SECURITIES PURCHASE AGREEMENT
THIS AGREEMENT dated as of the
7th day of October 2009 (the “Agreement”) between
TANGIERS INVESTORS, LP,
a limited partnership (the “Investor”), and NORTH BAY RESOURCES, INC., a
corporation organized and existing under the laws of the State of Delaware (the
“Company”).
WHEREAS, the parties desire
that, upon the terms and subject to the conditions contained herein, the Company
shall issue and sell to the Investor, as provided herein, and the Investor shall
purchase from the Company up to Five Million
Dollars ($5,000,000) of the Company’s common stock, par value $0.001 per
share (the “Common
Stock”); and
WHEREAS, such investments will
be made in reliance upon the provisions of Regulation D (“Regulation D”) of the
Securities Act of 1933, as amended, and the regulations promulgated thereunder
(the “Securities
Act”), and or upon such other exemption from the registration
requirements of the Securities Act as may be available with respect to any or
all of the investments to be made hereunder.
NOW, THEREFORE, the parties hereto
agree as follows:
ARTICLE
I.
Certain
Definitions
Section 1.1. “Advance” shall mean the portion of the
Commitment Amount requested by the Company in the Advance
Notice.
Section 1.2. “Advance
Date” shall mean the first
(1st) Trading Day after expiration of the
applicable Pricing Period for each Advance.
Section 1.3. “Advance
Notice” shall mean a
written notice in the form of Exhibit
A attached hereto to the
Investor executed by an officer of the Company and setting forth the Advance
amount that the Company requests from the Investor.
Section 1.4. “Advance
Notice Date” shall mean
each date the Company delivers (in accordance with Section 2.2(b) of this
Agreement) to the Investor an Advance Notice requiring the Investor to advance
funds to the Company, subject to the terms of this Agreement. No Advance Notice
Date shall be less than ten (10) Trading Days after the prior Advance Notice
Date.
Section 1.5. “Bid
Price” shall mean, on any
date, the closing bid price (as reported by Bloomberg L.P.) of the Common Stock
on the Principal Market or if the Common Stock is not traded on a Principal
Market, the highest reported bid price for the Common Stock, as furnished by the
National Association of Securities Dealers, Inc.
Section 1.6. “Closing” shall mean one of the closings of a
purchase and sale of Common Stock pursuant to Section 2.3.
Section 1.7. “Commitment
Amount” shall mean the
aggregate amount of up to Five Million Dollars ($5,000,000) which the Investor
has agreed to provide to the Company in order to purchase the Company’s Common
Stock pursuant to the terms and conditions of this
Agreement.
Section 1.8. “Commitment
Period” shall mean the
period commencing on the Effective Date, and expiring on the earliest to occur
of (x) the date on which the Investor shall have made payment of Advances
pursuant to this Agreement in the aggregate amount of the Commitment Amount, (y)
the date this Agreement is terminated pursuant to Section 10.2 or (z) the date
occurring twenty-four (24) months after the Effective Date or thirty six (36)
months after the Effective Date if twenty-four (24) months after the Effective
Date the Company files either an amendment to the then effective registration
statement or a new registration statement is declared
effective.
Section 1.9. “Common
Stock” shall mean the
Company’s common stock, par value $0.001per share whether issued to the Investor
directly or underlying warrants issued to the Investor.
Section 1.10. “Condition
Satisfaction Date” shall
have the meaning set forth in Section 7.2.
Section 1.11. “Damages” shall mean any loss, claim, damage,
liability, costs and expenses (including, without limitation, reasonable
attorney’s fees and disbursements and costs and expenses of expert witnesses and
investigation).
Section 1.12. “Effective
Date” shall mean the date
on which the SEC first declares effective a Registration Statement registering
the resale of the Registrable Securities as set forth in Section
7.2(a).
Section 1.13. “Exchange
Act” shall mean the
Securities Exchange Act of 1934, as amended, and the rules and regulations
promulgated thereunder.
Section 1.14. “Material
Adverse Effect” shall mean
any condition, circumstance, or situation that would prohibit or otherwise
materially interfere with the ability of the Company to enter into and perform
any of its obligations under this Agreement or the Registration Rights Agreement
in any material respect.
Section 1.15. “Market
Price” shall mean the
lowest daily volume weighted average price of the Common Stock during the
Pricing Period.
Section
1.16. “Maximum Advance
Amount” The maximum dollar amount of each Advance will be
equal to the average daily trading volume in dollar amount during the ten (10)
trading days preceding the Advance Date. No Advance will be made in an amount
lower than the Minimum Advance Amount (defined below) or higher than One Hundred
Thousand Dollars ($100,000).
Section
1.17. “Minimum Advance
Amount” shall be Five Thousand Dollars ($5,000) per Advance
Notice.
Section 1.18. “NASD” shall mean the National Association
of Securities Dealers, Inc.
Section 1.19. “Person” shall mean an individual, a
corporation, a partnership, an association, a trust or other entity or
organization, including a government or political subdivision or an agency or
instrumentality thereof.
Section 1.20. “Pricing
Period” shall mean the
five (5) consecutive Trading Days after the Advance Notice Date subject to the
terms and conditions provided herein.
Section 1.21. “Principal
Market” shall mean the
Nasdaq Global Select Market, the Nasdaq Global Market, the Nasdaq Capital
Market, the American Stock Exchange, the OTC Bulletin Board or the New York
Stock Exchange, whichever is at the time the principal trading exchange or
market for the Common Stock.
Section 1.22. “Purchase
Price” shall be set at
ninety percent (90%) of the Market Price during the Pricing
Period.
Section 1.23. “Registrable
Securities” shall mean the
shares of Common Stock to be issued hereunder and underlying any
warrants that may be issued by the Company to the Investor from time
to time pursuant to this Agreement; (i) in respect of which the
Registration Statement has not been declared effective by the SEC, (ii) which
have not been sold under circumstances meeting all of the applicable conditions
of Rule 144 (or any similar provision then in force) under the Securities Act
(“Rule
144”) or (iii) which have
not been otherwise transferred to a holder who may trade such shares without
restriction under the Securities Act, and the Company has delivered a new
certificate or other evidence of ownership for such securities not bearing a
restrictive legend.
Section 1.24. “Registration
Rights Agreement” shall
mean the Registration Rights Agreement dated the date hereof, regarding the
filing of the Registration Statement for the resale of the Registrable
Securities, entered into between the Company and the
Investor.
Section 1.25. “Registration
Statement” shall mean a
registration statement on Form S-1 (if use of such form is then available to the
Company pursuant to the rules of the SEC and, if not, on such other form
promulgated by the SEC for which the Company then qualifies and which counsel
for the Company shall deem appropriate, and which form shall be available for
the resale of the Registrable Securities to be registered thereunder in
accordance with the provisions of this Agreement and the Registration Rights
Agreement, and in accordance with the intended method of distribution of such
securities), for the registration of the resale by the Investor of the
Registrable Securities under the Securities Act.
Section 1.26. “Regulation
D” shall have the meaning
set forth in the recitals of this Agreement.
Section 1.27. “SEC” shall mean the United States
Securities and Exchange Commission.
Section 1.28. “Securities
Act” shall have the
meaning set forth in the recitals of this Agreement.
Section 1.29. “SEC
Documents” shall mean
Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on
Form 8-K and Proxy Statements of the Company as supplemented to the date hereof,
filed by the Company for a period of at least twelve (12) months immediately
preceding the date hereof or the Advance Date, as the case may be, until such
time as the Company no longer has an obligation to maintain the effectiveness of
a Registration Statement as set forth in the Registration Rights
Agreement.
Section 1.30. “Trading
Day” shall mean any day
during which the New York Stock Exchange shall be open for
business.
Section 1.31. “VWAP” shall mean the volume weighted
average price of the Company’s Common Stock as quoted by Bloomberg,
LP.
ARTICLE
II.
Advances
Section 2.1. Advances.
Subject
to the terms and conditions of this Agreement (including, without limitation,
the provisions of Article VII hereof), the Company, at its sole and exclusive
option, may issue and sell to the Investor, and the Investor shall purchase from
the Company, shares of the Company’s Common Stock by the delivery, in the
Company’s sole discretion, of Advance Notices. The number of shares of Common
Stock that the Investor shall purchase pursuant to each Advance shall be
determined by dividing the amount of the Advance by the Purchase Price. No
fractional shares shall be issued. Fractional shares shall be rounded to the
next higher whole number of shares. The aggregate maximum amount of all Advances
that the Investor shall be obligated to make under this Agreement shall not
exceed the Commitment Amount.
Section 2.2. Mechanics.
(a) Advance
Notice. At any time during
the Commitment Period, the Company may require the Investor to purchase shares
of Common Stock by delivering an Advance Notice to the Investor, subject to the
conditions set forth in Section 7.2; provided, however, the amount for each
Advance as designated by the Company in the applicable Advance Notice shall not
be less than the Minimum Advance Amount, nor more than the Maximum Advance
Amount and the aggregate amount of the Advances pursuant to this Agreement shall
not exceed the Commitment Amount. The Company acknowledges that the Investor may
sell shares of the Company’s Common Stock corresponding with a particular
Advance Notice after the Advance Notice is received by the Investor. There shall
be a minimum of ten (10) Trading Days between each Advance Notice
Date.
(b) Date of Delivery of Advance
Notice. An Advance Notice shall be deemed delivered on (i) the Trading
Day it is received by facsimile or otherwise by the Investor if such notice is
received prior to 5:00 pm Eastern Time, or (ii) the immediately succeeding
Trading Day if it is received by facsimile or otherwise after 5:00 pm Eastern
Time on a Trading Day or at any time on a day which is not a Trading Day. No
Advance Notice may be deemed delivered on a day that is not a Trading
Day.
(c) Warrant Issuance. The
Company shall issue the Investor warrants (the “Warrants”) to purchase two
thousand (2000) shares of the Company’s Common Stock for every One Hundred
Thousand Dollars ($100,000) in Advances requested by the Company under this
Agreement. A form of such Warrants shall be mutually agreed upon by the Company
and the Investor. The exercise price of the Warrants shall be set at
fifty percent (50%) below the Market Price at the time of issuance. No Advance
must be given to the Company unless and until the Company and the Investor have
mutually agreed upon the terms of the Warrant to be issued to the Investor
pursuant to the terms of this Agreement. For purposes of
clarification of this Agreement, any Common Stock underlying the Warrants issued
hereunder shall come within the definition of Registerable Securities and shall
have piggy-back registration rights attributed to such Registerable Securities
as such term is defined herein.
Section 2.3. Closings. On each Advance Date (i) the Company
shall deliver to the Investor such number of shares of the Common Stock
registered in the name of the Investor as shall equal (x) the amount of the
Advance specified in such Advance Notice pursuant to Section 2.1 herein, divided
by (y) the Purchase Price and (ii) upon receipt of such shares, the Investor
shall deliver to the Company the amount of the Advance specified in the Advance
Notice by wire transfer of immediately available funds. In addition, on or prior
to the Advance Date, each of the Company and the Investor shall deliver to the
other all documents, instruments and writings required to be delivered by either
of them pursuant to this Agreement in order to implement and effect the
transactions contemplated herein. To the extent the Company has not paid the
fees, expenses, and disbursements in accordance with Section 12.4, the amount of
such fees, expenses, and disbursements may be deducted by the Investor (and
shall be paid to the relevant party) directly out of the proceeds of the Advance
with no reduction in the amount of shares of the Company’s Common Stock to be
delivered on such Advance Date.
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(a)
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Company’s Obligations
Upon Closing.
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On each Advance Date:
(i) The Company
shall deliver to the Investor via DWAC transfer the shares of Common Stock
applicable to the Advance in accordance with Section 2.3. The certificates
evidencing such shares shall be free of restrictive legends, provided such
shares are registered pursuant to an effective registration
statement.
(ii) the Company’s Registration Statement
with respect to the resale of the shares of Common Stock delivered in connection
with the Advance shall have been declared effective by the
SEC;
(iii) the Company shall have obtained all
material permits and qualifications required by any applicable state for the
offer and sale of the Registrable Securities, or shall have the availability of
exemptions therefrom. The sale and issuance of the Registrable Securities shall
be legally permitted by all laws and regulations to which the Company is
subject;
(iv) the Company shall have filed with the
SEC in a timely manner all reports, notices and other documents required of a
“reporting company” under the Exchange Act and applicable Commission
regulations;
(v) the fees as set forth in Section 12.4
below shall have been paid or can be withheld as provided in Section 2.3;
and
(vi) the Company’s transfer agent shall be
DWAC eligible.
(b) Investor’s
Obligations Upon Closing. Upon receipt of the shares referenced
in Section 2.3(a)(i) above and provided the Company is in compliance with its
obligations in Section 2.3, the Investor shall deliver to the Company the amount
of the Advance specified in the Advance Notice by wire transfer of immediately
available funds.
Section
2.5. Hardship. In
the event the Investor sells shares of the Company’s Common Stock after receipt
of an Advance Notice and the Company fails to perform its obligations as
mandated in Section 2.3, and specifically the Company fails to deliver to the
Investor on the Advance Date the shares of Common Stock corresponding to the
applicable Advance pursuant to Section 2.3(a)(i), the Company acknowledges that
the Investor shall suffer financial hardship and, provided that the Investor has
performed its obligations pursuant to Section 2.3, and therefore the Company
shall be liable for any and all losses, commissions, fees, or financial hardship
caused to the Investor.
ARTICLE
III.
Representations
and Warranties of Investor
Investor
hereby represents and warrants to, and agrees with, the Company that the
following are true and correct as of the date hereof and as of each Advance
Date:
Section 3.1. Organization
and Authorization. The
Investor is duly incorporated or organized and validly existing in the
jurisdiction of its incorporation or organization and has all requisite power
and authority to purchase and hold the securities issuable hereunder. The
decision to invest and the execution and delivery of this Agreement by such
Investor, the performance by such Investor of its obligations hereunder and the
consummation by such Investor of the transactions contemplated hereby have been
duly authorized and requires no other proceedings on the part of the Investor.
The undersigned has the right, power and authority to execute and deliver this
Agreement and all other instruments (including, without limitations, the
Registration Rights Agreement), on behalf of the Investor. This Agreement has
been duly executed and delivered by the Investor and, assuming the execution and
delivery hereof and acceptance thereof by the Company, will constitute the
legal, valid and binding obligations of the Investor, enforceable against the
Investor in accordance with its terms.
Section 3.2. Evaluation
of Risks. The Investor has
such knowledge and experience in financial, tax and business matters as to be
capable of evaluating the merits and risks of, and bearing the economic risks
entailed by, an investment in the Company and of protecting its interests in
connection with this transaction. It recognizes that its investment in the
Company involves a high degree of risk.
Section 3.3. No Legal
Advice From the Company.
The Investor 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. The Investor 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.
Section 3.4. Investment
Purpose. The securities
are being purchased by the Investor for its own account, and for investment
purposes. The Investor agrees not to assign or in any way transfer the
Investor’s rights to the securities or any interest therein and acknowledges
that the Company will not recognize any purported assignment or transfer except
in accordance with applicable Federal and state securities laws. No other person
has or will have a direct or indirect beneficial interest in the securities. The
Investor agrees not to sell, hypothecate or otherwise transfer the Investor’s
securities unless the securities are registered under Federal and applicable
state securities laws or unless, in the opinion of counsel satisfactory to the
Company, an exemption from such laws is available.
Section 3.5. Accredited
Investor. The Investor is
and shall be on each Advance Date, an “Accredited
Investor” as that term is
defined in Rule 501(a)(3) of Regulation D of the Securities
Act.
Section 3.6. Information. The Investor and its advisors (and
its counsel), if any, have been furnished with all materials relating to the
business, finances and operations of the Company and information it deemed
material to making an informed investment decision. The Investor 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 Investor or its advisors, if any, or its
representatives shall modify, amend or affect the Investor’s right to rely on
the Company’s representations and warranties contained in this Agreement. The
Investor understands that its investment involves a high degree of
risk. The Investor has sought such accounting, legal and tax advice,
as it has considered necessary to make an informed investment decision with
respect to this transaction.
Section 3.7. Receipt of
Documents. The Investor
and its counsel have received and read in their entirety: (i) this Agreement and
the Exhibits annexed hereto; (ii) all due diligence and other information
necessary to verify the accuracy and completeness of such representations,
warranties and covenants; (iii) the Company’s most recent periodic filings filed
with the SEC; and (iv) answers to all questions the Investor submitted to
the Company regarding an investment in the Company; and the Investor has relied
on the information contained therein and has not been furnished any other
documents, literature, memorandum or prospectus.
Section 3.8. Registration
Rights Agreement. The
parties have entered into the Registration Rights Agreement dated the date
hereof.
Section 3.9. 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 under the Securities Act) in connection with
the offer or sale of the shares of Common Stock offered
hereby.
Section 3.10. Not an
Affiliate. The Investor is
not an officer, director or a person that directly, or indirectly through one or
more intermediaries, controls or is controlled by, or is under common control
with the Company or any “Affiliate” of the Company (as that term is
defined in Rule 405 of the Securities Act).
Section
3.11. Trading Activities.
The Investor’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 Investor nor
its affiliates has an open short position in the Common Stock of the Company,
the Investor agrees that it shall not, and that it will cause its affiliates not
to, engage in any short sales of or hedging transactions with respect to the
Common Stock, provided
that the Company acknowledges and agrees that upon receipt of an Advance Notice
the Investor has the right to sell the shares to be issued to the Investor
pursuant to the Advance Notice during the applicable Pricing
Period.
Section
3.12 Reliance on
Exemptions. The Investor understands that the
Common Stock is 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 Investor’ compliance with, the representations, warranties, agreements,
acknowledgements and understandings of such Investor set forth here in order to
determine the availability of such exemptions and the eligibility of such
Investor to acquire the Common Stock.
Section
3.13 No Governmental
Review. The Investor 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 Common Stock issuable
pursuant to this Agreement or the fairness or suitability of the investment in
the Common Stock nor have such authorities passed upon or endorsed the merits of
the offering of the Common Stock.
ARTICLE
IV.
Representations
and Warranties of the Company
Except as
stated below, on the disclosure schedules attached hereto or in the SEC
Documents (as defined herein), the Company hereby represents and warrants to,
and covenants with, the Investor that the following are true and correct as of
the date hereof:
Section 4.1. Organization
and Qualification. The
Company is duly incorporated or organized and validly existing in the
jurisdiction of its incorporation or organization and has all requisite
corporate power to own its properties and to carry on its 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 on the Company and its
subsidiaries taken as a whole.
Section 4.2. Authorization,
Enforcement, Compliance with Other Instruments. (i) The Company has the requisite
corporate power and authority to enter into and perform this Agreement, the
Registration Rights Agreement, and any related agreements, in accordance with
the terms hereof and thereof, (ii) the execution and delivery of this Agreement,
the Registration Rights Agreement and any related agreements by the Company and
the consummation by it of the transactions contemplated hereby and thereby, 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) this Agreement, the Registration Rights Agreement and any
related agreements have been duly executed and delivered by the Company, (iv)
this Agreement, the Registration Rights Agreement and assuming the execution and
delivery thereof and acceptance by the Investor and any related agreements
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.
Section 4.3. Capitalization. The authorized capital stock of the
Company consists of 250,000,000 shares of Common Stock and 10,000,000
shares of Preferred Stock (with various series), $0.001 par value per share
(“Preferred
Stock”), of which
58,597,287shares of Common Stock and 4,100,100 shares of Preferred Stock are issued
and outstanding. All of such outstanding shares have been 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 hereof, except
for the financing transactions and acquisitions previously disclosed to the
Investor; (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 (iii) there are no outstanding
registration statements other than on Form S-8 and (iv) 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
pursuant to the Registration Rights Agreement). There are no securities or
instruments containing anti-dilution or similar provisions that will be
triggered by this Agreement or any related agreement or the consummation of the
transactions described herein or therein. The Company has furnished to the
Investor 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 securities
convertible into or exercisable for Common Stock and the material rights of the
holders thereof in respect thereto.
Section 4.4. No
Conflict. Subject to the
Company’s Certificate of Incorporation, the execution, delivery and performance
of this Agreement 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 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 Principal Market on which the Common Stock is quoted)
applicable to the Company or any of its subsidiaries or by which any material
property or asset of the Company or any of its subsidiaries is bound or affected
and which would cause a Material Adverse Effect. Neither the Company nor its
subsidiaries is in violation of any term of or in default under its Articles 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 in violation of any material
law, ordinance, and 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 Registration Rights Agreement 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.
Section 4.5. SEC
Documents; Financial Statements. The Company has filed all reports,
schedules, forms, statements and other documents required to be filed by it with
the SEC. As of their respective dates, the financial statements of the Company
disclosed on the Company’s website and disclosed to the Investor (the
“Financial
Statements”) complied as
to form in all material respects with applicable accounting requirements and the
published rules and regulations 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 Investor 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.
Section 4.6. 10b-5. None of the documents provided to the
Investor include any untrue statements of material fact, nor do they omit to
state any material fact required to be stated therein necessary to make the
statements made, in light of the circumstances under which they were made, not
misleading.
Section 4.7. No
Default. The Company is
not in default in the performance or observance of any material obligation,
agreement, covenant or condition contained in any indenture, mortgage, deed of
trust or other material instrument or agreement to which it is a party or by
which it is or its property is bound (which has not been waived) and neither the
execution, nor the delivery by the Company, nor the performance by the Company
of its obligations under this Agreement or any of the exhibits or attachments
hereto will conflict with or result in the breach or violation (which has not
been waived) of any of the terms or provisions of, or constitute a
default or result in the creation or imposition of any lien or charge on any
assets or properties of the Company under its Certificate of Incorporation,
By-Laws, any material indenture, mortgage, deed of trust or other material
agreement applicable to the Company or instrument to which the Company is a
party or by which it is bound, or any statute, or any decree, judgment, order,
rules or regulation of any court or governmental agency or body having
jurisdiction over the Company or its properties, in each case which default,
lien or charge is likely to cause a Material Adverse Effect on the Company’s
business or financial condition.
Section 4.8. Absence of Events
of Default. No
Event of Default, as defined in the respective agreement to which the Company is
a party, and no event which, with the giving of notice or the passage of time or
both, would become an Event of Default (as so defined), has occurred and is
continuing, which would have a Material Adverse Effect on the Company’s
business, properties, prospects, financial condition or results of
operations.
Section 4.9. Intellectual
Property Rights. The
Company and its subsidiaries own or possess adequate rights or licenses to use
all material trademarks, trade names, service marks, service xxxx registrations,
service names, patents, patent rights, copyrights, inventions, licenses,
approvals, governmental authorizations, trade secrets and rights necessary to
conduct their respective businesses as now conducted. The Company and its
subsidiaries do not have any knowledge of any infringement by the Company or its
subsidiaries of trademark, trade name rights, patents, patent rights,
copyrights, inventions, licenses, service names, service marks, service xxxx
registrations, trade secret or other similar rights of others, and, to the
knowledge of the Company, there is no claim, action or proceeding being made or
brought against, or to the Company’s knowledge, being threatened against, the
Company or its subsidiaries regarding trademark, trade name, patents, patent
rights, invention, copyright, license, service names, service marks, service
xxxx registrations, trade secret or other infringement; and the Company and its
subsidiaries are unaware of any facts or circumstances which might give rise to
any of the foregoing.
Section 4.10. 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.
Section 4.11. Environmental
Laws. The Company and its
subsidiaries are (i) in compliance with any and all applicable material foreign,
federal, state and local laws and regulations relating to the protection of
human health and safety, the environment or hazardous or toxic substances or
wastes, pollutants or contaminants (“Environmental
Laws”), (ii) have received
all permits, licenses or other approvals required of them under applicable
Environmental Laws to conduct their respective businesses and (iii) are in
compliance with all terms and conditions of any such permit, license or
approval.
Section 4.12. Title. The Company has good and marketable
title to its properties and material assets owned by it, free and clear of any
pledge, lien, security interest, encumbrance, claim or equitable interest other
than such as are not material to the business of the Company. Any real property
and facilities held under lease by the Company and its subsidiaries are held by
them under valid, subsisting and enforceable leases with such exceptions as are
not material and do not interfere with the use made and proposed to be made of
such property and buildings by the Company and its
subsidiaries.
Section 4.13. Insurance. The Company and each of its
subsidiaries are insured by insurers of recognized financial responsibility
against such losses and risks and in such amounts as management of the Company
believes to be prudent and customary in the businesses in which the Company and
its subsidiaries are engaged. Neither the Company nor any such subsidiary has
been refused any insurance coverage sought or applied for and neither the
Company nor any such subsidiary has any reason to believe that it will not be
able to renew its existing insurance coverage as and when such coverage expires
or to obtain similar coverage from similar insurers as may be necessary to
continue its business at a cost that would not materially and adversely affect
the condition, financial or otherwise, or the earnings, business or operations
of the Company and its subsidiaries, taken as a whole.
Section 4.14. Regulatory
Permits. The Company and
its subsidiaries possess all material certificates, authorizations and permits
issued by the appropriate federal, state or foreign regulatory authorities
necessary to conduct their respective businesses, and neither the Company nor
any such subsidiary has received any notice of proceedings relating to the
revocation or modification of any such certificate, authorization or
permit.
Section 4.15. 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, (iii) access to assets is permitted only in
accordance with management’s general or specific authorization and (iv) the
recorded accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
Section 4.16. No Material
Adverse Breaches, etc.
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 on the business, properties,
operations, financial condition, results of operations or prospects of the
Company or its subsidiaries. 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 on the
business, properties, operations, financial condition, results of operations or
prospects of the Company or its subsidiaries.
Section 4.17. 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) have
a Material Adverse Effect on the transactions contemplated hereby (ii) 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 (iii) have a Material Adverse Effect on the business,
operations, properties, financial condition or results of operation of the
Company and its subsidiaries taken as a whole.
Section 4.18. Subsidiaries. Except for the Company’s inactive
subsidiary known as Lakeridge Mining Corp., the Company does not presently own
or control, directly or indirectly, any interest in any other corporation,
partnership, association or other business entity.
Section 4.19. Tax
Status. The Company and
each of its subsidiaries has made or 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.
Section 4.20. Certain
Transactions. Except for
the management services contract with The PAN Network, 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.
Section 4.21. 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 shareholders of the Company, underwriters, brokers, agents or other
third parties.
Section 4.22. Use of
Proceeds. The Company
shall use the net proceeds from this offering for general corporate purposes,
including, without limitation, the payment of loans incurred by the Company.
However, in no event shall the Company use the net proceeds from this offering
for the payment (or loan to any such person for the payment) of any judgment, or
other liability, incurred by any executive officer, officer, director or
employee of the Company, except for any liability owed to such person for
services rendered, expense reimbursement or if any judgment or other liability
is incurred by such person originating from services rendered to the Company, or
the Company has indemnified such person from liability.
Section 4.23. Further
Representation and Warranties of the Company. For so long as any securities
issuable hereunder held by the Investor remain outstanding, the Company
acknowledges, represents, warrants and agrees that it will use its best efforts
to maintain the listing of its Common Stock on the Principal
Market.
Section 4.25. Opinion of
Counsel. The
Company will obtain, subject to applicable securities laws, for the Investor, at
the Company’s expense, any and all opinions of counsel which may be reasonably
required in order to sell the securities issuable hereunder without
restriction.
Section 4.26. Dilution. The Company is aware and
acknowledges that issuance of shares of the Company’s Common Stock could cause
dilution to existing shareholders and could significantly increase the
outstanding number of shares of Common Stock.
ARTICLE
V.
Indemnification
The
Investor and the Company represent to the other the following with respect to
itself:
Section 5.1. Indemnification.
(a) In
consideration of the Investor’s execution and delivery of this Agreement, and in
addition to all of the Company’s other obligations under this Agreement, the
Company shall defend, protect, indemnify and hold harmless the Investor, and all
of its officers, directors, partners, employees and agents (including, without
limitation, those retained in connection with the transactions contemplated by
this Agreement) (collectively, the “Investor 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 Investor 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 Investor 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 Company in this Agreement or the Registration Rights
Agreement or any other certificate, instrument or document contemplated hereby
or thereby, (b) any breach of any covenant, agreement or obligation of the
Company contained in this Agreement or the Registration Rights Agreement or any
other certificate, instrument or document contemplated hereby or thereby, or (c)
any cause of action, suit or claim brought or made against such Investor
Indemnitee not arising out of any action or inaction of an Investor Indemnitee,
and arising out of or resulting from the execution, delivery, performance or
enforcement of this Agreement or any other instrument, document or agreement
executed pursuant hereto by any of the Investor Indemnitees. 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
Investor’s other obligations under this Agreement, the Investor shall defend,
protect, indemnify and hold harmless the Company and all of its officers,
directors, shareholders, 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
Investor in this Agreement, the Registration Rights Agreement, or any instrument
or document contemplated hereby or thereby executed by the Investor, (b) any
breach of any covenant, agreement or obligation of the Investor(s) contained in
this Agreement, the Registration Rights Agreement or any other certificate,
instrument or document contemplated hereby or thereby executed by the Investor,
or (c) any cause of action, suit or claim brought or made against such Company
Indemnitee based on misrepresentations or due to a breach by the Investor and
arising out of or resulting from the execution, delivery, performance or
enforcement of this Agreement or any other instrument, document or agreement
executed pursuant hereto by any of the Company Indemnitees. To the extent that
the foregoing undertaking by the Investor may be unenforceable for any reason,
the Investor shall make the maximum contribution to the payment and satisfaction
of each of the Indemnified Liabilities, which is permissible under applicable
law.
(c) The obligations of the parties to
indemnify or make contribution under this Section 5.1 shall survive
termination.
ARTICLE
VI.
Covenants
of the Company
Section 6.1. RESERVED.
Section 6.2. Listing of
Common Stock. During the
term of the Commitment Period, the Company shall maintain the Common Stock’s
authorization for quotation on the Principal Market.
Section 6.3. Exchange
Act Registration. During
the term of the Commitment Period, the Company will cause its Common Stock to
continue to be registered under Section 12(g) of the Exchange Act, will file in
a timely manner all reports and other documents required of it as a reporting
company under the Exchange Act and will not take any action or file any document
(whether or not permitted by Exchange Act or the rules thereunder) to terminate
or suspend such registration or to terminate or suspend its reporting and filing
obligations under said Exchange Act.
Section 6.4. Transfer
Agent Instructions. Upon
effectiveness of the Registration Statement the Company shall deliver
instructions to its transfer agent to issue shares of Common Stock to the
Investor free of restrictive legends on or before each Advance
Date.
Section 6.5. Corporate
Existence. During the
Commitment period, the Company will take all steps necessary to preserve and
continue the corporate existence of the Company.
Section 6.6. Notice of
Certain Events Affecting Registration; Suspension of Right to Make an
Advance. The Company will
immediately notify the Investor upon its becoming aware of the occurrence of any
of the following events in respect of a registration statement or related
prospectus relating to an offering of Registrable Securities: (i) receipt of any
request for additional information by the SEC or any other Federal or state
governmental authority during the period of effectiveness of the Registration
Statement for amendments or supplements to the registration statement or related
prospectus; (ii) the issuance by the SEC or any other Federal or state
governmental authority of any stop order suspending the effectiveness of the
Registration Statement or the initiation of any proceedings for that purpose;
(iii) receipt of any notification with respect to the suspension of the
qualification or exemption from qualification of any of the Registrable
Securities for sale in any jurisdiction or the initiation or threatening of any
proceeding for such purpose; (iv) the happening of any event that makes any
statement made in the Registration Statement or related prospectus of any
document incorporated or deemed to be incorporated therein by reference untrue
in any material respect or that requires the making of any changes in the
Registration Statement, related prospectus or documents so that, in the case of
the Registration Statement, it will not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading, and that in the case
of the related prospectus, it will not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading; and (v) the Company’s reasonable
determination that a post-effective amendment to the Registration Statement
would be appropriate; and the Company will promptly make available to the
Investor any such supplement or amendment to the related prospectus. The Company
shall not deliver to the Investor any Advance Notice during the continuation of
any of the foregoing events.
Section
6.7. Restriction on Sale of
Capital Stock. Except for the $1 Million in financing that the Company
has currently in place prior to the date hereof, during the Commitment Period,
the Company shall not, without the prior written consent of the Investor, (i)
issue or sell any Common Stock or Preferred Stock without consideration or for a
consideration per share less than the Bid Price of the Common Stock determined
immediately prior to its issuance, or (ii) issue or sell any Preferred Stock warrant, option,
right, contract, call, or other security or instrument granting the holder
thereof the right to acquire Common Stock without consideration or for a
consideration per share less than the Bid Price of the Common Stock determined
immediately prior to its issuance. Notwithstanding the foregoing this Section
shall not apply in respect of an Exempt Issuance or an underwritten public
offering of Common Stock. For purposes of this Agreement “Exempt Issuance”
means the issuance of (a) shares of Common Stock or options to employees,
officers, directors or consultants of the Company pursuant to any stock or
option plan duly adopted for such purpose, by a majority of the non-employee
members of the Board of Directors or a majority of the members of a committee of
non-employee directors established for such purpose, (b) securities upon the
exercise or exchange of or conversion of any Securities issued hereunder and/or
other securities exercisable or exchangeable for or convertible into shares of
Common Stock issued and outstanding on the date of this Agreement, provided that
such securities have not been amended since the date of this Agreement to
increase the number of such securities or to decrease the exercise, exchange or
conversion price of such securities, (c) any financing that the Company has in
place prior to the date of this Agreement, and (d) securities issued pursuant to
acquisitions or strategic transactions approved by a majority of the
disinterested directors of the Company, provided that any such issuance shall
only be to a Person which is, itself or through its subsidiaries, an operating
company in a business synergistic with the business of the Company and in which
the Company receives benefits in addition to the investment of funds, but shall
not include a transaction in which the Company is issuing securities primarily
for the purpose of raising capital or to an entity whose primary business is
investing in securities.
Section 6.8. Consolidation;
Merger. During the
Commitment Period, the Company shall not, at any time after the date hereof,
effect any merger or consolidation of the Company with or into, or a transfer of
all or substantially all the assets of the Company to another entity (a
“Consolidation
Event”) unless the
resulting successor or acquiring entity (if not the Company) assumes by written
instrument the obligation to deliver to the Investor such shares of stock and/or
securities as the Investor is entitled to receive pursuant to this
Agreement.
Section 6.9. Issuance of
the Company’s Common Stock. The sale of the shares of Common Stock
shall be made in accordance with the provisions and requirements of
Regulation D and any applicable state securities law.
Section 6.10. Review of
Public Disclosures. All
SEC filings (including, without limitation, all filings required under the
Exchange Act, which include Forms 10-Q and 10-QSB, 10-K and 10K-SB, 8-K, etc)
and other public disclosures made by the Company, including, without limitation,
all press releases, investor relations materials, and scripts of analysts
meetings and calls, shall be reviewed and approved for release by the Company’s
attorneys and, if containing financial information, the Company’s independent
certified public accountants.
Section 6.11. Market
Activities.The Company will not, directly or
indirectly, (i) take any action designed to cause or result in, or that
constitutes or might reasonably be expected to constitute, the stabilization or
manipulation of the price of any security of the Company to facilitate the sale
or resale of the Common Stock or (ii) sell, bid for or purchase the Common
Stock, or pay anyone any compensation for soliciting purchases of the Common
Stock.
ARTICLE
VII.
Conditions
Precedent
Section 7.1. Conditions
Precedent to the Obligations of the Company. The obligation hereunder of the
Company to issue and sell the shares of Common Stock to the Investor incident to
each Closing is subject to the satisfaction, or waiver by the Company, at or
before each such Closing, of each of the conditions set forth
below.
(a) Accuracy of
the Investor’s Representations and Warranties. The representations and warranties of
the Investor shall be true and correct in all material
respects.
(b) Performance
by the Investor. The
Investor shall have performed, satisfied and complied in all respects with all
covenants, agreements and conditions required by this Agreement and the
Registration Rights Agreement to be performed, satisfied or complied with by the
Investor at or prior to such Closing.
Section 7.2. Conditions
Precedent to the Right of the Company to Deliver an Advance Notice. The right of the Company to deliver
an Advance Notice is subject to the fulfillment by the Company, on such Advance
Notice (a “Condition
Satisfaction Date”), of
each of the following conditions:
(a) Registration
of the Common Stock with the SEC. The Company shall have filed with the
SEC a Registration Statement with respect to the resale of the Registrable
Securities in accordance with the terms of the Registration Rights Agreement. As
set forth in the Registration Rights Agreement, the Registration Statement shall
have previously become effective and shall remain effective on each Condition
Satisfaction Date and (i) neither the Company nor the Investor shall have
received notice that the SEC has issued or intends to issue a stop order with
respect to the Registration Statement or that the SEC otherwise has suspended or
withdrawn the effectiveness of the Registration Statement, either temporarily or
permanently, or intends or has threatened to do so (unless the SEC’s concerns
have been addressed and the Investor is reasonably satisfied that the SEC no
longer is considering or intends to take such action), and (ii) no other
suspension of the use or withdrawal of the effectiveness of the Registration
Statement or related prospectus shall exist. The Registration Statement must
have been declared effective by the SEC prior to the first Advance Notice
Date.
(b) Authority. The Company shall have obtained all
permits and qualifications required by any applicable state in accordance with
the Registration Rights Agreement for the offer and sale of the shares of Common
Stock, or shall have the availability of exemptions therefrom. The sale and
issuance of the shares of Common Stock shall be legally permitted by all laws
and regulations to which the Company is subject.
(c) Fundamental
Changes. There shall not
exist any fundamental changes to the information set forth in the Registration
Statement which would require the Company to file a post-effective amendment to
the Registration Statement.
(d) Performance
by the Company. The
Company shall have performed, satisfied and complied in all material respects
with all covenants, agreements and conditions required by this Agreement and the
Registration Rights Agreement to be performed, satisfied or complied with by the
Company at or prior to each Condition Satisfaction Date.
(e) No
Injunction. No statute,
rule, regulation, executive order, decree, ruling or injunction shall have been
enacted, entered, promulgated or endorsed by any court or governmental authority
of competent jurisdiction that prohibits or directly and adversely affects any
of the transactions contemplated by this Agreement, and no proceeding shall have
been commenced that may have the effect of prohibiting or adversely affecting
any of the transactions contemplated by this Agreement.
(f) No
Suspension of Trading in or Delisting of Common Stock. The trading of the Common Stock is
not suspended by the SEC or the Principal Market (if the Common Stock is traded
on a Principal Market). The issuance of shares of Common Stock with respect to
the applicable Closing, if any, shall not violate the shareholder approval
requirements of the Principal Market (if the Common Stock is traded on a
Principal Market). The Company shall not have received any notice threatening
the continued listing of the Common Stock on the Principal Market (if the Common
Stock is traded on a Principal Market).
(g) Maximum Advance Amount. The amount of an Advance requested by
the Company shall not exceed the Maximum Advance Amount. In addition, in no
event shall the number of shares issuable to the Investor pursuant to an Advance
cause the aggregate number of shares of Common Stock beneficially owned by the
Investor and its affiliates to exceed nine and 9/10 percent (9.9%) of the then
outstanding Common Stock of the Company. For the purposes of this section
beneficial ownership shall be calculated in accordance with Section 13(d) of the
Exchange Act.
(h) No
Knowledge. The Company has
no knowledge of any event which would be more likely than not to have the effect
of causing such Registration Statement to be suspended or otherwise
ineffective.
(i) Executed Advance
Notice. The Investor shall have received the Advance Notice executed by
an officer of the Company and the representations contained in such Advance
Notice shall be true and correct as of each Condition Satisfaction
Date.
ARTICLE
VIII.
Due
Diligence Review; Non-Disclosure of Non-Public Information
Section 8.1. Non-Disclosure
of Non-Public Information.
(a) The Company covenants and agrees that
it shall refrain from disclosing, and shall cause its officers, directors,
employees and agents to refrain from disclosing, any material non-public
information to the Investor without also disseminating such information to the
public, unless prior to disclosure of such information the Company identifies
such information as being material non-public information and provides the
Investor with the opportunity to accept or refuse to accept such material
non-public information for review.
(b) Nothing herein shall require the
Company to disclose non-public information to the Investor or its advisors or
representatives, and the Company represents that it does not disseminate
non-public information to any investors who purchase stock in the Company in a
public offering, to money managers or to securities analysts, provided, however,
that notwithstanding anything herein to the contrary, the Company will, as
hereinabove provided, immediately notify the advisors and representatives of the
Investor and, if any, underwriters, of any event or the existence of any
circumstance (without any obligation to disclose the specific event or
circumstance) of which it becomes aware, constituting non-public information
(whether or not requested of the Company specifically or generally during the
course of due diligence by such persons or entities), which, if not disclosed in
the prospectus included in the Registration Statement would cause such
prospectus to include a material misstatement or to omit a material fact
required to be stated therein in order to make the statements, therein, in light
of the circumstances in which they were made, not misleading. Nothing contained
in this Section 8.2 shall be construed to mean that such persons or entities
other than the Investor (without the written consent of the Investor prior to
disclosure of such information) may not obtain non-public information in the
course of conducting due diligence in accordance with the terms of this
Agreement and nothing herein shall prevent any such persons or entities from
notifying the Company of their opinion that based on such due diligence by such
persons or entities, that the Registration Statement contains an untrue
statement of material fact or omits a material fact required to be stated in the
Registration Statement or necessary to make the statements contained therein, in
light of the circumstances in which they were made, not
misleading.
ARTICLE
IX.
Choice
of Law/Jurisdiction
Section 9.1. Governing
Law. This Agreement shall
be governed by and interpreted in accordance with the laws of the State of
California without regard to the principles of conflict of laws. The parties
further agree that any action between them shall be heard in the State of
California, and expressly consent to the jurisdiction and venue of the courts,
sitting in California and the United States District Court of California for the
adjudication of any civil action asserted pursuant to this
paragraph.
ARTICLE
X.
Assignment;
Termination
Section 10.1. Assignment. Neither this Agreement nor any rights
of the Company hereunder may be assigned to any other
Person.
Section 10.2. Termination.
(a) The obligations of the Investor to make
Advances under Article II hereof shall terminate twenty-four (24) months after
the Effective Date or thirty six (36) months after the Effective Date if
twenty-four (24) months after the Effective Date the Company filed either an
amendment to the then effective registration statement or a new registration
statement was declared effective. The Company’s obligations under this Agreement
shall terminate on the date that the Investor is no longer obligated to make
Advances.
(b) The
obligation of the Investor to make an Advance to the Company pursuant to this
Agreement shall terminate permanently (including with respect to an Advance Date
that has not yet occurred) in the event that (i) there shall occur any stop
order or suspension of the effectiveness of the Registration Statement for an
aggregate of fifty (50) Trading Days, other than due to the acts of the
Investor, during the Commitment Period, or (ii) the Company shall at any time
fail materially to comply with the requirements of Article VI and such failure
is not cured within thirty (30) days after receipt of written notice from the
Investor, provided, however, that this
termination provision shall not apply to any period commencing upon the filing
of a post-effective amendment to such Registration Statement and ending upon the
date on which such post effective amendment is declared effective by the
SEC.
ARTICLE
XI.
Notices
Section 11.1. 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 receipt, when sent by facsimile,
provided a copy is mailed by U.S. certified mail, return receipt requested;
(iii) three (3) days after being 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:
|
XX
Xxx 000
Xxxxxxxx,
Xxxxxxxxxxxx 00000
|
||
|
Attention:
|
Xxxxx
Xxxxxxx
|
||
|
Telephone:
|
000-000-0000
|
||
|
Facsimile:
|
000-000-0000
|
||
|
Tangiers
Investors, LP
|
|||
|
If
to the Investor(s):
|
Xxxxxxx
Xxxxxx
|
||
|
000
Xxxx Xxxxxxxx
Xxxxx
000
|
|||
|
Xxx
Xxxxx, Xxxxxxxxxx 00000
|
|||
|
Telephone:
|
000-000-0000
|
||
|
Facsimile:
|
000-000-0000
|
||
Each
party shall provide five (5) days’ prior written notice to the other party of
any change in address or facsimile number.
ARTICLE
XII.
Miscellaneous
Section 12.1. 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, though failure to deliver such copies shall not affect the
validity of this Agreement.
Section 12.2. Entire
Agreement; Amendments.
This Agreement supersedes all other prior oral or written agreements between the
Investor, 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 the Investor 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.
Section 12.3. Reporting Entity
for the Common Stock. The reporting entity relied upon for
the determination of the trading price or trading volume of the Common Stock on
any given Trading Day for the purposes of this Agreement shall be Bloomberg,
L.P. or any successor thereto. The written mutual consent of the Investor and
the Company shall be required to employ any other reporting
entity.
Section
12.4. Commitment Fee. The
Company hereby agrees to pay the following fees:
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(a)
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Upon
the execution of this Agreement the Company shall issue to the Investor
shares of Common Stock in an amount equal to Eighty Five Thousand
Dollars ($85,000) divided by the lowest VWAP of the Company’s Common
Stock during the ten (10) business days immediately following the date
hereof, as quoted by Bloomberg, LP (the “Investor’s
Shares”). If at any time within a period of six months after the
date of this Agreement the stock price of the Company’s Common Stock falls
to a price per share that is below $0.0065 then the Company will issue an
amount of Common Stock to the Investor to bring the Investor’s total
shares held as a Commitment Fee to an amount equal to $85,000 divided by
the lowest VWAP of the Company’s Common Stock during the ten (10) business
days immediately following the date thereof, as quoted by Bloomberg, LP.
This issuance of additional shares shall not include in the calculation
thereof the amount of shares of Common Stock held by the Investor pursuant
to an Advance under this Agreement.
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(b) Fully
Earned. The Investor’s
Shares shall be deemed fully earned as of the date hereof.
(c) Registration
Rights. The Investor’s
Shares will have “piggy-back” registration rights.
Section 12.5. Brokerage. Each of the parties hereto represents
that it has had no dealings in connection with this transaction with any finder
or broker who will demand payment of any fee or commission from the other
party. The Company on the one hand, and the Investor, on the other
hand, agree to indemnify the other against and hold the other harmless from any
and all liabilities to any person claiming brokerage commissions or finder’s
fees on account of services purported to have been rendered on behalf of the
indemnifying party in connection with this Agreement or the transactions
contemplated hereby.
Section 12.6. Confidentiality. If for any reason the transactions
contemplated by this Agreement are not consummated, each of the parties hereto
shall keep confidential any information obtained from any other party (except
information publicly available or in such party’s domain prior to the date
hereof, and except as required by court order) and shall promptly return to the
other parties all schedules, documents, instruments, work papers or other
written information without retaining copies thereof, previously furnished by it
as a result of this Agreement or in connection herein.
[SIGNATURE
PAGE TO FOLLOW]
IN WITNESS WHEREOF, the parties
hereto have caused this Securities Purchase Agreement to be executed by the
undersigned, thereunto duly authorized, as of the date first set forth
above.
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COMPANY:
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NORTH
BAY RESOURCES, INC.
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/s/ Xxxxx
Xxxxxxx
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Name:
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Xxxxx
Xxxxxxx
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Title:
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CEO
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INVESTOR:
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Tangiers
Investors, LP
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/s/ Xxxxxxx
Xxxxxx
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By:
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Tangiers
Capital, LLC
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Its:
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General
Partner
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EXHIBIT
A
ADVANCE
NOTICE
NORTH
BAY RESOURCES, INC.
The undersigned,
_______________________ hereby certifies, with respect to the sale of shares of
Common Stock of NORTH BAY RESOURCES,
INC. (the “Company”) issuable in connection with this
Advance Notice, delivered pursuant to the Securities Purchase Agreement (the
“Agreement”), as follows:
1. The undersigned is the duly elected
______________ of the Company.
2. There are no fundamental changes to the
information set forth in the Registration Statement which would require the
Company to file a post effective amendment to the Registration
Statement.
3. The Company has performed in all
material respects all covenants and agreements to be performed by the Company
and has complied in all material respects with all obligations and conditions
contained in the Agreement on or prior to the Advance Notice Date, and shall
continue to perform in all material respects all covenants and agreements to be
performed by the Company through the applicable Advance Date. All conditions to
the delivery of this Advance Notice are satisfied as of the date
hereof.
4. The undersigned hereby represents,
warrants and covenants that it has made all filings (“SEC
Filings”) required to be
made by it pursuant to applicable securities laws (including, without
limitation, all filings required under the Securities Exchange Act of 1934,
which include Forms 10-Q, 10-K or 8-K, etc.). All SEC Filings and other public
disclosures made by the Company, including, without limitation, all press
releases, analysts meetings and calls, etc. (collectively, the “Public
Disclosures”), have been
reviewed and approved for release by the Company’s attorneys and, if containing
financial information, the Company’s independent certified public accountants.
None of the Company’s Public Disclosures contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading.
5. The Advance requested is
_____________________.
The
undersigned has executed this Certificate this ____ day of
_________________.
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NORTH
BAY RESOURCES, INC.
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By:
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Name:
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Title:
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If
Returning This Advance Notice via Facsimile Please Send To:
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If
by Mail, via Federal Express To:
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Tangiers
Investors, LP
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000
Xxxx Xxxxxxxx Xxxxx 000, Xxxxx 000, Xxx Xxxxx, XX
00000
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