Exhibit 10.1
QUEST MINERALS & MINING CORP.
CONVERTIBLE NOTE PURCHASE AGREEMENT
This Convertible Note Purchase Agreement ("Agreement") is made as of
March 10, 2008, but is only effective as of the date of acceptance of the
"Purchaser Signature Page" by and between Quest Minerals & Mining Corp., a Utah
corporation (the "Company"), and Gross Foundation, Inc. (the "Purchaser").
R E C I T A L S
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A. The Company desires to obtain funds from the Purchaser in
order to retire debt, provide working capital, to and further the operations of
the Company.
B. In order to obtain such funds, the Company is offering a
convertible promissory note (the "Note") in the aggregate principal amount of up
to $75,000.00. The Note is convertible into (the "Shares") of common stock,
$.001 par value per share (the "Common Stock") at the Conversion Price set forth
in the Note, on the terms and subject to the conditions set forth herein. The
Note and the Shares are collectively referred to herein as the "Securities."
AGREEMENT
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It is agreed as follows:
1. PURCHASE AND SALE OF NOTE. In reliance upon the
representations and warranties of the Company and the Purchaser contained herein
and subject to the terms and conditions set forth herein, at Closing, the
Purchaser shall purchase, and the Company shall sell and issue to each
Purchaser, the Note in the principal amount of $75,000 (the "Purchase Price").
The aggregate Purchase Price for the sale of the Note contemplated hereby shall
be held in escrow pursuant to the terms of a Escrow Agreement to be executed by
the parties in the form attached hereto as Exhibit A (the "Escrow Agreement").
2. CLOSING.
2.1 Date and Time. The closing of the sale of the Note
contemplated by this Agreement (the "Closing") shall take place at the offices
of Indeglia & Xxxxxx, P.C., counsel for the Company, on or before March 11,
2008.
2.2 Deliveries by Purchaser. Purchaser shall deliver the
following at Closing:
2.2.1 a completed and executed Purchaser
Signature Page
2.2.2 a completed and executed Escrow Agreement.
2.2.3 a check or wire transfer to the account
specified in the Escrow Agreement in the amount of the Purchase Price.
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2.3 Deliveries by Company. The Company shall deliver the
following at Closing:
2.3.1 a completed and executed copy of this
Agreement
2.3.2 a executed copy of a Note, in definitive
form and registered in the name of Purchaser against delivery of the items set
forth in Section 2.2 above.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
As a material inducement to the Purchaser to enter into this Agreement
and to purchase the Note, the Company represents and warrants that the following
statements are true and correct in all material respects as of the date hereof
and will be true and correct in all material respects at Closing, 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 Capitalization. The Company is authorized to issue
975,000,000 shares of Common Stock of which, as of February 26, 2008,
approximately 97,867,219 shares were issued and outstanding, and 10,000,000
shares of preferred stock, $0.001 par value, of which 432,397 shares are issued
and outstanding as Series A Preferred Stock, 48,284 shares are issued and
outstanding as Series B Preferred Stock and 260,000 shares are issued and
outstanding as Series C Preferred Stock. All outstanding shares of Common Stock
have been duly authorized and validly issued, and are fully paid, nonassessable,
and free of any preemptive rights.
3.3 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.
3.4 Valid Issuance of Note The Note that is being issued
to Purchaser hereunder, when issued, sold and delivered in accordance with the
terms hereof for the consideration expressed herein, will be duly and validly
issued, fully paid and nonassessable and free of restrictions on transfer, other
than restrictions on transfer under this Agreement and under applicable federal
and state securities laws, will be free of all other liens and adverse claims.
3.5 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.
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3.6 SEC Reports and Financial Statements.
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3.6.1 The Company has delivered or made available
to each Purchaser accurate and complete copies (excluding copies of exhibits) of
each report, registration statement, and definitive proxy statement filed by the
Company with the United States Securities and Exchange Commission ("SEC") since
January 1, 2007 (collectively, with all information incorporated by reference
therein or deemed to be incorporated by reference therein, the "SEC Reports").
All statements, reports, schedules, forms and other documents required to have
been filed by the Company with the SEC have been so filed on a timely basis,
except as indicated in such SEC Reports. As of the time it was filed with the
SEC (or, if amended or superseded by a filing prior to the date of this
Agreement, then on the date of such filing): (i) each of the SEC Reports
complied in all material respects with the applicable requirements of the
Securities Act of 1933, as amended (the "1933 Act"), or the Securities Exchange
Act of 1934, as amended (the "1934 Act"); and (ii) none of the SEC Reports
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.
3.6.2 Except for the pro forma financial
statements, the consolidated financial statements contained in the SEC Reports:
(i) complied as to form in all material respects with the published rules and
regulations of the SEC applicable thereto; (ii) were prepared in accordance with
GAAP applied on a consistent basis throughout the periods covered (except as may
be indicated in the notes to such financial statements and, in the case of
unaudited statements, as permitted by Form 10-QSB of the SEC, and except that
unaudited financial statements may not contain footnotes and are subject to
normal and recurring year-end audit adjustments which will not, individually or
in the aggregate, be material in amount); and (iii) fairly present, in all
material respects, the consolidated financial position of the Company and its
consolidated subsidiaries as of the respective dates thereof and the
consolidated results of operations of the Company and its consolidated
subsidiaries for the periods covered thereby. All adjustments considered
necessary for a fair presentation of the financial statements have been
included.
3.7 Securities Law Compliance. Assuming the accuracy of
the representations and warranties of Purchaser set forth in Section 4 of this
Agreement, the offer, issue, sale and delivery of the Note will constitute an
exempted transaction under the 1933 Act, and registration of the Note under the
1933 Act is not required. The Company shall make such filings as may be
necessary to comply with the Federal securities laws, which filings will be made
in a timely manner.
4. REPRESENTATIONS AND WARRANTIES OF PURCHASER.
Purchaser hereby represents, warrants and covenants with the Company as
follows:
4.1 Legal Power. Each Purchaser has the requisite
individual, corporate, partnership, limited liability company, trust, or
fiduciary power, as appropriate, and is authorized, if such Purchaser is a
corporation, partnership, limited liability company, or trust, to enter into
this Agreement, to purchase the Units hereunder, and to carry out and perform
its obligations under the terms of this Agreement.
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4.2 Due Execution. This Agreement has been duly
authorized, if such Purchaser is a corporation, partnership, limited liability
company, trust or fiduciary, executed and delivered by such Purchaser, and, upon
due execution and delivery by the Company, this Agreement will be a valid and
binding agreement of Purchaser.
4.3 Access to Information. Purchaser represents that such
Purchaser has been given full and complete access to the Company for the purpose
of obtaining such information as such Purchaser or its qualified representative
has reasonably requested in connection with the decision to purchase the Note.
Purchaser represents that it has received and reviewed copies of the SEC
Reports. Purchaser represents that it has been afforded the opportunity to ask
questions of the officers of the Company regarding its business prospects and
the Units, all as Purchaser or Purchaser's qualified representative have found
necessary to make an informed investment decision to purchase the Note.
4.4 Restricted Securities.
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4.4.1 Purchaser has been advised that none of the
Securities have been registered under the Securities Act or any other applicable
securities laws and that Units are being offered and sold pursuant to Section
4(2) of the Securities Act and/or Rule 506 of Regulation D thereunder, and that
the Company's reliance upon Section 4(2) and/or Rule 506 of Regulation D is
predicated in part on Purchaser representations as contained herein. Purchaser
acknowledges that the Securities will be issued as "restricted securities" as
defined by Rule 144 promulgated pursuant to the Securities Act. None of the
Securities 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.
4.4.2 Purchaser represents that it is acquiring
the Note for Purchaser'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.
4.4.3 Purchaser understands and acknowledges that
the Securities, when issued, will bear the following legend:
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.
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4.4.4 Purchaser acknowledges that an investment
in the Securities is not liquid and is transferable only under limited
conditions. Purchaser 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. Purchaser 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 such Rule is not now available and, in the future, may not
become available for resale of any of the Securities.
4.4.5 Purchaser is an "accredited investor" as
defined under Rule 501 under the Securities Act. The representations made by
Purchaser on the Purchaser Signature Page are true and correct.
4.5 Purchaser Sophistication and Ability to Bear Risk of
Loss. Purchaser 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 Purchaser's financial condition. Purchaser, either alone or with such
Purchaser's representative(s), otherwise has such knowledge and experience in
financial or business matters that such Purchaser is capable of evaluating the
merits and risks of the investment in the Note.
4.6 Preexisting Relationship. Purchaser has a preexisting
personal or business relationship with the Company, one or more of its officers,
directors, or controlling persons.
4.7 Purchases by Groups. Purchaser represents, warrants
and covenants that it is not acquiring the Note as part of a group within the
meaning of Section 13(d)(3) of the Securities Exchange Act of 1934, as amended.
5. COVENANTS OF THE COMPANY.
5.1 Use of Proceeds. The Company intends to employ the
proceeds from the purchase and sale of the Notes for the purposes set forth on
Schedule 5.1 hereto. Except as set forth on Schedule 5.1, the proceeds from the
purchase and sale of the Note may not and will not be used for accrued and
unpaid officer and director salaries, payment of financing related debt,
redemption of outstanding notes or equity instruments of the Company, litigation
related expenses or settlements, brokerage fees, nor non-trade obligations
outstanding on a Closing Date. Pending the Company's use of the proceeds from
the purchase and sale of the Note, the Company intends to invest the funds in
government securities and insured, short-term, interest-bearing investments of
varying maturities. Schedule 5.1 represents the Company's best estimate of the
allocation of the proceeds from the purchase and sale of the Note. Future
events, including the problems, delays, expenses, and complications frequently
encountered by development stage companies such as the Company, as well as
changes in economic, regulatory, or competitive conditions, changes in the
Company's planned business (and its success or failure), and changes in the
Company's product development activities, may require that it reallocate funds.
It is possible that that the estimates in Schedule 5.1 will prove inaccurate,
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that the Company's efforts to introduce its products and services will require
considerable additional expenditures, or that unforeseen events will cause the
Company to expend more funds than it currently expects
5.2 Public Filings. The Company shall file the reports
required to be filed by it under the Securities Act of 1933, as amended and the
Securities Exchange Act of 1934, as amended and the rules and regulations
adopted by the Securities and Exchange Commission thereunder, and will take such
further action as Purchaser may reasonably request, all to the extent required
from time to time to enable Purchaser to sell Shares of held by it without
registration under the Securities Act within the limitation of the exemption
provided by Rule 144. If, at any time beginning after September 10, 2008, the
Company has failed to file reports required to enable sales by Purchaser of
Shares pursuant to Rule 144 ("Not Current"), then, for each 30 day period that
(or portion thereof) the Company is Not Current, the Company shall deliver to
Purchaser, as liquidated damages ("Liquidated Damages"), an amount equal to two
percent (2%) of the Purchase Price of the Note remaining outstanding (which
amount shall be pro-rated for periods shorter than 30 days); provided, however,
that if the Company is Not Current for a period in excess of 60 days, then from
and after such 60 day period the Liquidated Damages shall be increased to three
percent (3%) for each subsequent 30 day period (or portion thereof). The
Liquidated Damages must be paid within 20 days after the end of each thirty (30)
day period for which Liquidated Damages are payable.
5.3 Reservation of Common Stock. The Company shall
reserve 75,000,000 shares of Common Stock to provide for the issuance of the
Shares.
6. MISCELLANEOUS.
6.1 Indemnification. Each Purchaser agrees to defend,
indemnify and hold the Company harmless against any liability, costs or expenses
arising as a result of any dissemination of any of the Notes or the Shares by
such Purchaser in violation of the 1933 Act or applicable state securities law.
6.2 Restriction on Resales. Purchaser agrees that at any
time while the Note is outstanding, Purchaser and its affiliates shall not make
any Net Sales (as defined below) of Common Stock held by it on any single day
during such period. "Net Sales" means, with respect to any date of
determination, the difference of (A) the number of shares of Common Stock sold,
including by way of short sales, or otherwise transferred or disposed of,
directly or indirectly, on such date of determination by Purchaser and its
affiliates minus (B) the number of shares of Common Stock purchased, directly or
indirectly (including a conversion of the Note), on such date of determination
by Purchaser and its affiliates. Notwithstanding the above, any overselling
unintentional or by error which is rectified within 5 business days shall not be
considered a violation of this Agreement.
6.3 Governing Law. This Agreement shall be governed by
and construed under the laws of the State of New Jersey.
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6.4 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.
6.5 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.
6.6 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.
6.7 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
Purchasers, or, to the extent such amendment affects only one Purchaser, by the
Company and such Purchaser. 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.
6.8 Notices. All notices and other communications
required or permitted hereunder or the Note shall be in writing and shall be
effective when delivered personally, or sent by telex or telecopier (with
receipt confirmed), provided that (other than Conversion Notices under the Note)
a copy is mailed by certified 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 0xx Xxxxxx
Xxxxxxxx, XX 00000
Attention: President
Fax: (000) 000-0000
With a copy to:
Indeglia & Xxxxxx, P.C.
0000 Xxxx Xxxxxx, Xxxxx 000
Xxxxxx, XX 00000
Attention: Xxxx X. Xxxxxxxx, Esq.
Fax: (000) 000-0000
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If to the Purchaser: At the address set forth on the
Purchaser's Signature Page
6.9 Faxes and Counterparts. This Agreement may be
executed in one or more counterparts. Delivery of an executed counterpart of the
Agreement or any exhibit attached hereto by facsimile transmission shall be
equally as effective as delivery of an executed hard copy of the same. Any party
delivering an executed counterpart of this Agreement or any exhibit attached
hereto by facsimile transmission shall also deliver an executed hard copy of the
same, but the failure by such party to deliver such executed hard copy shall not
affect the validity, enforceability or binding nature effect of this Agreement
or such exhibit.
6.10 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.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date set forth on the Purchase Signature Page hereto.
PURCHASER
(By Counterpart Form - SP Pages)
COMPANY
QUEST MINERALS & MINING CORP.
By:_____________________________________
Xxxxxx Xxxxxxxxxxx, Xx.,
President
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PURCHASER SIGNATURE PAGE
The undersigned Purchaser has read the Convertible Note Purchase
Agreement dated as of March 10, 2008 and acknowledges that execution of this
Purchaser Signature Page shall constitute the undersigned's execution of such
agreement.
I hereby subscribe for an aggregate of $75,000.00 in principal amount
of Notes and hereby deliver good funds with respect to this subscription for the
Notes.
I am a resident of the Brooklyn, New York.
Gross Foundation, Inc.
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Please print above the exact name(s) in which the Notes are to be held
My address is: 0000 00xx Xxxxxx
Xxxxxxxx, Xxx Xxxx 00000
SP-1
Executed this 10th day of March, 2008 at Brooklyn, New York.
SIGNATURES
INDIVIDUAL
_________________________________________
Name
_________________________________ _________________________________________
Signature (Individual) Street address
Address to Which Correspondence Should be
Directed
_________________________________ _________________________________________
Signature (All record holders City, State and Zip Code
should sign)
_________________________________ _________________________________________
Name(s) Typed or Printed Tax Identification or Social Security
Number
( )
_________________________________________
Telephone Number
_________________________________
Name(s) Typed or Printed (All
recorded holders should sign)
SP-2
CORPORATION, PARTNERSHIP, TRUST ENTITY OR OTHER
Gross Foundation, Inc. Address to Which Correspondence Should be
_________________________________ Directed:
Name of Entity
Corporation 0000 00xx Xxxxxx
_________________________________ _________________________________________
Type of Entity (i.e., corporation, Street Address
partnership, etc.)
00-0000000
By: _____________________________ _________________________________________
*Signature Tax Identification or Social Security
Number
Xxx Xxxx Xxxxxxxx, Xxx Xxxx 00000
_________________________________ _________________________________________
Jurisdiction of Formation of Entity City, State and Zip Code
Xxxxx Xxxxx
_________________________________
Name Typed or Printed
(000) 000-0000; (000) 000-0000
Its: ____________________________ _________________________________________
Title Telephone Number; Fax Number
*If Notes are being subscribed for by an entity, the Certificate of Signatory
must also be completed.
SP-3
CERTIFICATE OF SIGNATORY
To be completed if Note is being subscribed for by an entity.
I, Xxxxx Xxxxx, am the President of Gross Foundation, Inc. (the
"Entity").
I certify that I am empowered and duly authorized by the Entity to
execute and carry out the terms of the Convertible Note Purchase Agreement and
to purchase and hold the Note. The Convertible Note Purchase Agreement has been
duly and validly executed on behalf of the Entity and constitutes a legal and
binding obligation of the Entity.
IN WITNESS WHEREOF, I have hereto set my hand this 10th day of March,
2008.
_________________________________________
Signature
SP-4
ACCEPTANCE
AGREED AND ACCEPTED:
QUEST MINERALS & MINING CORP.
By: ____________________________________
Xxxxxx Xxxxxxxxxxx, Xx.
President
Date: March 11, 2008
SP-5
SCHEDULE 5.1
USE OF PROCEEDS
$15,000 Accountant's Fees (to be held in escrow pursuant to the Escrow
Agreement)
$5,000 Working Capital for Mine Operations and Satisfaction of Payables
arising out of Mine Operations
$5,000 Legal Fees (estimated)
$30,000 Purchase of Equipment for Mine Operations
$20,000 Supplies and Payroll for Mine Operations
