SECURITIES PURCHASE AGREEMENT
Exhibit 10.1
This
Securities Purchase Agreement (this “Agreement”)
is
dated as July 17, 2005, between Surge Global Energy, Inc., a Delaware
corporation (the “Company”),
and
each purchaser identified on the signature pages hereto (each, including its
successors and assigns, a “Purchaser”
and
collectively the “Purchasers”);
and
WHEREAS,
subject to the terms and conditions set forth in this Agreement and pursuant
to
Section 4(2) of the Securities Act of 1933, as amended (the “Securities
Act”)
and
Rule 506 promulgated thereunder, the Company desires to issue and sell to each
Purchaser, and each Purchaser, severally and not jointly, desires to purchase
from the Company, securities of the Company as more fully described in this
Agreement.
NOW,
THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement,
and for other good and valuable consideration the receipt and adequacy of which
are hereby acknowledged, the Company and each Purchaser agrees as
follows:
ARTICLE
I.
DEFINITIONS
1.1 Definitions.
In
addition to the terms defined elsewhere in this Agreement, for all purposes
of
this Agreement, the following terms have the meanings indicated in this Section
1.1:
“Affiliate”
means
any Person that, directly or indirectly through one or more intermediaries,
controls or is controlled by or is under common control with a Person as such
terms are used in and construed under Rule 144. With respect to a Purchaser,
any
investment fund or managed account that is managed on a discretionary basis
by
the same investment manager as such Purchaser will be deemed to be an Affiliate
of such Purchaser.
“Business
Day”
means
any day except Saturday, Sunday and any day which shall be a federal legal
holiday or a day on which banking institutions in the State of New York are
authorized or required by law or other governmental action to
close.
“Closing”
means
the closing of the purchase and sale of the Common Stock and the Warrants
pursuant to Section 2.1.
“Closing
Date”
means
the Trading Day when all of the Transaction Documents have been executed and
delivered by the applicable parties thereto, and all conditions precedent to
the
Purchasers’ obligations to pay the Subscription Amount have been satisfied or
waived.
“Closing
Price”
means
on any particular date (a) the last reported closing bid price per share
of
Common Stock on such date on the Trading Market (as reported by Bloomberg L.P.
at 4:15 PM (New York time), or (b) if there is no such price on such date,
then
the closing bid price on the Trading Market on the date nearest preceding such
date (as reported by Bloomberg L.P. at 4:15 PM (New York time) for the closing
bid price for regular session trading on such day), or (c) if the Common
Stock is not then listed or quoted on a Trading Market and if prices for the
Common Stock are then quoted on the OTC Bulletin Board, the closing bid price
of
the Common Stock for such date (or the nearest preceding date) on the OTC
Bulletin Board (as reported by Bloomberg L.P. at 4:15 PM (New York time), (d)
if
the Common Stock is not then listed or quoted on the Trading Market and if
prices for the Common Stock are then reported in the “pink sheets” published by
the Pink Sheets LLC (formerly the National Quotation Bureau Incorporated (or
a
similar organization or agency succeeding to its functions of reporting prices),
the most recent bid price per share of the Common Stock so reported, or
(e) if the shares of Common Stock are not then publicly traded the fair
market value of a share of Common Stock as determined by a qualified independent
appraiser selected in good faith by the Purchasers of a majority in interest
of
the Shares then outstanding.
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“Commission”
means
the Securities and Exchange Commission.
“Common
Stock”
means
the common stock of the Company, $0.01 par value per share, and any securities
into which such common stock may hereafter be reclassified.
“Company
Counsel”
means
Sichenzia Xxxx Xxxxxxxx Xxxxxxx LLP.
“Effective
Date”
means
the date that the Registration Statement is first declared effective by the
Commission.
“Exchange
Act”
means
the Securities Exchange Act of 1934, as amended.
“Per
Share Purchase Price”
equals
$1.00
USD,
subject
to adjustment for reverse and forward stock splits, stock dividends, stock
combinations and other similar transactions of the Common Stock that occur
after
the date of this Agreement.
“Person”
means
an individual or corporation, partnership, trust, incorporated or unincorporated
association, joint venture, limited liability company, joint stock company,
government (or an agency or subdivision thereof) or other entity of any
kind.
“Registration
Statement”
means
the registration statement to be filed by the Company pursuant to the
Registration Rights Agreement.
“Registration
Rights Agreement”
means
the Registration Rights Agreement, dated as of the date of this Agreement,
among
the Company and each Purchaser, in the form of Exhibit
A
hereto.
“Rule
144”
means
Rule 144 promulgated by the Commission pursuant to the Securities Act, as such
Rule may be amended from time to time, or any similar rule or regulation
hereafter adopted by the Commission having substantially the same effect as
such
Rule.
“SEC
Reports”
shall
have the meaning ascribed to such term in Section 3.1(h).
“Securities”
means
the Shares, the Warrants and the Warrant Shares.
“Securities
Act”
means
the Securities Act of 1933, as amended.
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“Shares”
means
the shares of Common Stock issued or issuable to each Purchaser pursuant to
this
Agreement.
“Subscription
Amount”
means,
as to each Purchaser, the amounts set forth below such Purchaser’s signature
block on the signature page hereto, in United States dollars and in immediately
available funds.
“Trading
Day”
means
(i) a day on which the Common Stock is traded on a Trading Market, or (ii)
if
the Common Stock is not listed on a Trading Market, a day on which the Common
Stock is traded on the over-the-counter market, as reported by the OTC Bulletin
Board, or (iii) if the Common Stock is not quoted on the OTC Bulletin Board,
a
day on which the Common Stock is quoted in the over-the-counter market as
reported by the National Quotation Bureau Incorporated (or any similar
organization or agency succeeding its functions of reporting prices); provided,
that in the event that the Common Stock is not listed or quoted as set forth
in
(i), (ii) and (iii) hereof, then Trading Day shall mean a Business
Day.
“Trading
Market”
means
the following markets or exchanges on which the Common Stock is listed or quoted
for trading on the date in question: the American Stock Exchange, the New York
Stock Exchange, the Nasdaq National Market or the Nasdaq SmallCap
Market.
“Transaction
Documents”
means
this Agreement, the Warrants and the Registration Rights Agreement and any
other
documents or agreements executed in connection with the transactions
contemplated hereunder.
“Warrants”
means
the Common Stock purchase warrants, in the forms of Exhibit C, issuable to
the
Purchasers at the Closing, as defined in Section 2(a) herein.
“Warrant
Shares”
means
the shares of Common Stock issuable upon exercise of the Warrants.
ARTICLE
II.
PURCHASE
AND SALE
2.1 Closing.
At the Closing, each Purchaser shall purchase from the Company, severally and
not jointly with the other Purchasers, and the Company shall issue and sell
to
each Purchaser, (a) a number of Shares equal to such Purchaser’s Subscription
Amount divided by the Per Share Purchase Price and (b) the Warrants as
determined pursuant to Section 2.2(a)(iii) - (v). The maximum aggregate
Subscription Amounts shall not exceed $10,000,000
USD.
Upon
satisfaction of the conditions set forth in Section 2.2, the Closing shall
occur
at the offices of the Company Counsel, or such other location as the parties
shall mutually agree.
2.2 Closing
Conditions.
(a) At
the
Closing the Company shall deliver or cause to be delivered to each Purchaser
the
following:
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(i) this
Agreement duly executed by the Company;
(ii) within
5
Trading Days of the Closing Date, a certificate evidencing a number of Shares
equal to such Purchaser’s Subscription Amount divided by the Per Share Purchase
Price, registered in the name of such Purchaser;
(iii) a
Warrant, registered in the name of such Purchaser, pursuant to which such
Purchaser shall have the right to purchase up to the number of shares of Common
Stock equal to 50% of the Shares to be issued to such Purchaser at the Closing,
which shall be exercisable immediately and have an exercise price equal to
$1.60
and
be
exercisable for a period of two years from the Closing Date (the “Series
C Warrant”);
(iv) the
Registration Rights Agreement duly executed by the Company; and
(b) At
the
Closing each Purchaser shall deliver or cause to be delivered to the Company
the
following:
(i) this
Agreement duly executed by such Purchaser;
(ii) such
Purchaser’s Subscription Amount by wire transfer to an account as specified in
writing by the Company; and
(iii) the
Registration Rights Agreement duly executed by such Purchaser.
(c) All
representations and warranties of the other party contained herein shall remain
true and correct as of the Closing Date and all covenants of the other party
shall have been performed if due prior to such date.
(d) From
the
date hereof to the Closing Date, trading in the Common Stock shall not have
been
suspended by the Commission (except for any suspension of trading of limited
duration agreed to by the Company, which suspension shall be terminated prior
to
the Closing), and, at any time prior to the Closing Date, trading in securities
generally as reported by Bloomberg Financial Markets shall not have been
suspended or limited, or minimum prices shall not have been established on
securities whose trades are reported by such service, or on any Trading Market,
nor shall a banking moratorium have been declared either by the United States
or
New York State authorities nor shall there have occurred any material outbreak
or escalation of hostilities or other national or international calamity of
such
magnitude in its effect on, or any material adverse change in, any financial
market which, in each case, in the reasonable judgment of each Purchaser, makes
it impracticable or inadvisable to purchase the Shares at the such
Closing.
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ARTICLE
III.
REPRESENTATIONS
AND WARRANTIES
3.1 Representations
and Warranties of the Company.Except
as
set forth under the corresponding section of the disclosure schedules delivered
to the Purchasers concurrently herewith (the “Disclosure Schedules”) which
Disclosure Schedules shall be deemed a part hereof, the Company hereby makes
the
representations and warranties set forth below to each Purchaser:
(a) Issuance
of the Securities.
The
Shares and Warrants are duly authorized and, when issued and paid for in
accordance with the Transaction Documents, will be duly and validly issued,
fully paid and nonassessable, free and clear of all Liens imposed by the Company
other than restrictions on transfer provided for in the Transaction Documents.
The Warrant Shares, when issued in accordance with the terms of the Transaction
Documents, will be validly issued, fully paid and nonassessable, free and clear
of all Liens imposed by the Company. The Company has reserved from its duly
authorized capital stock the maximum number of shares of Common Stock issuable
pursuant to this Agreement and the Warrants.
(b) Capitalization.
The
capitalization of the Company is as described in the Company’s most recent
periodic report filed with the Commission. The Company has not issued any
capital stock since such filing other than pursuant to the exercise of employee
stock options under the Company’s stock option plans, the issuance of shares of
Common Stock to employees pursuant to the Company’s employee stock purchase plan
and pursuant to the conversion or exercise of outstanding Common Stock
Equivalents.
(c) SEC
Reports; Financial Statements.
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 two years preceding the date hereof (or such shorter period as the
Company was required by law to file such material) (the foregoing materials
being collectively referred to herein as the “SEC
Reports”)
on a
timely basis or has received a valid extension of such time of filing and has
filed any such SEC Reports prior to the expiration of any such extension.
(d) Private
Placement.
Assuming the accuracy of the Purchasers representations and warranties set
forth
in Section 3.2, no registration under the Securities Act is required for the
offer and sale of the Securities by the Company to the Purchasers as
contemplated hereby in accordance with the terms of the Transaction Documents.
The issuance and sale of the Securities hereunder does not contravene the rules
and regulations of the Trading Market.
(e) Investment
Company.
The
Company is not, and is not an Affiliate of, an “investment company” within the
meaning of the Investment Company Act of 1940, as amended.
3.2 Representations
and Warranties of the Purchasers.
Each
Purchaser hereby, for itself and for no other Purchaser, represents and warrants
as of the date hereof and as of the Closing Date to the Company as
follows:
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(a) Organization;
Authority.
Such
Purchaser is an entity duly organized, validly existing and in good standing
under the laws of the jurisdiction of its organization with full right,
corporate or partnership power and authority to enter into and to consummate
the
transactions contemplated by the Transaction Documents and otherwise to carry
out its obligations thereunder. The execution, delivery and performance by
such
Purchaser of the transactions contemplated by this Agreement have been duly
authorized by all necessary corporate action on the part of such Purchaser.
Each
Transaction Document to which it is party has been duly executed by such
Purchaser, and when delivered by such Purchaser in accordance with the terms
hereof, will constitute the valid and legally binding obligation of such
Purchaser, enforceable against it in accordance with its terms except (i) as
limited by general equitable principles and 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) insofar as indemnification and contribution provisions may
be
limited by applicable law.
(b) Investment
Intent.
Such
Purchaser understands that the Securities are “restricted securities” and have
not been registered under the Securities Act or any applicable state securities
law and is acquiring the Securities as principal for its own account for
investment purposes only and not with a view to or for distributing or reselling
such Securities or any part thereof, has no present intention of distributing
any of such Securities and has no arrangement or understanding with any other
persons regarding the distribution of such Securities (this representation
and
warranty not limiting such Purchaser’s right to sell the Securities pursuant to
the Registration Statement or otherwise in compliance with applicable federal
and state securities laws). Such Purchaser is acquiring the Securities hereunder
in the ordinary course of its business. Such Purchaser does not have any
agreement or understanding, directly or indirectly, with any Person to
distribute any of the Securities.
(c) Purchaser
Status.
At the
time such Purchaser was offered the Securities, it was, and at the date hereof
it is, and on each date on which it exercises any Warrants, it will be either:
(i) an “accredited investor” as defined in Rule 501(a)(1), (a)(2), (a)(3),
(a)(7) or (a)(8) under the Securities Act or (ii) a “qualified institutional
buyer” as defined in Rule 144A(a) under the Securities Act. Such Purchaser is
not required to be registered as a broker-dealer under Section 15 of the
Exchange Act.
(d) Experience
of such Purchaser.
Such
Purchaser, both alone or together with its representatives, has such knowledge,
sophistication and experience in business and financial matters so as to be
capable of evaluating the merits and risks of the prospective investment in
the
Securities, and has so evaluated the merits and risks of such investment. Such
Purchaser is able to bear the economic risk of an investment in the Securities
and, at the present time, is able to afford a complete loss of such
investment.
(e) General
Solicitation.
Such
Purchaser is not purchasing the Securities as a result of any advertisement,
article, notice or other communication regarding the Securities published in
any
newspaper, magazine or similar media or broadcast over television or radio
or
presented at any seminar or any other general solicitation or general
advertisement.
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(f) Residence.
If such
Purchaser is an individual, then such Purchaser resides in the state or province
identified in the address of such Purchaser set forth on the signature page
hereto; if such Purchaser is a partnership, corporation, limited liability
company or other entity, then the office or offices of such Purchaser in which
its investment decision was made is located at the address or addresses of
such
Purchaser set forth on the signature page hereto.
(g) Rule
144.
Subject
to Section 4.1(a), such Purchaser acknowledges and agrees that the Securities
are “restricted securities” as defined in Rule 144 promulgated under the
Securities Act as in effect from time to time and must be held indefinitely
unless they are subsequently registered under the Securities Act or an exemption
from such registration is available. Such Purchaser has been advised or is
aware
of the provisions of Rule 144, which permits limited resale of shares purchased
in a private placement subject to the satisfaction of certain conditions,
including, among other things: the availability of certain current public
information about the Company, the resale occurring following the required
holding period under Rule 144 and the number of shares being sold during any
three-month period not exceeding specified limitations.
ARTICLE
IV.
OTHER
AGREEMENTS OF THE PARTIES
4.1 Restriction
on Sales, Short Sales and Hedging Transactions.
(a) The
Securities may only be disposed of in compliance with state and federal
securities laws. In connection with any transfer of Securities other than
pursuant to an effective registration statement or Rule 144, to the Company
or
to an Affiliate of a Purchaser, the Company may require the transferor thereof
to provide to the Company an opinion of counsel selected by the transferor
and
reasonably acceptable to the Company, the form and substance of which opinion
and shall be reasonably satisfactory to the Company, to the effect that such
transfer does not require registration of such transferred Securities under
the
Securities Act. As a condition of transfer, any such transferee shall agree
in
writing to be bound by the terms of this Agreement and shall have the rights
of
a Purchaser under this Agreement and the Registration Rights
Agreement.
(b) Each
Purchaser agrees to the imprinting, so long as is required by this Section
4.1(b), of the following legend on any certificate evidencing
Securities:
THESE
SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION
OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS.
7
4.2 Reservation
of Common Stock. As
of the
date hereof, the Company has reserved and the Company shall continue to reserve
and keep available at all times, free of preemptive rights, a sufficient number
of shares of Common Stock for the purpose of enabling the Company to issue
Shares pursuant to this Agreement and Warrant Shares pursuant to any exercise
of
the Warrants.
ARTICLE
V.
MISCELLANEOUS
5.1 Entire
Agreement. The Transaction Documents, together with the exhibits and
schedules thereto, contain the entire understanding of the parties with respect
to the subject matter hereof and supersede all prior agreements and
understandings, oral or written, with respect to such matters, which the parties
acknowledge have been merged into such documents, exhibits and
schedules.
5.3 Notices.
Any and all notices or other communications or deliveries required or permitted
to be provided hereunder shall be in writing and shall be deemed given and
effective on the earliest of (a) the date of transmission, if such notice or
communication is delivered via facsimile at the facsimile number set forth
on
the signature pages attached hereto prior to 6:30 p.m. (New York City time)
on a
Trading Day, (b) the next Trading Day after the date of transmission, if such
notice or communication is delivered via facsimile at the facsimile number
set
forth on the signature pages attached hereto on a day that is not a Trading
Day
or later than 6:30 p.m. (New York City time) on any Trading Day, (c) the second
Trading Day following the date of mailing, if sent by U.S. nationally recognized
overnight courier service, or (d) upon actual receipt by the party to whom
such
notice is required to be given. The address for such notices and communications
shall be as set forth on the signature pages attached hereto.
5.2 Amendments;
Waivers. No provision of this Agreement may be waived or amended except in a
written instrument signed, in the case of an amendment, by the Company and
each
of the Purchaser or, in the case of a waiver, by the party against whom
enforcement of any such waiver is sought. No waiver of any default with respect
to any provision, condition or requirement of this Agreement shall be deemed
to
be a continuing waiver in the future or a waiver of any subsequent default
or a
waiver of any other provision, condition or requirement hereof, nor shall any
delay or omission of either party to exercise any right hereunder in any manner
impair the exercise of any such right.
5.3 Construction.
The headings herein are for convenience only, do not constitute a part of this
Agreement and shall not be deemed to limit or affect any of the provisions
hereof. The language used in this Agreement will be deemed to be the language
chosen by the parties to express their mutual intent, and no rules of strict
construction will be applied against any party.
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5.4 Governing
Law; Venue; Waiver of Jury Trial. All questions concerning the construction,
validity, enforcement and interpretation of this Agreement shall be governed
by
and construed and enforced in accordance with the internal laws of the State
of
New York, without regard to the principles of conflicts of law thereof. Each
party hereby irrevocably submits to the exclusive jurisdiction of the state
and
federal courts sitting in the City of New York, borough of Manhattan for the
adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein (including with respect
to
the enforcement of any of the Transaction Documents), and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of any such court, that
such suit, action or proceeding is improper or inconvenient venue for such
proceeding. Each party hereby irrevocably waives personal service of process
and
consents to process being served in any such suit, action or proceeding by
mailing a copy thereof via registered or certified mail or overnight delivery
(with evidence of delivery) to such party at the address in effect for notices
to it under this Agreement and agrees that such service shall constitute good
and sufficient service of process and notice thereof. Nothing contained herein
shall be deemed to limit in any way any right to serve process in any manner
permitted by law. The parties hereby waive all rights to a trial by jury. If
either party shall commence an action or proceeding to enforce any provisions
of
this Agreement, then the prevailing party in such action or proceeding shall
be
reimbursed by the other party for its attorney’s fees and other costs and
expenses incurred with the investigation, preparation and prosecution of such
action or proceeding.
5.5 Survival.
The representations, warranties and covenants contained herein shall survive
the
Closing and delivery and/or exercise of the Securities, as applicable.
5.6 Execution.
This Agreement may be executed in two or more counterparts, all of which when
taken together shall be considered one and the same agreement and shall become
effective when counterparts have been signed by each party and delivered to
the
other party, it being understood that both parties need not sign the same
counterpart. In the event that any signature is delivered by facsimile
transmission, such signature shall create a valid and binding obligation of
the
party executing (or on whose behalf such signature is executed) with the same
force and effect as if such facsimile signature page were an original
thereof.
5.7 Severability.
If any provision of this Agreement is held to be invalid or unenforceable in
any
respect, the validity and enforceability of the remaining terms and provisions
of this Agreement shall not in any way be affected or impaired thereby and
the
parties will attempt to agree upon a valid and enforceable provision that is
a
reasonable substitute therefor, and upon so agreeing, shall incorporate such
substitute provision in this Agreement.
(Signature
Page Follows)
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IN
WITNESS WHEREOF, the parties hereto have caused this Securities Purchase
Agreement to be duly executed by their respective authorized signatories as
of
the date first indicated above.
| Surge Global Energy, Inc. | |
| By: ________________________________________ | |
| Name: Xxxx X. Xxxxx | |
| Title: Chief Executive Officer | |
|
Address
for Notice:
|
|
| 00000 Xx Xxxxxx Xxxx | |
|
Xxxxx
000
|
|
| Xxx Xxxxx, XX 00000 | |
| With a copy to: | |
| Xxxxxx X. Xxxxxx, Esq. | |
| Sichenzia Xxxx Xxxxxxxx Xxxxxxx LLP | |
| 0000 Xxxxxx xx Xxxxxxxx | |
| Xxx Xxxx, XX 00000 |
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE
PAGE FOR PURCHASER FOLLOWS]
10
[PURCHASERS
SIGNATURE PAGE - SRGG]
IN
WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement
to be duly executed by their respective authorized signatories as of the date
first indicated above.
Name
of
Purchaser: Xxxx
Xxxxxxxxxxx
Signature
of Authorized Signatory of Purchaser:
______________________________________
Name
of
Authorized Signatory:
____________________________________________________
Title
of
Authorized Signatory:
_____________________________________________________
Email
Address of Purchaser: Xxxx@XxxxxXxxxxxXxxxxx.xxx
Facsimile
of Purchaser: Mobile:
(000) 000-0000
Address
for Notice of Purchaser:
Xxxx
Xxxxxxxxxxx
Xxx
00000
Xxxxx Xxxxxxxx XXX
Xxxxxxx,
Xxxxxxx X0X 0X0 Xxxxxx Xxxxxx
X.
Xxxxxxx
Address
for Delivery of Securities for Purchaser (if not same as above):
Subscription
Amount in USD: $50,000.00
[Fifty Thousand US Dollars]
Shares:
50,000
[Fifty Thousand]
Warrant
Shares: 25,000
[Twenty Five Thousand]
EIN#
or
SS# Number: ______________________________________
[MUST
PROVIDE THIS UNDER SEPARATE COVER]
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