INVESTMENT AGREEMENT
THIS
INVESTMENT AGREEMENT (this “Agreement”),
dated
as of February 13, 2006, is made by and among BARNABUS
ENERGY, INC., a
Nevada
corporation (the “Company”),
and
the purchasers listed on the signature page hereto (each a “Purchaser” and
collectively the “Purchasers”).
RECITALS
WHEREAS,
on the terms and subject to the conditions set forth in this Agreement, the
Company desires to issue and sell the Purchased Securities to the Purchasers;
and
WHEREAS,
subject to the terms and conditions set forth in this Agreement, the Purchasers
wish to acquire the Purchased Securities;
NOW,
THEREFORE, in consideration of the premises and the mutual covenants contained
in this Agreement, the parties agree as follows:
ARTICLE
I
DEFINITIONS
For
all
purposes of this Agreement the following terms have the meanings set forth
in
this Article I.
“Business
Day”
means
any day other than a Saturday, Sunday or other day on which commercial banks
in
the State of California are authorized or required by law or executive order
to
close.
“Charter”
means
the articles or certificate of incorporation or formation, statute,
constitution, joint venture or partnership agreement, limited liability company
agreement or articles or other organizational document of any Person other
than
an individual, each as from time to time amended or modified.
“Closing”
has
the
meaning specified in Section 2.2.
“Closing
Date”
has
the
meaning specified in Section 2.2.
“Common
Stock”
means
the common stock of the Company, par value $0.001 per share, and any securities
into which such common stock may hereafter be converted or reclassified.
“Company”
has
the
meaning specified in the introduction to this Agreement.
“Debentures”
means
an aggregate of $5 million in principal amount of 0% 30-month subordinated
debentures in substantially the form set forth on Exhibit A-I issued to the
respective Purchasers in the respective principal amounts set forth opposite
each such Purchaser's name on the signature page hereto.
“Exchange
Act”
means
the Securities Exchange Act of 1934, as amended.
“Person”
means
an individual, partnership, corporation, limited liability company, association,
trust, joint venture, unincorporated organization or other entity and any
government, governmental department or agency or political subdivision
thereof.
“Purchased
Securities”
means
the Debentures and the Warrants.
“Purchaser”
and
“Purchasers”
has
the
meaning specified in introduction to this Agreement.
“Registration
Rights Agreement”
means
that certain Registration Rights Agreement of even date herewith by and between
the Company and the Purchasers, substantially in the form set forth on
Exhibit A-III.
“Securities
Act”
means
the United States Securities Act of 1933, as amended.
“Warrants”
means
warrants to purchase shares of Common Stock in substantially the form set forth
on Exhibit A-II issued to the respective Purchasers in the respective l amounts
set forth opposite each such Purchaser's name on the signature page
hereto.
ARTICLE
II
SALE
AND PURCHASE OF PURCHASED SECURITIES
SECTION
2.1.
Investment
Transactions.
(a)
Sale
and Purchase of the Purchased Securities.
For
value received, and on the terms and subject to all of the conditions set forth
herein, at the Closing, the Company shall issue and sell to the Purchasers,
and
the Purchasers shall purchase, the Purchased Securities in exchange for a
payment to the Company at the Closing of FIVE MILLION DOLLARS ($5,000,000.00),
less fees payable under Section 2.3..
(b)
Deliveries.
At the
Closing, the Company shall deliver to the Purchasers the following:
(i) the
Debentures, duly executed by the Company; and
(ii) the
Warrants duly executed by the Company;
and
the
Purchasers shall deliver to the Company the aggregate sum of FIVE MILLION
DOLLARS ($5,000,000.00) less fees payable under Section 2.3 by wire transfer
in
immediately available funds to an account designated by the Company to the
Purchasers.
SECTION
2.2.
Closing.
The
closing of the purchase and sale of Purchased Securities (the “Closing”)
hereunder shall take place remotely by means of mail, facsimile and electronic
mail (with originally executed documents to be exchanged immediately
thereafter). The Closing shall be held on February 8, 2006 or on such other
date
as may be agreed to by the Purchasers and the Company (the “Closing
Date”).
At
the Closing, (i) the Company shall issue, sell and deliver to each
Purchaser the Purchased Securities to be issued to such Purchaser at such
Closing by executing one or more Debentures and Warrants that in the aggregate
represent such Purchased Securities, a copy of this Agreement and of the
Registration Rights Agreement, sending a copy of the executed signature page
of
a copy of such Purchased Securities, this Agreement and the Registration Rights
Agreement to each such Purchaser by facsimile at the number provided by such
Purchaser for such purpose and placing executed copies of such executed
Purchased Securities, this Agreement and the Registration Rights Agreement
in
the hands of a reputable private delivery service for delivery to such
Purchaser, and (ii) each such Purchaser shall pay the aggregate purchase
price therefor by instructing counsel to wire transfer immediately available
funds to an account designated in writing by the Company, shall execute the
signature page to this Agreement and the Registration Rights Agreement and
send
the same by facsimile to the Company at (000) 000-0000 in the United States
of
America and shall place such executed signature pages in the hands of a
reputable private delivery service for delivery to the Company.
-2-
SECTION
2.3. Attorneys Fees. The Purchasers and the Company acknowledge that
the Purchasers' counsel will deduct, prior to forwarding the $5,000,000 to
the
Company pursuant to Section 2.1(b), outstanding fees to a maximum of
$25,000.
ARTICLE
III
REPRESENTATIONS
AND WARRANTIES OF THE COMPANY
In
order
to induce the Purchasers to enter into this Agreement and to induce the
Purchasers to purchase the Purchased Securities, the Company hereby represents
and warrants, as of the date hereof and as each Closing Date, that:
SECTION
3.1.
Organization
and Good Standing.
The
Company is duly organized, validly existing and in good standing in its
jurisdiction of organization and is duly qualified and authorized to do business
in all other jurisdictions in which the nature of its business or property
makes
such qualification necessary. The Company has the power to own its properties
and to carry on its business as now conducted and as proposed to be
conducted.
SECTION
3.2.
Authorization.
The
execution, delivery and performance by the Company of this Agreement, the
Registration Rights Agreement, and the issuance and sale by the Company of
the
Purchased Securities hereunder: (a) are within the Company’s power and
authority; (b) have been duly authorized by all necessary corporate and
other proceedings; (c) has been duly executed and delivered by an
authorized officer of the Company; and (d) do not and will not result in
the creation of any lien upon any of the Company’s property or conflict with or
result in any breach of any provision of the Company’s Charter, or any law,
regulation, order, judgment, writ, injunction, license, permit, agreement or
instrument to which the Company is subject.
SECTION
3.3.
Enforceability.
The
execution and delivery by the Company of this Agreement, the Registration Rights
Agreement, and the issuance and sale by the Company of the Purchased Securities
hereunder, will result in legally binding obligations of the Company,
enforceable against it in accordance with the respective terms and provisions
hereof and thereof except (i) as limited by applicable bankruptcy, insolvency,
reorganization, moratorium, and other laws of general application affecting
enforcement of creditors’ rights generally, (ii) as limited by laws
relating to the availability of specific performance, injunctive relief or
other
equitable remedies, and (iii) to the extent the indemnification provisions
contained in this Agreement and/or in the Registration Rights Agreement may
be
limited by applicable federal or state securities laws.
-3-
SECTION
3.4.
SEC
Reports.
The
Company has filed all reports required to be filed by it under the Securities
Act and the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof,
for the year preceding the date hereof (the foregoing reports, including the
exhibits thereto, being collectively referred to herein as the “SEC
Reports”).
As of
their respective dates, the SEC Reports complied in all material respects with
the requirements of the Securities Act and the Exchange Act and the rules and
regulations of the U.S. Securities Exchange Commission promulgated thereunder,
and none of the SEC Reports, when filed, contained any untrue statement of
a
material fact or omitted to state a material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
ARTICLE
IV
REPRESENTATIONS
OF THE PURCHASERS
SECTION
4.1.
Investment
Intent.
Each
Purchaser hereby represents, warrants and covenants to the Company that such
Purchaser will acquire the Purchased Securities to be purchased by the Purchaser
hereunder (and the securities received upon exercise or conversion thereof)
for
investment only for fully managed accounts not with a view to the sale of any
part thereof. The Purchaser hereby agrees that it will not transfer the
Purchased Securities or any securities received upon conversion or exercise
thereof in a manner that will violate the Securities Act.
SECTION
4.2.
Authorization.
Each
Purchaser hereby represents and warrants to the Company that each of this
Agreement and the Registration Rights Agreement has been executed by a duly
authorized Person on its behalf; and its execution, delivery and performance
hereof have been duly authorized by all appropriate action and do not and will
not conflict with or result in any breach of any provision of any law,
regulation, order, judgment, writ, injunction, license, permit, agreement or
instrument to which it is subject.
SECTION
4.3.
Enforceability.
Each
Purchaser hereby represents and warrants that the execution and delivery by
it
of this Agreement and the Registration Rights Agreement will result in legally
binding obligations of it enforceable against it in accordance with the
respective terms and provisions hereof and thereof except (i) as limited by
applicable bankruptcy, insolvency, reorganization, moratorium, and other laws
of
general application affecting enforcement of creditors’ rights generally, (ii)
as limited by laws relating to the availability of specific performance,
injunctive relief or other equitable remedies, and (iii) to the extent the
indemnification provisions contained in the Registration Rights Agreement may
be
limited by applicable federal or state securities laws.
SECTION
4.4.
Exemption.
Each
Purchaser understands that the Purchased Securities and any securities received
upon exercise or conversion of the Purchased Securities are not registered
under
the Securities Act on the grounds that the sale provided for in this Agreement
and the issuance of securities hereunder is exempt from registration under
the
Securities Act pursuant to section 4(2) thereof and Regulation S thereunder,
and
that the Company’s reliance on such exemptions is predicated on the Purchaser’s
representations set forth herein.
-4-
SECTION
4.5.
Experience.
Each
Purchaser represents that it has substantial experience in evaluating and
investing in private placement transactions of securities in companies similar
to the Company, is familiar with the risks associated with the business and
operations of the Company, has such knowledge and experience in financial and
business matters as to be capable of evaluating the merits and risks of its
investment, and has the ability to bear the economic risks of its investment
for
an indefinite period of time, including the risk of a complete loss of the
Purchaser’s investment in the Purchased Securities. The Purchaser represents
that it has had, during the course of the transaction and prior to the purchase
of the Purchased Securities, the opportunity to request information from and
ask
questions of the Company and its officers, employees and agents, concerning
the
Company, its assets, business and operations and to receive information and
answers to such requests and questions.
SECTION
4.6.
Restricted
Securities.
The
Purchaser understands that the Purchased Securities and any securities received
upon exercise or conversion thereof are “restricted securities” under the U.S.
federal securities laws inasmuch as they are being acquired from the Company
in
a transaction not involving a public offering and that under such laws and
applicable regulations the Purchased Securities and any securities received
upon
exercise or conversion thereof may be resold without registration under the
Securities Act only in certain limited circumstances. The Purchaser acknowledges
that the Purchased Securities and any securities received upon exercise or
conversion thereof must be held indefinitely unless subsequently registered
under the Securities Act and under applicable state securities laws or an
exemption from such registration is available. The Purchaser acknowledges that
each certificate representing the Purchased Securities or any securities
issuable upon exercise or conversion thereof shall bear a legend substantially
in the following form:
“THE
SECURITY REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT
AND
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. SUCH SHARES MAY
NOT
BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION IN EFFECT UNDER
SUCH
ACT UNLESS THE COMPANY RECEIVES AN OPINION OF COUNSEL OR OTHER EVIDENCE
REASONABLY ACCEPTABLE TO IT DEMONSTRATING THAT SUCH SALE OR TRANSFER IS EXEMPT
FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SAID ACT OR UNLESS
SOLD PURSUANT TO RULE 144 OF SUCH ACT.
The
foregoing legend shall be removed from the certificates representing any
Purchased Securities, at the request of the holder thereof, at such time as
(i) they become eligible for resale pursuant to an effective registration
statement or Rule 144(k) under the Securities Act or (ii) the Company shall
have received an opinion of counsel or other evidence reasonably acceptable
to
the Company to the effect that any transfer of the Purchased Securities
represented by such certificates or the securities issued upon conversion or
exercise thereof will not violate the Securities Act and applicable state
securities laws.
-5-
SECTION
4.7.
Further
Limitations on Disposition.
Without
in any way limiting the representations set forth above, Purchaser will not
to
make any disposition of all or any portion of the Purchaser’s Purchased
Securities and any securities received upon exercise or conversion thereof
unless and until one of the following conditions have been
satisfied:
(i) There
is
then in effect a Registration Statement under the Securities Act covering the
shares intended to be disposed of, and such disposition is made in accordance
with such Registration Statement; or
(ii) The
Purchaser shall have notified the Company of the proposed disposition and shall
have furnished the Company with a reasonably detailed statement of the
circumstances surrounding the proposed disposition, and if reasonably requested
by the Company, the Purchaser shall have furnished the Company with an opinion
of counsel, reasonably satisfactory to the Company to the effect that such
disposition will not require registration under the Securities Act, or the
Purchaser shall have otherwise sold such shares pursuant to Rule 144 under
the Securities Act.
SECTION
4.8.
Accredited
Investor.
Each
Purchaser hereby represents and warrants that:
(i)
such
Purchaser is an accredited investor as defined in Rule 501(a) of Regulation
D
promulgated under the Securities Act or
(ii)
(A)
such Purchaser (if a natural person) is NOT a resident of the United States
of
America or any State of the United States, or territory or possession of the
United States, or the District of Columbia (collectively, the "USA")
and is
NOT purchasing or considering purchasing the Securities for the account or
benefit of a resident of the USA, or (B) such Purchaser (if not a natural
person) is NOT organized or incorporated under the laws of the United States
of
America or any State of the United States, or territory or possession of the
United States, or the District of Columbia (collectively, the "USA"),
and
is NOT organized by a natural person resident in the USA, or by a partnership
or
corporation organized under the laws of the USA, or by any estate governed
under
USA law of which any executor or administrator is a resident or organized under
the laws of the USA, or by any trust of which any trustee is a resident or
organized under the laws of the USA.
SECTION
4.9.
Brokers
or Finders.
The
Purchaser hereby represents that it has not taken any action that would result
in the Company incurring any liability for brokerage or finders’ fees or agents’
commissions for any similar charges in connection with the transactions
contemplated by this Agreement.
SECTION
4.10.
Purchase.
The
Purchased Securities acquired by each Purchaser, and any securities acquired
upon exercise or conversion of the same, will be acquired by such Purchaser
for
fully managed accounts.
ARTICLE
V
CONDITIONS
TO THE PURCHASER’S OBLIGATIONS TO PURCHASE THE INITIAL OR REQUESTED
SHARES
-6-
The
Purchaser’s obligation to purchase Purchased Securities pursuant to Section 2.1
of this Agreement is subject to compliance by the Company with its agreements
and representations herein contained, and to the satisfaction, on or prior
to
the applicable Closing Date, of the following conditions (except to the extent
any such conditions may be waived in writing by a particular
Purchaser):
SECTION
5.1.
Representations
and Warranties.
The
Company’s representations and warranties contained in Article III hereof shall
be true and correct in all material respects on and as of the Closing Date
with
the same force and effect as though made on and as of the Closing Date and
the
Company shall have performed and complied with all conditions and agreements
required to be performed or complied with by each of them prior to the
Closing.
SECTION
5.2.
Legality;
Governmental and Other Authorizations.
The
purchase of the Purchased Securities to be acquired on such Closing Date by
the
Purchasers shall not be prohibited by any law or governmental order or
regulation, and shall not subject the Purchasers to any penalty, special tax
or
other onerous condition. All necessary consents, approvals, licenses, permits,
orders and authorizations of, or registrations, declarations and filings with,
any governmental or administrative agency or of or with any other Person, with
respect to any of the transactions contemplated by this Agreement shall have
been duly obtained or made and shall be in full force and effect other than
any
applicable state securities law or blue sky filings.
ARTICLE
VI
CONDITIONS
TO THE COMPANY’S OBLIGATIONS
The
Company’s obligation to sell and issue the Purchased Securities pursuant to this
Agreement is subject to compliance by the Purchaser with the agreements herein
contained, and to the satisfaction on or prior to the applicable Closing Date,
of the following conditions:
SECTION
6.1.
Representations.
The
representations made by the Purchasers in Article IV hereof shall be true and
correct in all material respects on and as of the Closing Date with the same
force and effect as though made on and as of the Closing Date.
SECTION
6.2.
Legality;
Governmental and Other Authorizations.
The
issuance and sale of the Purchased Securities by the Company at such Closing
shall not be prohibited by any law or governmental order or regulation, and
shall not subject the Company to any penalty, special tax, or other onerous
condition. All necessary consents, approvals, licenses, permits, orders and
authorizations of, or registrations, declarations and filings with, any
governmental or administrative agency or of or with any other Person, with
respect to any of the transactions contemplated by this Agreement shall have
been duly obtained or made and shall be in full force and effect other than
any
applicable state securities law or blue sky filings.
ARTICLE
VII
MISCELLANEOUS
SECTION
7.1.
Notices.
All
demands, notices, requests, consents and other communications required or
permitted under this Agreement shall be in writing and shall be personally
delivered or sent by facsimile machine (with a confirmation copy sent by one
of
the other methods authorized in this Section), commercial (including FedEx)
or
U.S. Postal Service overnight delivery service, or, deposited with the U.S.
Postal Service mailed first class, registered or certified mail, postage
prepaid, as set forth below:
-7-
If
to the
Company, addressed to:
Xxxxx
Xxxxxxx
President
and CEO
000
Xxx
Xx Xx Xxxxx
Xxxxx
000
Xxxxxx
Xxxxx, XX 00000
Fax: (000)
000-0000
with
a
copy to:
Xxxxxxx
Xxxxxx Xxxxxx & Dodge LLP
000
Xxxxxxxxx Xxxxxx
Xxx
Xxxx,
XX 00000
Attention: D.
Xxxxx Xxxxx
Fax: (000) 000-0000
If
to
Purchasers at the addresses set forth on the signature page hereto.
Notices
shall be deemed given upon the earlier to occur of (i) receipt by the party
to
whom such notice is directed; (ii) if sent by facsimile machine, on the day
(other than a Saturday, Sunday or legal holiday in the jurisdiction to which
such notice is directed) such notice is sent if sent (as evidenced by the
facsimile confirmed receipt) prior to 5:00 p.m. Eastern Time and, if sent after
5:00 p.m. Eastern Time, on the day (other than a Saturday, Sunday or legal
holiday in the jurisdiction to which such notice is directed) after which such
notice is sent; (iii) on the first business day (other than a Saturday, Sunday
or legal holiday in the jurisdiction to which such notice is directed) following
the day the same is deposited with the commercial carrier if sent by commercial
overnight delivery service; or (iv) the fifth day (other than a Saturday, Sunday
or legal holiday in the jurisdiction to which such notice is directed) following
deposit thereof with the U.S. Postal Service as aforesaid. Each party, by notice
duly given in accordance therewith may specify a different address for the
giving of any notice hereunder.
SECTION
7.2.
Amendments
and Waivers, Joinder.
Except
as otherwise expressly provided herein, any term of this Agreement may be
amended only with the written consent of the Company and the Purchaser. Any
amendment or waiver effected in accordance with this Section shall be binding
upon the Company and each holder of any Purchased Securities sold pursuant
to
this Agreement.
SECTION
7.3.
Waiver
of Jury Trial.
EACH
OF THE PARTIES HERETO HEREBY VOLUNTARILY AND IRREVOCABLY WAIVES TRIAL BY JURY
IN
ANY ACTION OR OTHER PROCEEDING BROUGHT IN CONNECTION WITH THIS AGREEMENT, ANY
OF
THE RELATED AGREEMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY OR
THEREBY.
-8-
SECTION
7.4.
Counterparts.
This
Agreement may be executed in any number of counterparts, each of which will
be
deemed an original and all of which will constitute one and the same
agreement.
SECTION
7.5.
Entire
Agreement.
This
Agreement and the other writings referred to herein or delivered pursuant hereto
which form a part hereof contain the entire agreement and understanding of
the
parties hereto with respect to the subject matter hereof. This Agreement
supersedes all prior and contemporaneous discussions, agreements and
understandings related to said subject matter.
SECTION
7.6.
Survival
of Representations and Warranties, etc.
All
representations and warranties contained herein shall survive until 12 months
from the date hereof.
SECTION
7.7.
Assignment.
All of
the terms and provisions of this Agreement shall be binding upon and inure
to
the benefit of and be enforceable by the respective successors and assigns
of
the parties hereto, whether so expressed or not, and, in particular, shall
inure
to the benefit of and be enforceable by the holder or holders at the time of
any
of the Purchased Securities.
SECTION
7.8.
Governing
Law.
This
Agreement shall be governed by the laws of the State of Nevada, without regard
to the conflicts of law provisions thereunder.
SECTION
7.9.
Fees
and Expenses of Counsel.
At the
Closing, the Company shall pay up to $25,000 of bona fide expenses, including
legal fees, incurred by the Purchasers upon delivery by the Purchasers to the
Company of appropriate and customary documentation thereof.
[remainder
of page intentionally left blank]
-9-
IN
WITNESS WHEREOF,
this
Agreement is executed and delivered as of the date first written above by the
undersigned who hereby agrees to be bound by the terms and provisions set forth
in the Agreement.
By:
__________________________
Name:
Xxxxx Xxxxxxx
Title:
President and CEO
PURCHASERS
____________________________________
|
Name:
|
Bank
Xxx. Xxxxxxxxx jr. & Cie.
(Schweiz)
AG on behalf of fully
managed
accounts
|
Address:
Xxxxxxxx
0000
0000 Xxxxxx
Fax
number: x00000000000
Amount
of
investment: $1,500,000
Number
of
Warrants: 672,646
EXHIBIT
A-I
Form
of
Debenture
EXHIBIT
A-II
Form
of
Warrant
EXHIBIT
A-III
Form
of
Registration Rights Agreement
