AMERICAN RESIDENTIAL FUNDING, INC.
ANZA CAPITAL, INC.
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NOTE AND WARRANT PURCHASE AGREEMENT
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NOTE AND WARRANT PURCHASE AGREEMENT
This Note and Warrant Purchase Agreement is made as of the 11th day of
October, 2004 (the "EFFECTIVE DATE") by and between American Residential
Funding, Inc., a Nevada corporation (the "COMPANY"), Anza Capital, Inc, a Nevada
corporation ("ANZA"), and Amres Holding, LLC, a Nevada limited liability company
("PURCHASER").
The parties hereby agree as follows:
1. Amount and Terms of the Loan; Issuance of Warrants
1.1 The Loan. Subject to the terms of this Agreement, the Purchaser
agrees to lend to the Company the amount set forth opposite Purchaser's name on
the Schedule of Purchasers attached hereto (each, a "LOAN AMOUNT") against the
issuance and delivery by the Company of a convertible secured promissory note
for the Loan Amount in substantially the form attached hereto as Exhibit A
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(each, a "NOTE" and collectively, the "NOTES"), dated the applicable Closing
Date (as defined below). Each Note may be converted, at Purchaser's option,
into shares of the Company's capital stock as provided in such Note.
1.2 Issuance of Warrant. Subject to the terms of this Agreement, Anza
agrees to sell to Purchaser, and Purchaser agrees to purchase, at the Closing
(as hereinafter defined), a warrant for the amount of shares set forth in the
Schedule of Purchasers attached hereto in substantially the form attached hereto
as Exhibit B (the "WARRANT").
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2. The Closing
2.1 Closing Date. The closing of the purchase and sale of the Note and
Warrant (the "CLOSING") shall be held on the Effective Date, or at such other
time as the Company and the Purchaser shall agree (the "CLOSING DATE").
2.2 Delivery. At the Closing, (i) Purchaser will deliver to the Company a
check or wire transfer funds in the amount of Purchaser's Loan Amount as
indicated on the Schedule of Purchasers; and (ii) the Company shall issue and
deliver to Purchaser a Note in favor of Purchaser payable in the principal
amount of Purchaser's Loan Amount and Anza shall issue and deliver to Purchaser
a Warrant to purchase the applicable number of shares of Anza's common stock.
3. Representations, Warranties and Covenants of the Company and Anza
The Company and Anza hereby represent and warrant to each Purchaser as
follows:
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3.1 Corporate Power. The Company and Anza will have at the Closing Date
all requisite corporate power to execute and deliver this Agreement and to carry
out and perform its obligations under the terms of this Agreement.
3.2 Authorization. All corporate action on the part of the Company and
Anza, their directors and stockholders necessary for the authorization,
execution, delivery and performance of this Agreement by the Company and the
performance of the Company's obligations hereunder, including the issuance and
delivery of the Note and Warrant and the reservation of the equity securities
issuable upon exercise of the Warrant or conversion of the Note has been taken
or will be taken prior to the issuance of such equity securities. This
Agreement, the Note and the Warrant, when executed and delivered by the Company
and Anza, shall constitute valid and binding obligations of the Company and Anza
enforceable in accordance with their terms, subject to laws of general
application relating to bankruptcy, insolvency, the relief of debtors and, with
respect to rights to indemnity, subject to federal and state securities laws.
All common stock of Anza, when issued in compliance with the provisions of this
Agreement, the Note or the Warrant, will be validly issued, fully paid and
nonassessable and free of any liens or encumbrances. The issuance of the Note
and Warrant pursuant to the provisions of this Agreement will not violate any
preemptive rights or rights of first refusal granted by the Company or Anza, and
the Note and Warrant will be issued in compliance with all applicable federal
and state securities laws, and will be free of any liens or encumbrances, other
than any liens or encumbrances created by or imposed upon the holders through no
action of the Company or Anza; provided, however, that the Note and the Warrant
may be subject to restrictions on transfer under state and/or federal securities
laws as set forth herein or as otherwise required by such laws at the time the
transfer is proposed.
3.3 Governmental Consents. All consents, approvals, orders, or
authorizations of, or registrations, qualifications, designations, declarations,
or filings with, any governmental authority, required on the part of the Company
and Anza in connection with the valid execution and delivery of this Agreement,
the offer, sale or issuance of the Note, the Warrant and the equity securities
issuable upon exercise of the Warrant, conversion of the Note or the
consummation of any other transaction contemplated hereby shall have been
obtained and will be effective at the Closing, except for notices required or
permitted to be filed with certain state and federal securities commissions,
which notices will be filed on a timely basis.
3.4 Offering. Assuming the accuracy of the representations and warranties
of Purchaser contained in Section 4 hereof, the offer, issue, and sale of the
Note and Warrant are and will be exempt from the registration and prospectus
delivery requirements of the Securities Act of 1933, as amended (the "ACT"), and
have been registered or qualified (or are exempt from registration and
qualification) under the registration, permit, or qualification requirements of
all applicable state securities laws.
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4. Representations and Warranties of the Purchaser
4.1 Purchase for Own Account. Purchaser represents that he is acquiring
the Note, the equity securities issuable upon conversion of the Note, the
Warrant and the equity securities issuable upon exercise of the Warrant
(collectively, the "SECURITIES") solely for his own account and beneficial
interest for investment and not for sale or with a view to distribution of the
Securities or any part thereof, has no present intention of selling (in
connection with a distribution or otherwise), granting any participation in, or
otherwise distributing the same, and does not presently have reason to
anticipate a change in such intention.
4.2 Ability to Bear Economic Risk. Purchaser acknowledges that an
investment in the Securities involves a high degree of risk, and represents that
it is able, without materially impairing its financial condition, to hold the
Securities for an indefinite period of time and to suffer a complete loss of its
investment.
4.3 Further Limitations on Disposition. Purchaser further acknowledges
that the Securities are restricted securities under Rule 144 of the Act, and,
therefore, when issued by Company to Purchaser will contain a restrictive legend
substantially similar to the following:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"). THEY MAY NOT
BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THE
SECURITIES UNDER THE ACT OR AN OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT
REQUIRED.
Without in any way limiting the representations set forth above, Purchaser
further agrees not to make any disposition of all or any portion of the
Securities unless and until:
(a) There is then in effect a Registration Statement under the Act
covering such proposed disposition and such disposition is made in
accordance with such Registration Statement; or
(b) Purchaser shall have notified the Company of the proposed
disposition and shall have furnished the Company with a detailed statement
of the circumstances surrounding the proposed disposition, and if
reasonably requested by the Company, Purchaser shall have furnished the
Company with an opinion of counsel, reasonably satisfactory to the Company,
that such disposition will not require registration under the Act or any
applicable state securities laws.
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(c) Notwithstanding the provisions of paragraphs (a) and (b) above,
no such registration statement or opinion of counsel shall be necessary for
a transfer by such Purchaser to a stockholder or partner (or retired
partner) of Purchaser, or transfers by gift, will or intestate succession
to any spouse or lineal descendants or ancestors, if all transferees agree
in writing to be subject to the terms hereof to the same extent as if they
were Purchasers hereunder.
(d) Accredited Investor Status. Purchaser is an "accredited
investor" as such term is defined in Rule 501 under the Act.
5. Miscellaneous
5.1 Binding Agreement. The terms and conditions of this Agreement shall
inure to the benefit of and be binding upon the respective successors and
assigns of the parties. Nothing in this Agreement, expressed or implied, is
intended to confer upon any third party any rights, remedies, obligations, or
liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement.
5.2 Governing Law. This Agreement shall be governed by and construed
under the laws of the State of California as applied to agreements among
California residents, made and to be performed entirely within the State of
California.
5.3 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
5.4 Titles and Subtitles. The titles and subtitles used in this Agreement
are used for convenience only and are not to be considered in construing or
interpreting this Agreement.
5.5 Notices. All notices required or permitted hereunder shall be in
writing and shall be deemed effectively given: (a) upon personal delivery to the
party to be notified, (b) when sent by confirmed facsimile if sent during normal
business hours of the recipient, if not, then on the next business day, or (c)
one (1) day after deposit with a nationally recognized overnight courier,
specifying next day delivery, with written verification of receipt. All
communications shall be sent to the Company and Anza at 0000 Xxxxxxx Xxxxxx,
Xxxxx 000, Xxxxx Xxxx, XX 00000, Facsimile (000) 000-0000, and to Purchaser at
the address set forth on the Schedule of Purchasers attached hereto or at such
other address as the Company or Purchaser may designate by ten (10) days advance
written notice to the other parties hereto.
5.6 Modification; Waiver. No modification or waiver of any provision of
this Agreement or consent to departure therefrom shall be effective unless in
writing and approved by the Company, Anza, and the Purchaser.
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5.7 Entire Agreement. This Agreement and the Exhibits hereto constitute
the full and entire understanding and agreement between 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 and agreements
except as specifically set forth herein.
5.8 Expenses. The Company shall pay all costs and expenses with respect
to the negotiation, execution, delivery and performance of the Agreement.
5.9 Conflict of Interest. Purchaser acknowledges that The Lebrecht Group,
APLC represents Anza and has represented Anza in connection with the negotiation
and drafting of this Agreement. One or more of the Purchaser's may be
affiliated with Anza, and the Company, Anza, and Purchaser hereby waive any
conflict of interest that may arise as a result of the representation by The
Lebrecht Group, APLC.
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In Witness Whereof, the parties have executed this Note and Warrant
Purchase Agreement as of the date first written above.
"Company" "Purchaser"
American Residential Funding, Inc., Amres Holding, LLC,
a Nevada corporation a Nevada limited liability company
/s/ Xxxxxxx Xxxxxxxx /s/ Xxxxxxx Xxxxxxxx
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By: Xxxxxxx Xxxxxxxx By: Xxxxxxx Xxxxxxxx
Its: President Its: Managing Member
"Anza"
Anza Capital, Inc.,
a Nevada corporation
/s/ Xxxxxxx Xxxxxxxx
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By: Xxxxxxx Xxxxxxxx
Its: President
SCHEDULES AND EXHIBITS
Schedule of Purchasers
Exhibit A: Form of Convertible Promissory Note
Exhibit B: Form of Warrant
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SCHEDULE OF PURCHASERS
Name & Address Loan Amount Warrants
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Amres Holding, LLC $125,000 250,000
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EXHIBIT A
FORM OF CONVERTIBLE PROMISSORY NOTE
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EXHIBIT B
FORM OF WARRANT
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