STOCK PURCHASE AGREEMENT Private Purchase and Sale of Common Stock of Loto Inc.
Private
Purchase and Sale of Common Stock of Loto Inc.
THIS
AGREEMENT is made and entered into as a private transaction of the date set
forth on the signature page below, by and between the Seller set forth on the
signature page hereto (the “Seller”) and the purchaser set forth on the
signature page below (the “Purchaser”);
WHEREAS,
the Seller is the record owner and holder of common stock shares (the “Common
Stock”), of Loto Inc., a Nevada corporation (the “Company”);
WHEREAS,
the Seller desires to sell to Purchaser such shares of Common Stock of the
Company set forth on the signature page below, (“Stock”); and
WHEREAS,
the Purchaser desires to purchase the Stock and the Seller desires to sell the
Stock, upon the terms and subject to the conditions hereinafter set
forth.
NOW,
THEREFORE, in consideration of the mutual covenants and agreements contained in
this Agreement, and other good and valuable consideration, the adequacy of which
is expressly acknowledged as sufficient in all respects, the Seller and the
Purchaser hereby agree as follows:
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1.
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PURCHASE
AND SALE.
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(a)
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Subject
to the terms and conditions hereinafter set forth, at the Closing of the
transaction as defined herein, the Seller shall sell, convey, transfer,
and deliver to the Purchaser the Stock, and the Purchaser shall purchase
from the Seller the Stock for the purchase price in the aggregate as set
forth on the signature page hereto (the “Purchase
Price”).
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(c)
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The
Closing of the transactions contemplated by this Agreement (the
“Closing”), shall be deemed to occur after all three of the following
conditions have been satisfied: (i) after acceptance of this Agreement by
the Seller, (ii) after receipt of the Note representing payment for the
Stock; and (iii) upon receipt by the Purchaser of the stock certificate
representing the purchased Stock into escrow of the Escrow Agent as
defined herein.
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(d)
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The
Purchase Price for the Stock shall be delivered by the Purchaser in the
form of a Note, in the form set forth as Exhibit A
hereto (the “Note”). The Note shall be for the full amount of
the Purchase Price and shall have an interest rate equal to prime rate
plus 1.5%. The principal and interest shall be due three (3)
years from the date of its
execution.
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(e)
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Acceptance
of the Agreement shall be subject to delivery of anti-money laundering due
diligence documentation which is satisfactory to the bank of the Seller,
the requirements of which are set forth on the Signature Page
hereto. The Seller reserves the right to request any and all
supplemental anti-money laundering due diligence information which it
deems necessary, as determined and requested at its sole discretion and
the Seller may reject the acceptance of any proceeds delivered as the
Purchase Price if such due diligence information is not satisfactory to
the Seller.
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2.
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REPRESENTATIONS
AND WARRANTIES OF SELLER.
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(a)
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The
Seller hereby represents and warrants to the Purchaser: (i) The Seller is
not a party to any agreement, written or oral, creating rights in respect
to the Stock in any third person or relating to ownership or voting of the
Stock; (ii) the Seller is the lawful owner of the Stock, free
and clear of all security interests, liens, encumbrances, contingent or
otherwise, equities or other charges, taxes or restrictions of any nature
(except restrictions of applicable securities laws); (iii) there are no
existing warrants, options, purchase agreements, redemption agreements,
calls, puts or other rights of any nature whatsoever relating to the
Stock, nor are there any other understandings, arrangements or agreements
creating rights of third parties with respect to such
Stock. Except with respect to restrictions applied as a matter
of law pertaining to transfers of restricted securities, at the Closing,
the Purchaser will acquire all right, title and interest in the Stock free
and clear of any impairment, encumbrance or liens or any interest,
contingent or otherwise, of any person, public or private entity,
association or organization, or any judicial orders or any governmental
entity or quasi-governmental
authority.
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(b)
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The
Seller hereby represents and warrants that there has been no act or
omission by the Seller which would give rise to any valid claim against
any of the parties hereto for a brokerage commission, finder's fee, or
other like payment in connection with the transactions contemplated hereby
and no third party has any rights, contingent or otherwise, in the Stock
or proceeds thereto.
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(c)
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The
Seller acknowledges its understanding that the offering and sale of Stock
is intended to be exempt from registration under Rule 903 of Regulation S
promulgated under the Securities Act of 1933, as amended (the “Securities
Act”).
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(d)
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The
Seller is not receiving a selling concession, fee or other remuneration in
respect of the securities sold.
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3.
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REPRESENTATIONS
AND WARRANTIES OF PURCHASER.
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(a)
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No
consent, approval, authorization or order of, or any filing or declaration
with any governmental authority or any other person, is required for the
consummation by the Purchaser of any of the transactions contemplated by
the Purchaser under this Agreement.
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(b)
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The
Purchaser is acquiring the Stock for his or her own account as principal,
and not as a nominee or agent; for investment purposes only, and not with
a view to, or for, resale, distribution or fractionalization thereof in
whole or in part; and no other person has a direct or indirect beneficial
interest in such Stock or any portion thereof. The Purchaser
has no contract, undertaking, agreement or arrangement with any person to
sell, transfer, distribute or grant participations in the Stock to any
person, entity or organization.
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(c)
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The
Purchaser is not acquiring the Stock as a result of or subsequent to any
advertisement, article, notice or other communication published in any
newspaper, magazine or similar media or broadcast over television or
radio, or presented at any seminar or meeting, or pursuant to any
solicitation of a subscription by a person not previously known to the
Purchaser in connection with investment securities
generally.
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(d)
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Except
as otherwise provided in this Agreement, the Purchaser understands that
the Company is under no obligation to register the Stock under the
Securities Act, or to assist the Purchaser in complying with the
Securities Act or the securities laws of any state of the United States or
of any foreign jurisdiction. The Purchaser understands that the
Stock must be held indefinitely unless such Stock is registered under the
Securities Act or an exemption from registration is
available. The Purchaser acknowledges that such person has been
advised of the limitation of Rule 144 promulgated under the Securities Act
(“Rule 144”), and that the Purchaser has been advised that Rule 144
permits resales only under certain circumstances which are currently not
available with respect to the Stock. The Purchaser understands
that it will be unable to sell or trade any of the Stock without either
registration under the Securities Act or the availability of exemption
from registration.
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(e)
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The
Purchaser (i) is experienced in making investments of the kind described
in this Agreement, (ii) is able, by reason of his or her own business and
financial experience and or his or her own professional advisors, has such
knowledge and experience in financial and business matters as to be
capable of evaluating the merits and risks of investment in the Stock and
(iii) is able to afford the entire loss of his or her own investment in
the Stock.
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(f)
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The
Purchaser acknowledges his understanding that the offering and sale of
Stock is intended to be exempt from registration under Rule 903 of
Regulation S promulgated under the Securities Act. In
furtherance thereof, in addition to the other representations and
warranties of the Purchaser made herein, nothing herein shall construe the
Purchaser as an agent acting on behalf of the
Company.
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(g)
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Purchaser
is aware that no U.S. federal or state agency has (i) made any finding or
determination as to the fairness of this investment, (ii) made any
recommendation or endorsement of the Stock, or (iii) guaranteed or insured
any investment in the Stock or any investment made by the
Company.
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(h)
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Purchaser
understands that the price of the Stock offered hereby bear no relation to
the assets, book value or net worth of the Company and such price was
determined solely by mutually agreement as determined between the
Purchaser and the Seller. Purchaser acknowledges and
understands that there is a risk of dilution on his or its investment in
the Company.
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4.
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REGULATION
S REPRESENTATIONS
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(a)
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The
Purchaser acknowledges and agrees that the Company shall, and shall
instruct its transfer agent to, refuse to register any transfer of the
Common Stock issued hereunder not made in accordance with the provisions
of Regulation S, pursuant to registration under Securities Act or pursuant
to an available exemption from registration required under the Securities
Act.
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(b)
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The
Purchaser understands and acknowledges that the shares of Stock have not
been registered under the Securities Act and are being offered and
transferred in reliance upon the exemptions provided in Regulation S of
the Securities Act and the Rules and Regulations adopted
thereunder. Accordingly, the shares of Stock may not be offered
or sold in the U.S. or to U.S. Persons (as such term is used in Regulation
S) unless the securities are registered under the Securities Act, or an
exemption for the regulation requirements is
available. Furthermore, hedging transactions involving the
shares of Stock may not be conducted unless in compliance with the
Securities Act.
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(c)
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The
Purchaser makes the following representations and warranties for the
benefit of the Seller and the Company with the intent that the same may be
relied upon in determining the suitability of the Purchaser as a qualified
Non-U.S. Person purchaser and transferee of
securities:
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(i) The
Purchaser did not receive the offer for the shares of Stock (the “Offer”), nor
was he, she or it solicited to purchase the shares of Stock, in the United
States; that this Agreement has not been executed or delivered by the Purchaser
in the United States, and neither the Purchaser nor any Person acting on behalf
of the Purchaser has engaged, directly or indirectly, in any negotiations with
respect to the Offer or this Agreement in the United States;
(ii) The
Purchaser is not a U.S. Person (i.e., (i) not an individual resident in the
U.S.; (ii) a partnership or corporation organized or incorporated in the United
States; (iii) an estate of which any executor or administrator is a U.S. Person;
(iv) a trust of which any trustee is a U.S. Person; (v) a dealer holding an
account for a customer; (vi) an agency or branch of a foreign entity located in
the U.S.; or (vii) a partnership or corporation (A) organized or incorporated
under the laws of any foreign jurisdiction and (B) formed by a U.S. Person
principally for the purpose of investing in securities not registered under the
Securities Act and is not acquiring the shares of Stock for the account or
benefit of a U.S. Person;
(iii) The
Purchaser is not purchasing the shares of Stock as a result of, or subsequent
to, (i) any advertisement, article, notice or other communication published in
any newspaper, magazine or other publication or broadcast over television or
radio in the U.S.; (ii) any promotional seminar or meeting in the U.S., or (iii)
any solicitation by a Person not previously known to it in connection with
investments in securities generally; and
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(iv) The
shares of Stock have not been registered under the Securities Act or under any
state securities laws and that the Purchaser agrees to transfer its shares of
Stock in the U.S. or to, or for the account or benefit of, U.S. Persons only if
(i) the shares of Stock are duly registered under the Securities Act and all
applicable state securities laws; or (ii) there is an exemption from
registration under the Securities Act, including any exemption from the
registration requirements of the Securities Act which may be available pursuant
to Rule 903 or Rule 904 under Regulation S, and all applicable state securities
laws; that prior to any such transfer the Company may require, as a condition
affecting a transfer of the shares of Stock, an opinion of counsel in form and
substance satisfactory to the Company as to the registration or exemption
therefrom under the Securities Act and applicable state securities laws; that
the Company is under no obligation to register the shares of Stock under the
Securities Act or any applicable state securities laws on its behalf or to
assist it in complying with any exemption from such registration;
(v)
Except as distributed by Purchaser in accordance with the requirements and
provisions of Rule 903 of Regulation S; the shares of Stock will be acquired
solely for the account of the Purchaser, for investment purposes only, and not
with a view to, or for sale in connection with, any distribution thereof and
with no present intention of distributing or reselling any part of the shares of
Stock.
(vi) The
Purchaser agrees not to sell, pledge, transfer, dispose of, or otherwise deal
with or engage in hedging transactions involving, its shares of Stock or any
portion thereof except as otherwise permitted herein, unless and until counsel
for the Company shall have determined that the intended disposition or action is
permissible and does not violate the Securities Act or any applicable state
securities laws, or the rules and regulations thereunder.
(vii) The
Purchaser jurisdiction of principal place of business and corporate domicile, as
set forth on the signature page hereto with respect to notices under this
Agreement, is true and correct.
(viii)
The Purchaser is not the issuer, a distributor, dealer or an affiliate of the
issuer, distributor or a dealer. The Purchaser is not receiving a
selling concession, fee or other remuneration in respect of the securities
sold. The Purchaser undertakes and agrees that: (a) any offer or
resale of the Stock within a one year restricted period shall be made solely
outside of the United States in an offshore transaction on a designated offshore
securities market as such term is defined in Rule 902(b) of Regulation S
promulgated under the Securities Act; (b) No directed selling efforts shall be
made in the United States by any seller, an affiliate, or any person acting on
their behalf; (c) the Seller or a person acting on the Seller's behalf will send
to the Purchaser a confirmation or other notice stating that the securities may
be offered and sold during the distribution compliance period only in accordance
with the provisions of this Regulation S (Rule 901 through Rule 905, and
Preliminary Notes); pursuant to registration of the securities under the Act; or
pursuant to an available exemption from the registration requirements of the
Act.
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5.
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GENERAL
PROVISIONS.
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(a)
Entire
Agreement. This Agreement (including the covenants of confidentiality
incorporated herein by reference to the Memorandum, the schedules and exhibits
hereto and any written amendments hereof executed by the parties) constitutes
the entire Agreement and supersedes all prior agreements and understandings,
oral and written, between the parties hereto with respect to the subject matter
hereof. The Company and the Company’s Transfer Agent, although not
signatory parties hereto, are expressly authorized and permitted to rely upon
any and all provisions of this Agreement. No other third party
beneficiaries may rely upon this Agreement.
(b)
Headings
and Construction. The section and other headings contained in this Agreement are
for reference purposes only and shall not affect the meaning or interpretation
of this Agreement. All pronouns and any variations thereof used
herein shall be deemed to refer to the masculine, feminine, neuter, singular or
plural as the identity of the person or persons referred to may
require.
(c)
Costs. Except
as otherwise set forth herein, each of the parties hereto shall pay its own fees
and expenses (including the fees of any attorneys, accountants, appraisers or
others engaged by such party) in connection with this Agreement and the
transactions contemplated hereby whether or not the transactions contemplated
hereby are consummated.
(d)
Each
Certificate representing the Stock shall be imprinted with the following legend
restricting the transferability of the Stock except as permitted by applicable
securities laws or exemptions therefrom:
THE
SECURITIES ARE BEING OFFERED TO PURCHASERS IN A PRIVATE TRANSACTION WHO ARE NOT
U.S. PERSONS (AS DEFINED IN REGULATION S UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE SECURITIES ACT)) AND WITHOUT REGISTRATION WITH THE UNITED STATES
SECURITIES AND EXCHANGE COMMISSION UNDER THE SECURITIES ACT IN RELIANCE UPON
REGULATION S PROMULGATED UNDER THE SECURITIES ACT. TRANSFER OF THESE
SECURITIES IS PROHIBITED, EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF REGULATION
S, PURSUANT TO REGISTRATION UNDER THE SECURITIES ACT, OR PURSUANT TO AVAILABLE
EXEMPTION FROM REGISTRATION. HEDGING TRANSACTIONS MAY NOT BE CONDUCTED UNLESS IN
COMPLIANCE WITH THE SECURITIES ACT.
(e)
Severability.
Each provision of this Agreement shall be considered separable and, if for any
reason any provision(s) hereof are determined to be invalid or contrary to
applicable law, such invalidity or illegality shall not impair the operation of
or affect the remaining portions of this Agreement.
(f)
Survival. The
parties’ representations and warranties made in this Agreement shall survive the
execution and delivery hereof and delivery of the purchased
Stock.
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(g)
Notices. Any notice or other communication required or permitted to
be given hereunder shall be in writing and given or made (a) by personal
delivery or (b) by overnight courier service with confirmation of receipt at the
respective addresses set forth on the signature page hereto, or at such other
address as any party hereto may subsequently furnish in writing to the other
party.
(h)
Assignability. This Agreement and the rights, interests and
obligations hereunder are not transferable or assignable by the Seller without
the consent of the Purchaser and the transfer or assignment of the Stock shall
be made only in accordance with this Agreement. The Purchaser may
assign its rights hereunder without consent of the Seller provided such assignee
performs all obligations of Seller set forth hereunder.
(i)
Irrevocability; Binding Effect. The Purchaser hereby acknowledges and
agrees that the purchase hereunder is irrevocable, except as required by
applicable law, and that this Agreement shall be binding upon and inure to the
benefit of the parties and their respective heirs, executors, administrators,
successors, legal representatives and permitted assigns. This
obligations of the Seller hereunder shall terminate if the bank of the Seller
does not accept the anti-money laundering documentation of
Purchaser.
(j)
Modification. This Agreement shall not be modified, amended or waived
except by a written instrument signed by the party against whom any such
modification, amendment or waiver is sought.
(k) Disputes. Any
controversy or claim arising out of or relating to this Agreement, or the breach
thereof, shall be settled exclusively by binding arbitration in Xxxxxxx,
Xxxxxxx, Xxxxxx pursuant to the rules of an arbitral forum mutually agreed upon
by the Seller and the Purchaser. In the event that an arbitral forum is
not agreed upon after delivery of notice by the party initiating such
arbitration and forty-five days after confirmed receipt of such notice by the
other party, then any court having competent jurisdiction over the party shall
have full power and authority to appoint an arbitrator in Xxxxxxx, Xxxxxxx,
Xxxxxx, who shall be a solicitor with not less than ten years corporate
transactional experience. The fees and costs of such arbitration shall be
paid by the non-prevailing party.
(l) Governing Law.
This Agreement shall be governed by, and construed and enforced in accordance
with, the laws of the State of New York, without regard to principles of
conflicts of law. Each of the Seller and the Purchaser (i) hereby
irrevocably submits to the jurisdiction of the United States District Court
sitting in the Southern District of New York for the purposes of any suit,
action or proceeding arising out of or relating to this Agreement and (ii)
hereby waives, and agrees not to assert in any such suit, action or proceeding,
any claim that it is not personally subject to the jurisdiction of such court,
that the suit, action or proceeding is brought in an inconvenient forum or that
the venue of the suit, action or proceeding is improper. Each of the
Seller and the Purchaser consents to process being served in any such suit,
action or proceeding by mailing a copy thereof to such party at the address in
effect for notices to it under this Agreement and agrees that such service shall
constitute good and sufficient service of process and notice thereof.
Nothing in this Section shall affect or limit any right to serve process in any
other manner permitted by law.
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(m) Stock
Power. The undersigned, a stockholder of record of Loto Inc., by the
hand of its duly authorized undersigned directors, hereby assigns and transfers
title unto the Purchaser the shares of Common Stock set forth on the signature
page hereto, as represented by the stock certificate of Seller, at such time as
all terms and conditions in this Agreement are satisfied or waived, subject to
delivery and acceptance by the Company’s Transfer Agent, and the Seller does
hereby irrevocably constitute and appoint the law firm of Wuersch & Xxxxxx
LLP as agent (the “Agent”) to cause the transfer of title of said shares of
Common Stock on the books of the within named Company, with full power of
substitution in the premises, effective as of the date of delivery to the
Transfer Agent. This provision shall be deemed to serve as a Stock
Power and shall have the same full power, force and effect as a separate Stock
Power instrument, which may be fully relied upon by the Company, the Agent and
the Transfer Agent to the same and full extent as a separately endorsed Stock
Power. The Transfer Agent is hereby expressly authorized to accept
delivery of this Agreement and any related instruction letter via fax, or scan
and e-mail, and to accept fax or scanned copies of the aforementioned executed
documents, and the Transfer Agent is furthermore expressly authorized to accept
the stock power contained herein without a medallion signature guarantee or
notary authentication.
(n) As a
security for the payment of the Purchase Price, the Purchaser shall place stock
certificates representing the Shares into escrow with the law firm designated by
Purchaser (the “Escrow Agent”). The Purchaser and Seller agree that
the terms of such escrow shall be mutually agreed upon based on the standard
form of the Escrow Agent. The Escrow Agent shall release to Purchaser
all stock certificates representing the Shares from escrow upon the receipt of
written notification from both the Seller and the Purchaser that the Note
representing the Purchase Price has been paid in full. The Purchaser
may not pledge, sell, loan or otherwise create any direct or contingent
third-party ownership interest in the Shares until such time as the Note
representing the Purchase Price has been paid in full.
(o)
Counterparts. This Agreement may be executed in one or more counterparts each of
which shall be deemed an original, but all of which shall together constitute
one and the same instrument.
[Signature
Page Follows]
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IN
WITNESS WHEREOF, this Agreement has been executed by each of the parties hereto
as of April 19, 2010.
Purchase
of Loto Inc. Common Stock:
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Purchase Price: **USD$1.50 (ONE DOLLAR FIFTY U.S.
CENTS)** PER SHARE
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Total Shares of Stock
Purchased: **19,300,000**
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Total Purchase
Price: **$28,950,000.00**- By Note
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Due Date for Receipt of Purchase Price Proceeds:
Per Note Exhibit A
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Purchaser:
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Print
Full Legal Name:
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2238646 ONTARIO
INC.
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Address:
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00 Xxxxxxx Xxxx, Xxxxxxx, Xxxxxxx, Xxxxxx, X0X
0X0
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Telephone
(with country code):
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x0 (000)
000-0000
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Fax
Number:
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E-mail:
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xxx@xxxxxxxxxxxx.xx
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Address
for Notices and Delivery of Stock Certificate:
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Per Escrow Agreement
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Permanent
Address (if different from above)
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same
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Legal
form if an entity (trust, corporation, partnership,
etc.):
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corporation
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Jurisdiction
of organization if an entity:
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Ontario,
Canada
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PURCHASER: 2238646 ONTARIO
INC.
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By:
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/s/ Xxxxx Xxxxxxx Xxxxx
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Name:
Xxxxx Xxxxxxx Xxxxx
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Title:
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SELLER:
Mhalka Capital Investments Ltd.
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By:
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/s/ Perpetum Finance Inc.
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Name:
Perpetum Finance Inc.
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Title:
Director
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Address
For Notices:
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x/x
Xxxxx Xxxxxxxx XX, Xxxxxxxxxxxxxx 00, XX Xxx 0000, 0000 Xxxxxx,
Xxxxxxxxxxx
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Exhibit
A
FORM
OF NOTE
(Attached)
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