SECURITIES PURCHASE AGREEMENT
W2
Energy, Inc.
____________________________
__________________________
This
Securities Purchase Agreement (this “Agreement”) is made and entered into
effective as of March 30, 2009 (the “Effective Date”) by and between W2 Energy,
Inc., a Nevada corporation (the “Company”), and Access Capital Fund I, LLC, a
Nevada limited liability company (the “Purchaser”). The Company and
Purchaser shall each be referred to as a “Party” and collectively as the
“Parties.”
1. PURCHASE OF
SECURITIES: On the Closing Date (as hereinafter defined),
subject to the terms and conditions set forth in this Agreement, the Purchaser
hereby agrees to purchase, and the Company hereby agrees to sell, a Convertible
Promissory Note of even date herewith (the “Note”) in the original principal
amount of Twenty Five Thousand Dollars ($25,000.00) (the “Purchase
Price”). The Note shall be convertible into common stock of the
Company (the “Conversion Shares” and together with the Note, the
“Securities”).
2. CLOSING AND
DELIVERY:
a) Upon
the terms and subject to the conditions set forth herein, the consummation of
the purchase and sale of the Note (the “Closing”) shall be held simultaneous
with the execution of this Agreement, or at such other time mutually agreed upon
between the constituent Parties (the “Closing Date”). The Closing
shall take place at the offices of the Purchaser set forth in Section 6 hereof,
or by the exchange of documents and instruments by mail, courier, facsimile and
wire transfer to the extent mutually acceptable to the Parties
hereto.
b) At
the Closing:
(i) The
Company shall deliver to the Escrow Agent (as defined in the Escrow Agreement in
the form attached hereto as Exhibit B”) fully
executed copies of the following:
| A. | the Note in the form attached hereto as Exhibit A; | |
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B.
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the
Escrow Agreement in the form attached hereto as Exhibit
B;
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C.
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the
Irrevocable Instruction Letter to Transfer Agent in the form attached
hereto as Exhibit
C;
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D.
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the
Conflict Waiver entered into between the Company and The Lebrecht Group,
APLC; and
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E.
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the
security shares as set forth in Section 4(e)
hereof.
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(ii) The
Company shall deliver to the Purchaser fully executed copies of the
following:
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A.
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the
Auditor Agreement in the form attached hereto as Exhibit D;
and
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B.
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the
Unanimous Written Consent of Directors of the Company in the form attached
hereto as Exhibit
E.
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(iii) The
Purchaser shall deliver to the Escrow Agent the Purchase Price.
3. REPRESENTATIONS, WARRANTIES
AND AGREEMENTS BY PURCHASER: The Purchaser hereby represents,
warrants and agrees as follows:
a) Purchase for Own
Account. Purchaser represents that it is acquiring the Note
solely for its own account and beneficial interest for investment and not for
sale or with a view to distribution of the Securities or any part thereof, has
no present intention of selling (in connection with a distribution or
otherwise), granting any participation in, or otherwise distributing the same,
and does not presently have reason to anticipate a change in such
intention.
b) Ability to Bear Economic
Risk. Purchaser acknowledges that an investment in the
Securities involves a high degree of risk, and represents that it is able,
without materially impairing its financial condition, to hold the Securities for
an indefinite period of time and to suffer a complete loss of its
investment.
c) Access to Information. The
Purchaser acknowledges that the Purchaser has been furnished with such financial
and other information concerning the Company, the directors and officers of the
Company, and the business and proposed business of the Company as the Purchaser
considers necessary in connection with the Purchaser’s investment in the
Note. As a result, the Purchaser is thoroughly familiar with the
proposed business, operations, properties and financial condition of the Company
and has discussed with officers of the Company any questions the Purchaser may
have had with respect thereto. The Purchaser
understands:
(i)
The risks involved in this investment, including the speculative nature of the
investment;
(ii)
The financial hazards involved in this investment, including the risk of losing
the Purchaser’s entire investment;
(iii) The
lack of liquidity and restrictions on transfers of the Securities;
and
(iv) The
tax consequences of this investment.
The
Purchaser has consulted with the Purchaser’s own legal, accounting, tax,
investment and other advisers with respect to the tax treatment of an investment
by the Purchaser in the Note and the merits and risks of an investment
therein.
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d) Securities Part of
Private
Placement. The Purchaser has been advised that the Securities
have not been registered under the Securities Act of 1933, as amended (the
“Act”), or qualified under the securities law of any state, on the ground, among
others, that no distribution or public offering of the Securities is to be
effected and the Securities will be issued by the Company in connection with a
transaction that does not involve any public offering within the meaning of
section 4(2) of the Act and/or Regulation D as promulgated by the Securities and
Exchange Commission under the Act, and under any applicable state blue sky
authority. The Purchaser understands that the Company is relying in
part on the Purchaser’s representations as set forth herein for purposes of
claiming such exemptions and that the basis for such exemptions may not be
present if, notwithstanding the Purchaser’s representations, the Purchaser has
in mind merely acquiring the Securities for resale on the occurrence or
nonoccurrence of some predetermined event. The Purchaser has no such
intention.
e) Further Limitations on
Disposition. Purchaser further acknowledges that the
Securities are restricted securities under Rule 144 of the Act, and, therefore,
any certificates reflecting the ownership interest in the Securities will
contain a restrictive legend substantially similar to the
following:
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THESE
SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE “ACT”). THEY MAY NOT BE SOLD, OFFERED FOR SALE,
PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT AS TO THE SECURITIES UNDER THE ACT OR AN OPINION OF COUNSEL
SATISFACTORY TO THE HOLDER THAT SUCH REGISTRATION IS NOT
REQUIRED.
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f) Accredited Investor
Status.
Purchaser is an “accredited investor” as such term is defined in Rule 501 under
the Act because Purchaser was not formed for the purpose of investing in the
Securities, has or will have other substantial business or investments, and each
of its members is an Accredited Investor. For purposes hereof, an
“Accredited Investor” is one that either:
(i)
has a net worth of at least $1,000,000
(including home and personal property), or
(ii)
had an individual income of more than $200,000 in each
of the two most recent calendar years, and reasonably expects to have an
individual income in excess of $200,000 in the current calendar year; or along
with Purchaser’s spouse had joint income in excess of $300,000 in each of the
two most recent calendar years, and reasonably expects to have a joint income in
excess of $300,000 in the current calendar year.
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For purposes of this Agreement,
“individual income” means “adjusted gross income” as reported for Federal income
tax purposes, exclusive of any income attributable to a spouse or to property
owned by a spouse: (i) the amount of any interest income
received which is tax-exempt under Section 103 of the Internal Revenue Code
of 1986, as amended, (the “Code”), (ii) the amount of losses claimed as a
limited partner in a limited partnership (as reported on Schedule E of form
1040), (iii) any deduction claimed for depletion under Section 611 et
seq. of the Code and (iv) any amount by which income from long-term capital
gains has been reduced in arriving at adjusted gross income pursuant to the
provisions of Sections 1202 of the Internal Revenue Code as it was in
effect prior to enactment of the Tax Reform Act of 1986.
For purposes of this Agreement, “joint
income” means, “adjusted gross income,” as reported for Federal income tax
purposes, including any income attributable to a spouse or to property owned by
a spouse, and increased by the following amounts: (i) the amount
of any interest income received which is tax-exempt under Section 103 of
the Internal Revenue Code of 1986, as amended (the “Code”), (ii) the amount of
losses claimed as a limited partner in a limited partnership (as reported on
Schedule E of Form 1040), (iii) any deduction claimed for
depletion under Section 611 et seq. of the Code and (iv) any
amount by which income from long-term capital gains has been reduced in arriving
at adjusted gross income pursuant to the provisions of Section 1202 of the
Internal Revenue Code as it was in effect prior to enactment of the Tax Reform
Act of 1986.
For the purposes of this Agreement,
“net worth” means (except as otherwise specifically defined) the excess of total
assets at fair market value, including home and personal property, over total
liabilities, including mortgages and income taxes on unrealized appreciation of
assets.
g) Purchaser
Authorization. The Purchaser is empowered and duly authorized
to enter into this Agreement under any governing document, partnership
agreement, trust instrument, pension plan, charter, certificate of
incorporation, bylaw provision or the like; this Agreement constitutes a valid
and binding agreement of the Purchaser enforceable against the Purchaser in
accordance with its terms; and the person signing this Agreement on behalf of
the Purchaser is empowered and duly authorized to do so by the governing
document or trust instrument, pension plan, charter, certificate of
incorporation, bylaw provision, board of directors or stockholder resolution, or
the like.
4. REPRESENTATIONS, WARRANTIES
AND AGREEMENTS BY COMPANY: The Company hereby represents,
warrants and agrees as follows:
a) Authority of
Company. The Company has all requisite authority to execute
and deliver this Agreement and to carry out and perform its obligations under
the terms of this Agreement.
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b) Authorization. All
actions on the part of the Company necessary for the authorization, execution,
delivery and performance of this Agreement by the Company and the
performance of the Company’s obligations hereunder has been taken or will be
taken prior to the issuance of the Note. This Agreement, when
executed and delivered by the Company, shall constitute valid and binding
obligations of the Company enforceable in accordance with their terms, subject
to laws of general application relating to bankruptcy, insolvency, the relief of
debtors and, with respect to rights to indemnity, subject to federal and state
securities laws. The Securities will be validly issued, fully paid
and nonassessable, will not violate any preemptive rights, rights of first
refusal, or any other rights granted by the Company, and will be issued in
compliance with all applicable federal and state securities laws, and will be
free of any liens or encumbrances, other than any liens or encumbrances created
by or imposed upon the Purchaser through no action of the Company; provided,
however, that the Securities may be subject to restrictions on transfer under
state and/or federal securities laws as set forth herein or as otherwise
required by such laws at the time the transfer is proposed.
c) Governmental
Consents. All consents, approvals, orders, or authorizations
of, or registrations, qualifications, designations, declarations, or filings
with, any governmental authority required on the part of the Company in
connection with the valid execution and delivery of this Agreement, the offer,
sale or issuance of the Securities, or the consummation of any other transaction
contemplated hereby shall have been obtained, except for notices required or
permitted to be filed with certain state and federal securities commissions,
which notices will be filed on a timely basis.
d) Escrow Agreement; Distribution of
Proceeds. The Company agrees to enter into the Escrow
Agreement, a copy of which is attached hereto as Exhibit B (the
“Escrow Agreement”), which provides for the distribution of the Purchase Price
and the release of the Conversion Shares upon conversion of the
Note.
e) Security
Shares. The Company agrees to deposit with the escrow agent
under the Escrow Agreement that number of shares of its common stock equal to
four (4) times the number of shares necessary to convert the Note on the date
hereof. The Company further agrees to replenish the shares of its
common stock held in escrow at the request of the Purchaser so that the number
of shares is always equal to at least two (2) times the number of shares
necessary to convert the Note.
f) Irrevocable Instruction Letter to
Transfer Agent; No Change in Transfer Agent. The Company
agrees to execute the Irrevocable Instruction Letter to Transfer Agent as set
forth in Exhibit
C attached hereto and further agrees that it shall not, in any case,
revoke the Irrevocable Instruction to Transfer Agent or prevent or obstruct in
any way the ability of the escrow agent under the Escrow Agreement to transfer
the shares held in escrow. The Company further agrees that as long as
the Note remains outstanding, the Company will not change transfer agents
without the express written consent of the Purchaser.
g) Registration
Rights. If the Company at any time proposes to register any of
its securities under the Act, including under an S-1 Registration Statement or
otherwise, it will each such time give written notice to Purchaser of its
intention so to do. Upon the written request of Purchaser given
within 30 days after receipt of any such notice, the Company will use its best
efforts to cause all shares underlying the conversion of the Note to be
registered under the Act (with the securities which the Company at the time
propose to register). All expenses incurred by the Company in
complying with this section, including without
limitation all registration and filing fees, listing fees, printing expenses,
fees and disbursements of all independent accountants, or counsel for the
Company and the expense of any special audits incident to or required by any
such registration and the expenses of complying with the securities or blue sky
laws of any jurisdiction shall be paid by the Company.
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5. MISCELLANEOUS:
a) Binding
Agreement. The terms and conditions of this Agreement shall
inure to the benefit of and be binding upon the respective successors and
assigns of the Parties. Nothing in this Agreement, expressed or
implied, is intended to confer upon any third party any rights, remedies,
obligations, or liabilities under or by reason of this Agreement, except as
expressly provided in this Agreement.
b) Governing Law;
Venue. This Agreement shall be governed by and construed under
the laws of the State of Utah as applied to agreements among Utah residents,
made and to be performed entirely within the State of Utah. The
Parties agree that any action brought to enforce the terms of this Agreement
will be brought in the appropriate federal or state court having jurisdiction
over Salt Lake County, Utah, United States of America.
c) Counterparts. This
Agreement may be executed in one or more counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
instrument.
d) Titles and
Subtitles. 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.
e) Notices
to be given hereunder shall be in writing and shall be deemed to have been
sufficiently given if delivered personally or sent by overnight courier, or by
facsimile transmission. Notice shall be deemed to have been received
on the date and time of personal or overnight delivery or facsimile
transmission, if received during normal business hours of the recipient; if not,
then on the next business day.
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Notices
to the Company shall be sent to:
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W2
Energy, Inc.
00
Xxxxxxx Xxxxxx
Xxxxxxx,
Xxxxxxx
Xxxxxx X0X0X0
Attn: Xxxx
XxXxxxx
Facsimile
No.: (000) 000-0000
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Notices
to the Holder shall be sent to:
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Access
Capital Fund I, LLC
0000
X. Xxxxxxxxx Xxx, Xxxxx 000
Xxxx,
Xxxx 00000
Attn: Xxxxxxx
Xxxxxxxxxx, Manager
Facsimile
No.: ________________
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f) Modification;
Waiver. No modification or waiver of any provision of this
Agreement or consent to departure therefrom shall be effective unless in writing
and approved by the Company and the Purchaser.
g) Entire Agreement;
Successors. This Agreement and the Exhibits hereto constitute
the full and entire understanding and agreement between the Parties with regard
to the subjects hereof and no Party shall be liable or bound to the other Party
in any manner by any representations, warranties, covenants and agreements
except as specifically set forth herein. The representations,
warranties and agreements contained in this Agreement shall be binding on the
Purchaser’s successors, assigns, heirs and legal representatives and shall inure
to the benefit of the respective successors and assigns of the Company and its
directors and officers.
h) Expenses. Each
Party shall pay their own expenses in connection with this
Agreement. In addition, should either Party commence any action, suit
or proceeding to enforce this Agreement or any term or provision hereof, then in
addition to any other damages or awards that may be granted to the prevailing
Party, the prevailing Party shall be entitled to have and recover from the other
Party such prevailing Party’s reasonable attorneys’ fees and costs incurred in
connection therewith.
i) Currency. All
currency is expressed in U.S. dollars.
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of page intentionally left blank; signature page to follow]
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IN
WITNESS WHEREOF, the Parties have
executed this Securities Purchase Agreement as of the date first
written above.
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“Company”
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“Purchaser”
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W2
Energy, Inc.,
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Access
Capital Fund I, LLC,
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a
Nevada corporation
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a
Nevada limited liability company
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| /s/ Xxxxxxx XxXxxxx | /s/ Xxxxxxx Xxxxxxxxxx | ||
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By: Xxxxxxx
XxXxxxx
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By: Xxxxxxx
Xxxxxxxxxx
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Its: President
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Its: Manager
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Exhibit
A
Note
A-1
Exhibit
B
Escrow
Agreement
B-1
Exhibit
C
Irrevocable
Instruction Letter to Transfer Agent
C-1
Exhibit
D
Auditors
Agreement
D-1
Exhibit
E
Unanimous
Written Consent of Directors of Company
E-1
