SECURITIES PURCHASE AGREEMENT
EXHIBIT
10.1
THIS
SECURITIES PURCHASE AGREEMENT (this “Agreement”) is dated
as of January 26, 2010, by and among Novo Energies Corp., a Florida corporation,
with headquarters located at Europa Place d’Armesa 000, Xxxx xx Xxxxx x’Xxxxx
Xxxxx 00, Xxxxxxxx, XX X0X 0X0, Xxxxxx (the “Company”) and
Trafalgar Capital Specialized Investment Fund, FIS (the “Buyer”).
RECITALS:
WHEREAS,
the Company and the Buyer are executing and delivering this Agreement in
reliance upon an exemption from securities registration pursuant to Section 4(2)
and/or Rule 506 of Regulation D (“Regulation D”) as
promulgated by the U.S. Securities and Exchange Commission (the “SEC”) under the
Securities Act of 1933, as amended (the “1933 Act”);
and
WHEREAS,
the parties hereto desire that, upon the terms and subject to the conditions
contained herein, the Company shall issue and sell to the Buyer, and the Buyer
shall purchase from the Company, Five Hundred Thousand United States Dollars
(US$500,000) (the “Purchase Price”) of
secured convertible bridge debentures (the “Debentures”) which
shall be funded on the date hereof and shall be in the form of Exhibit A attached
hereto; and
WHEREAS,
contemporaneously with the execution and delivery of this Agreement, the parties
hereto shall enter into an Escrow Agreement in the form of Exhibit B attached
hereto (the “Escrow
Agreement”) with K&L Gates LLP (the “Escrow Agent”)
pursuant to which the Escrow Agent shall accept, hold and disburse funds
deposited with it in accordance with the terms of the Escrow Agreement;
and
WHEREAS, contemporaneously with the
execution and delivery of this Agreement, the parties hereto are executing and
delivering a Security Agreement in the form of Exhibit C attached
hereto (the “Security
Agreement”) pursuant to which the Company has agreed to provide the Buyer
with a security interest in the Pledged Property (as defined in the Security
Agreement) to secure the Company’s obligations under this Agreement, the
Debentures and any other obligations of the Company to the Buyer;
and
WHEREAS,
this Agreement, the Debentures, the Escrow Agreement, the Security Agreement and
each additional Security Instrument (as defined in Section 4(r) herein below)
and any other instrument executed in connection with the transactions
contemplated herein and therein are collectively referred to herein as the
(“Transaction
Documents”).
AGREEMENT:
NOW,
THEREFORE, in consideration of the mutual covenants and other agreements
contained in this Agreement, the Company and the Buyer hereby agree as
follows:
1. PURCHASE AND SALE OF
DEBENTURES.
(a) Purchase of
Debentures. Subject to the satisfaction (or waiver) of the
terms and conditions of this Agreement, the Buyer hereby agrees to purchase from
the Company, and the Company hereby agrees to sell and issue to the Buyer, the
Debentures for the Purchase Price on the Closing Date (as defined herein
below). The Debentures shall have a maturity date of three hundred
sixty-five (365) days from the Closing Date. Prior to execution
hereof by the Buyer, the Buyer shall wire transfer the Purchase Price to the
Escrow Agent in accordance with Section 1(c) herein below and the terms of the
Escrow Agreement.
(b) Closing
Date. The closing of the purchase and sale of the Debentures
(the “Closing”)
shall take place at 10:00 a.m. Eastern Standard Time on the date hereof, subject
to notification of satisfaction of the conditions to the Closing set forth
herein and in Sections 5 and 6 below or such later date as is mutually agreed to
by the Company and the Buyer (the “Closing Date”). The
Closing shall occur at the offices of K&L Gates LLP, 000 Xxxxx Xxxxxxxx
Xxxx., Xxxxx 0000, Xxxxx, XX 00000 or such other place as is mutually agreed to
by the Company and the Buyer.
(c) Escrow Arrangements; Form of
Payment. Upon execution hereof by the Buyer and pending the
Closing and disbursement, the Purchase Price shall be deposited in an escrow
account (the “Escrow
Account”) with the Escrow Agent, pursuant to the terms of the Escrow
Agreement. Subject to the satisfaction of the terms and conditions of
this Agreement (i) the Escrow Agent shall deliver to the Company in accordance
with the terms of the Escrow Agreement that portion of the Escrow Funds (as that
term is defined in the Escrow Agreement) equal to the gross amount of the
Debentures being purchased by the Buyer on the Closing Date (minus the fees and
expenses as set forth herein which shall be paid directly from the Escrow
Funds at Closing) by wire transfer of immediately available funds and
(ii) the Company shall deliver to the Buyer (x) stock certificates
representing the Commitment Shares, as defined in Section 4(f)(2) and (y) the
Debentures, which the Buyer is purchasing, duly executed on behalf of the
Company.
(d) The
Debentures shall contain provisions that provide that in the event the Euro
strengthens against the U.S. Dollar during the life of the Debentures, the Buyer
shall be afforded an adjustment to compensate for any such movement in either
conversions or redemptions.
2. BUYER’S REPRESENTATIONS AND
WARRANTIES.
The Buyer
represents and warrants that:
(a) Investment
Purpose. As of the date hereof, the Buyer is acquiring the
Debentures for its own account for investment only and not with a view towards,
or for resale in connection with, the public sale or distribution thereof,
except pursuant to sales registered or exempted under the 1933 Act; provided,
however, that by making the representations herein, the Buyer reserves the right
to dispose of the Debentures at any time in accordance with or pursuant to
available exemption under the 1933 Act.
(b) Accredited Investor
Status. The Buyer is an “Accredited Investor”
as that term is defined in Rule 501(a) of Regulation D.
(c) Reliance on
Exemptions. The Buyer understands that the Debentures are
being offered and sold to it in reliance on specific exemptions from the
registration requirements of United States federal and state securities laws and
that the Company is relying in part upon the truth and accuracy of, and the
Buyer’s compliance with, the representations, warranties, agreements,
acknowledgments and understandings of such Buyer set forth herein in order to
determine the availability of such exemptions and the eligibility of the Buyer
to acquire such securities.
(d) Information. The
Buyer and its advisors (and its counsel), if any, have been furnished with all
materials relating to the business, finances and operations of the Company and
information the Buyer deemed material to making an informed investment decision
regarding its purchase of the Debentures, which have been requested by the
Buyer. The Buyer and its advisors, if any, have been afforded the
opportunity to ask questions of the Company and its
management. Neither such inquiries nor any other due diligence
investigations conducted by the Buyer or its advisors, if any, or its
representatives shall modify, amend or affect the Buyer’s right to rely on the
Company’s representations and warranties contained in Section 3
below. The Buyer understands that its investment in the Debentures
involves a high degree of risk. The Buyer has sought such accounting,
legal and tax advice, as it has considered necessary to make an informed
investment decision with respect to its acquisition of the
Debentures.
(e) No Governmental
Review. The Buyer understands that no United States federal or
state agency or any other government or governmental agency has passed on or
made any recommendation or endorsement of the Debentures, or the fairness or
suitability of the investment in the Debentures, nor have such authorities
passed upon or endorsed the merits of the offering of the
Debentures.
(f) Transfer or
Resale. The Buyer understands that: (A) the Debentures have
not been and are not being registered under the 1933 Act or any state securities
laws, and may not be offered for sale, sold, assigned or transferred unless (i)
subsequently registered thereunder, (ii) such Buyer shall have delivered to the
Company an opinion of counsel, in generally acceptable form, to the effect that
such securities to be sold, assigned or transferred may be sold, assigned or
transferred pursuant to an exemption from such registration requirements or
(iii) the Buyer provides the Company with reasonable assurances (in the form of
seller and broker representation letters) that the Debentures can be sold,
assigned or transferred pursuant to Rule 144 or Rule 144A promulgated under the
1933 Act (or a successor rule thereto) (collectively, “Rule 144”), in each
case following the applicable holding period set forth therein; (B) any sale of
such securities made in reliance on Rule 144 may be made only in accordance with
the terms of Rule 144 and further, if Rule 144 is not applicable, any resale of
such securities under circumstances in which the seller (or the person
through whom the sale is made) may be deemed to be an underwriter (as that term
is defined in the 0000 Xxx) may require compliance with some other exemption
under the 1933 Act or the rules and regulations of the SEC
thereunder;
and (C) neither the Company nor any other person is under any obligation to
register such securities under the 1933 Act or any state securities laws or to
comply with the terms and conditions of any exemption thereunder.
(g) Legends. The
Buyer understands that the certificates or other instruments representing the
Debentures, the Common Stock underlying the Debentures, and all securities
issued by the Company shall bear a restrictive legend in substantially the
following form (and a stop transfer order may be placed against transfer of
such certificates):
“THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES
LAWS. THE SECURITIES HAVE BEEN ACQUIRED SOLELY FOR INVESTMENT
PURPOSES AND NOT WITH A VIEW TOWARD RESALE AND MAY NOT BE OFFERED FOR SALE,
SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
APPLICABLE STATE SECURITIES LAWS, OR AN OPINION OF COUNSEL, GENERALLY ACCEPTABLE
TO COMPANY’S COUNSEL, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR
APPLICABLE STATE SECURITIES LAWS.”
The
legend set forth above shall be removed and the Company shall issue a
certificate without such legend within three (3) business days to the holder of
the security upon which it is stamped, if, unless otherwise required by state
securities laws: (i) in connection with a sale transaction, provided
the securities are registered under the 1933 Act or (ii) in connection with a
sale transaction, after such holder provides the Company with an opinion of
counsel, which opinion shall be in form, substance and scope reasonably
acceptable to counsel for the Company, to the effect that a public sale,
assignment or transfer of the securities may be made without registration under
the 1933 Act.
(h) Authorization,
Enforcement. This Agreement has been duly and validly
authorized, executed and delivered on behalf of the Buyer and is a valid and
binding agreement of the Buyer enforceable in accordance with its terms, except
as such enforceability may be limited by general principles of equity or
applicable bankruptcy, insolvency, reorganization, moratorium, liquidation and
other similar laws relating to, or affecting generally, the enforcement of
applicable creditors’ rights and remedies.
(i) Receipt of
Documents. The Buyer has received and read in its
entirety: (A) this Agreement and each representation, warranty and
covenant set forth herein and the other Transaction Documents; (B) all due
diligence and other information necessary to verify the accuracy and
completeness of such representations, warranties and covenants; and (C) answers
to all questions the Buyer submitted to the Company regarding an investment in
the Company; and the Buyer has relied on the information contained therein and
has not been furnished any other documents, literature, memorandum or
prospectus.
(j) Due Formation of the
Buyer. The Buyer has been formed and validly exists and has
not been organized for the specific purpose of purchasing the Debentures and is
not prohibited from doing so.
(k) No Legal Advice from the
Company. The Buyer acknowledges that it had the opportunity to
review this Agreement, the Transaction Documents and the transactions
contemplated by the Transaction Documents with its own legal counsel and
investment and tax advisors. The Buyer is relying solely on such
counsel and advisors and not on any statements or representations of the Company
or any of its representatives or agents for legal, tax or investment advice with
respect to this investment, the transactions contemplated by this Agreement or
the securities laws of any jurisdiction.
3. REPRESENTATIONS AND
WARRANTIES OF THE COMPANY.
The
Company represents and warrants as of the date hereof and as of the Closing Date
to the Buyer that:
(a) Organization and
Qualification; Subsidiaries. The Company and its subsidiaries
are corporations duly organized and validly existing in good standing under the
laws of the jurisdiction in which they are incorporated, and have the requisite
corporate power to own their properties and to carry on their business as now
being conducted. Each of the Company and its subsidiaries is duly
qualified as a foreign corporation to do business and is in good standing in
every jurisdiction in which the nature of the business conducted by it makes
such qualification necessary, except to the extent that the failure to be so
qualified or be in good standing would not have a material adverse effect on the
Company and its subsidiaries taken as a whole. Other than as set forth on Schedule 3(a), the Company
owns, directly or indirectly, all of the capital stock or other equity interests
of each subsidiary free and clear or any liens (other than liens in favor of the
Buyer), and all the issued and outstanding shares of capital stock of each
subsidiary are validly issued and are fully paid, non-assessable and free of
preemptive and similar rights to subscribe for or purchase
securities. Schedule
3(a) attached hereto sets forth a list of each of the Company’s
subsidiaries and the percentage of stock it owns in each
subsidiary.
(b) Authorization, Enforcement,
Compliance with Other Instruments. (A) The Company has
the requisite corporate power and authority to enter into and perform this
Agreement, the other Transaction Documents, and any related agreements, and to
issue the Debentures in accordance with the terms hereof and thereof, (B) the
execution and delivery of this Agreement, the other Transaction Documents and
any related agreements by the Company and the consummation by it of the
transactions contemplated hereby and thereby, including, without limitation, the
issuance of the Debentures, and the reservation for issuance of shares of Common
Stock underlying the Debentures have been duly authorized by the Company’s Board
of Directors and no further consent or authorization is required by the Company,
its Board of Directors or its stockholders, (C) this Agreement, the other
Transaction Documents and any related agreements have been duly executed and
delivered by the Company, (D) this Agreement, the other Transaction Documents
and any related agreements constitute the valid and binding obligations of the
Company enforceable against the Company in accordance with their
terms,
except as such enforceability may be limited by general principles of
equity or applicable bankruptcy, insolvency, reorganization, moratorium,
liquidation or similar laws relating to, or affecting generally, the enforcement
of creditors’ rights and remedies. The Company knows of no reason why
the Company cannot perform any of the Company’s obligations under this
Agreement, the Transaction Documents or any related agreements.
(c) Capitalization. The
authorized capital stock of the Company consists of 1,000,000,000 shares of
common stock, par value 0.00001 per share (“Common Stock”). The
Company has no shares of preferred stock authorized. As of the date
hereof, the Company has 27,060,913 shares of Common Stock issued and outstanding
and no shares of preferred stock issued and outstanding. All of the outstanding
shares of capital stock of the Company are validly issued, fully paid and
nonassessable, have been issued in compliance with all federal and state
securities laws and none of such outstanding shares were issued in violation of
any preemptive rights or similar rights to subscribe for or purchase
securities. As of the date of this Agreement, no shares of the
Company’s capital stock are subject to preemptive rights or any other similar
rights or any liens or encumbrances suffered or permitted by the
Company. With the exception of securities listed in the attached
Schedule 3(c), as of the
date of this Agreement, (i) there are no outstanding options, warrants, scrip,
rights to subscribe to, calls or commitments of any character whatsoever
relating to, or securities or rights convertible into, any shares of capital
stock of the Company or any of its subsidiaries, or contracts, commitments,
understandings or arrangements by which the Company or any of its subsidiaries
is or may become bound to issue additional shares of capital stock of the
Company or any of its subsidiaries or options, warrants, scrip, rights to
subscribe to, calls or commitments of any character whatsoever relating to, or
securities or rights convertible into, any shares of capital stock of the
Company or any of its subsidiaries, (ii) there are no outstanding debt
securities and (iii) there are no agreements or arrangements under which the
Company or any of its subsidiaries is obligated to register the sale of any of
their securities under the 1933 Act and (iv) there are no outstanding
registration statements and there are no outstanding comment letters from the
SEC or any other regulatory agency. There are no securities or
instruments containing anti-dilution or similar provisions that will be
triggered by the issuance of the Debentures or the Commitment Shares as
described in this Agreement. The Company has furnished to the Buyer
true and correct copies of the Company’s Articles of Incorporation, as amended
and as in effect on the date hereof (the “Articles of
Incorporation”), and the Company’s Bylaws, as in effect on the date
hereof (the “Bylaws”), and the
terms of all securities convertible into or exercisable for Common Stock and the
material rights of the holders thereof in respect thereto other than stock
options issued to employees and consultants.
(d) Issuance of
Securities. The issuances of the Debentures and the Commitment
Shares are duly authorized and free from all taxes, liens and charges with
respect to the issue thereof and are fully paid and nonassessable and the
issuance of Common Stock underlying the Debentures upon conversion will be duly
authorized and free from all taxes, liens and charges with respect to the issue
thereof and will be fully paid and nonassessable.
(e) No
Conflicts. The execution, delivery and performance of this
Agreement, the other Transaction Documents and any related agreements by the
Company and the consummation by the Company of the transactions contemplated
hereby (including, without limitation, the issuance of the Commitment Shares and
the Debentures and the reservation and
issuance of the shares of Common Stock underlying the Debentures upon
conversion) and thereby will not (A) result in a violation of the Articles of
Incorporation or the Bylaws or (B), to the best knowledge of the Company,
conflict with or constitute a default (or an event which with notice or lapse of
time or both would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, any agreement,
indenture or instrument to which the Company or any of its subsidiaries is a
party, or result in a violation of any law, rule, regulation, order, judgment or
decree (including United States federal and state securities laws and
regulations) applicable to the Company or any of its subsidiaries or
by which any property or asset of the Company or any of its subsidiaries is
bound or affected. To the best knowledge of the Company, neither the
Company nor its subsidiaries is in violation of any term of or in default under
its Articles of Incorporation or Bylaws or their organizational charter or
bylaws, respectively, or, any material contract,
agreement, mortgage, indebtedness, indenture, instrument, judgment, decree or
order or any statute, rule or regulation applicable to the Company or its
subsidiaries. The business of the Company and its subsidiaries is not
being conducted, and shall not be conducted in violation of any material law,
ordinance, or regulation of any governmental entity. Except as
specifically contemplated by this Agreement and as required under the 1933 Act
and any applicable state securities laws, the Company is not required to obtain
any consent, authorization or order of, or make any filing or registration with,
any court or governmental agency in order for it to execute, deliver or perform
any of its obligations under or contemplated by this Agreement in accordance
with the terms hereof. All consents, authorizations, orders, filings
and registrations which the Company is required to obtain pursuant to the
preceding sentence have been obtained or effected on or prior to the date
hereof, except for any required post-Closing notice filings under applicable
United States federal or state securities laws, if any.
(f) Absence of
Litigation. There is no action, suit, proceeding, inquiry or
investigation before or by any court, public board, government agency,
self-regulatory organization or body pending against or affecting the Company,
the Company’s capital stock or any of the Company’s subsidiaries, wherein an
unfavorable decision, ruling or finding would (A) have a material adverse effect
on the transactions contemplated hereby or by the Transaction Documents, (B)
adversely affect the validity or enforceability of, or the authority or ability
of the Company to perform its obligations under, this Agreement or the
Transaction Documents or (C) have a material adverse effect on the business,
operations, properties, financial condition or results of operations
of the Company and its subsidiaries taken as a whole.
(g) Acknowledgment Regarding
Buyer’s Purchase of the Debentures. The Company acknowledges
and agrees that the Buyer is acting solely in the capacity of an arm’s length
purchaser with respect to this Agreement, the other Transaction Documents and
the transactions contemplated hereby and thereby. The Company further
acknowledges that the Buyer is not acting as a financial advisor or fiduciary of
the Company (or in any similar capacity) with respect to this Agreement the
other Transaction Documents and the transactions contemplated hereby and thereby
and any advice given by the Buyer or any of their respective representatives or
agents in connection with this Agreement and the other Transaction Documents and
the transactions contemplated hereby and thereby is merely incidental to the
Buyer’s purchase of the Debentures. The Company further represents to
the Buyer that the Company’s decision to enter into the Transaction Documents
has been based solely on the independent evaluation by the Company and its
representatives.
(h) No General
Solicitation. Neither the Company, nor any of its affiliates,
nor any person acting on its or their behalf, has engaged in any form of general
solicitation or general advertising (within the meaning of Regulation D under
the 0000 Xxx) in connection with the offer or sale of the
Debentures.
(i) No Integrated
Offering. Neither the Company, nor any of its affiliates, nor
any person acting on its or their behalf has, directly or indirectly, made any
offers or sales of any security or solicited any offers to buy any security,
under circumstances that would require registration of the Debenture or shares
of Common Stock underlying the Debentures under the 1933 Act or cause this
offering of the Debentures to be integrated with prior offerings by the Company
for purposes of the 1933 Act.
(j) Employee
Relations. Neither the Company nor any of its subsidiaries is
involved in any labor dispute nor, to the knowledge of the Company or any of its
subsidiaries, is any such dispute threatened. None of the Company’s
or its subsidiaries’ employees is a member of a union and the Company and its
subsidiaries believe that their relations with their employees are
good.
(k) Intellectual Property
Rights. The Company and its subsidiaries own or possess
adequate rights or licenses to use all trademarks, trade names, service marks,
service xxxx registrations, service names, patents, patent rights, copyrights,
inventions, licenses, approvals, governmental authorizations, trade secrets and
rights necessary to conduct their respective businesses as now
conducted. The Company and its subsidiaries do not have any knowledge
of any infringement by the Company or its subsidiaries of trademark, trade name
rights, patents, patent rights, copyrights, inventions, licenses, service names,
service marks, service xxxx registrations, trade secret or other similar rights
of others, and, to the knowledge of the Company there is no claim, action or
proceeding being made or brought against, or to the Company’s knowledge, being
threatened against, the Company or its subsidiaries regarding trademark, trade
name, patents, patent rights, invention, copyright, license, service names,
service marks, service xxxx registrations, trade secret or other infringement;
and the Company and its subsidiaries are unaware of any facts or circumstances
which might give rise to any of the foregoing.
(l) Title.
(i) Any
real property and facilities held under lease by the Company and its
subsidiaries are held by them under valid, subsisting and enforceable leases
with such exceptions as are not material and do not interfere with the use made
and proposed to be made of such property and buildings by the Company and its
subsidiaries.
(ii) The
Company and its Subsidiaries have good and marketable title to all personal
property owned by them which is material to the business of the Company and its
Subsidiaries, in each case free and clear of all liens and encumbrances, other
than those in favor of the Buyer.
(m) Regulatory
Permits. The Company and its subsidiaries possess all material
certificates, authorizations and permits issued by the appropriate federal,
state or foreign regulatory authorities necessary to conduct their respective
businesses, and neither the Company nor any such subsidiary has received any
notice of proceedings relating to the revocation or modification of any such
certificate, authorization or permit.
(n) Internal Accounting
Controls. The Company and each of its subsidiaries maintain a
system of internal accounting controls sufficient to provide reasonable
assurance that (i) transactions are executed in accordance with management’s
general or specific authorizations, (ii) transactions are recorded as necessary
to permit preparation of financial statements in conformity with generally
accepted accounting principles and to maintain asset accountability, and (iii)
the recorded amounts for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
(o) No Material Adverse
Breaches, etc. Neither the Company nor any of its subsidiaries
is subject to any charter, corporate or other legal restriction, or any
judgment, decree, order, rule or regulation which in the judgment of the
Company’s officers has or is expected in the future to have a material adverse
effect on the business, properties, operations, financial condition, results of
operations or prospects of the Company or its subsidiaries. Neither
the Company nor any of its subsidiaries is in breach of any contract or
agreement and no event has occurred and is continuing which, with the giving of
notice or the passage of time or both, would become an event of default, which
breach or event, has or is expected to have a material adverse effect on the
business, properties, operations, financial condition, results of operations or
prospects of the Company or its subsidiaries.
(p) Tax
Status. The Company and each of its subsidiaries has made and
filed all federal and state income and all other tax returns, reports and
declarations required by any jurisdiction to which it is subject and (unless and
only to the extent that the Company and each of its subsidiaries has set aside
on its books provisions reasonably adequate for the payment of all unpaid and
unreported taxes) has paid all taxes and other governmental assessments and
charges that are material in amount, shown or determined to be due on such
returns, reports and declarations, except those being contested in good faith
and has set aside on its books provision reasonably adequate for the payment of
all taxes for periods subsequent to the periods to which such returns, reports
or declarations apply. There are no unpaid taxes in any material
amount claimed to be due by the taxing authority of any jurisdiction, and the
officers of the Company know of no basis for any such claim.
(q) Certain
Transactions. Except as set forth in Schedule 3(g) and except for
arm’s length transactions pursuant to which the Company makes payments in the
ordinary course of business upon terms no less favorable than the Company could
obtain from third parties and other than the grant of stock options or stock
grants previously disclosed in writing to the Buyer, none of the officers,
directors, or employees of the Company is presently a party to any transaction
with the Company (other than for services as employees, officers and directors),
including any contract, agreement or other arrangement providing for the
furnishing of services to or by, providing for rental of real or personal
property to or from, or otherwise
requiring
payments to or from any officer, director or such employee or, to the knowledge
of the Company, any corporation, partnership, trust or other entity in which any
officer, director, or any such employee has a substantial interest or is an
officer, director, trustee or partner.
(r) Fees and Rights of First
Refusal. The Company is not obligated to offer the securities
offered hereunder on a right of first refusal basis or otherwise to any third
parties including, but not limited to, current or former shareholders of the
Company, underwriters, brokers, agents or other third parties.
(s) Investment
Company. The Company is not, and is not an affiliate of, and
immediately after receipt of payment for the Debentures, will not be or be an
affiliate of, an “investment company” within the meaning of the Investment
Company Act of 1940, as amended. The Company shall conduct its
business in a manner so that it will not become subject to the Investment
Company Act.
(t) Registration
Rights. No person has any right to cause the Company to effect
the registration under the 1933 Act of any securities of the
Company. There are no outstanding registration statements not yet
declared effective and there are no outstanding comment letters from the SEC or
any other regulatory agency.
(u) Private
Placement. Assuming the accuracy of the Buyer’s
representations and warranties set forth in Section 2 herein above, no
registration under the 1933 Act is required for the offer and sale of the
Debentures, the Commitment Shares or the Common Stock underlying the Debentures
by the Company to the Buyer as contemplated hereby and by the Transaction
Documents.
(v) SEC Documents; Financial
Statements. Other than current reports on Form 8-K, the
Company has filed all reports, schedules, forms, statements and other documents
required to be filed by it with the SEC under the Securities Exchange Act of
1934, as amended (the “Exchange Act”), for
the two years preceding the date hereof (or such shorter period as the Company
was required by law or regulation to file such material) (all of the foregoing
filed prior to the date hereof or amended after the date hereof and all exhibits
included therein and financial statements and schedules thereto and documents
incorporated by reference therein, being hereinafter referred to as the “SEC Documents”) on
timely basis or has received a valid extension of such time of filing and has
filed any such SEC Document prior to the expiration of any such
extension. As of their respective dates, the SEC Documents complied
in all material respects with the requirements of the Exchange Act and the rules
and regulations of the SEC promulgated thereunder applicable to the SEC
Documents, and none of the SEC Documents, at the time they were filed with the
SEC, 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 the light of the circumstances under which they were
made, not misleading. As of their respective dates, the financial
statements of the Company included in the SEC Documents complied as to form in
all material respects with applicable accounting requirements and the published
rules and regulations of the SEC with respect thereto. Such financial
statements have been prepared in accordance with generally accepted accounting
principles, consistently applied, during the periods involved (except (i) as may
be otherwise
indicated
in such financial statements or the notes thereto, or (ii) in the case of
unaudited interim statements, to the extent they may exclude footnotes or may be
condensed or summary statements) and fairly present in all material respects the
financial position of the Company as of the dates thereof and the results of its
operations and cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal year-end audit adjustments). No
information provided by or on behalf of the Company to the Buyer contains any
untrue statement of a material fact or omits to state any material fact
necessary in order to make the statements therein, in the light of the
circumstance under which they are or were made and not misleading.
(w) Listing and Maintenance
Requirements. The Company’s Common Stock is registered
pursuant to Section 12(b) or 12(g) of the Exchange Act, and the Company has
taken no action designed to terminate, or which to its knowledge is likely to
have the effect of, terminating the registration of the Common Stock under the
Exchange Act nor has the Company received any notification that the SEC is
contemplating terminating such registration. The Company has not, in
the twelve (12) months preceding the date hereof, received notice from any
Primary Market (as defined herein below) on which the Common Stock is or has
been listed or quoted to the effect that the Company is not in compliance with
the listing or maintenance requirements of such Primary Market. The
Company is, and has no reason to believe that it will not in the foreseeable
future continue to be, in compliance with all such listing and maintenance
requirements.
(x) Reporting
Status. With a view to making available to the Buyer the
benefits of Rule 144 or any similar rule or regulation of the SEC that may at
any time permit the Buyer to sell securities of the Company to the public
without registration, and as a material inducement to the Buyer’s purchase of
the Securities, the Company represents and warrants to the following: (i) the
Company is, and has been for a period of at least 90 days immediately preceding
the date hereof, subject to the reporting requirements of Section 13 or 15(d) of
the Exchange Act (ii) the Company has filed all required reports under Section
13 or 15(d) of the Exchange, as applicable, during the 12 months preceding the
date hereof (or for such shorter period that the Company was required to file
such reports), (iii) the Company is not an issuer defined as a “Shell Company”,
and (iv) if the Company has, at any time, been an issuer defined as a “Shell
Company,” the Company has (A) not been an issuer defined as a Shell Company for
at least six (6) months prior to the Closing Date, and (B) has satisfied the
requirements of Rule 144(i) (including, without limitation, the proper filing of
“Form 10 information” at least six (6) months prior to the Closing
Date). For the purposes hereof, the term “Shell Company” shall mean
an issuer that meets the description defined under Rule 144.
(y) Manipulation of
Price. The Company has not, and to its knowledge no one
acting on its behalf has, (i) taken, directly or indirectly, any action designed
to cause or to result in the stabilization or manipulation of the price of any
security of the Company to facilitate the sale or resale of any of its
securities, (ii) sold, bid for, purchased, or, paid any compensation for
soliciting purchases of, any of its securities, or (iii) paid or agreed to pay
to any person any compensation for soliciting another to purchase any other
securities of the Company.
(z) Dilutive
Effect. The Company understands and acknowledges that the
number of shares of Common Stock issuable upon conversion of the Debentures will
increase in certain circumstances. The Company further acknowledges
that its obligation to issue shares of Common Stock upon conversion of the
Debentures is absolute and unconditional regardless of the dilutive effect that
such issuance may have on the ownership interests of other stockholders of the
Company.
(aa) No Material Misstatement or
Omission. None of the materials provided to the Buyer by the
Company and none of the representation and warranties made in this Agreement or
the Transaction Documents include any untrue statements of material fact, and
none of the representations and warranties made in this Agreement or any of the
other Transaction Documents omit to state any material fact required to be
stated therein necessary to make the statements made, in light of the
circumstances under which they were made, not misleading.
(bb) Use of
Proceeds. The Company represents and warrants that the
proceeds received from the sale of the Debentures are being utilized for the
purposes set forth in the attached Exhibit
D. The Company understands that the Buyer is relying on this
representation in order to enter into this transaction and that the proceeds
will not be utilized by the Company or its principals for any other purpose. At
the request of the Buyer, the Company shall furnish any documents requested
evidencing the use of proceeds including but not limited to bank statements and
wire confirmations.
(cc) WTL Renewable Energies
Inc. The Company represents and warrants that its wholly owned
subsidiary, WTL Renewable Energies Inc. has no assets or
liabilities.
4. COVENANTS.
(a) Best
Efforts. Each party shall use its best efforts timely to
satisfy each of the conditions to be satisfied by it as provided in Sections 5
and 6 of this Agreement.
(b) Form
D. The Company agrees to be solely responsible to file a Form
D with respect to the Debentures and the Commitment Shares as required under
Regulation D and to provide a copy thereof to the Buyer promptly after such
filing. The Company shall take such action as the Company shall
reasonably determine is necessary to qualify the Debentures and the Commitment
Shares, or obtain an exemption for the Debentures and the Commitment Shares for
sale to the Buyer pursuant to this Agreement under applicable securities or
“Blue Sky” laws of the states of the United States, and shall provide evidence
of any such action so taken to the Buyer.
(c) Reporting
Status. With a view to making available to the Buyer the
benefits of Rule 144 or any similar rule or regulation of the SEC that may at
any time permit the Buyer to sell securities of the Company to the public
without registration, and as a material inducement to the Buyer’s purchase of
the Debentures and the Common Stock underlying the Debentures, the Company
represents, warrants, and covenants to the following:
(i) The
Company is subject to the reporting requirements of Section 13 or 15(d) of the
Exchange Act and has filed all required reports under Section 13 or 15(d) of the
Exchange Act during the 12 months prior to the date hereof (or for such shorter
period that the issuer was required to file such reports), other than Current
Reports on Form 8-K;
(ii) Until
the time that Buyer no longer owns Debentures, Commitment Shares or Common Stock
underlying such Debentures or Commitment Shares, the Company covenants to
maintain the registration of the Common Stock under Section 12(b) or 12(g) of
the Exchange Act and to timely file (or obtain extensions in respect thereof and
file within the applicable grace period) all reports required to be filed by the
Company after the date hereof pursuant to the Exchange Act and such reports
shall conform to the requirements of the Exchange Act and the SEC for filing
thereunder. As long as any Buyer owns Securities, if the Company is
not required to file reports pursuant to the Exchange Act, it will prepare and
furnish to the Buyer and make publicly available in accordance with Rule 144(c)
such information as is required for the Buyer to sell the Securities under Rule
144. The Company further covenants that it will take such further
action as any holder of Securities may reasonably request, to the extent
required from time to time to enable such person to sell such Securities without
registration under the Securities Act within the requirements of the exemption
provided by Rule 144.
(iii) The
Company shall furnish to the Buyer, so long as the Buyer owns the Debentures,
the Commitment Shares and/or the Common Stock underlying the Debentures or the
Commitment Shares, promptly upon request, (i) a written statement by the Company
that it has complied with the reporting requirements of Rule 144, (ii) a copy of
the most recent annual or quarterly report of the Company and such other reports
and documents so filed by the Company, and (iii) such other information as may
be reasonably requested to permit the Buyer to sell such securities pursuant to
Rule 144 without registration; and
(d) Use of
Proceeds. The Company shall ensure that net proceeds in
connection with Section 3(dd) and Exhibit D
hereof. So long as any of the Debentures remain outstanding, the
Company agrees to provide the Investor with all evidence or documents
(including, without limitation, bank statements), as requested by the Investor
to show that proceeds were used in accordance with Section 3(dd)
hereof.
(e) Reservation of
Shares. The Company shall take all action reasonably necessary
to at all times have authorized, and reserved for the purpose of issuance, such
number of shares of Common Stock as shall be necessary to effect the full
conversion of the Debentures that have been issued hereunder (the “Share
Reserve”). If at any time the Share Reserve is insufficient to
effect the full conversion of the Debentures then outstanding, the Company shall
increase the Share Reserve accordingly. If the Company does not have
sufficient authorized and unissued shares of Common Stock available to increase
the Share Reserve, the Company shall call and hold a special meeting of the
shareholders within thirty (30) days of such occurrence, or take action by the
written consent of the holders of a majority of the outstanding shares of Common
Stock, if possible, for the sole purpose of increasing the number of shares
authorized. The Company’s management shall recommend to the
shareholders to vote in favor of increasing the number of shares of Common Stock
authorized. Management and Buyer shall also vote all of their
respective shares in favor of increasing the number of authorized shares of
Common Stock.
(f) Fees and Expenses.
The Company hereby agrees to pay the following fees:
(i) Structuring and Legal
Fees. On the Closing Date, the Company shall pay a structuring
and legal fee of Five Thousand United States Dollars (US $5,000) to the
Buyer. The Company shall pay its own fees and expenses in connection
with the documentation and closing of this Agreement, the other Transaction
Documents and the transactions contemplated hereby and thereby.
(ii) Commitment
Shares. Pursuant to Section 6(c) of this Agreement, the
Company shall deliver to the Buyer Xxx Xxxxxxx Xxxx-Xxxxxxx Xxxxxxxx Xxxxxx
Xxxxxx Dollars (US$1,500,000) of shares of Common Stock, the number which shall
be determined by dividing Xxx Xxxxxxx Xxxx-Xxxxxxx Xxxxxxxx Xxxxxx Xxxxxx
Dollars (US$1,500,000) by the Volume Weighted Average Price of the Common Stock,
as reported by Bloomberg, LP, for the five (5) Trading Days immediately
preceding the Closing Date (the “Initial Commitment Share
Price”). Such shares are hereinafter referred to as the “Commitment Shares”.
The Commitment Shares shall be (i) freely tradable without restriction under
Rule 144 six (6) months from the Closing Date; and (ii) shall have piggy back
registration rights as part of any registration statement that is filed by the
Company. While the Debentures remain outstanding, the Company
acknowledges and agrees that if the VWAP of the Commitment Shares falls below
the Initial Commitment Share Price, the Company shall issue additional shares of
Common Stock of the Company to the Buyer so that the aggregate value of the
Commitment Shares held by Buyer equals Xxx Xxxxxxx Xxxx Xxxxxxx Xxxxxxxx Xxxxxx
Xxxxxx Dollars (US$1,500,000) at all times. For purposes of this
Agreement, a “Trading
Day” shall mean any day during which the New York Stock Exchange shall be
open for business.
(iii) Commitment Fee. On the
Closing Date, the Company shall pay a Commitment Fee of Four Percent (4%) of the
Purchase Price to the Buyer.
(iv) Due Diligence Fee. On or
before the Closing Date, the Company shall pay to the Buyer a due diligence fee
of Two Thousand Five Hundred United States Dollars (US$2,500).
(g) Commitment Share Buy-Back
Option. At any time following the Closing, the Company may,
pursuant to notice to the Buyer, buy back the Commitment
Shares. Within thirty (30) days of the Company providing such notice
to the Buyer, the Company shall redeem all of the Commitment Shares from the
Buyer for a purchase price of One Million United States Dollars (US$1,000,000)
(the “Redemption
Price”). On the date of such redemption closing, the
Redemption Price shall be paid by the Company to the Buyer via wire transfer in
immediately available funds.
(h) Corporate Existence.
So long as any of the Debentures remain outstanding, the Company shall not
directly or indirectly consummate any merger, reorganization, restructuring,
reverse stock split consolidation, sale of all or substantially all of the
Company’s assets or any similar transaction or related transactions (each such
transaction, an “Organizational
Change”) unless, prior to the consummation an Organizational Change, the
Company obtains the written consent of the Buyer. In the case of any
Organizational Change, the Company will make appropriate provision with respect
to such holders’ rights and interests to insure that the provisions of this
Section 4(h) will thereafter be applicable to the Debentures.
(i) Transactions With
Affiliates. So long as any of the Debentures remain outstanding, the
Company shall not, and shall cause each of its subsidiaries not to, enter into,
amend, modify or supplement, or permit any subsidiary to enter into, amend,
modify or supplement any agreement, transaction, commitment, or arrangement with
any of its or any subsidiary’s officers, directors, persons who were officers or
directors at any time during the previous two (2) years, stockholders who
beneficially own five percent (5%) or more of the Common Stock, or Affiliates
(as defined below) or with any individual related by blood, marriage, or
adoption to any such individual or with any entity in which any such entity or
individual owns a five percent (5%) or more beneficial interest (each a “Related Party”),
except for (A) customary employment arrangements and benefit programs on
reasonable terms, (B) any investment in an Affiliate of the
Company, (C) any agreement, transaction, commitment, or arrangement
on an arms-length basis on terms no less favorable than terms which would have
been obtainable from a person other than such Related Party, and (D) any
agreement transaction, commitment, or arrangement which is approved by a
majority of the disinterested directors of the Company, for purposes hereof, any
director who is also an officer of the Company or any subsidiary of the Company
shall not be a disinterested director with respect to any such agreement,
transaction, commitment, or arrangement. “Affiliate” for
purposes hereof means, with respect to any person or entity, another person or
entity that, directly or indirectly, (i) has a ten percent (10%) or more equity
interest in that person or entity, (ii) has ten percent (10%) or more common
ownership with that person or entity, (iii) controls that person or entity, or
(iv) shares common control with that person or entity. “Control” or “controls” for
purposes hereof means that a person or entity has the power, direct or indirect,
to conduct or govern the policies of another person or entity.
(j) Restriction on Issuance of
the Capital Stock. So long as any of the Debentures remain outstanding,
the Company shall not, without the prior written consent of the Buyer, (A) issue
or sell shares of any of its capital stock without consideration or for a
consideration per share less than the bid price value of the Common Stock
determined immediately prior to its issuance, (B) issue or sell any warrant,
option, right, contract, call, or other security instrument granting the holder
thereof, the right to acquire Common Stock without consideration or for a
consideration less than such Common Stock’s bid price value determined
immediately prior to it’s issuance, (C) enter into any security instrument
granting the holder a security interest in any and all assets of the Company or
any subsidiary of the Company (whether now owned or acquired in the future while
the Debentures are outstanding), (iv) permit any subsidiary of the Company
(whether now owned or acquired in the future while the Debentures are
outstanding) to enter into any security instrument granting the holder a
security interest in any and all assets of such subsidiary or (v) file any
registration statement on Form S-8.
(k) Restriction on “Short”
Position. Neither the Buyer nor any of its affiliates have an
open short position in the Common Stock of the Company, and the Buyer agrees
that it shall not, and that it will cause its affiliates not to, engage in any
short sales with respect to the Common Stock as long as any Debentures shall
remain outstanding.
(l) Restriction on Incurring
Additional Debt. So long as any of the Debentures remain
outstanding, the Company shall not incur any additional debt or permit
any
subsidiary
of the Company to incur any additional debt without the Buyer’s prior written
consent. Any debt in the Company or any debt which is assumed or
generated as a result of any acquisition, including seller carry back notes must
be approved by the Buyer and in all cases shall be fully subordinated to the
Debentures.
(m) Dividends;
Distributions. So long as the Debentures are outstanding,
without the prior written consent of the Buyer, neither the Company nor any of
its subsidiaries may declare or make any dividend or other
distribution.
(n) Financial
Statements. So long as the Debentures are outstanding, the
Company will provide to the Buyer audited financial statements on an annual
basis within ninety (90) days of the end of a fiscal year and unaudited
financial statements on a quarterly basis within forty-five (45) days of the end
of each quarter.
(o) Employment and Incentive
Agreements. So long as any of the Debentures remain
outstanding, any employment, management incentive or other agreements, including
but not limited to any agreements providing for direct or indirect (e.g. perks
and benefits) compensation in which Company is or will become a party shall be
subject to the prior written approval of the Buyer.
(p) Transfer of Assets.
So long as any of the Debentures remain outstanding, the Company shall not, and
shall cause its subsidiaries not to, transfer, move or otherwise dispose of any
of their respective assets, other than in the ordinary course of business,
without the prior written consent of the Buyer.
(q) Primary
Market. So long as any of the Debentures remain outstanding,
the Common Stock shall be listed or quoted for trading on any of (a) the
American Stock Exchange, (b) New York Stock Exchange, (c) the NASDAQ Global
Market, (d) the NASDAQ capital market, or (e) the NASDAQ OTC Bulletin Board
(which does not include the Pink Sheets LLC) (“OTCBB”) each a “Primary
Market.”
(r) Security
Instruments. On the date hereof, the Company shall execute and
deliver (i) a Security Agreement in a form satisfactory to the Buyer (the “Security Agreement”) pursuant
to which the Company and its subsidiaries shall provide to the Buyer a security
interest in the pledged property and collateral set forth therein to secure the
Company’s obligations under the Transaction Documents or any other obligations
of the Company to the Buyer and (ii) any other security instrument which the
Buyer may request of the Company and/or the Company’s officers and directors in
order to secure the Company’s obligations under the Transaction Documents or any
other obligations of the Company to the Buyer. The Security Agreement
and any other security instrument contemplated by this Section 4(r) are
collectively referred to herein as the (“Security
Instruments”).
(s) Financing Statements.
Upon execution of the Security Agreement, the Company agrees that the
Buyer is authorized to file a form UCC-1 or such other forms as may
be required to perfect Buyer’s security interest in the Pledged Property (as
defined in the Security Agreement) providing to Buyer a first priority lien on
all of the Company’s and its existing and future Subsidiaries’ assets (real and
personal) and their intellectual property.
(t) Opinion of
Counsel. The Buyer shall receive an opinion letter from
counsel to the Company in a form satisfactory to the Buyer on the Closing
Date.
5. CONDITIONS TO THE COMPANY’S
OBLIGATION TO SELL.
The
obligation of the Company hereunder to issue and sell the Debentures to the
Buyer is subject to the satisfaction of each of the following conditions within
four (4) business days of the Closing, provided that these conditions are for
the Company’s sole benefit and may be waived by the Company at any time in its
sole discretion:
(a) The
Buyer shall have executed this Agreement and the Transaction Documents and
delivered the same to the Company.
(b) The
Buyer shall have delivered to the Company the Purchase Price for Debentures to
be purchased at the Closing (minus
the fees and expenses as set forth herein which shall be paid directly from the
Escrow
Funds
(as that term is defined in the Escrow Agreement) at Closing)
in accordance with the terms herein and in the Escrow Agreement.
(c) The
representations and warranties of the Buyer shall be true and correct in all
material respects as of the date when made and as of the Closing Date as though
made at that time (except for representations and warranties that speak as of a
specific date), and the Buyer shall have performed, satisfied and complied in
all material respects with the covenants, agreements and conditions required by
this Agreement to be performed, satisfied or complied with by the Buyer at or
prior to the Closing Date.
(d) The
Buyer shall have executed such other documents as are reasonably required by the
Company.
6. CONDITIONS TO THE BUYER’S
OBLIGATION TO PURCHASE.
The
obligation of the Buyer to direct the Escrow Agent to disburse to the Company
the net proceeds of the Purchase Price of the Debentures is subject to the
satisfaction of each of the following conditions within four (4) business days
of the Closing, provided that these conditions are for the Buyer’s sole benefit
and may be waived by the Buyer at any time in its sole discretion:
(a) The
Company shall have executed this Agreement, the Security Agreement, the
Debenture, the other Transaction Documents and any other documents relating to
this transaction and delivered the same to the Buyer;
(b) The
Company shall have delivered to the Buyer certified resolutions of the Company’s
Board of Directors authorizing this Agreement, the other Transactions and the
transactions contemplated hereby and thereby;
(c) The
Company shall have delivered to the Buyer the Commitment Shares required to be
delivered pursuant to Section 4(f)(ii) hereof;
(d) The
Company shall have provided to the Buyer a certificate of good standing from the
secretary of state from the state in which the Company is
incorporated;
(e) The
Company shall have delivered to the Buyer an opinion of counsel from counsel to
the Company in a form satisfactory to the Buyer and its counsel;
(f) All
fees, expenses and disbursements due pursuant to Section 4(f) hereof shall have
been deducted by the Buyer directly out of the proceeds of the Debenture with no
reduction in the amount of Commitment Shares to be delivered at
Closing;
(g) The
completion of satisfactory legal, accounting and financial due diligence on the
Company and its subsidiaries;
(h) The
representations and warranties of the Company in this Agreement, the Security
Agreement, the Debentures and the Transaction Documents shall be true and
correct in all material respects (except to the extent that any of such
representations and warranties is already qualified as to materiality in Section
3 above, in which case, such representations and warranties shall be true and
correct without further qualification) as of the date when made and as of the
Closing Date as though made at that time (except for representations and
warranties that speak as of a specific date) and the Company shall have
performed, satisfied and complied in all material respects with the covenants,
agreements and conditions required by this Agreement to be performed, satisfied
or complied with by the Company at or prior to the Closing Date. If
requested by the Buyer, the Buyer shall have received a certificate, executed by
the President of the Company, dated as of the respective Closing Date, to the
foregoing effect and as to such other matters as may be reasonably requested by
the Buyer;
(i) There
shall not have been any change or disruption or any development involving a
prospective change or disruption in the financial or capital markets the effect
of which is, in the Buyer’s sole judgment, so material and adverse as to make it
impractical or inadvisable to proceed with the purchase of the
Debentures;
(j) There
shall have been no change which the Buyer, in its sole and absolute discretion,
deems to be materially adverse in respect of the business, results of
operations, condition (financial or otherwise), value, prospects, liabilities or
assets of the Company;
(k) The
Company’s management incentive and employment agreements shall be acceptable to
the Buyer and its counsel;
(l) The
Company has received all approvals (governmental and otherwise) and third party
consents of all requisite parties necessary in order for the Company to
consummate the transactions contemplated by this Agreement and the Transaction
Documents; and
(m) The
Company has not defaulted in any material contracts and there is no material
litigation, as determined by the Buyer as of the Closing Date.
7. INDEMNIFICATION BY
COMPANY. In consideration of the Buyer’s execution and
delivery of this Agreement and the other Transaction Documents and for acquiring
the Debentures hereunder, and in addition to all of the Company’s other
obligations under this Agreement and the other Transaction Documents, the
Company shall defend, protect, indemnify and hold harmless the Buyer and each
other holder of the Debentures, and all of their officers, directors, employees
and agents (including, without limitation, those retained in connection
with the transactions contemplated by this Agreement) (collectively, the “Buyer Indemnitees”)
from and against any and all actions, causes of action, suits, claims, losses,
costs, penalties, fees, liabilities and damages, and expenses in connection
therewith (irrespective of whether any such Buyer Indemnitee is a party to the
action for which indemnification hereunder is sought), and including reasonable
attorneys’ fees and all costs, and disbursements (the “Indemnified
Liabilities”), incurred by the Buyer Indemnitees or any of them as a
result of, or arising out of, or relating to (A) any misrepresentation or breach
of any representation or warranty made by the Company in this Agreement, the
Transaction Documents or any other certificate, instrument or document
contemplated hereby or thereby, (B) any breach of any covenant, agreement or
obligation of the Company contained in this Agreement, the Transaction Documents
or any other certificate, instrument or document contemplated hereby or thereby
or (C) any cause of action, suit or claim brought or made against such Buyer
Indemnitee by a third party and arising out of or resulting from a material
misrepresentation by the Company under the Transaction Documents or due to a
material breach by the Company of its obligations under this Agreement and the
execution, delivery, performance or enforcement of this Agreement or any other
instrument, document or agreement executed pursuant hereto by any of the Buyer
Indemnities, any transaction financed or to be financed in whole or in part,
directly or indirectly, with the proceeds of the issuance of the Debentures or
the status of the Buyer or holder of the Debentures, as a purchaser of the
Debentures of the Company. To the extent that the foregoing
undertaking by the Company may be unenforceable for any reason, the Company
shall make the maximum contribution to the payment and satisfaction of each of
the Indemnified Liabilities, which is permissible under applicable
law.
8. RELEASE. In
consideration of the mutual promises and covenants made herein, and other good
and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, and intending to be legally bound hereby, the Company hereby
agrees to fully, finally and forever release and forever discharge and covenant
not to xxx the Buyer, and/or and its parent companies, subsidiaries, affiliates,
divisions, and their respective attorneys, officers, directors, agents,
shareholders, members, employees, predecessors, successors, assigns, personal
representatives, partners, heirs and executors from any and all debts, fees,
attorneys’ fees, liens, costs, expenses, damages, sums of money, accounts,
bonds, bills, covenants, promises, judgments, charges, demands, claims, causes
of action, suits, liabilities, expenses, obligations or contracts of any kind
whatsoever, whether in law or in equity, whether asserted or unasserted, whether
known or unknown, fixed or contingent, under statute or otherwise, from the
beginning of time through the Closing Date, including, without limiting
the generality of the foregoing, any and all claims relating to or arising out
of any financing transactions, credit facilities,
debentures, security agreements, and other agreements including, without
limitation, each of the Transaction Documents, entered into by the Company
with the Buyer and any and all claims that the Company does not know or
suspect to exist, whether through ignorance, oversight, error, negligence, or
otherwise, and which, if known, would materially affect their decision to enter
into this Agreement or the related Transaction Documents.
9. GOVERNING
LAW: MISCELLANEOUS.
(a) Governing
Law. This Agreement shall be deemed to be made under and shall
be construed in accordance with the laws of the State of Florida without giving
effect to the principals of conflict of laws thereof. Each of the
parties consents to the jurisdiction of the U.S. District Court sitting in the
Southern District of the State of Florida or the state courts of the State of
Florida sitting in Miami-Dade County, Florida in connection with any dispute
arising under this Agreement and the other Transaction Documents and hereby
waives, to the maximum extent permitted by law, any objection, including any
objection based on forum non conveniens to the
bringing of any such proceeding in such jurisdictions.
(b) Counterparts. This
Agreement may be executed in two or more identical counterparts, all of which
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.
(c) Headings. The
headings of this Agreement are for convenience of reference and shall not form
part of, or affect the interpretation of, this Agreement.
(d) Severability. If
any provision of this Agreement shall be invalid or unenforceable in any
jurisdiction, such invalidity or unenforceability shall not affect the validity
or enforceability of the remainder of this Agreement in that jurisdiction or the
validity or enforceability of any provision of this Agreement in any other
jurisdiction.
(e) Entire Agreement,
Amendments. This Agreement supersedes all other prior oral or
written agreements between the Buyer, the Company, their affiliates and persons
acting on their behalf with respect to the matters discussed herein, and this
Agreement and the instruments referenced herein contain the entire understanding
of the parties with respect to the matters covered herein and therein and,
except as specifically set forth herein or therein, neither the Company nor the
Buyer makes any representation, warranty, covenant or undertaking with respect
to such matters. No provision of this Agreement may be waived or
amended other than by an instrument in writing signed by the party to be charged
with enforcement.
(f) Notices. Any
notices, consents, waivers, or other communications required or permitted to be
given under the terms of this Agreement must be in writing and will be deemed to
have been delivered (A) upon receipt, when delivered personally; (B) upon
confirmation of receipt, when sent by facsimile; (C) three (3) days after being
sent by U.S. certified mail, return receipt requested, or (D) one (1) day after
deposit with a nationally recognized overnight delivery service, in each case
properly addressed to the party to receive the same. The addresses
and facsimile numbers for such communications shall be:
|
If
to the Company, to:
|
Europa
Place x’Xxxxx 000 Xxxx xx Xxxxx x’Xxxxx, Xxxxx 00
Xxxxxxxx,
XX X0X 0X0, Xxxxxx
Attention: Xx.
Xxxxxxx Xxxxxxxx, CEO
Telephone:
(000) 000-0000
Facsimile:
(000) 000-0000
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With
a copy to:
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Xxxxxxx
Xxxxxx Xxxxxx-Xxxx Xxxxxxxxxx LLP
000
Xxxxxxx Xxxxxx, 00xx
Xxxxx
Xxx
Xxxx, XX 00000
Attention:
Xxxxxxx X. Xxxxxxxxxx, Esq.
Telephone:
(000) 000-0000
Facsimile:
(000) 000-0000
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If
to the Buyer:
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Trafalgar
Capital Specialized Investment Fund
The
Xxxxxxx, Xxxx Street
00
Xxxxxxxxxxx Xxxxxx
Xxxxxx
XX0X 0XX
Attention:
Xxxxxx Xxxxx, Chairman of the Board of Trafalgar Capital Sarl, General
Partner
Facsimile: 011-44-207-405-0161
and
001-786-323-1651
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With
Copy to:
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K&L
Gates LLP
000
Xxxxx Xxxxxxxx Xxxx., Xxxxx 0000
Xxxxx,
Xxxxxxx 00000
Attention:
Xxxxxxx X. Xxxxxx, Esq.
Telephone:
(000) 000-0000
Facsimile: (000)
000-0000
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Each
party shall provide five (5) days’ prior written notice to the other party of
any change in address or facsimile number.
(g) Successors and
Assigns. This Agreement shall be binding upon and inure to the
benefit of the parties and their respective successors and
assigns. Neither the Company nor the Buyer shall assign this
Agreement or any rights or obligations hereunder without the prior written
consent of the other party hereto.
(h) No Third Party
Beneficiaries. This Agreement is intended for the benefit of
the parties hereto and their respective permitted successors and assigns, and is
not for the benefit of, nor may any provision hereof be enforced by, any other
person.
(i) Confidentiality. If
for any reason the transactions contemplated by this Agreement are not
consummated, each of the parties hereto shall keep confidential any information
obtained from the other party (except information publicly available or in such
party’s domain prior to disclosure of such information from the other party
hereto, and except as required by applicable laws) and shall promptly return to
the other party all schedules, documents, instruments, work papers and other
written information without retaining copies thereof, previously furnished by it
as a result of this Agreement or in connection herewith.
(j) Publicity. The
Company and the Buyer shall have the right to approve, before issuance any press
release or any other public statement with respect to the transactions
contemplated hereby made by any party; provided, however, that the Company shall
be entitled, without the prior approval of the Buyer, to issue any press release
or other public disclosure with respect to such transactions required under
applicable securities or other laws or regulations (the Company shall use its
best efforts to consult the Buyer in connection with any such press release or
other public disclosure prior to its release and Buyer shall be provided with a
copy thereof upon release thereof).
(k) Further
Assurances. Each party shall do and perform, or cause to be
done and performed, all such further acts and things, and shall execute and
deliver all such other agreements, certificates, instruments and documents, as
the other party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby. Furthermore, the Company agrees to
execute such other documents as are reasonably required by the Buyer and it
shall be deemed a default of this Agreement if the Company fails to execute any
such additional document within two (2) business days of the date of request by
the Buyer.
(l) No Strict
Construction. 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.
(m) Recitals. The
Recitals herein above are hereby incorporated into this Agreement as if fully
stated herein.
(n) Opportunity to Hire Counsel;
Role of K&L Gates LLP. The Company expressly acknowledges
that they have been advised and have been given an opportunity to hire counsel
with respect to this Agreement and the other Transaction Documents and the
transactions contemplated hereby and thereby. The Company further
acknowledges that the law firm of K&L Gates LLP did not provide them with
any legal advice with respect to the transactions contemplated by this Agreement
and the other Transaction Documents. The Company further acknowledges
that the law firm of K&L Gates LLP has solely represented the Buyer in
connection with this Agreement and the other Transaction Documents and the
transactions contemplated hereby and thereby and no other person.
(o) Termination. In
the event that the Closing shall not have occurred with respect to the Buyer on
or before five (5) business days from the date hereof due to the Company’s or
the Buyer’s failure to satisfy the conditions set forth in Sections 5 and 6
above (and the non-breaching party’s failure to waive such unsatisfied
condition(s)), the non-breaching party shall have the option to terminate this
Agreement with respect to such breaching party at the close of business on such
date without liability of any party to any other party.
(p) WAIVER OF TRIAL BY
JURY. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY
HAVE, AND AGREES NOT TO REQUEST, A TRIAL BY JURY FOR THE ADJUDICATION OF ANY
DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR
ANY TRANSACTION CONTEMPLATED HEREBY.
[REMAINDER OF PAGE INTENTIONALLY LEFT
BLANK]
IN
WITNESS WHEREOF, the Buyer and the Company have caused this Securities Purchase
Agreement to be duly executed as of the date first written above.
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COMPANY:
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By:
_________________
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Name: Xx.
Xxxxxxx Xxxxxxxx
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Title:
Chief Executive Officer
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BUYER:
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TRAFALGAR
CAPITAL SPECIALIZED
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INVESTMENT
FUND, FIS
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By: Trafalgar
Capital Sarl
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Its: General
Partner
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By:
_____________________
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Name: _____________________
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Title: _____________________
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EXHIBIT
A
[FORM
OF DEBENTURE]
EXHIBIT
B
[FORM
OF ESCROW AGREEMENT]
EXHIBIT
C
[FORM
OF SECURITY AGREEMENT]
