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EXHIBIT 10.64
NOTE PURCHASE AGREEMENT
THIS AGREEMENT ("Agreement") is made this 21st day of October 1998,
between CONSOLIDATED CAPITAL OF NORTH AMERICA, INC., a Colorado corporation (the
"Company") and _______________________________________ (the "Purchaser").
RECITAL
WHEREAS, on August 28, 1998 the Purchaser purchased the Company's 15%
Convertible Notes in an aggregate principal amount of $500,000 (the "August
Notes");
WHEREAS, on September 15, 1998 the Purchaser purchased the Company's
15% Convertible Notes in an aggregate principal amount of $500,000 (the
"September Notes");
WHEREAS, the Company has authorized the issuance and sale of the
Company's 18% Convertible Notes up to an aggregate principal amount of
$2,000,000 having the terms set forth in Exhibit A attached hereto (the
"Notes"); and
WHEREAS, the Purchaser desires to purchase, and the Company desires to
issue, the Notes on the terms set forth in this Agreement;
NOW, THEREFORE, in consideration of the foregoing and of the terms and
conditions contained in this Agreement, the Company and the Purchaser agree as
follows:
1. PURCHASE AND SALE OF NOTES. Subject to the terms and conditions
contained in this Agreement, at the Closing (as hereinafter defined) the
Purchaser shall purchase from the Company and the Company shall sell to the
Purchaser the Notes for $1,550,000 (the "Loan Amount") which shall be disbursed
as follows:
(a) $550,000.00 via wire transfer to Company's designated
account (not later than the next business day after the date hereof);
(b) $500,000.00 will be credited, as of the date hereof,
toward the principal balance of the August Note; and
(c) $500,000.00 will be credited, as of the date hereof,
toward the principal balance of the September Note.
Accrued and unpaid interest on the August Note and the September Note,
in the total amount of $18,900, shall be added to the Loan Amount and the
aggregate amount of the Notes to be issued to the Purchaser shall equal
$1,568,900.00. The sum of $18,900 shall be paid by the
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Company on January 15, 1999 in cash or at the option of the Purchaser in Common
Shares of the Company based on a price equal to $0.12 per share (the "January
Shares"). The remaining balance of the Notes shall be paid at the Maturity Date
set forth in the Notes.
2. CLOSING.
2.1 Closing Date. The closing of the purchase and sale of the Notes
(the "Closing") shall take place on October 21, 1998 or such other day as agreed
to by the parties (the "Closing Date").
2.2 Items to be Delivered to Purchaser. The following shall be
delivered by the Company to the Purchaser on the Closing Date:
(a) the Notes purchased by the Purchaser;
(b) a legal opinion of counsel to the Company acceptable
to the Purchaser;
(c) a certificate of the secretary or an assistant secretary
of the Company certifying that there has been no amendment or
modification to the Company's articles of incorporation or bylaws since
September 15, 1998 and attaching a complete and correct copy of
resolutions duly adopted by its board of directors authorizing the
execution, delivery and performance of this Agreement and the Notes;
(d) a certificate of the Chief Financial Officer of the
Company certifying that there has been no material negative change in
the financial condition of the Company since September 15, 1998;
(e) 700,000 shares of Common Stock of the Company (the
"Initial Loan Fee Shares"); and
(f) 100,000 shares of Common Stock of the Company which are
issuable as Additional Loan Fee Shares under the terms of the August
28, 1998 Loan Agreement (the "August Additional Loan Fee Shares").
2.3 Items to be Delivered to the Company. The following shall be
delivered by the Purchaser to the Company on the Closing Date:
(a) The purchase price by wire transfer to the account
designated by the Company; and
(b) The August Notes and the September Notes for cancellation.
2.4 Additional Loan Fee Shares. In the event the Company extends the
Maturity Date of the Notes as set forth in the Notes, the Company shall issue to
the Purchaser 450,000 shares of the Company's Common Stock (or a pro-rata
portion of such shares in the event that less than
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$1,550,000 of the Notes are outstanding and held by the Purchaser on any
extension date) for every ninety day period in which the Notes are outstanding
after the initial Maturity Date (the "October Additional Loan Fee Shares"). The
August Additional Loan Fee Shares, the October Additional Loan Fee Shares and
the Initial Loan Fee Shares are together referred to as the "Loan Fee Shares").
2.5 Termination of August 28, 1998 Loan Agreement. Effective as of the
Closing, the August Note, the September Note and the related Loan Agreements
shall terminate and have no further force or effect.
3. REPRESENTATIONS AND WARRANTIES.
3.1 Representations and Warranties of the Company. The Company
represents and warrants that as of the date of this Agreement:
(a) Existence. The Company is a corporation duly organized and
in good standing under the laws of the State of Colorado and is duly
qualified to do business and is in good standing in all states where
such qualification is necessary, except for those jurisdictions in
which the failure to qualify would not, in the aggregate, have a
material adverse effect on the Company's financial condition, results
of operations or business.
(b) Authority. The execution and delivery by the Company of
this Agreement and the Notes (i) are within the Company's corporate
powers; (ii) are duly authorized by the Company's board of directors;
(iii) are not in contravention of the terms of the Company's
certificate of incorporation or bylaws; (iv) are not in contravention
of any law or laws; (v) except for the filing of a Form D Notice with
the Securities and Exchange Commission and any exemption filing related
thereto which may be required pursuant to applicable state securities
or "blue sky" laws, do not require any governmental consent,
registration or approval; (vi) do not contravene any contractual or
governmental restriction binding upon the Company; and (vii) will not
result in the imposition of any lien, charge, security interest or
encumbrance upon any property of the Company under any existing
indenture, mortgage, deed of trust, loan or credit agreement or other
material agreement or instrument to which the Company is a party or by
which the Company or any of the Company's property may be bound or
affected.
(c) Binding Effect. This Agreement and the Notes have been
duly authorized, executed and delivered by the Company and constitute
the valid and legally binding obligation of the Company, enforceable in
accordance with their respective terms, subject to bankruptcy,
insolvency, reorganization and other laws of general applicability
relating to or affecting creditors' rights and to general equity
principles.
(d) Capitalization. The authorized capital stock of the
Company consists of 50,000,000 shares of Common Stock, par value $.0001
per share, 24,622,387 shares of which are issued and outstanding and
10,000,000 shares of Preferred Stock, par value $.01 per share, of
which the following Preferred Shares are authorized, issued and
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outstanding as of October 1, 1998: Series A Preferred Shares, par value
$1.00 per share, authorized 1,000,000 shares, 744,000 shares issued and
outstanding; Series B Preferred Shares, par value $1.00 per share,
authorized 1,000,000 shares, 449,000 shares issued and outstanding;
Series C Preferred Shares, stated value $10,000 per share, authorized
200 shares, 87 shares issued and outstanding. The shares of common
stock issuable upon conversion of the Notes (the "Conversion Shares"),
the shares of common stock issuable in lieu of cash interest payments
on the Notes (the "Interest Shares"), the Loan Fee Shares and the
January Shares (together the "Shares") have been duly and validly
authorized and reserved for issuance and, when issued and delivered in
accordance with the terms of this Agreement, will be duly and validly
issued, fully paid and non-assessable. The Company shall at all times
have authorized, reserved and set aside a sufficient number of Common
Shares for the conversion the Notes, for payment of interest on the
Notes and for issuance as Loan Fee Shares and as January Shares.
(e) SEC Documents. The Company has furnished the Purchaser
with a true and complete copy of the Company's Report on Form 8-K filed
on January 27, 1998, as amended on January 29, 1998 and March 27, 1998,
Report on Form 8-K filed on January 28, 1998 as amended on January 29,
1998, Report on Form 8-K filed on March 18, 1998, Report on Form 8-K
filed on May 1, 1998, Report on Form 8-K filed on August 5, 1998,
Report on Form 8-K filed on September 18, 1998, the Company's Form
10-KSB for the fiscal year ended December 31, 1997, Form 10-QSB for the
quarterly period ended March 31, 1998, Form 10-QSB for the quarterly
period ended June 30, 1998, and the Registration Statement on Form SB-2
(No. 333-60761) and the Proxy Statement dated October 16, 1998 (the
"Disclosure Documents"). Except as disclosed in the Disclosure
Documents, since December 31, 1997 the Company has not incurred any
material liability except in the ordinary course of its business
consistent with past practice and there has not been any change in the
business, financial condition or results of operations of the Company
which has had a material adverse effect on the Company. Since January
1, 1997, the Company has filed with the Securities and Exchange
Commission (the "SEC") all documents required to be filed pursuant to
the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
and the rules and regulations promulgated thereunder. As of their
respective filing dates, the Disclosure Documents complied in all
material respects with the requirements of the Exchange Act, and the
rules and regulations of the SEC thereunder applicable to such
Disclosure Documents, and the Disclosure Documents did not contain any
untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary 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
Disclosure Documents (the "Financial Statements") comply as to form in
all material respects with applicable accounting requirements and with
the published rules and regulations of the SEC with respect thereto.
The Financial Statements are accurate, complete and have been prepared
in accordance with the books and records of the Company and in
accordance with generally accepted accounting principles applied on a
consistent basis during the periods involved (except as may be
indicated in the notes thereto and fairly present (subject, in the case
of the unaudited statements, to normal, recurring audit adjustments
that are not
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material) the consolidated financial position of the Company as at the
dates thereof and the consolidated results of its operations and cash
flows for the periods then ended.
(f) Litigation. There is neither pending nor, to the Company's
knowledge and belief, threatened any action, suit, proceeding or claim,
or any basis therefor, to which the Company is or may be named as a
party or its property is or may be subject other than routine
litigation in the ordinary course of business or which calls into
question any of the transactions contemplated by this Agreement.
(g) Securities Matters. Subject to the accuracy of the
representations of the Purchaser set forth in Section 3.2 hereof, the
offer, sale and issuance of the Notes and the Shares as contemplated by
this Agreement are exempt from the registration requirements of the
Securities Act of 1933 as amended (the "Securities Act"). The Company
has complied and will comply with all applicable state "blue sky" or
securities laws in connection with the offer, sale and issuance of the
Notes and the Shares as contemplated by this Agreement. The Company
agrees that on or after January 1, 1999 it will, within thirty (30)
days of the Purchaser's written request for such and at the Company's
cost, make appropriate registration filings under the Securities Act to
cause the Shares and the 200,000 Common Shares issued in connection
with the August Note and the September Note to become registered
thereunder and the Company agrees that it will use its best efforts to
cause such registration to be declared effective as soon as possible.
Purchaser shall have one such demand registration right.
3.2 Representations and Warranties of the Purchasers. Each Purchaser
represents and warrants that as of the date of the execution of this
Agreement:
(a) Authorization. This Agreement constitutes a valid and
legally binding obligation of such Purchaser.
(b) Investment Representations (i) The Purchaser has received
and reviewed the Company's Disclosure Documents and the Purchaser or
the Purchaser's designated representatives have concluded a
satisfactory due diligence investigation of the Company and have had an
opportunity to review the documents provided by the Company and to have
all of their questions related thereto satisfactorily answered.
(ii) The Purchaser acknowledges that the Notes and
the Shares are speculative and involve a high degree of risk
and the Purchaser represents that it is able to sustain the
loss of the entire amount of its investment.
(iii) The Purchaser (or its members and/or officers)
has previously invested in unregistered securities and has
sufficient financial and investing expertise to evaluate and
understand the risks of the Notes and the Shares.
(iv) The Purchaser has received from the Company, and
is relying on, no representations (except as set forth in this
Agreement) or projections with respect to the Company's
business and prospects.
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(v) The Purchaser is an "accredited investor" within
the meaning of Regulation D under the Securities Act.
(vi) The Purchaser is acquiring the Notes and the
Shares for investment purposes only without intent to
distribute the same, and acknowledges that the Notes and the
Shares have not been registered under the Securities Act and
applicable state securities laws, and accordingly, constitute
"restricted securities" for purposes of the Securities Act and
such state securities laws.
(vii) The Purchaser acknowledges that it will not be
able to transfer the Notes and the Shares except upon
compliance with the registration requirements of the
Securities Act and applicable state securities laws or
exemptions therefrom.
(viii) The certificates and/or instruments evidencing
the Notes and the Shares will contain a legend to the
foregoing effect.
4. MISCELLANEOUS.
4.1 Confidentiality. (a) The Purchaser agrees to keep confidential any
and all non-public information delivered or made available to the Purchaser by
the Company except for disclosures, as necessary, made by the Purchaser to the
Purchaser's officers, directors, employees, agents, counsel and accountants each
of whom shall be notified by the Purchaser of this confidentiality covenant and
for whom the Purchaser shall be liable in the event of any breach of this
covenant by any such individual or individuals; provided, however, that nothing
herein shall prevent the Purchaser from disclosing such information (a) upon the
order of any court or administrative agency, (b) upon the request or demand of
any regulatory agency or authority having jurisdiction over the Purchaser, (c)
which has been publicly disclosed or (d) to any of its members provided that any
such members agree in writing (with a copy provided to the Company) to be bound
by confidentiality provisions in form and substance substantially as are
contained herein. In the event of a mandatory disclosure as described in clause
(a) and/or (b) of the preceding sentence, the Purchaser shall promptly notify
the Company in writing of any applicable order, request or demand for such
information, cooperate with the Company if and to the extent that the Company
elects to seek an appropriate protective order or other relief from such order,
request, or demand, and disclose only the minimal amount of information
ultimately required to be disclosed. The Purchaser shall not use for its own
benefit, nor permit any other person to use for such person's benefit, any of
the Company's non-public information including, without limitation, in
connection with the purchase and/or sale of the Company's securities.
(b) The Company shall in no event disclose non-public
information to the Purchaser, advisors to or representatives of the
Purchaser unless prior to disclosure of such information the Company
marks such information as "Non-Public Information - Confidential" and
provides the Purchaser, such advisors and representatives with the
opportunity to accept or refuse to accept such non-public information
for review. The
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Company may, as a condition to disclosing any non-public information
hereunder, require the Purchaser's advisors and representatives to
enter into a confidentiality agreement in form reasonably satisfactory
to the Company and the Purchaser.
(c) Nothing herein shall require the Company to disclose
non-public information to the Purchaser or its advisors or
representatives, and the Company represents that it does not
disseminate non-public information to any Purchasers who purchase stock
in the Company in a public offering, to money managers or to securities
analysts.
4.2 Legends. To the extent applicable, each note, certificate or other
document evidencing the Notes to be purchased and sold pursuant to this
Agreement and any Shares issued shall be endorsed with the legends set forth
below, and the Purchaser on behalf of itself and each holder of the Notes
covenants that, except to the extent such restrictions are waived by the
Company, it shall not transfer the Notes or Shares without complying with the
restrictions on transfer described in the legends endorsed on such note or
certificate:
(a) The following legend under the Securities Act:
"THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED,
AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED, PLEDGED, OR
HYPOTHECATED ABSENT AN EFFECTIVE REGISTRATION THEREOF UNDER
SUCH ACT OR COMPLIANCE WITH RULE 144 PROMULGATED UNDER SUCH
ACT, OR UNLESS THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL,
IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO THE COMPANY
AND ITS COUNSEL AND FROM ATTORNEYS REASONABLY ACCEPTABLE TO
THE COMPANY AND ITS COUNSEL, THAT SUCH REGISTRATION IS NOT
REQUIRED."
(b) If required by the authorities of any state in connection
with the issuance or sale of the Note or the Shares, the legend
required by such state authority.
4.3 Costs and Expenses. The Company shall reimburse Purchaser for its
reasonable legal fees and expenses in connection with the purchase of the Notes
up to a maximum of $7,900. The Company shall be responsible for all of its fees
and expenses in connection with this transaction.
4.4 Assignability; Successors. The provisions of this Agreement shall
inure to the benefit of and be binding upon the permitted successors and assigns
of the parties hereto.
4.5 Survival. All agreements, covenants, representations and warranties
made by the Company or by the Purchaser herein shall survive the execution and
delivery of this Agreement.
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4.6 GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED ACCORDING TO THE
LAWS OF THE STATE OF COLORADO WITHOUT GIVING EFFECT TO THE PRINCIPLES THEREOF
RELATING TO CONFLICTS OF LAWS.
4.7 Counterparts: Headings. This Agreement may be executed in several
counterparts, each of which shall be deemed an original, but such counterparts
shall together constitute but one and the same agreement. The descriptive
headings in this Agreement are inserted for convenience of reference only and
shall not affect the construction of this Agreement.
4.8 Entire Agreement, Amendments. This Agreement and the Exhibits
contain the entire understanding of the parties with respect to the subject
matter hereof, and supersede all other representations and understandings, oral
or written, with respect to the subject matter hereof. No amendment,
modification, alteration, or waiver of the terms of this Agreement or consent
required under the terms of this Agreement shall be effective unless made in a
writing, which makes specific reference to this Agreement and which has been
signed by the Company and each Purchaser. Any such amendment, modification,
alteration, waiver or consent shall be effective only in the specific instance
and for the specific purpose for which given.
4.9 Notices. All communications or notices required or permitted by
this Agreement shall be in writing and shall be deemed to have been given or
made when delivered in hand, deposited in the mail, or sent by facsimile, with
confirmation (if sent by facsimile on a non-business day, receipt shall be
deemed to have occurred on the next succeeding business day). Communications or
notices shall be delivered personally or by certified or registered mail,
postage, or by facsimile and addressed as follows, unless and until either of
such parties notifies the other in accordance with this Section of a change of
address:
if to the Company Consolidated Capital of North America, Inc.
000 00xx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxx 00000
Att: Secretary
Tel: (000) 000-0000
Fax: (000) 000-0000
with copies to: Xxxxxxxxx, Xxxxxx & Xxxxxx
000 Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxx, Xxx Xxxxxx 00000
Att: Xxxxxx X. Xxxxxxxxx
Tel: (000) 000-0000
Fax: (000) 000-0000
if to the Purchaser:
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with copies to:
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4.10 Severability. Whenever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement 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
provision or the remaining provisions of this Agreement.
4.11 Maximum Interest. It is expressly stipulated and agreed to be the
intent of the Company and the Purchaser at all times to comply with the
applicable law governing the maximum rate of interest payable on or in
connection with all indebtedness and transactions hereunder (or applicable
United States federal law to the extent that it permits Purchaser to contract
for, charge, take, reserve or receive a greater amount of interest). If the
applicable law is ever judicially interpreted so as to render usurious any
amount of money or other consideration called for hereunder, or contracted for,
charged, taken, reserved or received with respect to any loan or advance
hereunder, or if acceleration of the maturity of the Note results in the
Company's having paid any interest in excess of that permitted by law, then it
is the Company's and the Purchaser's express intent that all excess cash amounts
theretofore collected by Purchaser be credited on the principal balance of the
Note (or if the Note has been or would thereby be paid in full, refunded to the
Company), and the provisions of this Agreement immediately be deemed reformed
and the amounts thereafter collectible hereunder reduced, without the necessity
of the execution of any new document, so as to comply with the applicable law,
but so as to permit the recovery of the fullest amount otherwise called for
hereunder. The right to accelerate maturity of the Note does not include the
right to accelerate any interest which has not otherwise accrued on the date of
such acceleration, and the Purchaser does not intend to collect any unearned
interest in the event of acceleration.
4.12 Right of First Refusal. Subject to the terms and conditions
specified in this paragraph 4.12 the Company hereby grants to the Purchaser a
right of first refusal with respect to any sale by the Company or any of its
subsidiaries of any non-metals companies, divisions, subsidiaries or product
lines, whether through the sale of securities or assets but excluding any sale
of all or substantially all of the Company's securities or assets (a "Non-Metals
Sale") during the six month period commencing on the Closing (the "Right of
First Refusal Period"). Each time the Company proposes to enter into a
Non-Metals Sale during the Right of First Refusal Period, the Company shall
first give the Purchaser the right of first refusal with respect to such
Non-Metals Sale in accordance with the following provisions:
(a) The Company shall deliver a notice pursuant to Section 4.9
to the Purchaser in the event that a third party has indicated an
interest in entering into a Non-Metals Sale and the Company shall give
the Purchaser the same opportunity to conduct a due diligence review as
the potential purchaser.
(b) After the completion of any such due diligence period, the
Company shall
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deliver a notice pursuant to Section 4.9 ("Sale Notice") to the
Purchaser stating (i) its bona fide intention to enter into a
Non-Metals Sale with the third party and (ii) the terms and conditions
of the Non-Metals Sale.
(c) Within thirty (30) days after mailing of the Notice, the
Purchaser may elect to enter into the Non-Metals Sale with the Company,
at the price and on the terms specified in the Notice.
(d) The Company may, during the 120-day period following the
expiration of the period provided in subsection 4.12(c) hereof, enter
into a Non-Metals Sale to any person or persons upon terms no more
favorable to the offeree than, those specified in the Notice. If the
Company does not consummate the proposed Non-Metals Sale within such
period, the right provided hereunder shall be deemed to be revived and
such transaction shall not be entered into unless first re-offered to
the Purchaser in accordance herewith.
IN WITNESS WHEREOF, this Agreement has been duly executed as of the day
and year first above written.
CONSOLIDATED CAPITAL
OF NORTH AMERICA, INC,
By:
-----------------------------
Name:
Title:
PURCHASER
By:
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Name:
Title:
