STOCK ISSUANCE AGREEMENT
STOCK
ISSUANCE AGREEMENT dated the 10th day
of September, 2010
BETWEEN:
AMERICAN POWER CORP., a Nevada
domestic corporation, with offices at 00 Xxxxxx Xxxxxx Centre, 0000 00xx
Xxxxxx, Xxx 000, Xxxxxx XX 00000, XXX (hereinafter, the "Company")
AND:
BLACK SANDS HOLDINGS INC., a
corporation organized under the laws of the Xxxxxxxx Islands, with registered
address on Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro,
Xxxxxxxx Xxxxxxx, XX 00000 (hereinafter, the "Subscriber")
NOW THEREFORE THIS STOCK
ISSUANCE AGREEMENT
(“Agreement”) WITNESSES that the parties hereto agree as
follows:
ARTICLE 1 –
DEFINITIONS
Section 1.1. Definitions. When
used in this Agreement (including the recitals and schedules hereto) or in any
amendment hereto, the following terms shall, unless otherwise expressly
provided, have the meanings assigned to them herein:
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“Banking Day” shall mean
any day other than a Saturday, Sunday, public holiday under the laws of
the State of Nevada or other day on which banking institutions are
authorized or obligated to close in
Nevada.
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“Charter Documents”
means constating documents and by-laws, and all amendments
thereto;
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“Consent” means any
permit, license, approval, consent, order, right, certificate, judgment,
writ, injunction, award, determination, direction, decree, authorization,
franchise, privilege, grant, waiver, exemption and other concession or
by-law, rule or regulation;
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“Unit Price” means a
price equal to 75% of the volume weighted average of the closing price
(the “VWAP”) of Common Stock, for the ten (10) Banking Days immediately
preceding the date of the Notice, as quoted on xxxx://xxx.xxxxxx.xxx/, or
other source of stock quotes as agreed to by the parties;
and
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“Dollar” or “$” means the currency
of the United States of America.
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ARTICLE 2 - THE STOCK
ISSUANCE
Section 2.1. STOCK ISSUANCE.
The Subscriber shall make available to the Company in accordance with,
and subject to the terms and conditions of, this Agreement, until March 31, 2013
(the "Completion Date"),
up to $10,000,000 by way of Advances in accordance with this Sections
2.2, 2.3 and 2.4 of this Agreement. The Completion Date may be extended for an
additional term of up to twelve months at the option of the Company or the
Subscriber upon written notice on or before the Completion Date in accordance
with the notice provisions in Section 6.1 of this Agreement.
Section 2.2. The Advances. On
the terms and conditions set forth herein the Subscriber, from time to time, on
any Banking Day, prior to the Completion Date, agrees to make advances to the
Company ("Advances").
Each Advance shall be in an aggregate amount of not more than $1,000,000 and in
integral multiples of $100,000. The funding made available to the Company within
any three-month period shall not exceed $1,000,000 unless mutually agreed by the
parties.
Section 2.3. Procedure to Request
Advances. Each Advance shall be made on or before five Banking Days
following notice from the Company. Each such notice shall be given by a notice
to the Subscriber in the form substantially the same as the form attached hereto
in Schedule A (each a "Notice").
Section 2.4. Subscription Agreement.
Upon making each Advance, the Subscriber shall provide an executed
Subscription Agreement, in a form acceptable to both parties to this Agreement,
to the Company.
Section 2.5. Use of Proceeds.
The Company shall use all Advances to fund operating expenses,
acquisitions, working capital and general corporate activities.
ARTICLE 3 - REPRESENTATIONS
AND WARRANTIES
Section 3.1. Representations and
Warranties of the Company. The Company represents and warrants to the
Subscriber:
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(a)
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Organization
and Corporate Power. The Company has been duly incorporated and organized
and is validly subsisting and in good standing under the laws of its
jurisdiction and has full corporate right, power and authority to enter
into and perform its obligations under the Agreement to which it is or
shall be a party and has full corporate right, power and authority to own
and operate its properties and to carry on its
business;
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(b)
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Conflict
with Other Instruments. The execution and delivery by the Company of the
Agreement and the performance by the Company of its obligations
thereunder, do not and will not: (i) conflict with or result in a breach
of any of the terms, conditions or provisions of: (A) the Charter
Documents of the Company; (B) any law applicable to or binding on the
Company; or (C) any contractual restriction binding on or affecting the
Company or its properties the breach of which would have a material
adverse effect on the Company; or (ii) result in, or require or permit:
(A) the imposition of any lien on or with respect to the properties now
owned or hereafter acquired by the Company; or (B) the acceleration of the
maturity of any debt of the Company, under any contractual provision
binding on or affecting the
Company;
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(c)
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Consents,
Official Body Approvals. The execution and delivery of the Agreement and
the performance by the Company of its obligations thereunder have been
duly authorized by all necessary action on the part of the Company, and no
Consent under any applicable law and no registration, qualification,
designation, declaration or filing with any official body having
jurisdiction over the Company is or was necessary therefor. The Company
possesses all Consents, in full force and effect, under any applicable
law, which are necessary in connection with the operation of its business,
the non-possession of which could reasonably be expected to have a
material adverse effect on the
Company;
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(d)
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Execution
of Binding Obligation. The Agreement has been duly executed and delivered
by the Company and, when duly executed by the Company and delivered for
value, the Agreement will constitute legal, valid and binding obligations
of the Company, enforceable against the Company, in accordance with its
terms;
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(e)
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No
Litigation. There are no actions, suits or proceedings pending or, to the
knowledge of the Company, after due inquiry, threatened against or
affecting the Company (nor, to the knowledge of the Company, after due
inquiry, any basis therefor) before any official body having jurisdiction
over the Company which purport to or do challenge the validity or
propriety of the transactions contemplated by the Stock Issuance the
Company, which if adversely determined could reasonably be expected to
have a material adverse effect on the
Company;
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(g)
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Absence
of Changes. Since the date of the most recently delivered financial
statements of the Company, the Company has carried on its business,
operations and affairs only in the ordinary and normal course consistent
with past practice.
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Section
3.2. Representations and Warranties of the
Subscriber. The Subscriber represents and warrants to the
Company:
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(a)
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Organization
and Corporate Power. The Subscriber has been duly incorporated and
organized and is validly subsisting and in good standing under the laws of
its jurisdiction and has full corporate right, power and authority to
enter into and perform its obligations under the Agreement to which it is
or shall be a party and has full corporate right, power and authority to
own and operate its properties and to carry on its
business;
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(b)
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Consents,
Official Body Approvals. The execution and delivery of the Agreement and
the performance by the Subscriber of its obligations thereunder have been
duly authorized by all necessary action on the part of the Subscriber, and
no Consent under any applicable law and no registration, qualification,
designation, declaration or filing with any official body having
jurisdiction over the Subscriber is or was necessary therefor. The
Subscriber possesses all Consents, in full force and effect, under any
applicable law, which are necessary in connection with the operation of
its business, the non-possession of which could reasonably be expected to
have a material adverse effect on the
Subscriber;
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(c)
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Execution
of Binding Obligation. The Agreement has been duly executed and delivered
by the Subscriber and, when duly executed by the Subscriber and delivered
for value, the Agreement will constitute legal, valid and binding
obligations of the Subscriber, enforceable against the Subscriber, in
accordance with its terms.
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ARTICLE 4 - COVENANTS OF THE
COMPANY
Section 4.1. Affirmative Covenants.
Until the Completion Date, the Company shall:
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(a)
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Compliance with Laws, etc.
Comply with all applicable laws, non-compliance with which could
have a material adverse effect on the
Company;
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(b)
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Payment of Taxes and Claims.
Pay and discharge before the same shall become delinquent: (i) all
taxes and assessments; and (ii) all lawful claims which, if unpaid, might
become a lien upon or in respect of the Company's assets or
properties;
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(c)
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Maintain Title. Maintain
and, as soon as reasonably practicable, defend and take, all action
necessary or advisable at any time, and from time to time, to maintain,
defend, exercise or renew its right, title and interest in and to all of
its property and assets;
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(d)
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Pay Obligations to Subscriber
and Perform Other Covenants. Make full and timely payment of its
obligations hereunder and duly comply with the terms and covenants
contained in this Agreement, all at the times and places and in the manner
set forth therein;
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(e)
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Further Assurances. At
its cost and expense, upon request by the Subscriber, duly execute and
deliver, or cause to be duly executed and delivered, to the Subscriber,
such further instruments and do and cause to be done such other acts as
may be necessary or proper in the reasonable opinion of the Subscriber to
carry out more effectually the provisions and purposes of this
Agreement.
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ARTICLE 5 – STOCK
ISSUANCE
Section 5.1 Stock
Issuance. The Company shall issue, within ten (10) Banking
Days following the date of the receipt by the Company of any Advance under this
Agreement, units (each a “Unit”) of the Company at the
Unit Price. Each Unit shall consist of one (1) share (each a “Share”) of the common stock of
the Company (the “Common
Stock”) and one share
purchase warrant (each a “Warrant”). Each
Warrant shall entitle the Subscriber to purchase one additional share (each a
“Warrant Share”) of
Common Stock, at an exercise price equal to 150% of the Unit Price at which the
Unit containing the Warrant being exercised was issued, for a period of three
(3) years from the date such Warrant is issued. Upon receipt of any
Advance under this Agreement, the Company shall promptly cause its registrar and
transfer agent to issue the certificates representing the Shares. If the
Subscriber exercises the Warrants, the Company shall promptly cause its
registrar and transfer agent to issue the certificates representing the Warrant
Shares.
Section 5.2 Fractional
Shares. Notwithstanding any other provisions of this
Agreement, no certificate for fractional shares of the Shares or the Warrant
Shares shall be issued to the Subscriber. In lieu of any such
fractional shares or warrants, if the Subscriber would otherwise be entitled to
receive a fraction of a Share, Warrant or Warrant Shares following an Stock
Issuance or
exercise of a Warrant, as applicable, the Subscriber shall be entitled to
receive from the Company a stock certificate representing the nearest whole
number of shares of the Company, or in the case of an Advance that results in
the issuance of one-half of a Warrant, the Company shall issue the Subscriber a
Warrant certificate representing the nearest whole number of Warrant
Shares.
ARTICLE 6 -
MISCELLANEOUS
Section 6.1. Notices, etc.
Except as otherwise expressly provided herein, all notices, requests,
demands, directions and communications by one party to the other shall be sent
by hand delivery or registered mail or fax, and shall be effective when hand
delivered or when delivered by the relevant postal service or when faxed and
confirmed, as the case may be. All such notices shall be addressed to the
President of the notified party at its address given on the signature page of
this Agreement, or in accordance with any unrevoked written direction from such
party to the other party.
Section 6.2. No Waiver; Remedies.
No failure on the part of the Subscriber or the Company to exercise, and
no delay in exercising, any right under this Agreement shall operate as a waiver
thereof. The remedies herein provided are cumulative and not exclusive of any
remedies provided by Law.
Section 6.3. Jurisdiction. (1)
Each of the parties hereby irrevocably attorns to the non-exclusive jurisdiction
of the Courts of the State of Nevada in any action or proceeding arising out of
or relating to this Agreement. The Company agrees that a final judgment in any
such action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by Law;
and (2) nothing in this Section 6.3 shall affect the right of the Subscriber to
serve legal process in any other manner permitted by Law or affect the right of
the Subscriber to bring any action or proceeding against the Company or its
property in the courts of other jurisdictions.
Section 6.4. Successors and Assigns.
The Company shall not have the right to assign its rights hereunder or
any interest herein without the prior written consent of the Subscriber, which
consent may be arbitrarily withheld.
Section 6.5. Severability. If
one or more provisions of this Agreement be or become invalid, or unenforceable
in whole or in part in any jurisdiction, the validity of the remaining
provisions of this Agreement shall not be affected. The parties hereto undertake
to replace any such invalid provision without delay with a valid provision which
as nearly as possible duplicates the economic intent of the invalid
provision.
Section 6.6. Counterparts.
This Agreement may be executed in counterparts and by different parties
in separate counterparts, each of which when so executed shall be deemed an
original and all of which, taken together, shall constitute one and the same
instrument.
Section 6.7.
Syndication/Participation. The Subscriber may not sell, transfer, assign,
participate, syndicate or negotiate to one or more third parties, in whole or in
part, the Commitment and its rights under this Agreement, without the prior
written consent of the Company, which consent may not be arbitrarily
withheld.
[SIGNATURE
PAGE FOLLOWS]
IN WITNESS WHEREOF the parties
hereto have caused this Agreement to be executed by their respective officers
thereunto duly authorized, as of the date first above written.
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THE SUBSCRIBER
BLACK
SANDS HOLDINGS INC.
By:
Authorized
Signing Officer
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THE COMPANY
By:
Authorized
Signing Officer
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Address
for
Notice: Address
for Notice:
00
Xxxxxx Xxxxxx Xxxxxx
0000
00xx Xxxxxx, Xxx
000,
Xxxxxx
XX 00000, XXX
Fax:
x0.000.000.0000
SCHEDULE
A
NOTICE
Messrs
Black Sands Holdings Inc.
The
undersigned, AMERICAN POWER
CORP. (the “Company”) hereby requests an advance of
US$__________________, in accordance with the terms and conditions set forth in
the Stock Issuance Agreement dated September 10th,
2010, between the Subscriber and the Company and as of the Date of Notice
written below.
Date of
Notice: ________________
Remaining
amount to be advanced under the Share
Issuance: US$
_____________
Price
Calculation:
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Date
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Closing
Price
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Volume
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Calculations
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Xxxx
0
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#
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Xxxx
0
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X)
Weighted Average Price
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#.##
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Date
3
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#
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#
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B)
75% of A
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#.##
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Date
4
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#
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#
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C)
Amount of Subscription
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$###,###.##
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Date
5
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#
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#
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D)
Shares Subscribed (C/B)
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#
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Xxxx
0
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#
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#
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X)
Warrants Price (150% x B)
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#.##
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Date
7
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#
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#
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F)
Warrant Shares (1:2)
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:
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#
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Date
8
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#
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#
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Date
9
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#
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#
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Date
10
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#
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#
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Per:
____________________________
Authorized
Representative
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The
Subscriber hereby acknowledges receipt of this Notice and agrees with the
amounts set out above as of this Notice.
BLACK
SANDS HOLDINGS INC.
Per:
Authorized
Representative
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