SECURITIES PURCHASE AGREEMENT
SECURITIES PURCHASE AGREEMENT (the "Agreement"), dated as of April 27,
2005, among AMERICAN PALLET LEASING, INC., a corporation organized under the
laws of the State of Delaware ("APLS"), and BRITTANY CAPITAL MANAGEMENT LIMITED,
a Bahamian corporation ("Purchaser").
WHEREAS, Purchaser and APLS are executing and delivering this Agreement in
reliance upon the exemption from securities registration afforded by Section
4(2) of the Securities Act of 1933, as amended (the "1933 Act");
WHEREAS, Purchaser desires to purchase and APLS desires to issue, upon the
terms and conditions set forth in this Agreement, a convertible promissory note
and a stock warrant of APLS in consideration for the payment by Purchaser to
APLS of $250,000.00 in cash; and
NOW THEREFORE, in consideration of the premises and the mutual covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
1. PURCHASE AND SALE OF CONVERTIBLE PROMISSORY NOTE.
a. Purchase of Convertible Promissory Note. On the Closing Date (as
defined below), APLS shall issue and deliver to Purchaser, and Purchaser agrees
to purchase from APLS, (1) a duly executed 8% convertible promissory note in the
principal amount of $250,000.00 (the "Note") and (2) a stock warrant for 115,385
shares of APLS common stock (the "Warrant") in consideration for $250,000.00
cash (the "Purchase Price").
b. Closing Date. Subject to the satisfaction (or waiver) of the
conditions thereto set forth in Section 5 and Section 6 below, the date and time
of the sale of the Note pursuant to this Agreement (the "Closing Date") shall be
12:00 noon New York City Time on April 26, 2005 or such other mutually agreed
upon time. The closing of the transactions contemplated by this Agreement (the
"Closing") shall occur on the Closing Date at such location as may be agreed to
by the parties.
c. Form of Payment. On the Closing Date, (i) Purchaser shall pay the
Purchase Price in United States dollars by wire transfer of immediately
available funds to an account designated in writing by APLS for such purpose,
against delivery of the Note and the Warrant, and (ii) APLS shall deliver to
Purchaser the Note and Warrant duly executed on behalf of APLS, against delivery
of the Purchase Price.
d. Guarantee; Pledge. The Note is further guaranteed by the
Guarantor pursuant to a Limited Recourse Guarantee, and secured pursuant to a
Stock Pledge Agreement, each dated April 26, 2005 between the parties whereby
the Guarantor has pledged certain Collateral in order to guarantee the Note and
has granted to Purchaser a security interest in Collateral, as defined therein,
to secure the payment of the Note. Such security interest may be perfected by
the filing of the applicable UCC statements in the appropriate recording
offices.
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2. PURCHASER'S REPRESENTATIONS AND WARRANTIES. Purchaser represents and
warrants to APLS that:
a. Accredited Purchaser; Investment Purpose. Purchaser represents
that it is an "Accredited Investor" as defined in Regulation D under the
Securities Act of 1933. Purchaser is purchasing the Note for its own account for
investment purposes only and not with a view toward, or for resale in connection
with, the public sale or distribution thereof, except pursuant to sales
registered or exempted under the 1993 Act and applicable state securities laws;
provided, however, that by making the representations herein, Purchaser does not
agree to hold the Note for any minimum or other specific term and reserves the
right to dispose of the Note at any time in accordance with or pursuant to a
registration statement or an exemption under the 1933 Act and applicable state
securities laws.
b. Reliance on Exemptions. Purchaser understands that the Note is
being offered and sold to it in reliance upon specific exemptions from the
registration requirements of United States federal and state securities laws and
that APLS is relying upon the truth and accuracy of, and Purchaser's compliance
with, the representations, warranties, agreements, acknowledgments and
understandings of Purchaser set forth herein in order to determine the
availability of such exemptions and the eligibility of the Purchaser to acquire
the Note.
c. Information. Purchaser and its advisors, if any, have been
furnished with materials relating to the business, finances and operations of
APLS and materials relating to the offer and sale of the Note which have been
requested by Purchaser or its advisors. Neither such inquiries nor any other due
diligence investigation conducted by Purchaser or any of its advisors or
representatives shall modify, amend or affect Purchaser's right to rely on
APLS's representations and warranties contained in Section 3 below. Purchaser
understands that its investment in the Note involves a significant degree of
risk.
d. Governmental Review. Purchaser understands that no United States
federal or state agency or any other government or governmental agency has
passed upon or made any recommendation or endorsement of the Note.
e. Transfer or Resale. Purchaser understands that (i) the sale or
resale of the Note and the Warrant and any underlying conversion shares of
common stock has not been and is not being registered under the 1933 Act or any
applicable state securities laws, and the Note and the Warrant may not be
transferred unless (a) the Note, the Warrant and Common Stock issuable upon
conversion of the Note ("Conversion Shares") are sold pursuant to an effective
registration statement under the 1933 Act, (b) the Note, the Warrant and the
Conversion Shares are sold or transferred pursuant to an exemption from such
registration, (c) the Note, the Warrant and the Conversion Shares are sold or
transferred to an "affiliate" (as defined in Rule 144 promulgated under the 1933
Act (or a successor rule) ("Rule 144")) of Purchaser who agrees to sell or
otherwise transfer the Note or the Warrant only in accordance with this Section
2(e) and who is an Accredited Investor, or (d) (i) the Note, the Warrant and the
Conversion Shares are sold pursuant to Rule 144, if such Rule is available; (ii)
any sale of such Note, the Warrant and the Conversion Shares made in reliance on
Rule 144 may be made only in accordance with the terms of said Rule and further,
if said Rule is not applicable, any resale of such Note, the Warrant and the
Conversion Shares 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 (iii)
neither APLS nor any other person is under any obligation to comply with the
terms and conditions of any exemption under the 1933 Act.
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f. Legends. Purchaser understands that the Note, the Warrant, and
the Conversion shares shall bear a restrictive legend in the following form:
"NEITHER THIS SECURITY NOR THE SECURITIES ISSUABLE UPON
CONVERSION HEREOF HAVE BEEN REGISTERED WITH THE UNITED STATES
SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES
COMMISSION OF ANY STATE OR UNDER THE SECURITIES ACT OF 1933,
AS AMENDED. THE SECURITIES ARE RESTRICTED AND MAY NOT BE
OFFERED, RESOLD, PLEDGED OR TRANSFERRED EXCEPT AS PERMITTED
UNDER THE ACT PURSUANT TO REGISTRATION OR EXEMPTION OR SAFE
HARBOR THEREFROM."
g. Authorization; Enforcement. This Agreement has been duly and
validly authorized by Purchaser. This Agreement has been duly executed and
delivered on behalf of Purchaser, and this Agreement constitutes a valid and
binding agreement of Purchaser enforceable in accordance with its terms, except
as such enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar laws relating to, or
affecting generally, the enforcement of creditors' rights and remedies or by
other equitable principles of general application.
i. No Brokers. Purchaser has taken no action which would give rise
to any claim by any person for brokerage commissions, finder's fees or similar
payments relating to this Agreement or the transactions contemplated hereby.
3. REPRESENTATIONS AND WARRANTIES OF APLS. APLS represents and warrants to
Purchaser that:
a. Authorization; Enforcement. (i) APLS has all requisite corporate
power and authority to enter into and perform this Agreement and to consummate
the transactions contemplated hereby and to sell the Note and the Warrant, in
accordance with the terms hereof, (ii) the execution and delivery of this
Agreement by APLS and the consummation by it of the transactions contemplated
hereby (including without limitation, the sale of the Note to Purchaser) have
been duly authorized by APLS and no further consent or authorization of APLS or
its shareholders is required, (iii) this Agreement has been duly executed and
delivered by APLS, and (iv) this Agreement constitutes a legal, valid and
binding obligation of APLS enforceable against APLS in accordance with its
terms, except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, liquidation or similar laws relating to,
or affecting generally, the enforcement of creditors' rights and remedies or by
other equitable principles of general application
b. Title; Rule 144 Matters. APLS acknowledges that Pledgor, as
defined in the Stock Pledge Agreement of even date, has good and marketable
title to the Pledge Shares, free and clear of all liens, pledges and
encumbrances of any kind, and that Pledgor has owned the Shares since September
20, 2004.
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c. No Conflicts. The execution, delivery and performance of this
Agreement by APLS and the consummation by APLS of the transactions contemplated
hereby (including, without limitation, the sale of the Note and Warrant to
Purchaser) will not (i) conflict with or result in a violation of any provision
of its certificate of formation or other organizational documents, or (ii)
violate or conflict with, or result in a breach of any provision of, or
constitute a default (or an event which with notice or lapse of time or both
could become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, any agreement, note, bond, indenture
or other instrument to which APLS is a party, or (iii) result in a violation of
any law, rule, regulation, order, judgment or decree (including federal and
state securities laws and regulations and regulations of any self-regulatory
organizations to which APLS is subject) applicable to APLS or by which any
property of APLS are bound or affected. Except as specifically contemplated by
this Agreement and as required under the 1933 Act and any applicable federal and
state securities laws, APLS is not required to obtain any consent, authorization
or order of, or make any filing or registration with, any court, governmental
agency, regulatory agency, self regulatory organization or stock market or any
third party in order for it to execute, deliver or perform any of its
obligations under this Agreement in accordance with the terms hereof. Except for
filings that may be required under applicable federal and state securities laws
in connection with the issuance and sale of the Note and the Warrant, all
consents, authorizations, orders, filings and registrations which APLS is
required to obtain pursuant to the preceding sentence have been obtained or
effected on or prior to the date hereof.
d. No Brokers. APLS has taken no action which would give rise to any
claim by any person for brokerage commissions, finder's fees or similar payments
relating to this Agreement or the transactions contemplated hereby.
e. No Other Representations. Except as specifically set forth
herein, APLS makes no representations or warranties with respect its financial
status, earnings, assets, liabilities, corporate status or any other matter.
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4. COVENANTS.
a. Best Efforts. The parties shall use their best efforts to satisfy
timely each of the conditions described in Section 5 and Section 6 of this
Agreement.
b. Financial Reporting. Subsequent to Closing Date, APLS will take
no action which would adversely affect the tacking for the benefit of the
Purchaser of Pledgor's holding period under Rule 144. APLS shall make and keep
public information available, as those terms are understood and defined in Rule
144 and shall file with the SEC in a timely manner all reports and other
documents required of APLS under the Securities Act and the Exchange Act.
5. CONDITIONS TO SELLER'S OBLIGATION TO SELL. The obligation of APLS
hereunder to sell and deliver the Note and the Warrant to Purchaser at the
Closing is subject to the satisfaction, at or before the Closing Date of each of
the following conditions thereto, provided that these conditions are for APLS's
sole benefit and may be waived by APLS at any time in its sole discretion:
a. Purchaser shall have executed this Agreement and delivered the
same to APLS.
b. Purchaser shall have delivered the Purchase Price in accordance
with Section 1(b) above.
c. The representations and warranties of Purchaser 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 Purchaser 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
Purchaser at or prior to the Closing Date.
d. No litigation, statute, rule, regulation, executive order,
decree, ruling or injunction shall have been enacted, entered, promulgated or
endorsed by or in any court or governmental authority of competent jurisdiction
or any self-regulatory organization having authority over the matters
contemplated hereby which prohibits the consummation of any of the transactions
contemplated by this Agreement.
6. CONDITIONS TO PURCHASER'S OBLIGATION TO PURCHASE. The obligation of
Purchaser hereunder to purchase the Shares at the Closing is subject to the
satisfaction, at or before the Closing Date of each of the following conditions,
provided that these conditions are for Purchaser's sole benefit and may be
waived by Purchaser at any time in its sole discretion.
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a. APLS shall have executed this Agreement and delivered the same to
Purchaser.
b. APLS shall have delivered to Purchaser duly executed Note and
Warrant (in such denominations as Purchaser shall reasonably request) in
accordance with Section 1(b) above.
c. The representations and warranties of APLS 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 such time (except for representations and warranties that
speak as of a specific date) and APLS 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 APLS
at or prior to the Closing Date.
d. No litigation, statute, rule, regulation, executive order,
decree, ruling or injunction shall have been enacted, entered, promulgated or
endorsed by or in any court or governmental authority of competent jurisdiction
or any self-regulatory organization having authority over the matters
contemplated hereby which prohibits the consummation of any of the transactions
contemplated by this Agreement.
7. GOVERNING LAW; MISCELLANEOUS.
a. Governing Law; Jurisdiction. THIS AGREEMENT SHALL BE ENFORCED,
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK
APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY WITH SUCH STATE,
WITHOUT REGARD TO THE PRINCIPLES OF CONFLICT OF LAWS. THE PARTIES HERETO HEREBY
SUBMIT TO THE EXCLUSIVE JURISDICTION OF THE UNITED STATES FEDERAL COURTS LOCATED
IN THE CITY OF NEW YORK, NEW YORK WITH RESPECT TO ANY DISPUTE ARISING UNDER THIS
AGREEMENT, THE AGREEMENTS ENTERED INTO IN CONNECTION HEREWITH OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. BOTH PARTIES IRREVOCABLY WAIVE THE
DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH SUIT OR PROCEEDING.
BOTH PARTIES FURTHER AGREE THAT SERVICE OF PROCESS UPON A PARTY MAILED BY FIRST
CLASS MAIL SHALL BE DEEMED IN EVERY RESPECT EFFECTIVE SERVICE OF PROCESS UPON
THE PARTY IN ANY SUCH SUIT OR PROCEEDING. NOTHING HEREIN SHALL AFFECT ANY
PARTY'S RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW. THE PARTIES
AGREE THAT A FINAL NON-APPEALABLE JUDGMENT IN ANY SUCH SUIT OR PROCEEDING SHALL
BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON SUCH
JUDGMENT OR IN ANY OTHER LAWFUL MANNER. THE PARTIES HEREBY WAIVE A TRIAL BY JURY
IN ANY ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY EITHER OF THE PARTIES
HERETO AGAINST THE OTHER IN RESPECT OF ANY MATTER ARISING OUT OF OR IN
CONNECTION WITH THIS AGREEMENT.
b. Counterparts; Signatures by Facsimile. This Agreement may be
executed in one or more counterparts, each of which shall be deemed an original
but all of which shall constitute one and the same agreement and shall become
effective when counterparts have been signed by each party and delivered to the
other party. This Agreement, once executed by a party, may be delivered to the
other party hereto by facsimile transmission of a copy of this Agreement bearing
the signature of the party so delivering this Agreement.
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c. Headings. The headings of this Agreement are for convenience of
reference only and shall not form part of, or affect the interpretation of, this
Agreement.
d. Severability. In the event that any provision of this Agreement
is invalid or enforceable under any applicable statute or rule of law, then such
provision shall be deemed inoperative to the extent that it may conflict
therewith and shall be deemed modified to conform with such statute or rule of
law. Any provision hereof which may prove invalid or unenforceable under any law
shall not affect the validity or enforceability of any other provision hereof.
e. Entire Agreement; Amendments. 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 APLS nor Purchaser 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 required or permitted to be given under the
terms of this Agreement shall be sent by certified or registered mail (return
receipt requested) or delivered personally or by courier (including a recognized
overnight delivery service) or by facsimile and shall be effective five days
after being placed in the mail, if mailed by regular United States mail, or upon
receipt, if delivered personally or by courier (including a recognized overnight
delivery service) or by facsimile, in each case addressed to a party. The
addresses for such communications shall be:
If to APLS:
000 Xxxxxx Xxxxxx, X.X., Xxxxx 000
Xxxxx Xxxxxx, XX 00000
Attention: President
Facsimile: (000) 000-0000
If to Purchaser:
Brittany Capital Management Limited
c/o Lion Corporate Services
Xxxxxxxxxx Xxxxx
00 Xxxxxxxxxx Xxxxxx
PO Box N-10818
Nassau, New Providence
Bahamas
Facsimile: (000) 000-0000
Each party shall provide notice to the other party of any change in
address.
g. Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties and their successors and assigns. Neither
APLS nor Purchaser shall assign this Agreement or any rights or obligations
hereunder without the prior written consent of the other. Notwithstanding the
foregoing, subject to Section 2(e), Purchaser may assign its rights hereunder to
any person that purchases the Note, the Warrant or any Conversion Shares in a
private transaction from Purchaser or to any of its "affiliates," as that term
is defined under the 1934 Act, without the consent of APLS.
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h. 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. 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.
j. 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.
IN WITNESS WHEREOF, Purchaser and APLS have caused this Securities
Purchase Agreement to be duly executed as of the date first above written.
AMERICAN PALLET LEASING, INC.
Name: /s/ Xxxxxxx Xxxxxxxxx
------------------------------------
Title:President
BRITTANY CAPITAL MANAGEMENT LIMITED
By: /s/ Xxxxx X. Xxxxxx
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