EXCHANGE AGREEMENT
This Exchange Agreement (“Agreement”)
is made as of June 26, 2009 by and among Quest Minerals & Mining Corp., a
Utah corporation (the “Company”), and Interstellar Holdings, LLC (the
“Investor”).
R E C I T A L S
A. From
May, 2006 to June, 2007, Xxxxx Xxxxxxxxxx and Xxxxxxx Xxxxxx invested an
aggregate of $925,313 in the Company, as set forth in Exhibit A
hereto. The Company agreed to repay these amounts upon demand at an
interest rate of five percent (5%) per annum. Due to mistake,
inadvertence, and neglect, the Company did not prepare written demand notes
evidencing this indebtedness in writing. As of the date hereof, the
principal balance on these evidences of indebtedness is $920,313 and the accrued
interest is $112,700.86. On June 21, 2007, Xx. Xxxxxxxxxx and Xx.
Xxxxxx assigned all right, title, and interest in the right to repayment of this
indebtedness to the Investor.
B. From
July, 2007 to December 31, 2008, the Investor invested an aggregate of $162,098
in the Company, as set forth in Exhibit B hereto. The Company agreed
to repay these amounts upon demand at an interest rate of five percent (5%) per
annum. Due to mistake, inadvertence, and neglect, the Company did not
prepare written demand notes evidencing this indebtedness in
writing. As of the date hereof, the principal balance on these
evidences of indebtedness is $162,098 and the accrued interest is
$11,494.35.
C. The
Company and the Investor desire to exchange the aforementioned evidences of
indebtedness (the “Evidences of Indebtedness”) for a new convertible promissory
note (the “Note”) in the aggregate principal amount of $1,200,000, the form of
which is attached hereto as Exhibit C on the terms and subject to the conditions
set forth herein.
A G R E E M E N T
It is agreed as follows:
1. EXCHANGE OF
SECURITIES.
1.1 Exchange of
Securities. In reliance upon the representations and
warranties of the Company and the Investor contained herein and subject to the
terms and conditions set forth herein, the Investor agrees to sell, assign,
transfer and deliver to the Company, and the Company agrees to purchase from the
Investor, the Evidences of Indebtedness in exchange for the issuance of the Note
by the Company to the Investor, in the principal amount of
$1,200,000.
1.2 Deliveries by
Company. Concurrently with the execution of this Agreement, or
as soon thereafter as practicable, the Company will deliver the Note to the
Investor.
1
1.3 Deliveries by
Investor. By execution of this Agreement, the Investor hereby
assigns and transfers to the Company all of the Investor’s right, title, and
interest in and to the Evidences of Indebtedness. From time to time
after the effective date of this Agreement, and without further consideration,
the Investor will execute and deliver such other instruments of transfer and
take such other actions as the Company may reasonably request in order to
facilitate the transfer to the Company of the securities intended to be
transferred hereunder.
|
|
2.
|
COVENANTS.
|
2.1 Information
Statement. On or before August 15, 2009, the Parent shall file
a proxy and/or statement with the SEC to amend its articles of incorporation to
change the par value of the Common Stock to $0.0001 per share.
2.2 Holding
Period. The Company agrees and stipulates that, for purposes
of Rule 144 of the Securities Act of 1933, as amended (the “Securities Act”),
the Note is deemed to have been acquired by the Investor on the original
investment dates as specified on Exhibit A, pursuant to Rule 144(d)(3)(ii) of
the Securities Act.
3. REPRESENTATIONS AND WARRANTIES OF THE
COMPANY.
The
Company represents and warrants that the following statements are true and
correct in all material respects as of the date hereof, except as expressly
qualified or modified herein.
3.1 Organization and Good
Standing. The Company is a corporation duly organized, validly
existing, and in good standing under the laws of the State of Utah and has full
corporate power and authority to enter into and perform its obligations under
this Agreement, and to own its properties and to carry on its business as
presently conducted and as proposed to be conducted.
3.2 Validity of
Transactions. This Agreement, and each document executed and
delivered by the Company in connection with the transactions contemplated by
this Agreement, including this Agreement, have been duly authorized, executed
and delivered by the Company and is each the valid and legally binding
obligation of the Company, enforceable in accordance with its terms, except as
limited by applicable bankruptcy, insolvency reorganization and moratorium laws
and other laws affecting enforcement of creditor’s rights generally and by
general principles of equity.
3.3 Purpose of
Investment. The Company’s purpose in borrowing the
above-referenced funds was to raise funds for the general use of the Company’s
business, including payment of accrued and ongoing expenses of the
Company.
3.4 No
Violation. The execution, delivery, and performance of this
Agreement has been duly authorized by the Company’s Board of Directors and will
not violate any law or any order of any court or government agency applicable to
the Company, as the case may be, or the Articles of Incorporation or Bylaws of
the Company, and will not result in any breach of or default under, or, except
as expressly provided herein, result in the creation of any encumbrance upon any
of the assets of the Company pursuant to the terms of any agreement or
instrument by which the Company or any of its assets may be bound. No
approval of or filing with any governmental authority is required for the
Company to enter into, execute or perform this Agreement.
2
3.5 Securities Law
Compliance. The offer, issue, sale, and delivery of the Note
will constitute an exempted transaction under the Securities Act, and
registration of the Note under the Securities Act is not
required.
3.6 Resales Under Rule
144. With a view to making available to the Investor the
benefits of Rule 144 promulgated under the 1933 Act (“Rule 144”) and any other
rule or regulation of the SEC that may at any time permit the Investor to sell
common shares issuable upon conversion of the Note (“Conversion Shares”) to the
public without registration, the Company will do all of the
following:
3.7.1 use
its commercial best efforts to make and keep public information available, as
those terms are understood and defined in Rule 144;
3.7.2 take
such action, including compliance with the reporting requirements of section 13
or 15(d) of the 1934 Act, as is necessary to enable the Investor to utilize Rule
144;
3.7.3 file
with the SEC in a timely manner all reports and other documents required of the
Company under the 1933 Act and the 1934 Act; and
3.7.4 furnish
to the Investor forthwith upon written request:
(1) a
written statement by the Company as to its compliance with the reporting
requirements of Rule 144, the 1933 Act and the 1934 Act (at any time after it
has become subject to such reporting requirements);
(2) a
copy of the most recent annual or quarterly report of the Company and such other
reports and documents so filed by the Company;
(3) an
opinion of the Company’s counsel that the Note and/or the Conversion Shares may
be resold in the absence of an effective registration thereof under the
Securities Act pursuant to Rule 144; and
(4) such
other documents as may be reasonably requested in availing the Investor of any
rule or regulation of the SEC that permits the selling of the Note and/or the
Conversion Shares without registration.
3
4. REPRESENTATIONS AND WARRANTIES OF THE
INVESTOR.
The Investor hereby represents,
warrants, and covenants with the Company as follows:
4.3 Restricted
Securities.
4.3.1 The
Investor has been advised that neither the Note nor the Conversion Shares have
been registered under the Securities Act or any other applicable securities
laws. The Investor acknowledges that the Note is being issued as
“restricted securities” as defined by Rule 144 promulgated pursuant to the
Securities Act. Neither the Note nor the Conversion Shares may be
resold in the absence of an effective registration thereof under the Securities
Act and applicable state securities laws unless, in the opinion of the Company’s
counsel, an applicable exemption from registration is available.
4.3.2 The
Investor represents that it is acquiring the Notes for Investor’s own account,
and not as nominee or agent, for investment purposes only and not with a view
to, or for sale in connection with, a distribution, as that term is used in
Section 2(11) of the Securities Act, in a manner which would require
registration under the Securities Act or any state securities laws.
THE
SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY
STATE. THE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT
BE SOLD OR TRANSFERRED FOR VALUE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
THEREOF UNDER THE SECURITIES ACT OF 1933 AND/OR THE SECURITIES ACT OF ANY STATE
HAVING JURISDICTION OR AN OPINION OF COUNSEL ACCEPTABLE TO THE CORPORATION THAT
SUCH REGISTRATION IS NOT REQUIRED UNDER SUCH ACT OR ACTS.
4
4.3.4 Investor
acknowledges that the Note and the Conversion Shares are not liquid and are
transferable only under limited conditions. Investor acknowledges
that such securities must be held indefinitely unless they are subsequently
registered under the Securities Act or an exemption from such registration is
available. Investor is aware of the provisions of Rule 144
promulgated under the Securities Act, which permits limited resale of restricted
securities subject to the satisfaction of certain conditions and that, in the
future, such Rule may not be available for resale of either the Note or any
Conversion Shares.
4.3.5 Investor
is an “accredited investor” as defined under Rule 501 under the Securities
Act.
4.4 Access to
Information. The Investor represents that the Investor has
been given full and complete access to the Company for the purpose of obtaining
such information as the Investor or its qualified representative has reasonably
requested in connection with the decision to exchange for the
Note. The Investor represents that the Investor has received and
reviewed copies of each report, registration statement, and definitive proxy
statement filed by the Company with the Securities Exchange Commission since
January 1, 2007 (collectively, with all information incorporated by reference
therein or deemed to be incorporated by reference therein, the “SEC
Reports”).
4.5 Investor Sophistication and
Ability to Bear Risk of Loss. Investor acknowledges that it is
able to protect its interests in connection with the acquisition of the Note and
can bear the economic risk of investment in such securities without producing a
material adverse change in such Investor’s financial
condition. Investor, either alone or with such Investor’s
representative(s), otherwise has such knowledge and experience in financial or
business matters that the Investor is capable of evaluating the merits and risks
of the investment in the Notes.
4.6 Investment
Intent. The Investor loaned the above-referenced funds
evidenced by the Evidences of Indebtedness loans because the Investor sought a
rate of return on its investment in the Company and was interested in the profit
to be generated by making the loan.
5. MISCELLANEOUS.
5.1 Governing
Law. This Agreement shall be governed by and construed under
the laws of the State of Connecticut.
5.2 Successors and
Assigns. Except as otherwise expressly provided herein, the
provisions hereof shall inure to the benefit of, and be binding upon, the
successors, assigns, heirs, executors, and administrators of the parties
hereto.
5
5.3 Entire
Agreement. This Agreement and the Exhibits hereto and thereto,
and the other documents delivered pursuant hereto and thereto, constitute the
full and entire understanding and agreement among the parties with regard to the
subjects hereof and no party shall be liable or bound to any other party in any
manner by any representations, warranties, covenants, or agreements except as
specifically set forth herein or therein. Nothing in this Agreement,
express or implied, is intended to confer upon any party, other than the parties
hereto and their respective successors and assigns, any rights, remedies,
obligations, or liabilities under or by reason of this Agreement, except as
expressly provided herein.
5.4 Severability. In
case any provision of this Agreement shall be invalid, illegal, or
unenforceable, it shall to the extent practicable, be modified so as to make it
valid, legal and enforceable and to retain as nearly as practicable the intent
of the parties, and the validity, legality, and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.
5.5 Amendment and
Waiver. Except as otherwise provided herein, any term of this
Agreement may be amended, and the observance of any term of this Agreement may
be waived (either generally or in a particular instance, either retroactively or
prospectively, and either for a specified period of time or indefinitely), with
the written consent of the Company and the Investor. Any amendment or
waiver effected in accordance with this Section shall be binding upon each
future holder of any security purchased under this Agreement (including
securities into which such securities have been converted) and the
Company.
5.6 Notices. All
notices and other communications required or permitted hereunder shall be in
writing and shall be effective when delivered personally, or sent by telex or
telecopier (with receipt confirmed), provided that a copy is mailed by
registered mail, return receipt requested, or when received by the addressee, if
sent by Express Mail, Federal Express, or other express delivery service
(receipt requested) in each case to the appropriate address set forth
below:
If to the
Company: Quest
Minerals & Mining Corp.
00X Xxxx
0xx
Xxxxxx
Xxxxxxxx,
XX 00000
If to the
Investor: Interstellar
Holdings, LLC
0000
Xxxxxxx Xxxx
Xxxxxxxxx
XX, 00000
5.7 Titles and
Subtitles. The titles of the paragraphs and subparagraphs of
this Agreement are for convenience of reference only and are not to be
considered in construing this Agreement.
[Remainder
of page intentionally left blank.]
6
IN
WITNESS WHEREOF, the parties have executed this Agreement as of the date set
forth above.
COMPANY
QUEST MINERALS & MINING
CORP.
By:
Xxxxxx Xxxxxxxxxxx, Xx.,
President
INVESTOR
INTERSTELLAR HOLDINGS,
LLC
By:
Xxxxxxx Xxxxx,
Manager
7
EXHIBIT
A
SCHEDULE
OF ADVANCES
(Xxxxxxxxxx
and Hunter)
|
Date of Advance
|
Amount of Advance
|
Accrued Interest
|
||
|
5/31/2006
|
$6,724.00
|
$1,047.82
|
||
|
6/30/2006
|
$36,000.00
|
$5,460.00
|
||
|
7/31/2006
|
$90,351.00
|
$13,314.22
|
||
|
8/31/2006
|
$95,000.00
|
$13,590.28
|
||
|
9/30/2006
|
$10,000.00
|
$1,388.89
|
||
|
10/31/2006
|
$104,800.00
|
$14,104.33
|
||
|
11/30/2006
|
$26,000.00
|
$3,390.83
|
||
|
12/31/2006
|
$4,000.00
|
$504.44
|
||
|
1/31/2007
|
$30,000.00
|
$3,654.17
|
||
|
2/28/2007
|
$65,900.00
|
$7,770.71
|
||
|
3/31/2007
|
$108,000.00
|
$12,270.00
|
||
|
4/30/2007
|
$125,000.00
|
$13,680.56
|
||
|
5/31/2007
|
$110,000.00
|
$11,565.28
|
||
|
6/30/2007
|
$108,538.00
|
$10,959.32
|
A-1
EXHIBIT
B
SCHEDULE
OF ADVANCES
(Interstellar)
|
Date of Advance
|
Amount of Advance
|
Accrued Interest
|
||
|
8/31/2007
|
$22,736.00
|
$2,099.92
|
||
|
9/30/2007
|
$22,000.00
|
$1,940.28
|
||
|
11/30/2007
|
$40,000.00
|
$3,188.89
|
||
|
1/31/2008
|
$2,000.00
|
$142.22
|
||
|
2/29/2008
|
$8,300.00
|
$556.79
|
||
|
3/31/2008
|
$11,500.00
|
$721.94
|
||
|
4/30/2008
|
$5,200.00
|
$304.78
|
||
|
5/31/2008
|
$36,000.00
|
$1,955.00
|
||
|
6/30/2008
|
$5,119.00
|
$256.66
|
||
|
7/31/2008
|
$2,543.00
|
$116.55
|
||
|
10/31/2008
|
$5,500.00
|
$181.81
|
||
|
12/31/2008
|
$1,200.00
|
$29.50
|
B-1
EXHIBIT
C
FORM
OF CONVERTIBLE PROMISSORY NOTE
C-1
