NOTE AND RESTRICTED STOCK PURCHASE AGREEMENT
EXHIBIT
10.1
This
NOTE AND RESTRICTED STOCK
PURCHASE AGREEMENT (the "Agreement") is made and
entered into as of January 13, 2009 by and between CelLynx Group, Inc., a Nevada
corporation (the "Company"), and Xxx
Xxxxxx (the "Lender").
The Note
and the Restricted Stock are sometimes referred to herein as the “Securities.”
In
connection with this subscription, Lender and the Company agree as
follows:
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A.
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Terms of the
Loan.
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1. Purchase of
Note and Restricted Stock. The Lender hereby irrevocably agrees,
represents and warrants with, to and for the benefit of the Company, that such
Lender is executing this Agreement in connection with a loan made to the Company
by Lender in the amount of US $100,000 in consideration of (i) an Unsecured
Convertible Promissory Note in the form attached hereto as Exhibit
A in the principal amount
of US $100,000 convertible into common stock of the Company at a conversion
price of $0.20 per share (the “Note”), and (ii) 50,000 shares of
restricted common stock of the Company (the “Restricted
Stock”).
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B.
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Representations and
Warranties of the Lender
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The
Lender hereby represents and warrants to the Company as of the date
hereof:
1. Place of
Business. The principal place of business address
set forth below is such Lender's true and correct principal place of
business.
2. Sale or
Transfer of the Securities. The Lender understands that the
Securities have not been registered under the United States Securities Act of
1933, as amended (the “Securities Act”), or under the laws of any other
jurisdiction. The Lender understands and agrees that transfer or sale of the
Securities may be restricted or prohibited unless they are subsequently
registered under the Securities Act and, where required, under the laws of other
jurisdictions or an exemption from registration is available. The Lender will
not offer, sell, transfer or assign the Securities or any interest therein in
contravention of this Agreement, the Securities Act or any other law. The Lender
understands and acknowledges that, because of the substantial restrictions on
the transferability of the Securities, it may not be possible for the Lender to
sell the Note, the underlying shares thereof, or the Restricted Stock readily,
even in the case of an emergency.
3. Representation
of Accredited Investor Status, Investment Experience and Ability to Bear
Risk. Lender acknowledges
that the Offering has not been registered with the United States Securities and
Exchange Commission because the Company is relying on an exemption from
registration under Section 4(2) of the Securities Act, and Regulation D and/or
Regulation S promulgated thereunder. Lender believes that at the
time of the sale of the Securities to Lender, Lender (or, if Lender is a
corporation, limited liability company or trust, each of its equity owners)
qualifies as an "accredited investor" (as defined under Rule 501 of Regulation D
promulgated under the Securities Act).
In
addition, Lender is knowledgeable and experienced with respect to the financial
and business activities contemplated by the Company and is capable of evaluating
the risks and merits of investing in the Securities and, in making a decision to
proceed with this loan, has not relied upon any representations, warranties or
agreements, other than those set forth in this Agreement.
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4. Own
Advice. In connection with
the Lender's loan to the Company, the Lender has carefully considered and has,
to the extent the Lender believes such discussion necessary, discussed with the
Lender's professional legal, tax and financial advisers (the "Investment
Advisors") the suitability
of making the Loan pursuant to this Agreement for the Lender's particular tax
and financial situation and the Lender has determined that the Securities are a
suitable investment for the Lender.
5. Risks. The Lender represents and warrants
that the Lender is aware that the Securities involve a substantial degree of
risk of loss of the Lender's entire investment and that there is no assurance of
any income from the Lender's investment. The Lender further represents that the
Lender is relying solely on the Lender's own conclusions or the advice of the
Lender’s Investment Advisors with respect to tax aspects of any investment in
the Securities. The Lender further
represents that it has read and reviewed the Company’s filings made with the
United States Securities and Exchange Commission available online at
xxx.xxx.xxx.
6. Inquiries/Non-solicitation. The Lender and its Investment
Advisors have been given access to, and prior to the execution of this
Agreement, have been provided with an opportunity to ask questions of, and
receive answers from, the Company officers concerning the Company, and to obtain
any other information which the Lender and the Lender's Investment Advisors
required with respect to the Company and an investment in the Company in order
to evaluate such investment and verify the accuracy of all information furnished
to the Lender and its Investment Advisors regarding the Company. All such
questions, if asked, were answered satisfactorily and all information or
documents provided were found to be satisfactory. Neither the Lender nor its
Investment Advisors have been furnished any offering literature on which they
have relied on other than this Agreement and the Lender and its Investment
Advisors have relied only on this Agreement. At no time was the Lender presented
with or solicited by any leaflet, public promotion meeting, newspaper or
magazine article, radio or television advertisement or any other form of general
advertising or general solicitation.
7. Authority. The Lender is authorized and has full
right and power to purchase the Securities and to perform the Lender's
obligations pursuant to the provisions of this Agreement; the person signing
this Agreement and any other instrument executed and delivered herewith on
behalf of such Lender has been duly authorized by such entity and has full power
and authority to do so. If the Lender is a corporation, partnership,
unincorporated association or other entity, the person signing this Agreement
has the legal capacity to authorize, deliver and be bound by this Agreement and
to take all actions required pursuant hereto and further certifies that all
necessary approvals of directors, shareholders or otherwise have been given and
obtained; and if the Lender is an individual, is of the full age of majority in
the jurisdiction in which the Lender is resident and is legally competent to
execute, deliver and be bound by this Agreement and take all action pursuant
hereto.
8. No
Default. The execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby and thereby will not conflict with, or result in any violation of or
default pursuant to, any provision of any governing instrument applicable to the
Lender, or any agreement or other instrument to which the Lender is a party or
by which the Lender or any of the Lender's properties are bound or any permit,
franchise, judgment, decree, statute, rule or regulation applicable to the
Lender or any of the Lender's business or properties.
9. Purchase
Entirely For Own Account.
This Agreement is made with the Lender in reliance upon the Lender's
representations to the Company, which by the Lender's execution of this
Agreement, the Lender hereby confirms, that the Securities issuable to the
Lender will be acquired for investment for the Lender's own account, not as a
nominee or agent, and not with a view to the resale or distribution of any part
thereof, and that the Lender has no present intention of selling, granting any
participation in, or otherwise distributing the same. The Lender represents and
warrants that the Lender has no contract, understanding, agreement or
arrangement with any person to sell or transfer or pledge to such person or
anyone else any of the Securities for which the Lender hereby subscribes (in
whole or in part) or any interest therein; and the Lender represents and
warrants that the Lender has no present plans to enter into any such contract,
undertaking, agreement or arrangement.
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The
Lender represents and warrants that the funds which will be advanced by the
Lender hereunder will not represent proceeds of crime and the Lender
acknowledges that the Company may in the future be required by law to disclose
the Lender's name and other information relating to this Agreement and the
Lender's subscription hereunder, on a confidential basis, and to the best of the
Lender's knowledge (i) none of the subscription funds to be provided by the
Lender (a) have been or will be derived from or related to any activity that is
deemed criminal under the laws of the United States of America, or any other
jurisdiction, or (b) are being tendered on behalf of a person or entity who has
not been identified to the Lender, and (ii) it shall promptly notify the Company
if the Lender discovers that any of such representations ceases to be true, and
to provide the Company with appropriate information in connection
therewith.
10. Acknowledgments. The
Lender acknowledges that:
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(a)
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no
securities commission or similar regulatory authority has reviewed or
passed on the merits of the Securities;
and
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(b)
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there
is no government or other insurance covering the Securities;
and
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(c)
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there
are risks associated with the purchase of the Securities;
and
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(d)
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there
are restrictions on the Lender's ability to resell the Securities and it
is the responsibility of the Lender to find out what those restrictions
are and to comply with them before selling the Securities;
and
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(e)
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the
Company has advised the Lender that the Company is relying on an exemption
from the requirements to provide the Lender with a prospectus and to sell
securities through a person or company registered to sell securities under
applicable securities laws and, as a consequence of acquiring the
Securities pursuant to this exemption, certain protections, rights and
remedies provided by applicable securities laws, including statutory
rights of rescission or damages, will not be available to the
Lender.
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The Lender further acknowledges that
(i) the Company may complete secured or unsecured debt financings or equity
financings in the future in order to develop the Company's business and to fund
its ongoing development, (ii) there is no assurance that such financings will be
available and, if available, on reasonable terms, (iii) any such future
financings may have a dilutive effect on current security holders, including the
Lender, and (iv) if such future financings are not available, the Company may be
unable to fund its ongoing development and the lack of capital resources may
result in the failure of its business.
11. Hedging
Transactions. The Lender will not, directly or indirectly,
except in compliance with (that is, only to the extent required to comply with)
the Securities Act and such other securities or “Blue Sky” laws as may be
applicable, (i) offer, sell, pledge, transfer or otherwise dispose of (or
solicit any offers to buy, purchase or otherwise acquire or take a pledge of)
any of the Securities, (ii) engage in any short sale which results in a
disposition of any of the Securities by Lender, or (iii) hedge the economic risk
of the Lender’s investment in the Securities.
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C.
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Representations and
Warranties of the Company. Except as set forth in the SEC
Documents [and the Disclosure Schedule], Company represents and warrants
that:
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1. Corporate
Organization; Authority; Due Authorization.
(a) The Company (i) is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of the State of Nevada, (ii) has the corporate power and authority
to own or lease its properties as and in the places where its business is now
conducted and to carry on its business as now conducted, and (iii) is duly
qualified as a foreign corporation authorized to do business in every
jurisdiction where the failure to so qualify, individually or in the aggregate,
would have a material adverse effect on the operations, assets, liabilities,
financial condition or business of the Company taken as a whole (a “Material Adverse
Effect”).
(b) The Company (i) has the requisite
corporate power and authority to execute, deliver and perform this Agreement,
the Note and the Restricted Stock (collectively, the “Transaction
Documents”) to which it is
a party and to incur the obligations herein and therein and (ii) has been
authorized by all necessary corporate action to execute, deliver and perform the
Transaction Documents and to consummate the transactions contemplated hereby and
thereby (the “Contemplated
Transactions”). The Transaction Documents will be
on the Closing Date valid and binding obligations of the Company enforceable in
accordance with their terms except as limited by applicable bankruptcy,
reorganization, insolvency, moratorium or similar laws affecting the enforcement
of creditors’ rights and the availability of equitable remedies (regardless of
whether such enforceability is considered in a proceeding at law or
equity).
2. Capitalization. The authorized capital stock of the
Company consists of four hundred million (400,000,000) shares of common stock,
$0.001 par value, of which approximately one hundred twenty six million sixty
eight thousand eight hundred and forty six (126,068,846) shares of common stock
are issued and outstanding; and one hundred million (100,000,000) shares of
Series A Preferred Stock, of which no shares are issued and outstanding. All
outstanding shares of capital stock of the Company were issued in compliance
with all applicable Federal and state securities laws, and the issuance of such
shares was duly authorized by all necessary corporate action on the part of the
Company. Except as contemplated by this Agreement or as set forth in the SEC
Documents (hereinafter defined), there are (i) no outstanding subscriptions,
warrants, options, conversion privileges or other rights or agreements
obligating the Company to purchase or otherwise acquire or issue any shares of
capital stock of the Company (or shares reserved for such purpose), (ii) no
preemptive rights contained in the Company’s Articles of Incorporation, as
amended (the “Articles of
Incorporation”), the
By-laws of the Company or contracts to which the Company is a party or rights of
first refusal with respect to the issuance of additional shares of capital stock
of the Company, including without limitation the Securities and (iii) no
commitments or understandings (oral or written) of the Company to issue any
shares, warrants, options or other rights to acquire any equity securities of
the Company other than with respect to existing antidilution rights and
preemptive rights of certain existing investors. To the Company’s knowledge,
except as set forth in the SEC Documents, none of the shares of common stock are
subject to any stockholders’ agreement, voting trust agreement or similar
arrangement or understanding. Except as set forth in the SEC Documents, the
Company has no outstanding bonds, debentures, notes or other obligations the
holders of which have the right to vote (or which are convertible into or
exercisable for securities having the right to vote) with the stockholders of
the Company on any matter.
3. Validity of
Securities. The issuance
of the Securities has been duly authorized by all necessary corporate action on
the part of the Company and, when issued to, delivered to, and paid for by the
Lenders in accordance with this Agreement, the Securities will be validly
issued, fully paid and non-assessable.
4. Private
Offering. The Company
agrees that neither the Company nor anyone authorized to act on its behalf will
offer the Securities or any part thereof or any similar securities for issuance
or sale to, or solicit any offer to acquire any of the same from, anyone so as
to make the issuance and sale of the Securities subject to the registration
requirements of Section 5 of the Securities Act.
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5. No
Conflict; Required Filings and Consents. The Company's execution, delivery and
performance of this Agreement and all other agreements contemplated hereby and
thereby and the consummation of the transactions contemplated hereby and thereby
will not with or without the giving of notice or the lapse of time or both (A)
violate any provision of law, statute, rule or regulation to which the Company
is subject, (B) violate any order, judgment or decree applicable to it, or (C)
conflict with or result in a breach or default under any term or condition of
its applicable governing instruments or any agreement or other instrument to
which it is a party or by which it is bound.
6. Compliance. Except as set forth in the SEC
Documents, the Company is not in conflict with, or in default or violation of
(i) any law, rule, regulation, order, judgment or decree applicable to the
Company or by which any property or asset of the Company is bound or affected
(“Legal
Requirement”), or (ii) any
Material Agreement, in each case except for any such conflicts, defaults or
violations that would not, individually or in the aggregate, have a Material
Adverse Effect. The Company has not received any written notice or other
communication from any Governmental Body regarding any actual or possible
violation of, or failure to comply with, any Legal Requirement, except any such
violations or failures that would not, individually or in the aggregate, have a
Material Adverse Effect.
7. SEC
Documents; Financial Statements.
(a) The information contained
in the following documents, did not, as of the date of the applicable document,
include 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 in which they were made, not misleading, as of
their respective filing dates or, if amended, as so amended (the following
documents, collectively, the “SEC Documents”), provided that
the representation in this sentence shall not apply to any misstatement or
omission in any SEC Document filed prior to the date of this Agreement which was
superseded by a subsequent SEC Document filed prior to the date of this
Agreement:
(i) the Company’s Annual Report on Form
10-K for the year ended September 30, 2008; and
(ii) the Company’s interim filings on Form
10-Q or current reports on Form 8-K or other appropriate forms filed on any date
after December 31, 2008 and on or before the Closing.
(b) In addition, as of the date of this
Agreement, when read together with the SEC Documents and the information,
qualifications and exceptions contained in this Agreement, do not include any
untrue statement of a material fact or omit to state a material fact in light of
the circumstances in which such written disclosures were
made.
(c) The Company has filed all forms,
reports and documents required to be filed by it with the SEC for the 12 months
preceding the date of this Agreement, including without limitation the SEC
Documents. As of their respective dates, the SEC Documents filed prior to the
date hereof complied as to form in all material respects with the applicable
requirements of the Securities Act, the Exchange Act, and the rules and
regulations thereunder.
9. Use of Proceeds. The
net proceeds received by the Company from the sale of the Securities shall be
used by the Company for working capital and general corporate
purposes.
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D. Legend. The certificate representing the
Securities issued by the Company shall bear the following (or similar)
legends:
THE SECURITIES REPRESENTED BY THIS
CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE AND ARE
BEING OFFERED AND SOLD IN RELIANCE ON EXEMPTIONS FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND SUCH LAWS. THESE SECURITIES MAY NOT BE
SOLD, TRANSFERRED OR ASSIGNED UNLESS PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT OR EXEMPTION THEREFROM.
E. Indemnification. The Lender agrees to indemnify and
hold harmless the Company and its officers, managers, members, employees, agents
and affiliates against any and all loss, liability, claim, damage and expense
whatsoever (including without limitation any and all expenses reasonably
incurred in investigating, preparing or defending against any litigation
commenced or threatened or any claim whatsoever) arising out of or based upon
any false representation or warranty or breach or failure by the Lender to
comply with any covenant agreement made by the Lender herein. The Company agrees
to indemnify and hold harmless the Lender and its officers, managers, members,
employees, agents and affiliates against any and all loss, liability, claim,
damage and expense whatsoever (including without limitation any and all expenses
reasonably incurred in investigating, preparing or defending against any
litigation commenced or threatened or any claim whatsoever) arising out of or
based upon any false representation or warranty or breach or failure to comply
with any covenant agreement made by the Company herein.
F. Modification. Neither this Agreement nor any
provision hereof shall be waived, modified, discharged or terminated except by
an instrument in writing signed by the party against whom any such waiver,
modification, discharge or termination is sought.
G. Assignability. This Agreement and the rights and
obligations hereunder are not transferable or assignable by the
Lender.
H. Governing
Law. This Agreement shall
be governed by and construed in accordance with the laws of the State of
California without regard to principles of conflicts of law.
I. Survival of
Representations and Warranties. All representations and warranties
made by the Lender in this Agreement shall survive the execution and delivery of
this Agreement, as well as any investigation at any time made by or on behalf of
the Company and the issue and sale of the Securities.
J. Reliance. The Lender understands and
acknowledges that the Lender's representations, warranties, acknowledgements and
agreements in this Agreement will be relied upon by the Company in determining
the Lender's suitability as a purchaser of the Securities.
K. Further
Assurances. The Lender
agrees to provide, if requested, any additional information that may be
requested or required to determine the Lender's eligibility to purchase the
Securities.
L. Entire
Agreement. This Agreement
constitutes the full and entire understanding and agreement between the parties
with regard to the subject matter hereof and no party shall be liable or bound
to any other in any manner by any representations, warranties, covenants and
agreements except as specifically set forth herein and
therein.
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M. Severability. In the
event one or more of the provisions of this Agreement should, for any reason, be
held to be invalid, illegal or unenforceable in any respect, such invalidity,
illegality, or unenforceability shall not affect any other provisions of this
Agreement, and this Agreement shall be construed as if such invalid, illegal or
unenforceable provision had never been contained herein.
N.
Notices. Any notice
or other communication required or permitted to be given hereunder (each a
“Notice”) shall be given
in writing and shall be made by personal delivery or sent by overnight - courier
addressed to a party at its address shown below or at such other address as such
party may designate by three days’ advance Notice to the other
parties.
Any Notice to the Lender shall be sent
to the address for such Lender set forth on the signature page
hereof.
Any Notice to the Company shall be sent
to:
00000 Xxxxx, Xxxxx 000
Xxxxxxx Xxxxx, Xxxxxxxxxx,
00000
Attention: CEO
with a copy to:
Xxxxxxxxxx & Xxxxx LLP
00000 Xxxxxxxx Xxxx., Xxxxx
000
Xxx Xxxxxxx, XX. 00000
Fax: 000.000.0000
Attention: Xxxxxxx Xxxxxxx,
Esq.
Each
Notice shall be deemed given and effective upon receipt (or refusal of
receipt).
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]
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IN
WITNESS WHEREOF, the undersigned has executed this Agreement on the date set
forth below effective as of the date set forth above.
a Nevada
corporation
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By:
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/s/
Xxxxxx X. Xxx
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Xxxxxx
X. Xxx
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Date
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Chief
Executive Officer
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LENDER:
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Name:
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Xxx
Xxxxxx
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Date
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Signature:
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/s/
Xxx Xxxxxx
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Address:
0000-X
Xxxxxx Xxxx
Xxxx
Xxxxxx, Xxxxxxxxxx 00000
Phone: 000-000-0000
Fax: 000-000-0000
Email: xxxxxxx@xxxxxx.xxx
EXHIBIT
A
FORM
OF
UNSECURED
CONVERTIBLE PROMISSORY NOTE
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