SECURITIES PURCHASE AGREEMENT
THIS SECURITIES
PURCHASE AGREEMENT
(this
“Agreement”), dated as of June 22, 2007, is entered into by and among Xxxxxxxx
Uranium Corp.,
a Nevada
corporation (the “Company”), Gottbetter
& Partners, LLP (with
respect to Article 8 hereof) and the Buyers listed on Schedule I attached
hereto (individually, a “Buyer” or collectively “Buyers”).
WITNESSETH:
WHEREAS,
the
Company and the Buyer(s) are executing and delivering this Agreement in reliance
upon an exemption from securities registration pursuant to Section 4(2) and/or
Rule 506 of Regulation D (“Regulation D”) and/or Regulation S (“Regulation
S”) as promulgated by the U.S. Securities and Exchange Commission (the “SEC”)
under the Securities Act of 1933, as amended (the “Securities
Act”);
WHEREAS,
the
parties desire that, upon the terms and subject to the conditions contained
herein, the Company shall issue and sell to the Buyer(s), as provided herein,
and the Buyer(s) shall purchase up to Seven Hundred Fifty Thousand Dollars
($750,000) (the “Purchase Price”) principal amount of secured Convertible
Debentures (the “Convertible Debentures”), which shall become convertible into
units (“Units”) of the Company’s securities at a conversion price ( the
“Conversion Price”) of $0.50 per Unit. Each Unit shall consist of one share of
the Company’s common stock, par value $0.001 (the “Common Stock”) (as converted,
the “Conversion Shares”) and one common stock purchase warrant (“Warrants”),
exercisable at a price of $0.75 per share. The total Purchase Price shall be
allocated among the Buyer(s) in the respective amounts set forth opposite each
Buyers name on Schedule I (the “Subscription Amount”); and
WHEREAS,
all
of the
total principal amount of the Convertible Debentures, subject to the deduction
of any and all fees, shall be utilized by the Company to make a loan (the
“Bridge Loan”) to Xxxxxxxx Uranium Holdings, Inc. (“Xxxxxxxx”); and
WHEREAS,
the
Company (i) is currently negotiating a reverse triangular merger with Xxxxxxxx
(the “Merger”) and (ii) intends to conduct a private placement offering (the
“PPO”) of its Units subsequent to the closing of the Merger; and
WHEREAS,
in
connection with the Merger and the PPO the Company shall (i) change its name
(the “Name Change”) to Xxxxxxxx Uranium Corp., (ii) increase its authorized
capital stock (the “Recapitalization”) to 300,000,000 shares of Common Stock and
10,000,000 shares of preferred stock, $0.001 par value per share (“Preferred
Stock”) and (ii) conduct a 6.35 for one forward stock split (the “Stock Split”)
in the form of a stock dividend
WHEREAS,
the
Convertible Debentures shall be automatically converted into Units
simultaneously with the closing of the Merger (and prior to the commencement
of
the PPO) (the Merger, the PPO, the Stock Split and the transactions contemplated
thereby are sometimes hereinafter referred to as the “Transactions”);
and
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WHEREAS,
the
aggregate proceeds of the sale of the Convertible Debentures shall be held
in
escrow by the Escrow Agent, as defined below, pursuant to the terms of Article
8
of this Agreement.
NOW,
THEREFORE,
in
consideration of the mutual covenants and other agreements contained in this
Agreement the Company and the Buyer(s) hereby agree as follows:
1. PURCHASE
AND SALE OF CONVERTIBLE DEBENTURES.
(a) Purchase
of Convertible Debentures.
Subject
to the satisfaction (or waiver) of the terms and conditions of this Agreement,
each Buyer agrees, severally and not jointly, to purchase at Closing (as defined
herein below) and the Company agrees to sell and issue to each Buyer, severally
and not jointly, at Closing, Convertible Debentures in amounts set forth
opposite each Buyer’s name on Schedule I hereto. Upon execution hereof by a
Buyer, the Buyer shall wire transfer the Subscription Amount set forth opposite
his name on Schedule I in same-day funds or a check payable to “Gottbetter &
Partners, LLP, as Escrow Agent for Arbutus Resources, Inc.”, which Subscription
Amount shall be held in escrow pursuant to the terms of Article 8 of this
Agreement and disbursed in accordance therewith.
(b) Closing
Date.
The
Closing of the purchase and sale of the Convertible Debentures shall take place
at 10:00 a.m. Eastern Standard Time on or before the fifth (5th)
business day following the date hereof, subject to notification of satisfaction
of the conditions to the Closing set forth herein and in Sections 7 and 8 below
(or such later date as is mutually agreed to by the Company and the Buyer(s))
(the “Closing
Date”).
The
Closing shall occur on the Closing Date at the offices of Gottbetter &
Partners, LLP, 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 (or such other
place
as is mutually agreed to by the Company and the Buyer(s)).
(c) Escrow
Arrangements; Form of Payment.
Upon
execution hereof by Buyer and pending the Closing, the Purchase Price shall
be
deposited in a non-interest bearing escrow account with Gottbetter &
Partners, LLP as escrow agent (the “Escrow
Agent”),
pursuant to the terms of Article 8 of this Agreement. Subject to the
satisfaction of the terms and conditions of this Agreement, on the Closing
Date,
(i) the Escrow Agent shall deliver to the Company the Purchase Price for the
Convertible Debentures to be issued and sold to the Buyer(s), and (ii) the
Company shall deliver to the Buyer(s), the Convertible Debenture, duly executed
on behalf of the Company.
2. BUYER’S
REPRESENTATIONS AND WARRANTIES.
Each
Buyer represents and warrants, severally and not jointly, that:
(a) Investment
Purpose.
Each
Buyer is acquiring the Convertible Debentures, and, upon conversion of
Convertible Debentures, the Buyer will acquire the Conversion Shares, the
Warrants and/or Warrant Shares, then issuable, for its own account for
investment only and not with a view towards, or for resale in connection with,
the public sale or distribution thereof, except pursuant to sales registered
or
exempted under the Securities Act; provided, however, that by making the
representations herein, such Buyer reserves the right to dispose of the
Conversion Shares, the Warrants and the Warrant Shares at any time
in
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accordance
with or pursuant to an effective registration statement covering such Conversion
Shares, the Warrants and the Warrant Shares or an available exemption under
the
Securities Act. The Buyer agrees not to sell, hypothecate or otherwise transfer
the Buyer’s securities unless the securities are registered under the Federal
and applicable state securities laws or unless, in the opinion of counsel
satisfactory to the Company, an exemption from such law is
available.
(b) Residence
of Buyer.
Each
Buyer resides in the jurisdiction set forth opposite the Buyer’s name on
Schedule I.
(c) Non-US
Person.
If a
Buyer is not a person in the United States or a U.S. Person (as defined in
Rule
902(k) of Regulation S) or is not purchasing the Convertible Debentures on
behalf of a person in the United States or a U.S. Person:
(i) neither
the Buyer nor any disclosed principal is a U.S. Person nor are they subscribing
for the Convertible Debentures for the account of a U.S. Person or for resale
in
the United States and the Buyer confirms that the Convertible Debentures have
not been offered to the Buyer in the United States and that this Agreement
has
not been signed in the United States;
(ii) the
Buyer
acknowledges that the Convertible Debentures have not been registered under
the
Securities Act and may not be offered or sold in the United States or to a
U.S.
Person unless the securities are registered under the U.S. Securities Act and
all applicable state securities laws or an exemption from such registration
requirements is available, and further agrees that hedging transactions
involving such securities may not be conducted unless in compliance with the
U.S. Securities Act;
(iii) the
Buyer
and if applicable, the disclosed principal for whom the Buyer is acting,
understands that the Company is the seller of the Convertible Debentures and
underlying securities and that, for purposes of Regulation S, a "distributor” is
any underwriter, dealer or other person who participates, pursuant to a
contractual arrangement in the distribution of securities sold in reliance
on
Regulation S and that an "affiliate" is any partner, officer, director or any
person directly or indirectly controlling, controlled by or under common control
with any person in question. Except as otherwise permitted by Regulation S,
the
Buyer and if applicable, the disclosed principal for whom the Buyer is acting,
agrees that it will not, during a one year distribution compliance period,
act
as a distributor, either directly or through any affiliate, or sell, transfer,
hypothecate or otherwise convey the Debentures or underlying securities other
than to a non-U.S. Person;
(iv) the
Buyer
and if applicable, the disclosed principal for whom the Buyer is acting,
acknowledges and understands that in the event the Convertible Debentures are
offered, sold or otherwise transferred by the Buyer or if applicable, the
disclosed principal for whom the Buyer is acting, to a non-U.S Person prior
to
the expiration of a one year distribution compliance period, the purchaser
or
transferee must agree not to resell such securities except in accordance with
the provisions of Regulation S, pursuant to registration under the Securities
Act, or pursuant to an available exemption from registration; and must further
agree not to engage in hedging transactions with regard to such securities
unless in compliance with the Securities Act; and
3
(v) neither
the Buyer nor any disclosed principal will offer, sell or otherwise dispose
of
the Convertible Debentures or the underlying securities in the United States
or
to a U.S. Person unless (A) the Company has consented to such offer, sale or
disposition and such offer, sale or disposition is made in accordance with
an
exemption from the registration requirements under the Securities Act and the
securities laws of all applicable states of the United States or (B) the United
States Securities and Exchange Commission (the “SEC”) has declared effective a
registration statement in respect of such securities.
(d) Accredited
Investor Status.
If the
Buyer is a person in the United States or a U.S. person, such Buyer is an
“Accredited
Investor”
as
that
term is defined in Rule 501(a)(3) of Regulation D.
(e) Reliance
on Exemptions.
Each
Buyer understands that the Convertible Debentures are being offered and sold
to
it in reliance on specific exemptions from the registration requirements of
United States federal and state securities laws and that the Company is relying
in part upon the truth and accuracy of, and such Buyer’s compliance with, the
representations, warranties, agreements, acknowledgments and understandings
of
such Buyer set forth herein in order to determine the availability of such
exemptions and the eligibility of such Buyer to acquire such
securities.
(f) Information.
Each
Buyer and its advisors (and his or, its counsel), if any, have been furnished
with all materials relating to the business, finances and operations of the
Company and information he deemed material to making an informed investment
decision regarding his purchase of the Convertible Debentures and the underlying
Units, which have been requested by such Buyer. Each Buyer and its advisors,
if
any, have been afforded the opportunity to ask questions of the Company and
its
management. Neither such inquiries nor any other due diligence investigations
conducted by such Buyer or its advisors, if any, or its representatives shall
modify, amend or affect such Buyer’s right to rely on the Company’s
representations and warranties contained in Section 3 below. Each Buyer
understands that its investment in the Convertible Debentures, and upon
conversion the underlying Units involves a high degree of risk. Each Buyer
is in
a position regarding the Company, which, based upon employment, family
relationship or economic bargaining power, enabled and enables such Buyer to
obtain information from the Company in order to evaluate the merits and risks
of
this investment. Each Buyer has sought such accounting, legal and tax advice,
as
it has considered necessary to make an informed investment decision with respect
to its acquisition of the Convertible Debentures.
(g) No
Governmental Review.
Each
Buyer understands that no United States federal or state agency or any other
government or governmental agency has passed on or made any recommendation
or
endorsement of the Convertible Debentures, the Warrants, the Warrant Shares
or
the Conversion Shares, or the fairness or suitability of the investment in
the
Convertible Debentures, the Warrants, the Warrant Shares or the Conversion
Shares, nor have such authorities passed upon or endorsed the merits of the
offering of the Convertible Debentures, the Warrants, the Warrant Shares or
the
Conversion Shares.
(h) Transfer
or Resale.
Each
Buyer understands that: (i) the Convertible Debentures have not been and are
not
being registered under the Securities Act or any state
4
securities
laws, and may not be offered for sale, sold, assigned or transferred unless
(A)
subsequently registered thereunder, or (B) such Buyer shall have delivered
to
the Company an opinion of counsel, in a generally acceptable form, to the effect
that such securities to be sold, assigned or transferred may be sold, assigned
or transferred pursuant to an exemption from such registration requirements;
(ii) any sale of such securities made in reliance on Rule 144 under the
Securities Act (or a successor rule thereto) (“Rule 144”)
may be
made only in accordance with the terms of Rule 144 and further, if Rule 144
is
not applicable, any resale of such securities 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 Securities Act) may require
compliance with some other exemption under the Securities Act or the rules
and
regulations of the SEC thereunder; and (iii) neither the Company nor any other
person is under any obligation to register such securities under the Securities
Act or any state securities laws or to comply with the terms and conditions
of
any exemption thereunder. The Company reserves the right to place stop transfer
instructions against the shares and certificates for the Conversion Shares
and
the Warrant Shares to the extent specifically set forth under this
Agreement.
(i) Legends.
Each
Buyer understands that the certificates or other instruments representing the
Convertible Debentures, the Warrants, the Warrant Shares and or the Conversion
Shares shall bear a restrictive legend in substantially the following form
(and
a stop transfer order may be placed against transfer of such stock
certificates):
THE
SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”). THESE SECURITIES MAY
BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (A) TO THE COMPANY,
(B)
OUTSIDE THE UNITED STATES IN COMPLIANCE WITH RULE 904 OF REGULATION S UNDER
THE
SECURITIES ACT, (C) IN COMPLIANCE WITH RULE 144 OR 144A THEREUNDER, IF
AVAILABLE, AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS, (D) PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT, OR (E) IN A TRANSACTION THAT DOES NOT
REQUIRE REGISTRATION UNDER THE SECURITIES ACT OR ANY APPLICABLE STATE SECURITIES
LAWS, AND THE HOLDER HAS, PRIOR TO SUCH SALE, FURNISHED TO THE COMPANY AN
OPINION OF COUNSEL OR OTHER EVIDENCE OF EXEMPTION, IN EITHER CASE REASONABLY
SATISFACTORY TO THE COMPANY. HEDGING TRANSACTIONS INVOLVING THESE SECURITIES
MAY
NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE SECURITIES
ACT.
5
The
legend set forth above shall be removed and the Company within three (3)
business days shall issue a certificate without such legend to the holder of
the
Warrants, Warrant Shares and Conversion Shares upon which it is stamped, if,
unless otherwise required by state securities laws, (i) the Buyer or its broker
make the necessary representations and warranties to the transfer agent for
the
Common Stock that it has complied with the prospectus delivery requirements
in
connection with a sale transaction, provided the Convertible Debentures,
Warrants, Warrant Shares and Conversion Shares are registered under the
Securities Act or (ii) in connection with a sale transaction, after such holder
provides the Company with an opinion of counsel satisfactory to the Company,
which opinion shall be in form, substance and scope customary for opinions
of
counsel in comparable transactions, to the effect that a public sale, assignment
or transfer of the Warrants, Warrant Shares and Conversion Shares may be made
without registration under the Securities Act.
(j) Authorization,
Enforcement.
This
Agreement has been duly and validly authorized, executed and delivered on behalf
of such Buyer and is a valid and binding agreement of such Buyer enforceable
in
accordance with its terms, except as such enforceability may be limited by
general principles of equity or applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation and other similar laws relating to,
or
affecting generally, the enforcement of applicable creditors’ rights and
remedies.
(k) Receipt
of Documents.
Each
Buyer and his or its counsel has received and read in their entirety: (i) this
Agreement and each representation, warranty and covenant set forth herein;
(ii)
all due diligence and other information necessary to verify the accuracy and
completeness of such representations, warranties and covenants; and (iii) it
has
received answers to all questions each Buyer submitted to the Company regarding
an investment in the Company; and each Buyer has relied on the information
contained therein and has not been furnished any other documents, literature,
memorandum or prospectus.
(l) Due
Formation of Corporate and Other Buyers.
If a
Buyer is a corporation, trust, partnership or other entity that is not an
individual person, it has been formed and validly exists and has not been
organized for the specific purpose of purchasing the Convertible Debentures
and
is not prohibited from doing so.
(m) Trading
Activities.
The
Buyer’s trading activities with respect to the Company’s Common Stock shall be
in compliance with all applicable federal and state securities laws, rules
and
regulations and the rules and regulations of the principal market on which
the
Company’s Common Stock is listed or traded. Neither the Buyer nor its affiliates
has an open short position in the Common Stock of the Company and, except as
set
forth below, the Buyer shall not, and shall not cause any of its affiliates
under common control with the Buyer, to engage in any short sale as defined
in
any applicable SEC or National Association of Securities Dealers rules on any
hedging transactions with respect to the Common Stock until the earlier to
occur
of (i) the third anniversary of the Closing Date and (ii) the Buyer(s) no longer
own a principal balance of the Convertible Debentures. Without limiting the
foregoing, the Buyer agrees not to engage in any naked short transactions in
excess of the amount of shares owned (or an offsetting long position) by Buyer.
6
(n) No
Legal Advice From the Company.
Each
Buyer acknowledges that it had the opportunity to review this Agreement and
the
transactions contemplated by this Agreement with his or its own legal counsel
and investment and tax advisors. Each Buyer is relying solely on such counsel
and advisors and not on any statements or representations of the Company or
any
of its representatives or agents for legal, tax or investment advice with
respect to this investment, the transactions contemplated by this Agreement
or
the securities laws of any jurisdiction.
(o) No
Group Participation.Each
Buyer and its affiliates is not a member of any group, nor is any Buyer acting
in concert with any other person, including any other Buyer, with respect to
its
acquisition of the Convertible Debentures, Warrants, the Warrant Shares or
Conversion Shares.
(p) Each
Buyer understands, acknowledges and agrees that the Conversion Shares and the
Warrant Shares are “restricted securities” within the meaning of Rule 144
promulgated under the Act. Each Buyer further understands, acknowledges and
agrees that (a) such shares can and will only be resold by the Buyer pursuant
to
(i) an effective registration statement under the Act where the prospectus
delivery requirements are complied with or (ii) under an applicable exemption
from registration under the Act, and (b) it will not sell or otherwise dispose
of or transfer the Conversion Shares or the Warrant Shares or any interest
therein in a transaction that is part of a plan or scheme to avoid the
registration requirements of the Act.
(q) Each
Buyer understands that the Company, its officers, directors and agents are
relying on the representations of the Buyers set forth in this Article 2 in
order to determine compliance with applicable securities laws in connection
with
the sale and issuance of the shares to the Buyer.
3. REPRESENTATIONS
AND WARRANTIES OF THE COMPANY.
The
Company represents and warrants to each of the Buyers that:
(a) Organization
and Qualification.
The
Company and its subsidiaries are corporations duly organized and validly
existing in good standing under the laws of the jurisdiction in which they
are
incorporated, and have the requisite corporate power to own their properties
and
to carry on their business as now being conducted. Each of the Company and
its
subsidiaries is duly qualified as a foreign corporation to do business and
is in
good standing in every jurisdiction in which the nature of the business
conducted by it makes such qualification necessary, except to the extent that
the failure to be so qualified or be in good standing would not have a Material
Adverse Effect, as defined below.
(b) Authorization,
Enforcement, Compliance with Other Instruments.
(i) The Company has the requisite corporate power and authority to enter
into and perform this Agreement and all other documents necessary or desirable
to effect the transactions contemplated hereby (collectively the “Transaction
Documents”) and to issue the Convertible Debentures, the Warrants, the Warrant
Shares and the Conversion Shares in accordance with the terms hereof and
thereof, (ii) the execution and delivery of the Transaction Documents by the
7
Company
and the consummation by it of the transactions contemplated hereby and thereby,
including, without limitation, the issuance of the Convertible Debentures,
the
Warrants, the Warrant Shares and the Conversion Shares and the reservation
for
issuance and the issuance of the Conversion Shares and the Warrant Shares
issuable upon conversion or exercise thereof, have been duly authorized by
the
Company’s Board of Directors and no further consent or authorization is required
by the Company, its Board of Directors or its stockholders, (iii) the
Transaction Documents have been duly executed and delivered by the Company,
(iv)
the Transaction Documents constitute the valid and binding obligations of the
Company enforceable against the Company in accordance with their terms, except
as such enforceability may be limited by general principles of equity or
applicable bankruptcy, insolvency, reorganization, moratorium, liquidation
or
similar laws relating to, or affecting generally, the enforcement of creditors’
rights and remedies.
(c) Capitalization.
The
authorized capital stock of the Company consists of 75,000,000 shares of Common
Stock. After giving effect to the Recapitalization, the authorized capital
stock
of the Company will consist of 300,000,000 shares of Common Stock and 10,000,000
shares of Preferred Stock. As of the date hereof, the Company has 10,780,000
shares of Common Stock issued and outstanding (approximately 68,453,000 shares
of Common Stock, after giving effect to the Stock Split) and 0 shares of
preferred stock outstanding. All of such outstanding shares have been duly
authorized, validly issued and are fully paid and nonassessable. No shares
of
Common Stock are subject to preemptive rights or any other similar rights or
any
liens or encumbrances suffered or permitted by the Company. As of the date
of
this Agreement, (i) there are no outstanding options, warrants, scrip, rights
to
subscribe to, calls or commitments of any character whatsoever relating to,
or
securities or rights convertible into, any shares of capital stock of the
Company or any of its subsidiaries, or contracts, commitments, understandings
or
arrangements by which the Company or any of its subsidiaries is or may become
bound to issue additional shares of capital stock of the Company or any of
its
subsidiaries or options, warrants, scrip, rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities or rights
convertible into, any shares of capital stock of the Company or any of its
subsidiaries, (ii) there are no outstanding debt securities and (iii) there
are
no agreements or arrangements under which the Company or any of its subsidiaries
is obligated to register the sale of any of their securities under the
Securities Act (except in connection with the Merger and the PPO), and (iv)
there are no outstanding registration statements and there are no outstanding
comment letters from the SEC or any other regulatory agency. There are no
securities or instruments containing anti-dilution or similar provisions that
will be triggered by the issuance of the Convertible Debentures as described
in
this Agreement. The Convertible Debentures, Warrants, Warrant Shares and
Conversion Shares when issued, will be free and clear of all pledges, liens,
encumbrances and other restrictions (other than those arising under federal
or
state securities laws as a result of the issuance of the Convertible
Debentures). No co-sale right, right of first refusal or other similar right
exists with respect to the Convertible Debentures, Warrants, Warrant Shares
and
the Conversion Shares or the issuance and sale thereof. The issue and sale
of
the Convertible Debentures, Warrants, Warrant Shares and the Conversion Shares
will not result in a right of any holder of Company securities to adjust the
exercise, conversion, exchange or reset price under such securities. The Company
has made available to the Buyer true and correct copies of the Company’s
Certificate of Incorporation, as amended and as in effect on the date hereof
(the “Certificate of Incorporation”), and the Company’s By-laws, as in effect on
the date hereof (the “By-laws”), and the terms of all
8
securities
convertible into or exercisable for Common Stock and the material rights of
the
holders thereof in respect thereto other than stock options issued to employees
and consultants.
(d) Issuance
of Securities.
The
Convertible Debentures are duly authorized and, upon issuance in accordance
with
the terms hereof, shall be duly issued, fully paid and nonassessable, are free
from all taxes, liens and charges with respect to the issue thereof. The
Conversion Shares and the Warrant Shares have been duly authorized and reserved
for issuance, based on the initial conversion price. Upon conversion or exercise
in accordance with the Transaction Documents, the Conversion Shares and the
Warrant Shares will be duly issued, fully paid and nonassessable.
(e) No
Conflicts.
The
execution, delivery and performance of the Transaction Documents by the Company
and the consummation by the Company of the transactions contemplated hereby
will
not (i) result in a violation of the Certificate of Incorporation, any
certificate of designations of any outstanding series of preferred stock of
the
Company or the By-laws or (ii) conflict with or constitute a default (or an
event which with notice or lapse of time or both would become a default) under,
or give to others any rights of termination, amendment, acceleration or
cancellation of, any agreement, indenture or instrument to which the Company
or
any of its subsidiaries is a party, or result in a violation of any law, rule,
regulation, order, judgment or decree (including federal and state securities
laws and regulations and the rules and regulations of The National Association
of Securities Dealers Inc.’s OTC Bulletin Board (the “OTC”) on which the Common
Stock is quoted) applicable to the Company or any of its subsidiaries or by
which any property or asset of the Company or any of its subsidiaries is bound
or affected except for those which could not reasonably be expected to have
a
material adverse effect on the assets, business, condition (financial or
otherwise), results of operations or future prospects of the Company and its
subsidiaries taken as a whole (a “Material Adverse Effect”). Except those which
could not reasonably be expected to have a material adverse effect on the
Company, neither the Company nor its subsidiaries is in violation of any term
of
or in default under its Certificate of Incorporation or By-laws or their
organizational charter or by-laws, respectively, or any material contract,
agreement, mortgage, indebtedness, indenture, instrument, judgment, decree
or
order or any statute, rule or regulation applicable to the Company or its
subsidiaries. The business of the Company and its subsidiaries is not being
conducted, and shall not be conducted in violation of any material law,
ordinance, or regulation of any governmental entity. Except as specifically
contemplated by this Agreement and as required under the Securities Act and
any
applicable state securities laws, the Company is not required to obtain any
consent, authorization or order of, or make any filing or registration with,
any
court or governmental agency in order for it to execute, deliver or perform
any
of its obligations under or contemplated by this Agreement or the other
Transaction Documents in accordance with the terms hereof or thereof. All
consents, authorizations, orders, filings and registrations which the Company
is
required to obtain pursuant to the preceding sentence have been obtained or
effected on or prior to the date hereof. The Company and its subsidiaries are
unaware of any facts or circumstance, which might give rise to any of the
foregoing.
(f) Financial
Statements.
As of
their respective dates, the financial statements of the Company included in
the
Company’s public filings (the “SEC Filings”) with the SEC (the “Financial
Statements”) for the two most recently completed fiscal years and any subsequent
interim period complied as to form in all material respects with applicable
accounting
9
requirements
and the published rules and regulations of the SEC with respect thereto. Such
financial statements have been prepared in accordance with generally accepted
accounting principles, consistently applied, during the periods involved (except
(i) as may be otherwise indicated in such Financial Statements or the notes
thereto, or (ii) in the case of unaudited interim statements, to the extent
they
may exclude footnotes or may be condensed or summary statements) and, fairly
present in all material respects the financial position of the Company as of
the
dates thereof and the results of its operations and cash flows for the periods
then ended (subject, in the case of unaudited statements, to normal year-end
audit adjustments). No other information provided by or on behalf of the Company
to the Buyer including, without limitation, information referred to in this
Agreement, contains any untrue statement of a material fact or omits to state
any material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not
misleading.
(g) Absence
of Litigation.
There
is no action, suit, proceeding, inquiry or investigation before or by any court,
public board, government agency, self-regulatory organization or body pending
against or affecting the Company, the Common Stock or any of the Company’s
subsidiaries, wherein an unfavorable decision, ruling or finding would (i)
adversely affect the validity or enforceability of, or the authority or ability
of the Company to perform its obligations under, this Agreement or any of the
documents contemplated herein, or (ii) have a Material Adverse
Effect.
(h) Acknowledgment
Regarding Buyer’s Purchase of the Convertible Debentures.
The
Company acknowledges and agrees that each Buyer is acting solely in the capacity
of an arm’s length purchaser with respect to this Agreement and the transactions
contemplated hereby. The Company further acknowledges that each Buyer is not
acting as a financial advisor or fiduciary of the Company (or in any similar
capacity) with respect to this Agreement and the transactions contemplated
hereby and any advice given by such Buyer or any of their respective
representatives or agents in connection with this Agreement and the transactions
contemplated hereby is merely incidental to such Buyer’s purchase of the
Convertible Debentures, the Warrants, the Warrant Shares or the Conversion
Shares. The Company further represents to the Buyers that the Company’s decision
to enter into this Agreement has been based solely on the independent evaluation
by the Company and its representatives.
(i) No
General Solicitation.
Neither
the Company, nor any of its affiliates, nor any person acting on its or their
behalf, has engaged in any form of general solicitation or general advertising
(within the meaning of Regulation D) in connection with the offer or sale of
the
Convertible Debentures, the Warrants, the Warrant Shares or the Conversion
Shares.
(j) No
Integrated Offering.
Neither
the Company, nor any of its affiliates, nor any person acting on its or their
behalf has, directly or indirectly, made any offers or sales of any security
or
solicited any offers to buy any security, under circumstances that would require
registration of the Convertible Debentures, the Warrants, the Warrant Shares
or
the Conversion Shares under the Securities Act or cause this offering of the
Convertible Debentures, the Warrants, the Warrant Shares or the Conversion
Shares to be integrated with prior offerings by the Company for purposes of
the
Securities Act.
10
(k) Employee
Relations.
Neither
the Company nor any of its subsidiaries is involved in any labor dispute nor,
to
the knowledge of the Company or any of its subsidiaries, is any such dispute
threatened. None of the Company’s or its subsidiaries’ employees is a member of
a union and the Company and its subsidiaries believe that their relations with
their employees are good.
(l) Intellectual
Property Rights.
The
Company has no proprietary intellectual property.
(m) Environmental
Laws.
(i) Each
of
the Company and its subsidiaries has complied with all applicable Environmental
Laws (as defined below), except for violations of Environmental Laws that,
individually or in the aggregate, have not had and would not reasonably be
expected to have a Material Adverse Effect. There is no pending or, to the
knowledge of the Company, threatened civil or criminal litigation, written
notice of violation, formal administrative proceeding, or investigation, inquiry
or information request, relating to any Environmental Law involving the Company
or any subsidiary, except for litigation, notices of violations, formal
administrative proceedings or investigations, inquiries or information requests
that, individually or in the aggregate, have not had and would not reasonably
be
expected to have a Material Adverse Effect. For purposes of this Agreement,
“Environmental Law” means any federal, state or local law, statute, rule or
regulation or the common law relating to the environment or occupational health
and safety, including without limitation any statute, regulation, administrative
decision or order pertaining to (i) treatment, storage, disposal, generation
and
transportation of industrial, toxic or hazardous materials or substances or
solid or hazardous waste; (ii) air, water and noise pollution; (iii) groundwater
and soil contamination; (iv) the release or threatened release into the
environment of industrial, toxic or hazardous materials or substances, or solid
or hazardous waste, including without limitation emissions, discharges,
injections, spills, escapes or dumping of pollutants, contaminants or chemicals;
(v) the protection of wild life, marine life and wetlands, including without
limitation all endangered and threatened species; (vi) storage tanks, vessels,
containers, abandoned or discarded barrels, and other closed receptacles; (vii)
health and safety of employees and other persons; and (viii) manufacturing,
processing, using, distributing, treating, storing, disposing, transporting
or
handling of materials regulated under any law as pollutants, contaminants,
toxic
or hazardous materials or substances or oil or petroleum products or solid
or
hazardous waste. As used above, the terms “release” and “environment” shall have
the meaning set forth in the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended (“CERCLA”).
(ii) To
the
knowledge of the Company there is no material environmental liability with
respect to any solid or hazardous waste transporter or treatment, storage or
disposal facility that has been used by the Company or any
subsidiary.
(iii) The
Company and its subsidiaries (i) have received all permits, licenses or other
approvals required of them under applicable Environmental Laws to conduct their
respective businesses and (ii) are in compliance with all terms and conditions
of any such permit, license or approval.
11
(n) Title.
The
Company does not own or lease any real or personal property.
(o) Internal
Accounting Controls.
The
Company and each of its subsidiaries maintain a system of internal accounting
controls sufficient to provide reasonable assurance 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 conformity with generally accepted accounting principles and
to
maintain asset accountability, and (iii) the recorded amounts for assets is
compared with the existing assets at reasonable intervals and appropriate action
is taken with respect to any differences.
(p) No
Material Adverse Breaches, etc.
Except
as set forth in the SEC Filings, neither the Company nor any of its subsidiaries
is subject to any charter, corporate or other legal restriction, or any
judgment, decree, order, rule or regulation which in the judgment of the
Company’s officers has or is expected in the future to have a Material Adverse
Effect. Except as set forth in the SEC Filings, neither the Company nor any
of
its subsidiaries is in breach of any contract or agreement which breach, in
the
judgment of the Company’s officers, has or is expected to have a Material
Adverse Effect.
(q) Tax
Status.
The
Company and each of its subsidiaries has made and filed all federal and state
income and all other tax returns, reports and declarations required by any
jurisdiction to which it is subject and (unless and only to the extent that
the
Company and each of its subsidiaries has set aside on its books provisions
reasonably adequate for the payment of all unpaid and unreported taxes) has
paid
all taxes and other governmental assessments and charges that are material
in
amount, shown or determined to be due on such returns, reports and declarations,
except those being contested in good faith and has set aside on its books
provision reasonably adequate for the payment of all taxes for periods
subsequent to the periods to which such returns, reports or declarations apply.
There are no unpaid taxes in any material amount claimed to be due by the taxing
authority of any jurisdiction, and the officers of the Company know of no basis
for any such claim.
(r) Certain
Transactions.
Except
as set forth in the SEC Filings, and except for arm’s length transactions
pursuant to which the Company makes payments in the ordinary course of business
upon terms no less favorable than the Company could obtain from third parties,
none of the officers, directors, or employees of the Company is presently a
party to any transaction with the Company (other than for services as employees,
officers and directors), including any contract, agreement or other arrangement
providing for the furnishing of services to or by, providing for rental of
real
or personal property to or from, or otherwise requiring payments to or from
any
officer, director or such employee or, to the knowledge of the Company, any
corporation, partnership, trust or other entity in which any officer, director,
or any such employee has a substantial interest or is an officer, director,
trustee or partner.
(s) Fees
and Rights of First Refusal.
The
Company is not obligated to offer the securities offered hereunder on a right
of
first refusal basis or otherwise to any third parties including, but not limited
to, current or former stockholders of the Company, underwriters, brokers, agents
or other third parties.
12
(t) Reliance.
The
Company acknowledges that the Buyers are relying on the representations and
warranties made by the Company hereunder and that such representations and
warranties are a material inducement to the Buyer purchasing the Convertible
Debentures. The Company further acknowledges that without such representations
and warranties of the Company made hereunder, the Buyers would not enter into
this Agreement.
(u) Anti-Takeover
Provision.
The
Company and its Board of Directors have taken all necessary action, if any,
in
order to render inapplicable any control share acquisition, business
combination, poison pill (including any distribution under a rights agreement)
or other similar anti-takeover provision under the Company’s certificate of
incorporation (or similar charter documents) or the laws of its jurisdiction
of
incorporation that is or could become applicable to the Buyers as a result
of
the Buyers and the Company fulfilling their obligations or exercising their
rights under this Agreement, including without limitation the Company’s issuance
of the Convertible Debentures, Warrants, Warrant Shares and Conversion Shares
and the Buyer’s ownership thereof.
4. COVENANTS.
(a) Best
Efforts.
Each
party shall use its best efforts timely to satisfy each of the conditions to
be
satisfied by it as provided in Sections 5 and 6 of this Agreement.
(b) Form
D.
The
Company agrees to file a Form D with respect to the Convertible Debentures
as
required under Regulation D. The Company shall, on or before the Closing Date,
take such action as the Company shall reasonably determine is necessary to
qualify the Convertible Debentures, Warrants, the Warrant Shares and Conversion
Shares, or obtain an exemption for the Convertible Debentures, Warrants, the
Warrant Shares and Conversion Shares for sale to the Buyers at the Closing
pursuant to this Agreement under applicable securities or “Blue Sky” laws of the
states of the United States, and shall provide evidence of any such action
so
taken to the Buyers on or prior to the Closing Date.
(c) Reporting
Status.
Until
the earlier of (i) the date as of which the Buyer(s) may sell all of the
Warrants, the Warrant Shares, and Conversion Shares without restriction pursuant
to Rule 144(k) promulgated under the Securities Act (or successor thereto),
or
(ii) the date on which (A) the Buyer(s) shall have sold all the Warrants, the
Warrant Shares and Conversion Shares and (B) none of the Convertible Debentures
are outstanding, the Company shall file in a timely manner all reports required
to be filed with the SEC pursuant to the Securities Exchange Act of 1934, as
amended (the “Exchange Act”) and the regulations of the SEC thereunder, and the
Company shall not terminate its status as an issuer required to file reports
under the Exchange Act even if the Exchange Act or the rules and regulations
thereunder would otherwise permit such termination.
(d) Use
of
Proceeds.
The
Company shall use the proceeds from the sale of the Convertible Debentures
to
make the Bridge Loan to Xxxxxxxx.
(e) Reservation
of Shares.
The
Company shall take all action reasonably necessary to at all times have
authorized, and reserved for the purpose of issuance, that number of shares
of
Common Stock equal to equal to the sum of (i) the number of shares of
13
Common
Stock into which the Convertible Debentures are convertible from time to time
based upon a conversion price (the “Conversion Price”) of $0.50 per Unit, plus
(ii) the number of shares of Common Stock for which the Warrants are exercisable
from time to time based upon an exercise price (the “Exercise Price”) per whole
Warrant of $0.75 per share.
(f) Listings
or Quotation.
The
Company shall use its best efforts to maintain the listing or quotation of
its
Common Stock upon the OTCBB.
(g) Corporate
Existence.
So long
as any of the Convertible Debentures remain outstanding, the Company shall
not
directly or indirectly consummate any merger, reorganization, restructuring,
reverse stock split consolidation, sale of all or substantially all of the
Company’s assets or any similar transaction or related transactions (each such
transaction, an “Organizational Change”), other than the Recapitalization and
the Stock Split, unless, prior to the consummation of an Organizational Change,
the Company obtains the written consent of each Buyer. In any such case, the
Company will make appropriate provision with respect to such holders’ rights and
interests to insure that the provisions of this Section 4(i) will thereafter
be
applicable to the Convertible Debentures. The provisions of this Section 4(g)
shall be inapplicable with respect to any Organizational Change, including
the
Recapitalization and the Stock Split, effected in connection with the
Merger.
(h) Resales
Absent Effective Registration Statement.
Each of the Buyers understand and acknowledge that (i) this Agreement and the
agreements contemplated hereby may require the Company to issue and deliver
Conversion Shares or Warrant Shares to the Buyers with legend restricting their
transferability under the Securities Act, and (ii) it is aware that resales
of
such Conversion Shares or Warrant Shares may not be made unless, at the time
of
resale, there is an effective registration statement under the Securities Act
covering such Buyer’s resale(s) or an applicable exemption from registration.
5. CONDITIONS
TO THE COMPANY’S OBLIGATION TO SELL.
The
obligation of the Company hereunder to issue and sell the Convertible Debentures
to the Buyer(s) 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 the Company’s sole benefit and may be waived by the Company
at any time in its sole discretion:
(a) Each
Buyer shall have executed the Transaction Documents and delivered them to the
Company.
(b) The
Buyer(s) shall have delivered to the Escrow Agent the Purchase Price for
Convertible Debentures in respective amounts as set forth next to each Buyer
as
outlined on Schedule I attached hereto and the Escrow Agent shall have delivered
the net proceeds to the Company by wire transfer of immediately available U.S.
funds pursuant to the wire instructions provided by the Company; it being
understood that the sale of the Convertible Debentures shall not close unless
a
minimum of $420,000 principal amount of Convertible Debentures is subscribed
for.
(c) The
representations and warranties of the Buyer(s) contained in this Agreement
shall
be true and correct in all material respects as
14
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 the
Buyer(s) 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 the Buyer(s) at or prior to the Closing
Date.
6. CONDITIONS
TO THE BUYER’S OBLIGATION TO PURCHASE.
The
obligation of the Buyer(s) hereunder to purchase the Convertible Debentures
at
the Closing is subject to the satisfaction, at or before the Closing Date,
of
each of the following conditions:
(i) The
Company shall have executed the Transaction Documents and delivered the same
to
the Buyer(s).
(ii) The
representations and warranties of the Company contained in this Agreement shall
be true and correct in all material respects (except to the extent that any
of
such representations and warranties is already qualified as to materiality
in
Section 3 above, in which case, such representations and warranties shall be
true and correct without further qualification) 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 the Company 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 the Company at or prior to the Closing Date. If requested
by
the Buyer, the Buyer shall have received a certificate, executed by the
President of the Company, dated as of the Closing Date, to the foregoing effect
and as to such other matters as may be reasonably requested by the Buyer
including, without limitation an update as of the Closing Date regarding the
representation contained in Section 3(c) above.
(iii) The
Company shall have executed and delivered to the Buyer(s) the Convertible
Debentures in the respective amounts set forth opposite each Buyer(s) name
on
Schedule I attached hereto.
(iv) The
Company shall have provided to the Buyer a certificate of good standing from
the
Secretary of State from the state in which the Company is
incorporated.
(v) The
Company shall have reserved out of its authorized and unissued Common Stock,
solely for the purpose of effecting the conversion of the Convertible
Debentures, sufficient shares of Common Stock to effect the conversion of all
of
the Convertible Debentures’ and the exercise of all Warrants.
7. INDEMNIFICATION.
(a) In
consideration of the Buyer’s execution and delivery of this Agreement and
acquiring the Convertible Debentures, the Warrants and the Conversion Shares
hereunder, and in addition to all of the Company’s other obligations under this
Agreement, the Company shall defend, protect, indemnify and hold harmless the
Buyer(s) and each other holder of the Convertible Debentures, the Warrants
and
the Conversion Shares, and all of their officers,
15
directors,
employees and agents (including, without limitation, those retained in
connection with the transactions contemplated by this Agreement) (collectively,
the “Buyer Indemnitees”) from and against any and all actions, causes of action,
suits, claims, losses, costs, penalties, fees, liabilities and damages, and
expenses in connection therewith (irrespective of whether any such Buyer
Indemnitee is a party to the action for which indemnification hereunder is
sought), and including reasonable attorneys’ fees and disbursements (the
“Indemnified Liabilities”), incurred by the Buyer Indemnitees or any of them as
a result of, or arising out of, or relating to (a) any material
misrepresentation or material breach of any representation or warranty made
by
the Company in the Transaction Documents, (b) any material breach of any
covenant, agreement or obligation of the Company contained in the Transaction
Documents, or (c) any cause of action, suit or claim brought or made against
such Indemnitee and arising out of or resulting from the execution, delivery,
performance or enforcement of this Agreement or any other Transaction Document
executed pursuant hereto by any of the Indemnities. To the extent that the
foregoing undertaking by the Company may be unenforceable for any reason, the
Company shall make the maximum contribution to the payment and satisfaction
of
each of the Indemnified Liabilities, which is permissible under applicable
law.
(b) In
consideration of the Company’s execution and delivery of this Agreement, and in
addition to all of the Buyer’s other obligations under this Agreement, the Buyer
shall defend, protect, indemnify and hold harmless the Company and all of its
officers, directors, employees and agents (including, without limitation, those
retained in connection with the transactions contemplated by this Agreement)
(collectively, the “Company Indemnitees”) from and against any and all
Indemnified Liabilities incurred by the Company Indemnitees or any of them
as a
result of, or arising out of, or relating to (a) any misrepresentation or breach
of any representation or warranty made by the Buyer(s) in this Agreement, or
any
other Transaction Document executed by the Buyer, (b) any breach of any
covenant, agreement or obligation of the Buyer(s) contained in this Agreement,
or any other Transaction Document executed by the Buyer, or (c) any cause of
action, suit or claim brought or made against such Company Indemnitee based
on
material misrepresentations or due to a material breach and arising out of
or
resulting from the execution, delivery, performance or enforcement of the
Transaction Docuemtns by any of the Buyers. To the extent that the foregoing
undertaking by each Buyer may be unenforceable for any reason, each Buyer shall
make the maximum contribution to the payment and satisfaction of each of the
Indemnified Liabilities, which is permissible under applicable law.
8. ESCROW
(a) On
or
before the date of the Closing, each Buyer shall have delivered to the Escrow
Agent its portion of the purchase price for the Convertible Debentures (the
aggregate of purchase price referred to as the “Escrowed Funds”) and the
Transaction Documents. The parties shall ensure that each Buyer’s portion of the
Escrowed Funds will be delivered to the Escrow Agent pursuant to the following
wire transfer instructions:
16
BANK:
CITIBANK, N.A., 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
XXX:
000000000
BENEFICIARY:
Gottbetter & Partners, LLP, Attorney Trust Account
ACCOUNT:
00000000
REFERENCE:
“Arbutus Resources, Inc. - [insert Buyer’s name]”
Gottbetter
& Partners Accounting Contact: Xxxxxxx XxXxxxx; telephone: (000) 000-0000;
email: xxx@xxxxxxxxxx.xxx.
(b) The
Company intends that the Transaction Documents and the Escrowed Funds shall
be
held in escrow by the Escrow Agent pursuant to this Agreement for their benefit
and for the benefit of the Buyers as set forth herein.
(c) The
Escrow Agent shall hold and release the Transaction Documents and the Escrowed
Funds only in accordance with the terms and conditions of this Article
8.
(d) Subject
to the provisions of Section 8(f), the Escrow Agent shall release the
Transaction Documents and Escrowed Funds as follows:
(i) On
the
Closing Date, the Escrow Agent will release the Transaction Documents to the
Company and the Escrowed Funds to or for the benefit of the Company except
that
the legal fees and expenses owed to Gottbetter & Partners, LLP as counsel to
the Company shall be deducted from the Escrowed Funds and released to Gottbetter
& Partners, LLP.
(ii) All
funds
to be delivered to the Company shall be delivered pursuant to written
instructions substantially in the form of Exhibit A hereto (the “Instructions”)
signed by the Company.
(iii) Notwithstanding
the above, upon receipt by the Escrow Agent of the Instructions, the Escrow
Agent shall deliver the Transaction Documents and the Escrowed Funds in
accordance with the terms of the Instructions; provided,
however,
that in
the event of any conflict between such Instructions and the provisions of
Section 8(d)(i) of this Agreement, the provisions of Section 8(d)(i) shall
control.
(iv) Notwithstanding
the above, upon receipt by the Escrow Agent of a final and non-appealable
judgment, order, decree or award of a court of competent jurisdiction (a “Court
Order”), the Escrow Agent shall deliver the Transaction Documents and the
Escrowed Funds in accordance with the Court Order. Any Court Order shall be
accompanied by an opinion of counsel for the party presenting the Court Order
to
the Escrow Agent (which opinion shall be satisfactory to the Escrow Agent)
to
the effect that the court issuing the Court Order has competent jurisdiction
and
that the Court Order is final and non-appealable.
17
(v) In
the
event Transaction Documents for an aggregate purchase price of not less than
the
Minimum of $420,000 and corresponding Escrowed Funds for an aggregate of not
less than such Minimum of $420,000 have not been received by the Escrow Agent
on
or before the Termination Date, then the Escrow Agent shall release the
Transaction Documents and the Escrowed Funds to the Buyers as soon as reasonably
possible.
(vi) The
Company acknowledges that the only terms and conditions upon which the
Transaction Documents and Escrowed Funds are to be released are set forth in
this Article 8. The Company reaffirms its agreement to abide by the terms and
conditions of this Agreement with respect to the release of the Transaction
Documents and the Escrowed Funds. Any dispute with respect to the release of
the
Transaction Documents or Escrowed Funds shall be resolved pursuant to Section
8(f) or by agreement between the parties.
(e) The
Escrow Agent’s duties and responsibilities shall be subject to the following
terms and conditions:
(i) The
Company and the Buyers acknowledge and agree that the Escrow Agent (i) shall
not
be responsible for or bound by, and shall not be required to inquire into
whether either the Company or the Buyers are entitled to receipt of the
Transaction Documents or Escrowed Funds pursuant to, any other agreement or
otherwise; (ii) shall be obligated only for the performance of such duties
as
are specifically assumed by the Escrow Agent pursuant to this Agreement; (iii)
may rely on and shall be protected in acting or refraining from acting upon
any
written notice, instruction, instrument, statement, request or document
furnished to it hereunder and believed by the Escrow Agent in good faith to
be
genuine and to have been signed or presented by the proper person or party,
without being required to determine the authenticity or correctness of any
fact
stated therein or the propriety or validity or the service thereof; (iv) may
assume that any person believed by the Escrow Agent in good faith to be
authorized to give notice or make any statement or execute any document in
connection with the provisions hereof is so authorized; (v) shall not be under
any duty to give the property held by Escrow Agent hereunder any greater degree
of care than the Escrow Agent gives its own similar property, but in no event
less than a reasonable amount of care; and (vi) may consult with counsel
satisfactory to the Escrow Agent, the opinion of such counsel to be full and
complete authorization and protection in respect of any action taken, suffered
or omitted by the Escrow Agent hereunder in good faith and in accordance with
the opinion of such counsel.
(ii) The
Company and the buyers acknowledge that the Escrow Agent is acting solely as
a
stakeholder at their request and that the Escrow Agent shall not be liable
for
any action taken by Escrow Agent in good faith and believed by the Escrow Agent
to be authorized or within the rights or powers conferred upon the Escrow Agent
by this Agreement. The Company agrees to indemnify and hold harmless the Escrow
Agent and any of the Escrow Agent’s partners, employees, agents, and
representatives for any action taken or omitted to be taken by the Escrow Agent
or any of them hereunder, including the fees of outside counsel and other costs
and expenses of defending itself against any claim or liability under this
Agreement, except in the case of gross negligence or willful misconduct on
the
part of the Escrow Agent committed in its capacity as Escrow Agent under this
Agreement. The Escrow Agent shall owe a duty only to the Company and the Buyers
under this Agreement and to no other person.
18
(iii) The
Company agrees to reimburse the Escrow Agent for outside counsel fees, to the
extent authorized hereunder and incurred in connection with the performance
of
its duties and responsibilities hereunder.
(iv) The
Escrow Agent may at any time resign as Escrow Agent hereunder by giving five
(5)
days prior written notice of resignation to the Company. Prior to the effective
date of the resignation as specified in such notice, the Company will issue
to
the Escrow Agent an Instruction authorizing delivery of the Transaction
Documents and the Escrowed Funds to a substitute escrow agent selected by the
Company. If no successor escrow agent is named by the Company, the Escrow Agent
may apply to a court of competent jurisdiction in the State of New York for
appointment of a successor escrow agent, and to deposit the Transaction
Documents and Escrowed Funds with the clerk of any such court.
(v) The
Escrow Agent does not have and will not have any interest in the Transaction
Documents or the Escrowed Funds, but is serving only as escrow agent in
connection therewith, having only possession thereof.
(vi) This
Agreement sets forth exclusively the duties of the Escrow Agent with respect
to
any and all matters pertinent thereto and no implied duties or obligations
shall
be read into this Agreement.
(vii) The
provisions of this Section 8(e) shall survive the resignation of the Escrow
Agent or the termination of this Agreement.
(f) Resolution
of disputes arising under this Article 8 shall be subject to the following
terms
and conditions:
(i) If
any
dispute shall arise with respect to the delivery, ownership, right of possession
or disposition of the Transaction Documents or the Escrowed Funds, or if the
Escrow Agent shall in good faith be uncertain as to its duties or rights
hereunder, the Escrow Agent shall be authorized, without liability to anyone,
to
(i) refrain from taking any action other than to continue to hold the
Transaction Documents or the Escrowed Funds pending receipt of an Instruction
from the Company, or (ii) deposit the Transaction Documents and Escrowed Funds
with any court of competent jurisdiction in the State of New York, in which
event the Escrow Agent shall give written notice thereof to the Company and
shall thereupon be relieved and discharged from all further obligations pursuant
to this Agreement. The Escrow Agent may, but shall be under no duty to,
institute or defend any legal proceedings which relate to the Transaction
Documents or the Escrowed Funds. The Escrow Agent shall have the right to retain
counsel if it becomes involved in any disagreement, dispute or litigation on
account of this Agreement or otherwise determines that it is necessary to
consult counsel.
(ii) The
Escrow Agent is hereby expressly authorized to comply with and obey any Court
Order. In case the Escrow Agent obeys or complies with a Court Order, the Escrow
Agent shall not be liable to the Buyers, the Company or to any other person,
firm, corporation or entity by reason of such compliance.
(g) The
escrow established hereby shall terminate upon the release of all of the
Transaction Documents and delivery to the Company of the Escrowed Funds in
19
accordance
with this Article 8, or at any time upon the agreement in writing of the Buyers
and the Company.
(h) The
Escrowed Funds shall neither be held in an interest bearing account nor will
interest be payable in connection therewith. In the event the Escrowed Funds
are
deposited in an interest bearing account, each Buyer shall be entitled to
receive its pro
rata
portion
of any accrued interest thereon, but only if the Escrow Agent receives from
such
Buyer the Buyer’s United States taxpayer identification number and other
requested information and forms.
9. GOVERNING
LAW: MISCELLANEOUS.
(a) Governing
Law.
This
Agreement shall be governed by and interpreted in accordance with the laws
of
the State of New York without regard to the principles of conflict of laws.
The
parties further agree that any action between them shall be heard exclusively
in
federal or state court sitting in the New York County, New York, and expressly
consent to the jurisdiction and venue of the Supreme Court of New York, sitting
in New York County and the United States District Court for the Southern
District of New York for the adjudication of any civil action asserted pursuant
to this Paragraph.
(b) Counterparts.
This
Agreement may be executed in two or more identical counterparts, all of which
shall be considered one and the same agreement and shall become effective when
counterparts have been signed by each party and delivered to the other party.
In
the event any signature page is delivered by facsimile transmission, the party
using such means of delivery shall cause four (4) additional original executed
signature pages to be physically delivered to the other party within five (5)
days of the execution and delivery hereof.
(c) Headings.
The
headings of this Agreement are for convenience of reference and shall not form
part of, or affect the interpretation of, this Agreement.
(d) Severability.
If any
provision of this Agreement shall be invalid or unenforceable in any
jurisdiction, such invalidity or unenforceability shall not affect the validity
or enforceability of the remainder of this Agreement in that jurisdiction or
the
validity or enforceability of any provision of this Agreement in any other
jurisdiction.
(e) Entire
Agreement, Amendments.
This
Agreement supersedes all other prior oral or written agreements between the
Buyer(s), the Company, their affiliates and persons acting on their behalf
with
respect to the matters discussed herein, and 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 the Company nor any Buyer 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, consents, waivers, or other communications required or permitted to
be
given under the terms of this Agreement must be in writing and will be deemed
to
have been delivered (i) upon receipt, when delivered personally; (ii) upon
20
confirmation
of receipt, when sent by facsimile; (iii) upon receipt when sent by U.S.
certified mail, return receipt requested, or (iv) one (1) day after deposit
with
a nationally recognized overnight delivery service, in each case properly
addressed to the party to receive the same. The addresses and facsimile numbers
for such communications shall be:
If
to the Company, to:
|
Xxxxxxxx
Uranium Corp.
|
0000
Xxxxxxx Xxx
|
|
Xxxxxx
Xxxxx, XX 00000
|
|
Attention:
Xxxxx
Xxxxxx
|
|
Telephone:
(000)
000-0000
|
|
Facsimile:
(000)
000-0000
|
|
|
|
With
a copy to (or for notices to
the
Escrow Agent):
|
Gottbetter
& Partners, LLP
|
000
Xxxxxxx Xxxxxx, 00xx
Xxxxx
|
|
Xxx
Xxxx, Xxx Xxxx 00000
|
|
Xxxx
X. Xxxxxxxxxx, Esq.
|
|
Telephone:
000-000-0000
|
|
Facsimile:
000-000-0000
|
If
to the
Buyer(s), to its address and facsimile number on Schedule I, with copies to
the
Buyer’s counsel as set forth on Schedule I. Each party shall provide five (5)
days’ prior written notice to the other party of any change in address or
facsimile number.
(g) Successors
and Assigns.
This
Agreement shall be binding upon and inure to the benefit of the parties and
their respective successors and assigns. Neither the Company nor any Buyer
shall
assign this Agreement or any rights or obligations hereunder without the prior
written consent of the other party hereto.
(h) No
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) Survival.
Unless
this Agreement is terminated under Section 9(l), the representations and
warranties of the Company and the Buyer(s) contained in Sections 2 and 3, the
agreements and covenants set forth in Sections 4, 5 and 9, and the
indemnification provisions set forth in Section 7, shall survive the Closing
for
a period of two (2) years following the date on which the Convertible Debentures
are converted in full. The Buyer(s) shall be responsible only for its own
representations, warranties, agreements and covenants hereunder.
(j) Publicity.
The
Company and the Buyer(s) shall have the right to approve, before issuance any
press release or any other public statement with respect to the transactions
contemplated hereby made by any party; provided, however, that the Company
shall
be entitled, without the prior approval of the Buyer(s), to issue any press
release or other public disclosure with respect to such transactions required
under applicable securities or other laws or regulations (the Company shall
use
its best efforts to consult the Buyer(s) in connection with any
21
such
press release or other public disclosure prior to its release and Buyer(s)
shall
be provided with a copy thereof upon release thereof).
(k) 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.
(l) Termination.
In the
event that the Closing shall not have occurred with respect to the Buyers on
or
before five (5) business days from the date hereof due to the Company’s or the
Buyer’s failure to satisfy the conditions set forth in Sections 5 and 6 above
(and the non-breaching party’s failure to waive such unsatisfied condition(s)),
the non-breaching party shall have the option to terminate this Agreement with
respect to such breaching party at the close of business on such date without
liability of any party to any other party.
(m) 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.
(n) Remedies.
In
addition to being entitled to exercise all rights provided herein or granted
by
law, including recovery of damages, the Buyer and the Company will be entitled
to specific performance under the Agreement. The parties agree that monetary
damages may not be adequate compensation for any loss incurred by reason of
any
breach of obligations described in the foregoing sentence and hereby agree
to
waive in any action for specific performance of any such obligation the defense
that a remedy at law would be adequate.
[REMAINDER
PAGE INTENTIONALLY LEFT BLANK]
22
IN
WITNESS WHEREOF,
the
Buyers and the Company have caused this Securities Purchase Agreement to be
duly
executed as of the date first written above.
ESCROW
AGENT (with respect to Article 8 only)
|
COMPANY:
|
Gottbetter
& Partners, LLP
|
Xxxxxxxx
Uranium Corp.
|
By:/s/
Xxxx Xxxxxxxxxx
|
By:
/s/ Xxxxx Xxxxxx
|
Name: Xxxx
X. Xxxxxxxxxx
|
Name: Xxxxx
Xxxxxx
|
Title:
Managing Partner
|
Title: Chief
Executive Officer
|
23
SCHEDULE
I
SCHEDULE
OF BUYERS
Name
|
Signature
|
Address/Facsimile
Number
of Buyer
|
Amount
of Subscription
|
By:__________________________
|
|||
Name:
|
|||
Office:
|
|||
By:___________________________
|
|||
Name:
|
|||
Office:
|
|||
By:____________________________
|
|||
Name:
|
|||
Office:
|
|||
By:_____________________________
|
|||
Name:
|
|||
Office
|
1
EXHIBIT
A
Form
of
Instructions
Xx.
Xxxx
Xxxxxxxxxx
Gottbetter
& Partners, LLP
000
Xxxxxxx Xxx.
Xxx
Xxxx,
Xxx Xxxx 00000-0000
P:
212-400-6900
F:
000-000-0000
Re: Arbutus
Resources, Inc.
Dear
Xx.
Xxxxxxxxxx:
We
hereby
confirm that with respect to Article 8 of the Securities Purchase Agreement
entered into on June , 2007 among Arbutus Resources, Inc., the Buyers and
Gottbetter & Partners (the “Agreement”), LLP, the closing of the Debenture
PPO (as defined in the Agreement) has taken place. All conditions for the
release of the Transaction Documents and the Escrowed Funds have therefore
been
met. We authorize the release of the Transaction Documents and Escrowed Funds
to
the Company.
ARBUTUS
RESOURCES, INC.
By:______________________________
Name: Xxxxx
Xxxxxx
Title: Chief
Executive Officer
2