Securities Purchase Agreement
This Securities Purchase Agreement,
dated as of May 14, 2010 (this “Agreement”), is by and between
Clenergen Corporation, a Nevada corporation (the “Company”), and Xxxxxxx Trading
Limited, a British Virgin Islands corporation (“Investor”).
WHEREAS, Investor wishes to purchase
from the Company, and the Company wishes to sell to Investors, (x) a promissory
note of the Company in the principal amount of $250,000, in the form attached as
Exhibit A to this Agreement (the “Note”), and (y) 1 million
warrants (each, a “Warrant”)
to purchase shares (each, a “Warrant Share”) of the common
stock, par value $0.001 per share (the “Common Stock”), of the Company, the
Warrants to be evidenced by a form of the certificate to evidence any or all of
the Warrants to be substantially in the form attached as Exhibit B to this
Agreement (the “Warrant
Certificate”), on the terms and subject to the conditions set forth in
this Agreement.
NOW, THEREFORE, in consideration of the
foregoing premises, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereby agree as
follows:
ARTICLE
I
AUTHORIZATION
AND SALE OF SECURITIES
1.1. Sale of Promissory Note and
Warrants. The Company has authorized the sale and issuance to
Investor, and, at the Closing (as hereinafter defined), the Company shall sell
to Investor, and Investor shall purchase from the Company, the Note and
Warrants. The purchase price (the “Purchase Price”) for the Note
and Warrants is $250,000. The Note and Warrants shall be in
registered form and reflected in the books and records of the
Company. The exercise price per Warrant shall be equal to 70% of the
closing price of the Common Stock on the business day immediately preceding the
date of the Closing.
1.2. Use of
Proceeds. The Company will use the proceeds from the sale of
the Note and Warrants for general corporate and working capital
purposes.
ARTICLE
II
REPRESENTATIONS
AND WARRANTIES OF INVESTOR
In order to induce the Company to
consummate the transactions contemplated by this Agreement, Investor hereby
represents and warrants to the Company, as follows:
2.1. Organization. Investor
is a corporation duly formed and validly existing and in good standing under the
laws of Investor’s jurisdiction of organization, with all requisite corporate
power and authority to carry on Investor’s business as it is now being
conducted.
2.2. Authority. Investor
has full power and authority to execute and deliver this Agreement, and to
perform Investor’s obligations under this Agreement, and such execution,
delivery and performance has been duly authorized by all required actions of
Investor. No other action on the part of Investor is necessary to
authorize the execution and delivery of this Agreement, or the performance by
Investor of Investor’s obligations under this Agreement. This
Agreement, when executed and delivered by Investor, constitutes a legal, valid
and binding agreement of Investor, enforceable against Investor in accordance
with its terms, subject to applicable bankruptcy, insolvency, moratorium,
reorganization or similar laws affecting creditors' rights generally and subject
to general equitable principles (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
2.3. Brokers. Investor
has not paid or become obligated to pay any fee or commission to any broker,
finder, investment banker or other intermediary in connection with this
Agreement or the transactions contemplated hereby. Investor shall
indemnify and to hold the Company harmless of and from any liability for any
commission or compensation in the nature of a finder's fee to any broker or
other person or firm (and the costs and expenses of defending against such
liability or asserted liability) for which Investor, or any of Investor’s
employees or representatives, is, or is alleged to be, responsible.
2.4. Accredited
Investor. Investor is an "accredited investor" within the
meaning of Rule 501 of Regulation D promulgated by the Securities and Exchange
Commission under the Securities Act of 1933, as amended (the "Securities Act").
2.5. Investment
Intent. Investor is acquiring the Note and Warrants (and will
acquire each of the Warrant Shares upon exercise of any of the Warrants) for
Investor’s own account, for investment only and not with a view to, or for sale
in connection with, a distribution of the Note, Warrants and/or Warrant Shares
or any part thereof, within the meaning of the Securities Act, and the rules and
regulations promulgated under the Securities Act, or any applicable state
securities or blue-sky laws and regulations.
2.6. Intent to
Transfer. Investor is not a party or subject to or bound by
any contract, undertaking, agreement or arrangement with any Person (as such
capitalized term is defined below) to sell, transfer or pledge the Note, any
Warrants or any Warrant Shares, or any portion or proceeds of the Note, Warrants
and/or Warrant Shares to any Person, nor has a present intention to enter into
such a contract, undertaking, agreement or arrangement. As used in
this Agreement, the capitalized term “Person” means any natural person,
corporation, partnership, limited liability company, limited liability
partnership, joint venture, trust or other entity.
2.7. Offering Exempt from
Registration; Company’s Reliance. The Company has advised
Investor that:
(a) neither the
Note, Warrants nor Warrant Shares have been registered under the Securities Act
or under the securities laws of any state on the basis that the issuance of such
securities is (or will be) exempt from such registration;
(b) the
Company’s reliance on the availability of such exemption is, in part, based upon
the accuracy and truthfulness of Investor’s representations contained in this
Agreement;
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(c) as a
result of such lack of registration, the Note, Warrants and Warrant Shares may
not be resold or otherwise transferred or disposed of without registration or
pursuant to or an exemption from registration available under the Securities Act
and such state securities laws.
2.8. Sophistication of
Investor. Investor has evaluated the merits and risks of
acquiring the Note and has such knowledge and experience in financial and
business matters that Investor is capable of evaluating the merits and risks of
such acquisition, is aware of and has considered the financial risks and
financial hazards of acquiring the Note, Warrants and Warrant Shares and is able
to bear the economic risk of acquiring such securities, including the
possibility of a complete loss with respect thereto.
2.9. Access to
Information. Investor has had access to such information
regarding the business and finances of the Company, and has been provided the
opportunity to discuss with the Company’s management the business, affairs and
financial condition of the Company and such other matters with respect to the
Company as would concern a reasonable person considering the transactions
contemplated by this Agreement and/or concerned with the operation of the
Company, including, without limitation, pursuant to a meeting and/or discussions
with management of the Company.
2.10. No
Guarantees. That it never has been represented, guaranteed or
warranted to Investor by the Company, or by any of the Company’s officers,
directors, agents, representatives or employees, or any other Person, expressly
or by implication, that the past performance or experience on the part of the
Company or its predecessors, officers, directors, employees or any other Person,
will in any way (a) indicate any future results of the Company or (b) that the
Company will have the financial viability to repay the Note at the Note’s stated
maturity date or at any other time.
2.11. High Degree of Investment
Risk. That Investor is aware that:
(a) The
acquisition of the Note, Warrants and Warrant Shares involves a high degree of
risk and may result in a loss of the entire amount invested;
(b) The
Company has limited working capital and limited sources of financing available;
and
(c) There
is no assurance that the Company’s operations will be profitable or cash flow
positive at any time in the future.
2.12. State of Principal Place of
Business. That the address set forth in section 7.4 of this
Agreement is Investor’s true and correct principal place of business, and
Investor has no present intention of transferring its principal place of
business to any other country, state or jurisdiction.
2.13. No Purchaser
Representative. Investor has not authorized any person or
institution to act as Investor’s “purchaser representative” (as such term is
defined in Rule 501 of Regulation D promulgated under the Securities Act) in
connection with Investor’s acquisition of the Note and Warrants.
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2.14. No General
Solicitation. Investor has not received any general
solicitation or general advertising regarding the sale or acquisition of the
Note and Warrants.
2.15. Company’s Financial
Condition. Investor acknowledges that the Company’s operations
and cash flows are not sufficient to fund the Company’s repayment obligations
under the Note and that the primary, if only, source of funds to satisfy the
Company’s repayment obligations under the Note will be from additional financing
of the Company by third parties, none of which is subject to definitive
obligations on the part of any such third party.
2.16. Due
Diligence. Investor has conducted the due diligence review of
the Company as Investor believes necessary under the circumstances and that
neither the Company (and its officers, directors, employees, agents and
representatives) has advised Investor concerning the nature and/or extent of
Investor’s due diligence review.
2.18. No Other Representations,
Warranties, Covenants or Agreements of the Company. Except as
set forth in this Agreement, or the documents referred to herein, the Company
has not made any representation, warranty and covenant to Investor, nor has the
Company entered into any agreement with any of Investor with respect to the
matters contained in this Agreement or in the other agreements and documents
referred to in this Agreement.
ARTICLE
III
REPRESENTATIONS
AND WARRANTIES OF THE COMPANY
In order to induce Investor to
consummate the transactions contemplated by this Agreement, the Company hereby
represents and warrants to Investor as follows:
3.1. Corporate
Status. The Company:
(a) Is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Nevada
(b) has
all necessary corporate power and authority to own, operate or lease the
properties and assets now owned, operated or leased by the Company and to carry
on the business of the Company, as it is now being conducted, and
(c) is
duly licensed or qualified and in good standing as a foreign corporation
authorized to do business in each jurisdiction wherein the character of the
properties owned or leased by the Company and/or the nature of the activities
conducted by the Company makes such licensing or qualification necessary, except
where the failure to be so licensed or qualified and in good standing would not
prevent the Company from performing any of its material obligations under this
Agreement and would not have a material adverse effect on the business,
operations or financial condition of the Company (a “Material Adverse
Effect”).
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3.2. Authority of
Agreement. The Company has the power and authority to accept,
execute and deliver this Agreement and, upon acceptance by the Company, to carry
out the Company’s obligations under this Agreement; the execution, delivery and
performance by the Company of this Agreement and the consummation of the
transactions contemplated by this Agreement have been duly authorized by all
necessary corporate action on the part of the Company and this Agreement
constitutes the valid and legally binding obligations of the Company enforceable
against the Company in accordance with its terms, except as the same may be
limited by bankruptcy, insolvency, reorganization or other laws affecting the
enforcement of creditors’ rights generally now or hereafter in effect and
subject to the application of equitable principles and the availability of
equitable remedies; and the Note, upon issuance in accordance with the terms of
this Agreement, will be validly authorized, fully paid and
non-assessable.
3.3. Consents and Approvals; No
Conflict.
(a) The
acceptance, execution and delivery of this Agreement by the Company does not,
and the performance by the Company of its obligations under this Agreement will
not, require any consent, approval, authorization or other action by, or filing
with or notification to, any governmental or regulatory authority, other than in
connection with state securities or “blue sky” laws, except where failure to
obtain such consent, approval, authorization or action, or to make such filing
or notification, would not prevent the Company from performing any of its
material obligations under this Agreement and would not have a Material Adverse
Effect.
(b) The
acceptance, execution, delivery and performance of this Agreement by the Company
and the other agreements and documents to be executed, delivered and performed
by the Company pursuant to this Agreement and the consummation of the
transactions contemplated by this Agreement by the Company do not and will not
conflict with, violate or result in a breach or termination of any provision of,
or constitute a default under (or event which with the giving of notice or lapse
of time, or both, would become a default under) the Certificate of Incorporation
or By-laws of the Company, the breach of or constitute a default under any
indenture, agreement or undertaking to which the Company is a party or by which
the Company or its property may be bound or affected or, except as would not
prevent the Company from performing any of its material obligations under this
Agreement and would not have a Material Adverse Effect, any law, rule,
regulation, order, writ, judgment, injunction, decree, determination or award
applicable to the Company or give to others any rights of termination,
amendment, acceleration or cancellation of, or result in the creation of any
lien or encumbrance on any of the assets or properties of the Company pursuant
to, any note, bond, mortgage, indenture, contract, agreement, lease, license,
permit, franchise or other instrument relating to such assets or properties to
which the Company is a party or by which any of such assets or properties is
bound.
3.4. Absence of
Litigation. No claim, action, proceeding or investigation is
pending which seeks to delay or prevent the consummation of the transactions
contemplated by this Agreement or which would be reasonably likely to adversely
affect the Company’s ability to consummate the Exchange or which would have a
Material Adverse Effect.
3.5. Extent of
Offering. Subject in part to the truth and accuracy of
Investor’s representations set forth in Article III of this Agreement, the
offer, sale and issuance of the Note and Warrants, as contemplated by this
Agreement, are exempt from the registration requirements of the Securities Act
and applicable state securities laws.
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3.6. Governmental Consent,
etc. No consent, approval or authorization of or designation,
declaration or filing with any governmental authority on the part of the Company
is required in connection with the valid execution and delivery of this
Agreement, or the offer, sale or issuance of the Note and Warrants, or the
consummation of the transactions contemplated by this Agreement.
3.7. No Other Representations,
Warranties, Covenants or Agreements of the Company. Except as
set forth in this Agreement, or the agreements and documents referred to in this
Agreement, Investor has not made any representation, warranty, covenant or
agreement with respect to the matters contained in this Agreement or such
agreements and documents.
3.8. No
Finder. The Company has not retained a finder, or Person
performing such function, in connection with the transactions contemplated by
this Agreement.
ARTICLE
IV
CONDITIONS
TO OBLIGATIONS OF THE COMPANY
The obligations of the Company under
this Agreement are, at the option of the Company, subject to the satisfaction at
and prior to the Closing Date of the following conditions:
4.1. Fulfillment of
Covenants. All the terms, covenants and conditions of this
Agreement to be complied with and performed by Investor on or before the Closing
Date shall have been duly complied with and performed.
4.2. Accuracy of Representations
and Warranties. All of the representations and warranties made
by Investor in this Agreement shall be true as of the Closing Date with the same
force and effect as though such representations and warranties had been made as
of the Closing Date.
4.3. No
Litigation. There shall be no action, proceeding,
investigation or pending or actual litigation the purpose of which is to enjoin
or may be to enjoin the transactions contemplated by this Agreement, including,
without limitation, the sale and issuance of the Note and Warrants, or which
would have the effect, if successful, of imposing a material liability upon the
Company (other than the repayment obligations of the Company under the Note), or
any of the officers or directors thereof, because of or due to, in many
respects, the consummation of the transactions contemplated by this
Agreement.
ARTICLE
V
CONDITIONS
TO OBLIGATIONS OF INVESTOR
The obligations of Investor under this
Agreement are, at the option of Investor, subject to the satisfaction at and
prior to the Closing Date of the following conditions:
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5.1. Fulfillment of
Covenants. All the terms, covenants and conditions of this
Agreement to be complied with and performed by the Company on or before the
Closing Date shall have been duly complied with and performed.
5.2. Accuracy of Representations
and Warranties. All of the representations and warranties made
by the Company in this Agreement shall be true as of the Closing Date with the
same force and effect as though such representations and warranties had been
made as of the Closing Date.
5.3. No
Litigation. There shall be no action, proceeding,
investigation or pending or actual litigation the purpose of which is to enjoin
or may be to enjoin the transactions contemplated by this Agreement or which
would have the effect, if successful, of imposing a material liability upon
Investor because of or due to, in many respects, the consummation of the
transactions contemplated by this Agreement. There shall be no
action, proceeding, investigation or pending or actual litigation against or
with respect to the Company, Note, Warrants, outstanding shares of Common Stock
or the Warrant Shares which could, in any way, invalidate or damage this
Agreement or value of the Notes and Warrants which Investor is acquiring
pursuant to this Agreement.
ARTICLE
VI
CLOSING
6.1. Closing
Date. The consummation of the transactions contemplated by
this Agreement (the “Closing”) shall take place at the offices of the Company’s
counsel, Moritt Xxxx Hamroff & Xxxxxxxx LLP, located at 000 Xxxxxx Xxxx
Xxxxx, Xxxxxx Xxxx, Xxx Xxxx 00000, at 10:00 a.m., local time, on May 14, 2010
(the “Closing Date”), or such other time or place as shall be mutually agreed
upon by the parties to this Agreement.
6.2. Deliverables by the
Company. At the Closing, the Company shall deliver to Investor
the following:
(a) The
Note, duly dated and executed; and
(b) The
Warrant Certificate, duly dated and executed.
6.4. Deliverables by
Investor. At the Closing, Investor shall deliver to the
Company the following:
(a) the
Purchase Price, by check or wire transfer.
ARTICLE
VII
GENERAL
7.1. Payment of
Expenses. Each party shall bear its own expenses with respect
to this Agreement and the transactions contemplated hereby.
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7.2. Consent to Jurisdiction and
Waivers. The parties hereto each irrevocably consents that any
legal action or proceeding against any of them under, arising out of or in any
manner relating to, this Agreement or any other document delivered in connection
herewith, may be brought in any court of the State of New York of competent
jurisdiction located within Nassau County or in the United States District Court
for the Eastern District of New York. The parties to this Agreement,
by the execution and delivery of this Agreement, expressly and irrevocably
consent and submit to the personal jurisdiction of any of such courts in any
such action or proceeding. The parties hereto hereby expressly and
irrevocably waive any claim or defense in any such action or proceeding based on
any alleged lack of personal jurisdiction, improper venue or forum non
convenient or any similar basis.
7.3. Amendments and
Waivers.
(a) Except
as otherwise provided herein, the provisions of this Agreement may not be
amended, modified or supplemented without the written consent of each of the
parties to this Agreement. Any of the parties may, by written notice
to the other party:
(i) waive
any of the conditions to such party’s obligations under this Agreement or extend
the time for the performance of any of the obligations or actions of the other
party,
(ii)
waive any inaccuracies in the representations of
the other contained in this Agreement or in any documents delivered pursuant to
this Agreement,
(iii) waive
compliance with any of the covenants of the other party contained in this
Agreement and
(iv)
waive or modify performance of any of the obligations of
the other party.
(b) No
action taken pursuant to this Agreement, including, without limitation, any
investigation by or on behalf of any party, shall be deemed to constitute a
waiver by the party taking such action or compliance with any representation,
warranty, condition or agreement contained herein. Waiver of the
breach of any one or more provisions of this Agreement shall not be deemed or
construed to be a waiver of other breaches or subsequent breaches of the same
provisions.
7.4. Notices. All
notices, demands, requests, demands and other communications required or
otherwise given under this Agreement shall be in writing and shall be deemed to
have been duly given if: (i) delivered by hand against written receipt therefor,
(ii) forwarded by a third party company or governmental entity providing
delivery services in the ordinary course of business which guarantees delivery
the following business day, or (iii) mailed by registered or certified mail,
return receipt requested, postage prepaid, addressed (with respect to clauses
(ii) and (iii)) as follows:
If to the Company,
to: Xxxx
X.X. Xxxxx, Chief Executive Officer
Clenergen Corporation
Xxxx Xxxxx
Xxxxxx Xxxxx
Xxxxxx, Xxxxx Xxxxxxx XX0X
0XX
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with a copy
to: Xxxxxx
X. X’Xxxxxx, Esq.
Moritt Xxxx Hamroff & Xxxxxxxx
LLP
000 Xxxxxx Xxxx Xxxxx
Xxxxxx Xxxx, Xxx Xxxx
00000
If to the Trust,
to: Vastani
Trading Limited
Xxxxxxxxxxxxxxxxxx 0-X
Xxxxxxxxx 00000 Xxxxxxx
with a copy to:
or, in
the case of any of the parties to this Agreement, at such other address as such
party shall have furnished to each of the other parties hereto in accordance
with this section 8.4. Each such notice, demand, request or other
communication shall be deemed given (x) on the date of such delivery by hand,
(y) on the first business day following the date of such delivery to the
overnight delivery service or (z) three business days following such
mailing.
7.5. Successors and Assigns:
Holders and Third Parties as Beneficiaries. This Agreement
shall inure to the benefit of and be binding upon the parties hereto and their
respective successors and assigns.
7.6. Counterparts. This
Agreement may be executed in any number of counterparts and by the parties
hereto in separate counterparts, each of which when so executed shall be deemed
to be an original and all of which taken together shall constitute one and the
same agreement.
7.7. Headings. The
headings of the articles, sections, paragraphs and clauses in this Agreement are
for convenience of reference only and shall not limit or otherwise affect the
meanings or interpretations of the terms contained therein.
7.8. Governing
Law. This Agreement and the rights, obligations and
liabilities of the parties hereto shall be governed by and construed and
interpreted in accordance with the laws of the State of New York without regard
to the conflicts of laws principles thereof.
7.9. Severability; Specific
Enforcement. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstances, is
held invalid, illegal, or unenforceable for any reason, the validity, legality
and enforceability of any such provision in every other respect and of the
remaining provisions contained in this Agreement shall not be in any way
impaired thereby, it being intended that all of the rights and privileges of the
parties to this Agreement shall be enforceable to the fullest extent permitted
by law. Each of the parties to this Agreement acknowledge that the
other parties would not have an adequate remedy at law for money damages in the
event that any of the covenants or agreements of any other party in this
Agreement were not performed in accordance with its terms and therefore agrees
that the other parties shall be entitled to specific enforcement of such
covenants or agreements and to injunctive and other equitable relief in addition
to any other remedy to which it may be entitled, at law or in
equity.
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7.10. Entire Agreement;
Survival. This Agreement and the agreements referred to herein
are intended by the parties as a final expression of their agreements and are
intended to be a complete and exclusive statement of the agreements and
understandings of the parties to this Agreement in respect of the subject matter
contained in this Agreement and therein. There are no restrictions,
promises, representations, warranties or undertakings, with respect to the
subject matter of this Agreement, other than those set forth or referred to in
this Agreement and therein. This Agreement and the agreements
referred to in this Agreement supersede all prior agreements and understandings
between the parties with respect to such subject matters.
7.11. Binding
Nature. This Agreement shall be binding upon and inure to the
benefit of the parties hereto. No party to this Agreement may assign
or transfer any rights under this Agreement.
7.12. Use of Certain Terms and
References. The words “hereof,” “herein” and “hereunder” and
words of similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this Agreement; the
term “or” shall be deemed to include the term “and/or;” singular or plural
tenses shall be deemed to include the opposite whenever the context so indicates
or requires; and article, section, subsection, paragraph, clause, schedule and
exhibit references are to this Agreement unless otherwise
specified.
7.13. No Xxxxxxx
Xxxxxxx. Investor agrees and covenants that it will not engage
in any transaction with respect to securities of the Company at any time if, at
the time of such transaction, the Trust is aware of any material non-public
information relating to the Company or the Company’s securities.
IN WITNESS WHEREOF, the parties hereto
have duly executed this Agreement as of the date first above
written.
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The
Company:
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Clenergen
Corporation
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By:
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/s/ Xxxx X.X. Xxxxx
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Xxxx
X.X. Xxxxx
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Chief
Executive Officer
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Investor:
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Xxxxxxx
Trading Limited
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By:
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/s/ Xxx Xxxxxx
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Xxx
Xxxxxx, President
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