SUBSCRIPTION AGREEMENT BETWEEN NET ELEMENT, INC. AND ENERFUND, LLC
EXHIBIT 10.34
BETWEEN
AND
ENERFUND,
LLC
THIS
SUBSCRIPTION AGREEMENT (this “Agreement”) is made and
entered into as of this 31st day of
December 2010, by and between NET ELEMENT, INC., a corporation organized and
existing under the laws of the State of Delaware (the “Company”), and ENERFUND, LLC,
a Florida limited liability company (the “Investor”).
Recitals
A. The
Company desires to issue, and the Investor desires to acquire an aggregate of
200,000,000 shares of Common Stock (the “Stock”) and warrants to
purchase 100,000,000 shares of the Company’s Common Stock at a purchase price of
$0.05 per share (the “Warrants”) as consideration for the Investor’s investment
of $2,000,000 (the “Investment”) in the Company.
B. The
Company and the Investor believe that it is in their respective best interests
to have the Company issue the Shares and the Warrants and have Investor acquire
the issued Stock in accordance with the terms of this Agreement.
C. Capitalized
terms used but not otherwise defined herein shall have the meanings set forth in
Schedule II to this Agreement.
Agreement
NOW
THEREFORE, in consideration of the premises and mutual covenants set forth in
this Agreement, and such other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Company and the Investor hereby
agree as follows:
1. Authorization and
Subscription for Units.
1.1 Authorization. The
Company has duly authorized the sale and issuance of the Shares, pursuant to the
terms and conditions contained in this Agreement.
1.2 Issuance of Stock and
Warrants; Consideration. Subject to the terms and conditions
of this Agreement, upon the execution of this Agreement and reclassification of
the $2,000,000 previously transferred to the Company as equity (the “Purchase Price”) and other
good and valuable consideration to the Company by Investor, the Company will
transfer and issue to the Investor and the Investor shall acquire the Shares and
the Warrants.
1.3 Use of
Proceeds. The Company shall use the proceeds received from the
issuance of the Shares as operating funds for the Company’s
business.
2. The
Closing.
The
closing (the “Closing”)
of the sale and purchase of the Shares under this Agreement shall take place as
of the Effective Date (the “Closing Date”). At
the Closing:
2
(a) Execution of
Agreements. The Company and the Investor shall execute and deliver this
Agreement.
(b) Conditions to Closing by the
Company. The obligations of the Company under this Agreement
are subject to satisfaction of the following conditions at or prior to each
Closing Date, any of which may be waived by the Company in writing:
(i) All
documents reasonably requested from the Investor by the Company pursuant to this
Agreement shall have been previously delivered to the Company by the
Investor.
(iii) All
the representations and warranties of the Investor contained in this Agreement
shall be true and complete in all material respects and the Investor shall have
performed all obligations and complied in all material respects with all
agreements, undertakings, covenants and conditions required by it to be
performed at or prior to each Closing.
(c) Conditions to Closing by the
Investor. The obligations of the Investor under this Agreement
are subject to satisfaction of the following conditions at or prior to each
Closing Date, any of which may be waived by the Investor in
writing:
(i) All
documents reasonably requested from the Company by the Investor pursuant to this
Agreement shall have been previously delivered to the Investor by the
Company.
(ii) The
Investor shall have received a resolution of the Board of Directors of the
Company authorizing the execution of this Agreement.
(iii) All
the representations and warranties of the Company contained in this Agreement
shall be true and complete in all material respects and the Company shall have
performed all obligations and complied in all material respects with all
agreements, undertakings, covenants and conditions required by it to be
performed at or prior to each Closing.
3. Representations and
Warranties of the Company. The Company hereby represents and
warrants as follows:
(a) Authorization
of Transaction. The Company has full power
and authority to execute, deliver and perform this Agreement to which it is, or
is specified to be, a party. The Board of Directors of the Company
have duly authorized and approved this Agreement and the transactions
contemplated hereby. This Agreement has been, or when executed, will
be, duly executed and delivered by the Company and constitute legal, valid and
binding obligations of the Company enforceable in accordance with their
respective terms.
(b) No
Contravention. Neither the execution and
the delivery of this Agreement, nor the consummation of the transactions
contemplated hereby or thereby, shall (with or without notice or lapse of time
or both) (i) violate any Law or Order to which the Company or its assets are
subject, (ii) violate or conflict with the provisions of the charter or bylaws
of the Company, (iii) conflict with, result in a breach of, constitute a default
under, result in the acceleration or material modification of, create for any
party the right to accelerate, terminate, materially modify or cancel, or
require any notice under any material Contract or material License to which the
Company is a party or by which the Company is bound or to which its assets are
subject, or (iv) result in the imposition of any material Lien, other than a
Permitted Lien, upon any of the material properties or assets of the
Company. No material consent, approval or authorization of, or
registration or filing with, any Governmental or Regulatory Body or other Person
is required in connection with the execution or delivery by the Company of this
Agreement.
3
(c) Organization. The Company is duly
organized, validly existing and in good standing under the Laws of the State of
Delaware. The Company has all requisite corporate power and authority
to own, operate or lease its assets and to conduct its business as presently
conducted and, as applicable, to enter into this Agreement and to consummate the
transactions contemplated herein and therein. The Company is duly
authorized to conduct business and is in good standing in each jurisdiction
where such authorization is required to conduct its business as currently
conducted by it. The Company has previously made available to
Investor copies of the organizational documents of the Company, as currently in
effect, and the Company is not in default in the performance, observation or
fulfillment of its obligations under such organizational
documents.
(d) The
Shares. The
Shares will be legally issued, fully paid, and non-assessable and Investor will
receive good and marketable title to the Shares free and clear of all Liens,
except as prohibited by the securites’ laws of the United
States.
(e) Litigation. The Company knows of no
outstanding Order applicable to the Company or its assets; (ii) is not a party
to any Action or Proceeding; or (iii) has been threatened in writing to be made
a party to any Action or Proceeding with respect to any threat by a
Person.
(f) Books and
Records. The
minute books of the Company, as previously made available to the Investor and
its representatives, contain in all material respects accurate records of all
meetings of and all corporate actions or written consents by the Board of
Directors of the Company.
(g) Disclosure. No representation or
warranty contained in this Section 3 contains any untrue statement of a
material fact or omits to state a material fact necessary in order to make the
statements herein or therein, in the light of the circumstances under which they
were made, not misleading.
(h) Brokers’
Fees. The
Company has no Liability to pay any fees or commissions to any broker,
investment banker, finder or agent with respect to the transactions contemplated
by this Agreement for which Investor could become liable or
obligated.
4. Representations and
Warranties of the Investor. The Investor hereby represents,
warrants and agrees as follows:
(a) Due Execution. This
Agreement has been duly executed and delivered by the Investor and constitutes
valid and binding obligations of the Investor which shall be enforceable in
accordance with its terms, subject as to enforceability to any applicable
bankruptcy, insolvency, debtors’ relief, receivership, reorganization, or other
similar statutes and equitable principles that may govern the enforcement of
creditors’ rights generally.
4
(b) Authorization of
Transaction. The Investor has full legal right and power and all
authority and approval required (i) to execute and deliver, or authorize
execution and delivery of, this Agreement and all other instruments executed and
delivered by the Investor in connection with the purchase of the Shares, and
(ii) to purchase and hold such Shares.
(c) No Contravention. The
execution of and performance of the transactions contemplated by this Agreement
and compliance with their respective provisions by the Investor will not (i)
require on the part of the Investor any filing with, or any permit,
authorization, consent or approval of, governmental entity, or (ii) violate any
order, writ, injunction, decree, statute, rule or regulation applicable to the
Investor or any of its properties or assets.
(d) Restrictions on
Transfer. The Investor is aware that it cannot sell or otherwise transfer
the Shares in the United States without registration under applicable federal or
state securities laws or without an exemption therefrom, and is aware that the
Investor will be required to bear the financial risks of the Investor’s purchase
for an indefinite period of time because, among other reasons, the Shares have
not been and are not anticipated to be registered with the U.S. Securities and
Exchange Commission or any regulatory authority of any State and, therefore,
cannot be transferred or resold unless they are subsequently registered under
applicable federal and state securities laws or an exemption from such
registration is available.
(e) Accredited
Investor. The Investor is an “Accredited Investor” within the
meaning of the definition set forth in Regulation D of the Securities
Act.
(f) Disclosure. No
representation or warranty contained in this Section 4 contains any untrue
statement of a material fact or omits to state a material fact necessary in
order to make the statements herein or therein, in the light of the
circumstances under which they were made, not misleading.
(g) Brokers’
Fees. The Investor has no Liability to pay any fees or
commissions to any broker, investment banker, finder or agent with respect to
the transactions contemplated by this Agreement for which Company could become
liable or obligated.
5. Binding
Agreement. This Agreement and the representations and
warranties contained herein shall be binding upon and inure to the benefit of
any heirs, executors, administrators, successors and assigns of each party
hereto, and shall survive the purchase and issuance of the Shares.
6. Amendment and
Modification. Neither this Agreement nor any provisions hereof
shall be modified, discharged or terminated except by an instrument in writing
executed by the parties hereto.
7. Counterparts. This
Agreement may be executed through the use of separate signature pages or in any
number of counterparts, and each of such counterparts shall, for all purposes,
constitute one agreement binding on all the parties, notwithstanding that all
parties are not signatories to the same counterpart.
5
8. Entire Agreement.
This Agreement contains the entire agreement of the parties, and there are no
representations, covenants or other agreements except as stated or referred to
herein.
9. Assignment. This
Agreement is not transferable or assignable by either party without the express
written consent of the other party.
10. Governing Law. This
Agreement shall be governed by and construed under the laws of the State of
Florida.
11. Section Headings. The
titles and subtitles used in this Agreement are used for convenience only and
are not to be considered in construing or interpreting this
Agreement.
12. Notices. Unless
otherwise provided, any notice required or permitted under this Agreement shall
be given in writing and shall be deemed effectively given upon personal delivery
to the party to be notified by hand or professional courier service or two (2)
business days after deposit with the United States Post office, by registered or
certified mail, postage prepaid and addressed to the party to be notified at the
address indicated for such party on the signature page hereof, or at such other
address as such party may designate by ten (10) calendar days’ advance written
notice to the other parties.
13. Survival of
Representations. All of the representations and warranties of
the Parties contained in this Agreement shall survive the Closing and continue
in full force and effect until the expiration of any applicable statutes of
limitations.
6
IN WITNESS WHEREOF, the
undersigned has executed this Agreement this 31st day of
December, 2010.
By: /s/ Xxxxxxxx
New
Name: Xxxxxxxx
New
Title: CFO
ENERFUND,
LLC
By: /s/ Xxxx
Xxx
Name: Xxxx
Xxx
Title: Managing
Member
7
Schedule
I
Definitions
“Action” or “Proceeding” means any action, hearing, proceeding
(public or private), arbitration or suit (whether civil, criminal,
administrative or investigative) commenced, brought or conducted by any Person,
or any investigation or audit by any Governmental or Regulatory
Body.
“Agreement” has the meaning set forth in the
preface, and shall include all Disclosure Schedules and Exhibits which are
incorporated in this Agreement by this reference.
“Company” means the Company and its
Subsidiaries.
“Contract” means any contract, agreement,
subcontract, indenture, note, bonds (including surety bond), loan, instrument,
lease, mortgage, franchise, license, assignment, purchase order, sale order,
proposal, bid, understanding, commitment, whether written or oral, that is
legally binding.
“Governmental
Authorization” or “License” means any consent, license,
registration, authorization or permit issued, granted, given or otherwise made
available by or under the authority of any Governmental or Regulatory Body or
pursuant to any Law.
“Governmental
or Regulatory Body” means, collectively, any
(i) nation, state, county, city, town, village, district or other
jurisdiction of any nature, (ii) federal, state, local, municipal or other
governmental organization or body, (iii) governmental or quasi-governmental
authority of any nature (including any governmental agency, branch, department,
official or entity and any court or other tribunal), or (iv) body
exercising, or entitled to exercise, any administrative, executive, judicial,
legislative, regulatory or Taxing Authority of any nature.
“Knowledge” means, with respect to the Company, the
actual knowledge of an executive officer of the Company, and in each such case,
the knowledge that a reasonably prudent person would be expected to have acting
in such person’s capacity in the conduct of the Business.
“Law” means any law, statute, rule,
regulation, ordinance and other pronouncement having the effect of law of the
United States of America, the State of Florida, any foreign country or any
domestic or foreign state, county, city or other political subdivision of any
Governmental or Regulatory Body.
“Liabilities” means any direct or indirect liability,
indebtedness, claim, loss, damage, deficiency, obligation, penalty,
responsibility, cost or expense, fixed or unfixed, xxxxxx or inchoate,
liquidated or unliquidated, secured or unsecured, accrued, absolute, known or
unknown, contingent or otherwise.
“Lien” means any mortgage, lien, pledge,
charge, security interest, claim, contractual restriction, easement,
right-of-way, option, conditional sale or installment contract or encumbrance of
any kind.
8
“Order” means any decision, award, writ,
judgment, decree, ruling, verdict, injunction, assessment, penalty, or similar
order made, issued or entered by, or settlement with, any Governmental or
Regulatory Body or arbitrator.
“Party” and “Parties” have the meanings set forth in the
preface.
“Person” means an individual, a partnership, a
corporation, an association, a joint stock company, a trust, a joint venture, an
unincorporated organization or a governmental entity (or any department, agency
or political subdivision thereof).
“SEC” means the Securities and Exchange
Commission.
“Securities
Act”
means the Securities Act of
1933, as amended, and all rules and regulations issued pursuant
thereto.
“Subsidiary” means, with respect to any Person, any
corporation, association or other Person of which securities or other interests
having the power to elect a majority of that corporation’s or other Person’s
board of directors or similar governing body, or otherwise having the power to
direct the business and policies of that corporation or other Person (other than
securities or other interests having such power only upon the happening of a
contingency that has not occurred), are held by such Person or one or more of
its Subsidiaries.
9
