Exhibit B SECURITIES PURCHASE AGREEM.ENT
Exhibit
B
SECURITIES
PURCHASE AGREEM.ENT
THIS
SECURITIESPURCHASE AGREEMENT (this "Agreement") is made as of December
17,
2007
by and between Bonanza Oil & Gas, Inc. (OCTBB: NFLA), a corporation
organized under the laws of
the State of
Nevada, with its principal offices at 0000 Xxxx Xxx Xxxxx, Xxxxx 000,
Xxxxxxx, XX 00000 (the "Company"), and Phoenix Capital Opportunity Fund, L.P.
a
limited
artnership organized under the State of
Delware with offices at 0000 Xxxxxxxx Xxxx Xxxxxxxx, Xxxxxxx 00000 (the
"Purchaser")
WHEREAS,
the Company and Purchaser have entered into a series of
agreements dated of
even date herewith comprised of
that certain Loan Agreement (the "Loan Agreement"), that certain Secured
Promissory Note (the "Note"), that certain Security Agreement (the "Security
Agreement"') (the Note, the Security Agreement and this Agreement are referred
herein as the "Loan Documents") pursuant to which the Purchaser has extended
a
loan to the Company (the "Loan"'); and
IN
CONSIDERATION of the mutual covenants contained
in this Agreement, the sufficiency of
which is hereby acknowledged, the Company and the Purchaser hereby agree
as follows:
SECTION
1.Agreement
to Issue Shares. In consideration for the making of the
Loan, the Company hereby agrees to issue to the Purchaser 35,714 shares which
shall be subject to a forward stock split of 2.1 to 1 (as more fully described
in the Company's Information Statement filed on Form 14C on November 15, 2007)
shares of
the Company's common stock (the "Shares").
SECTION
2.Closing
of the Purchase of the Shares. The making of the Loan (the
"Closing") shall take place on the date of this Agreement. At the Closing,
the
Company
shall execute and deliver the Note to the
Purchaser and each of the Company and the Purchaser shall execute and
deliver to the other a counterpart of the Loan Documents.
SECTION
3. Representations
and Warranties of the Company. The Company hereby represents
and warrants to the Purchaser as follows:
3.1 Organization
and Qualification. The Company is a corporation duly organized,
validly
existing and in good standing under the laws of its jurisdiction of
incorporation and the Company is qualified to do business as a foreign
corporation in each jurisdiction in which qualification is required, except
where the failure to so qualify would not individually or in the aggregate
have
a material adverse effect on the financial condition, results of operations,
properties or business of the Company taken as a whole.
3.2 Subsidiaries.
As
of the
date hereof, the Company does not have any subsidiaries other than:
National Filing Agents Acquisition Corporation (the "Subsidiaries"). The term
"the Company" shall include the Subsidiaries.
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3.3 Capitalization.
The authorized capital stock of the Company consists of
(a)
60,000,000
authorized shares of common stock, of which 12,178,7403 shares of common stock
are outstanding as of December 12, 2007; and (b) 15,000,000 authorized shares
of
preferred stock, of which 0 are outstanding. All of the outstanding shares
of
common and preferred stock were issued in compliance with all applicable federal
and state securities laws.
3.4 Issuance,
Sale and Delivery of the Shares. The
Shares
have been dulyauthorized
and, when issued and delivered in accordance with this Agreement, will be duly
authorized, validly issued, fully paid and nonassessable. No preemptive rights
or other rights to subscribe for or purchase exist with respect to the issuance
and sale of the Shares by the Company pursuant to this Agreement. No further
approval or authority of the stockholders or the Board of Directors of the
Company will be required for the issuance of the Shares to the Purchaser as
contemplated herein or by the Note.
3.5 Due
Execution, Delivery and Performance of the Agreements. The
Company
has full legal right, corporate power and authority to enter into the Loan
Documents and to perform the transactions contemplated hereby and thereby.
This
Agreement has been duly authorized, executed and delivered by the Company.
The
execution, delivery and performance of the Loan Documents by the Company and
the
consummation of the transactions herein and therein contemplated will not
violate any provision of the organizational documents of the Company and will
not (except for rights granted to the Purchaser under the Security Agreement)
result in the creation of any lien, charge, security interest or encumbrance
upon any assets or property of the Company pursuant to the terms or provisions
of, or will not conflict with, result in the breach or violation of, or
constitute, either by itself or upon notice or the passage of time or both,
a
default under any agreement. mortgage, deed of trust, lease, franchise, license,
indenture, permit or other instrument to which the Company is a party or by
which the Company or any of its assets or properties may be bound or affected
or
any statute or any authorization, judgment, decree, order, rule or regulation
of
any court or any regulatory body, administrative agency or other governmental
body applicable to the Company or any of its properties. No consent, approval,
authorization or other order of any court, regulatory body, administrative
agency or other governmental body is required for the execution, delivery and
performance of the Loan Documents or the consummation by the Company of the
transactions contemplated hereby or thereby, except for compliance with the
Blue
Sky laws and federal securities laws applicable to the issuance of the Note
or
the Shares. Assuming the valid execution hereof and thereof by the Purchaser,
the Loan Documents will constitute legal, valid and binding obligations of
the
Company, enforceable in accordance with their respective Win's, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights
generally.
3.6
No
Actions. Except as disclosed to the Purchaser, there are no
legal or governmental
actions, suits or proceedings pending or, to the Company's knowledge, threatened
to which the Company is or nay be a party which seeks to prevent or restrain
the
transactions contemplated by this Agreement or to recover damages as a result
of
the consummation of such transactions.
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3.7 Investment
Company. The Company is not an "investment company" or
an "affiliated
person" of, or "promoter" or "principal underwriter" for an investment company,
within the meaning of the Investment Company Act of 1940, as
amended.
3.8
Brokers and Consultants. Viewpoint Securities,
LLC is the Company's investment
bankers and will receive a cash commission equal to 5% of the Note as a result
of the transactions contemplated by the Loan Documents.
3.9
Books and Records. The
books, records and accounts of the Company, accurately
and fairly reflect, in reasonable detail, the transactions in, and dispositions
of, the assets of, and the results of operations of, the Company, all to the
extent required by generally accepted accounting principles. The Company
maintains a system of internal accounting controls sufficient to provide
reasonable assurances 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 accordance with
generally accepted accounting principles and to maintain asset accountability,
(iii) access to assets is permitted only in accordance with management's general
or specific authorization and (iv) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and appropriate action
is taken with respect to any differences.
3.10 Taxes.
The Company has filed in a timely manner all federal, state and
local
tax
returns that it has been required to file, and has paid in a timely manner
all
taxes shown thereon as owing. The Company has not incurred any tax liabilities
except in the ordinary course of business. The Company knows of no tax
deficiency or claim for additional taxes asserted or threatened to be asserted
against Company by any taxing authority or any grounds for any such
assessment.
SECTION
4. Representations and Warranties of the Purchaser.
The purchaser represents and warrants to
the Company as
follows:
4.1 Organization
and Qualification. The Purchaser is an accredited investor or a
company
duly organized, validly existing and in good standing under the laws of its
jurisdiction of formation.
4.2 Due
Execution, Delivery and Performance of the Agreements. The
Purchaser has
full
legal right, power and authority to enter into the Loan Documents and to perform
the transactions contemplated hereby and thereby. This Agreement has been duly
authorized, executed and delivered by the Purchaser.
4.3 No
Actions. There are no legal or governmental actions, suits or
proceedings pending
or, to the Purchaser's knowledge, threatened to which the Purchaser is or may
be
a party which seeks to prevent or restrain the transactions contemplated by
the
Loan Documents or to recover damages as a result of the consummation of such
transactions. The Purchaser, to its knowledge, has not been and is not currently
the subject of an
investigation or inquiry by the Securities and Exchange Commission, the
NASD, or any state securities commission.
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4.4
Nature of Purchaser. If the purchaser is a corporation,
the Purchaser is an "'accredited investor" within the meaning of Rule 501(a)
of
Regulation D promulgated under the Securities Act by virtue of the fact that
all
equity holders of the Purchaser are "accredited investors", The Purchaser is
not
a "dealer" within the meaning of the Securities Act or a "broker" or "'dealer"
within the meaning of the Securities Exchange Act of 1934, as Amended (the
"Exchange Act").
4.5 Investment
Intent. The Purchaser is making the Loan and acquiring
the Shares in
the
ordinary course of its business and for its own account for investment only
and
with no present intention of distributing any interest in the Note or any of
the
Shares or entering into any arrangement or understanding with any other person
regarding such a distribution (it being understood that the foregoing does
not
limit the Purchaser's right to distribute the Shares to the equity investors
of
the Purchaser in a transaction exempt from registration under applicable
securities laws).
SECTION
5. Covenants.
5.1 Registration
Procedures and Expenses.
(a) If
at any time the Company shall determine to prepare and fl le with the
Securities
and Exchange Commission a registration statement relating to an offering for
its
own account or the account of others under the Securities Act of 1933 as
amended, of any of its equity securities, (a "Registration Statement"), then
the
Company shall send to Purchaser a written notice of such determination and,
if
within 15 days after the date of such notice, Purchaser shall so request in
writing, the Company shall include in such Registration Statement all of the
Shares. Company shall include in any Registration Statement all of the Shares
issued to Purchaser under this Agreement even if the Shares have not been issued
to Purchaser prior to filing of the Registration Statement
(b) The
Company shall prepare and file with the Commission such amendments
and supplements to the Registration Statement and the prospectus forming a
part
thereof as may be necessary to keep the Registration Statement effective until
the earliest date on which (i) all the Shares have been disposed of pursuant
to
the Registration Statement, (ii) all of the Shares then held by the Purchaser
may be sold under the provisions of Rule 144 without limitation as to volume,
whether pursuant to Rule 144(k) or otherwise, or (iii) all Shares then held
by
the Purchaser may be sold without restriction under the Securities Act and
the
transfer agent has removed any stop transfer instructions relating to such
Shares and offered to cause to be removed any restrictive legends on the
certificates, if any representing such Shares (the period between the date
the
Registration Statement is declared effective (the "'Effective Date") and the
earliest of such dates is referred to herein as the "Registration
Period"').
(c) With
a view to making available to the Purchaser the benefits of Rule 144,
the
Company agrees, throughout the Registration Period and so long as the Purchaser
owns Shares purchased pursuant to this Agreement, to:
(i) Comply
with the provisions of paragraph (c)(1) of Rule 144; and
(ii) file
with
the Commission in a timely manner all reports and other documents
required to be filed by the Company pursuant to Section 13 or 15(d) under the
Exchange Act; and, if at any time it is not required to file such reports but
in
the past had been required to or did file such reports, it will, upon the
request of the Purchaser, make available other information as required by,
and
so long as necessary to permit sales of its Shares pursuant to, Rule
144.
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(d) The
Company shall bear all expenses incurred by
it in
connection with the procedures
in paragraphs (a) through (c) of this Section 5.1 and the registration of the
Shares pursuant to the Registration Statements. The Company shall not be
responsible for any expenses incurred by the Purchaser in connection with its
sale of the Shares or its participation in the procedures in paragraphs (a)
through (c) of this Section 5.1 including, without limitation, any fees and
expenses of counselor other advisers to the Purchaser and any underwriting
discounts; brokerage fees and commissions incurred by the
Purchaser.
5.2
Indemnification. For the purposes of this Section
5.2:
(i) the
term
"Purchaser Affiliate" shall mean any person who controls the Purchaser within
the meaning of Section 15 of the Securities Act or Section 20 of the Exchange
Act; and
(ii) The
term
"Registration Statement" shall include any final prospectus, exhibit, supplement
or amendment included in or relating to the Registration Statement referred
to
in Section 5.1.
(a)
The
Company agrees to indemnify and hold harmless the Purchaser and each Purchaser
Affiliate, against any losses, claims, damages, liabilities or expenses joint
or
several, to which such Purchaser or such Purchaser Affiliate may become subject
under the Securities Act, the Exchange Act, or any other federal or state
statutory law or regulation, or at common law or otherwise (including in
settlement of any litigation, if such settlement is effected with the written
consent of the Company), insofar as such losses, claims, damages, liabilities
or
expenses (or actions in respect thereof as contemplated below) arise out of
or
are based upon (i) any untrue statement or alleged untrue statement of any
material fact contained in the Registration Statement, as amended as of the
Effective Date, including any information deemed to be a part thereof as of
the
time of effectiveness pursuant to paragraph (b) of Rule 430A, or pursuant to
Rule 434 promulgated under the Securities Act, or the prospectus, in the form
first filed with the Commission pursuant to Rule 424(b) of the Regulations,
or
filed as part of the Registration Statement at the time of effectiveness if
no
Rule 424(b) filing is required (the "Prospectus"), or any amendment or
supplement thereto, (ii) the omission or alleged omission to state in the
Registration Statement as of the Effective Date a material fact required to
be
stated therein or necessary to make the statements in the Registration Statement
or any post-effective amendment or supplement thereto, or in the Prospectus
or
any amendment or supplement thereto, not misleading, in each case in the light
of the circumstances under which the statements contained therein were made,
or
(iii) any inaccuracy in the representations and warranties of the Company
contained in this Agreement, or any failure of the Company to perform its
obligations hereunder, and
will
reimburse the Purchaser and each such Purchaser Affiliate any legal and other
expenses as such expenses which are reasonably incurred by the Purchaser or
such
Purchaser Affiliate in connection with investigating, defending, settling,
compromising or paying any such loss, claim, damage, liability, expense or
action; provided, however, that the Company will not be liable in any
such case to the extent that any such loss, claim, damage, liability or expense
arises out of or is based upon (i) an untrue statement or alleged untrue
statement or omission or alleged omission made in the Registration Statement,
the Prospectus or any amendment or supplement thereto in reliance upon and
in
conformity with written information furnished to the Company by the Purchaser
expressly for use therein, or (ii) the failure of the Purchaser to comply with
the covenants and agreements contained in Section 5.2
hereof respecting the sale of the Shares, or (iii) the inaccuracy of
any
representations made by the Purchaser herein or (iv) any statement or omission
in any Prospectus that is corrected or disclosed in any subsequent Prospectus
that was delivered to the Purchaser prior to the pertinent sale or sales by
the
Purchaser.
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SECTION
6. Notices. All notices, requests, consents and
other communications hereunder shall be in writing, shall be mailed by
first-class registered or certified mail, confirmed facsimile or nationally
recognized overnight express courier postage prepaid, and shall be deemed given
when so mailed and shall be delivered as addressed as follows:
|
If
to the Company:
With
a copy to:
|
Bonanza
Oil & Gas, Inc.
Attn:
Xxxx Xxxxxxx, President
0000
Xxxx Xxx Xxxxx,
Xxxxx 000
Xxxxxxx,
XX
00000
Tel:
(000) 000-0000 Fax:
(000) 000-0000
|
or
to
such other person at such other place as the Company shall designate to the
Purchaser in writing, and
If
to the
Purchaser:
or
to
such other person at such other place as the Purchaser shall designate to the
Company in writing, and
SECTION
7. Assignment. This agreement is binding upon
and inures to the benefit of the parties hereto and their respective heirs,
successors and permitted assigns. The rights and shares granted to the Purchaser
under this Agreement may be assigned by Purchaser to any other purchaser or
assignee of the Purchaser. In the event of a transfer of the rights granted
under this Agreement, Purchaser agrees that the Company may require that the
transferee to comply with reasonable conditions as determined in the discretion
of the Company.
SECTION
8. Changes. This Agreement may not be modified
or amended except pursuant to an instrument in writing signed by the Company
and
the Purchaser.
SECTION
9. Headings. The headings of the various sections of this
Agreement have been inserted
for convenience of reference only and shall not be deemed to be part of this
Agreement.
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SECTION
10. Severability. In case any provision
contained in this Agreement should be invalid, illegal or unenforceable in
any
respect, the validity, legality and enforceability of the remaining provisions
contained herein shall not in any way be affected or impaired
thereby.
SECTION
11. Governing Law. This Agreement
shall be governed by and construed in accordance with the laws of the State
of
Nevada without regard to its conflicts of law principles and the federal law
of
the United States of America.
SECTION
12. Counterparts. This Agreement may
be executed in two or more counterparts, each of which shall constitute an
original, but all of which, when taken together, shall constitute but one
instrument, and shall become effective when one or more counterparts have been
signed by each party hereto and delivered to the other parties.
IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by
their duly authorized representatives as of the day and year first above
written.
[signature
page to follow]
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| "COMPANY" | |||
|
|
By:
|
/s/ Xxxx Xxxxxxx | |
| Xxxx Xxxxxxx, President and CEO | |||
| Bonanza Oil & Gas, Inc. | |||
| A Nevada Corporation | |||
| "PURCHASER" | |||
|
|
By:
|
/s/ | |
| By: | /s/ | ||
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