EXHIBIT 10.40
NORD RESOURCES CORPORATION
DEBT CONVERSION AGREEMENT
THIS DEBT CONVERSION AGREEMENT (the "Agreement") is entered into and made
effective as of the 25th day of October, 2005 (the "Effective Date"), by and
between XXXXXX, XXXXXX & XXXXXXX, P.A., a professional association organized and
existing under the laws of the State of New Mexico (the "Investor"), and NORD
RESOURCES CORPORATION, a corporation organized and existing under the laws of
the State of Delaware (the "Company").
RECITALS
WHEREAS, the Investor is in the business of providing legal services for
compensation, and has its principal place of business in the City of
Albuquerque, County of Bernalillo, State of New Mexico; and
WHEREAS, the Company has incurred indebtedness to the Investor in the
stated amount of Two Hundred Thirty Nine Thousand Four Hundred Sixty-Two Dollars
and Seventy-Four Cents ($239,462.74) for legal services rendered prior to the
date hereof (the "Debt"); and
WHEREAS, the Company has requested, and the Investor has agreed, to accept
shares of restricted common stock from the Company in settlement and full
satisfaction of the Debt, subject to the terms and conditions set forth in this
Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing premises, and the mutual
promises and covenants contained in this Agreement, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties, intending to be legally bound, hereby agree as
follows:
1. Company Obligations. Not less than five (5) days prior to the Effective
Date of this Agreement, the Company shall have filed with the New Mexico
Securities Division a notice of this contemplated transaction on Form 27-U,
in accordance with the provisions of Section 12.11.12.16 of the New Mexico
Administrative Code, and Section 58-13B-27(U) of the New Mexico Revised
Statutes (the "Applicable Securities Laws"). Promptly upon the execution of
this Agreement, the Company shall issue to the Investor a stock certificate
evidencing the Investor's ownership of 239,463 shares of its capital common
stock (the "Repayment Shares"), at an effective purchase price of One
Dollar ($1.00) per Repayment Share. The parties have further agreed that,
in the event any shares of common stock are sold by the Company to an
investor in any similar debt conversion transaction for less than the price
of One Dollar ($1.00) per share
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within twelve (12) months from the Effective Date, then the price of the
Repayment Shares shall be adjusted to reflect the lower purchase price
through the issuance of additional Repayment Shares to the Investor.
2. Investor Obligation. In consideration and payment in full for the issuance
and delivery of the Repayment Shares to the Investor in accordance with the
provisions of Section 1 above, the Investor hereby agrees to release and
discharge the Company and its respective successors and assigns from any
and all further liability in respect of the Debt, except for the Company's
performance as expressly required under this Agreement.
3. Legends on Stock Certificates. Each certificate representing Repayment
Shares shall contain the following legends on the reverse of such
certificate:
THIS SECURITY HAS NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE
COMMISSION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"),
OR ANY STATE SECURITIES DEPARTMENT, IN RELIANCE UPON THE EXEMPTION
FROM REGISTRATION PROVIDED IN SECTION 4(2) OF THE ACT AND REGULATION D
THEREUNDER. AS SUCH, THE PURCHASE OF THIS SECURITY WAS NECESSARILY
WITH THE INTENT OF INVESTMENT AND NOT WITH A VIEW FOR DISTRIBUTION.
THEREFORE, ANY SUBSEQUENT TRANSFER OF THIS SECURITY OR ANY INTEREST
THEREIN WILL BE UNLAWFUL UNLESS IT IS REGISTERED UNDER THE ACT OR
UNLESS AN EXEMPTION FROM REGISTRATION IS AVAILABLE. FURTHERMORE, IT IS
UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THIS SECURITY, OR ANY
INTEREST THEREIN, WITHOUT THE OPINION OF COUNSEL FOR THE COMPANY THAT
THE PROPOSED TRANSFER OR SALE DOES NOT AFFECT THE EXEMPTIONS RELIED
UPON BY THE COMPANY IN ORIGINALLY DISTRIBUTING THIS SECURITY.
THIS SECURITY HAS NOT BEEN REGISTERED WITH THE NEW MEXICO SECURITIES
DIVISION UNDER THE NEW MEXICO SECURITIES ACT, OR ANY OTHER LAW, AND
MAY NOT BE RESOLD TO ANY PERSON UNLESS AND UNTIL SUCH REGISTRATION HAS
OCCURRED OR PURSUANT TO AN EXEMPTION FROM REGISTRATION PERMITTED BY
THE APPLICABLE SECURITIES LAWS AND REGULATIONS OF THE STATE OF NEW
MEXICO.
4. Investor Representations. The Investor hereby represents and warrants to
the Company, as of the date hereof, the following:
(a) the Investor is a professional association duly organized and validly
existing under the laws of the State of New Mexico, and has full power
and authority to enter into, execute and perform this Agreement, which
Agreement, once executed by the Investor, shall be the valid and
binding obligation of such party, enforceable against such party by
any court of competent jurisdiction in accordance with its terms;
(b) the individuals signing this Agreement on behalf the Investor are the
duly elected executive officers of the Investor, and have full power
and authority to enter into and execute this Agreement for and on
behalf of the Investor;
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(c) with respect to the Repayment Shares being acquired by the Investor:
(i) the Investor is acquiring the Repayment Shares for its own
account, and not with a view toward the subdivision, resale,
distribution, or fractionalization thereof; the Investor has no
contract, undertaking, or arrangement with any person to sell,
transfer, or otherwise dispose of the Repayment Shares (or any
portion thereof hereby subscribed for), and has no present
intention to enter into any such contract, undertaking, agreement
or arrangement;
(ii) the subscription for Repayment Shares by the Investor hereunder
is not the result of any form of general solicitation or general
advertising;
(iii) the Investor hereby acknowledges that: (A) the offering of the
Repayment Shares was made only through direct, personal
communication between the Investor and the Company; (B) the
Investor has had full access to material concerning the Company's
planned business and operations, which material was furnished or
made available to the Investor by officers or representatives of
the Company; (C) the Company has given the Investor the
opportunity to ask any questions and obtain all additional
information desired in order to verify or supplement the material
so furnished; and (D) the Investor understands and acknowledges
that the Repayment Shares are subject to substantial restrictions
upon the transfer thereof, and that a purchaser of the Repayment
Shares must be prepared to bear the economic risk of such
investment for an indefinite period;
(iv) the Investor understands that the Repayment Shares have not been
registered under the Securities Act of 1933 (the "Act") or any
state securities act (nor passed upon by the SEC or any state
securities commission), and that the Repayment Shares may never
be registered or qualified by the Investor under federal or state
securities laws solely in reliance upon an available exemption
from such registration or qualification, and hence such Repayment
Shares cannot be sold unless they are subsequently so registered
or qualified, or are otherwise subject to any applicable
exemption from such registration requirements; and
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(v) the Investor further understands and acknowledges that (A) the
Repayment Shares have not been registered with the New Mexico
Securities Division under the New Mexico Securities Act, or any
other law or regulation, (B) may not be resold to any person
unless and until such registration has occurred or pursuant to an
exemption from registration permitted by the applicable
securities laws and regulations of the State of New Mexico; and
(C) that there are substantial restrictions on transfer of the
Repayment Shares, as set forth by legend on the reverse side of
every certificate evidencing the ownership of the Repayment
Shares;
(d) the Investor is an "accredited investor" as such term is defined in
Rule 501 of Regulation D promulgated by the Securities and Exchange
Commission under the Act, or is a sophisticated investor meeting the
minimum standards for an investment in an unregistered security under
the Applicable Securities Laws; and
(e) the Investor has been advised to consult with an attorney regarding
legal matters concerning the purchase and ownership of the Repayment
Shares, and with a tax advisor regarding the tax consequences of
purchasing such Repayment Shares.
5. Miscellaneous Provisions.
(a) Notices. All notices, requests, demands and other communications to be
given hereunder shall be in writing and shall be deemed to have been
duly given on the date of personal service or transmission by fax if
such transmission is received during the normal business hours of the
addressee, or on the first business day after sending the same by
overnight courier service or by telegram, or on the third business day
after mailing the same by first class mail, or on the day of receipt
if sent by certified or registered mail, addressed as set forth below,
or at such other address as any party may hereafter indicate by notice
delivered as set forth in this Section 5(a):
If to the Company: Nord Resources Corporation
0000 Xxxxx Xxxxx Xxxxxx
Xxxxxx, XX 00000
Attn: Xxxxxx Xxxxxxxx
President
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If to the Investor: Xxxxxx, Xxxxxx & Xxxxxxx, P.A.
00 Xxxxx Xxxxx, Xxxxx 000
Xxxxxxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxx
(b) Entire Agreement. This Agreement constitutes the entire and final
agreement and understanding between the parties with respect to the
subject matter hereof and the transactions contemplated hereby, and
supersedes any and all prior oral or written agreements, statements,
representations, warranties or understandings between the parties, all
of which are merged herein and superseded hereby.
(c) Counterparts; Facsimiles. 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.
Facsimiles of original signatures shall be deemed original signatures
for all purposes.
(d) Further Documents and Acts. Each party agrees to execute such other
and further documents and to perform such other and further acts as
may be reasonably necessary to carry out the purposes and provisions
of this Agreement.
(e) Governing Law; Venue. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of Arizona
applicable to contracts to be performed within that state, without
giving effect to the law of conflicts of laws applied thereby. In the
event either party shall be forced to bring any legal action to
protect or defend its rights hereunder, then the prevailing party in
such proceeding shall be entitled to reimbursement from the
non-prevailing party of all fees, costs and other expenses (including,
without limitation, the reasonable expenses of its attorneys) in
bringing or defending against such action.
(f) Severable Provisions. The provisions of this Agreement are severable,
and if any one or more provisions is determined to be illegal,
indefinite, invalid or otherwise unenforceable, in whole or in part,
by any court of competent jurisdiction, then the remaining provisions
of this Agreement and any partially unenforceable provisions to the
extent enforceable in the pertinent jurisdiction, shall continue in
full force and effect and shall be binding and enforceable on the
parties.
[SIGNATURES APPEAR ON THE FOLLOWING PAGE]
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
and year first written above.
THE COMPANY:
NORD RESOURCES CORPORATION: ATTEST:
By: /s/ Xxxxxx Xxxxxxxx By: /s/ Secretary
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Xxxxxx Xxxxxxxx Secretary
President
THE INVESTOR:
XXXXXX, XXXXXX & XXXXXXX, P.A.: ATTEST:
By: /s/ Xxxxxx X. Xxxxxx/for By: /s/ Vice President
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Xxxxxxx X. Xxxxxx Vice President
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