investment Right and the rights and obligations evidenced hereby
shall inure to the benefit of and be binding upon the successors of the
Company and the successors and permitted assigns of Holder. The provisions of
this Additional Investment Right are intended to be for the benefit of all
Holders from time to time of this Additional Investment Right and shall be
enforceable by any such Holder or holder of Additional Investment Right Notes.
(h) Amendment. This Additional Investment Right may be modified or amended or
the provisions hereof waived only with the written consent of the Company and
the Holder.
(i) Severability. Wherever possible, each provision of this Additional
Investment Right shall be interpreted in such manner as to be effective and
valid under applicable law, but if any provision of this Additional Investment
Right shall be prohibited by or invalid under applicable law, such provision
shall be ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provisions or the remaining provisions of
this Additional Investment Right.
(j) Headings. The headings used in this Additional Investment Right are for
the convenience of reference only and shall not, for any purpose, be deemed a
part of this Additional Investment Right.
********************
IN WITNESS WHEREOF, the Company has caused this Additional Investment Right to
be executed by its officer thereunto duly authorized.
Dated: February __, 2005
CONSOLIDATED ENERGY, INC.
By:__________________________________________
Name: Xxxxx Xxxxxxx
Title: President
NOTICE OF EXERCISE
To: Consolidated Energy, Inc.
(1) The undersigned hereby elects to purchase $________ original principal
amount of Additional Investment Right Notes of the Company pursuant to the
terms of the attached Additional Investment Right (only if exercised in full),
and tenders herewith payment of the exercise price in full, together with all
applicable transfer taxes, if any.
(2) Please issue the original Additional Investment Right Notes in the name of
the undersigned or in such other name as is specified below:
_______________________________
The Additional Investment Right Notes shall be delivered to the following:
_______________________________
_______________________________
_______________________________
(4) Accredited Investor. The undersigned is an "accredited
investor" as defined in Regulation D under the Securities Act of 1933, as
amended.
[BUYER]
By: ______________________________
Name:
Title:
Dated: ________________________
ASSIGNMENT FORM
(To assign the foregoing Additional Investment Right, execute
this form and supply required information.
Do not use this form to exercise the Additional Investment Right.)
FOR VALUE RECEIVED, the foregoing Additional Investment Right and all rights
evidenced thereby are hereby assigned to
_______________________________________________ whose address is
_______________________________________________________________.
_______________________________________________________________
Dated: ______________, _______
Holder's Signature: _____________________________
Holder's Address: _____________________________
_____________________________
Signature Guaranteed: ___________________________________________
NOTE: The signature to this Assignment Form must correspond with the name as
it appears on the face of the Additional Investment Right, without alteration
or enlargement or any change whatsoever, and must be guaranteed by a bank or
trust company. Officers of corporations and those acting in a fiduciary or
other representative capacity should file proper evidence of authority to
assign the foregoing Additional Investment Right.
