SUBSCRIPTION AGREEMENT
THIS SUBSCRIPTION AGREEMENT (this “Agreement”), is dated as of
__________, 2009, by and between Mesa Energy Holdings, Inc. (formerly Mesquite
Mining, Inc.), a Delaware corporation (the “Company”), and the subscribers
set forth on the signature pages affixed hereto (the “Subscribers”).
WHEREAS, the Company and the
Subscribers are executing and delivering this Agreement in reliance upon an
exemption from securities registration afforded by the provisions of Section
4(2), Section 4(6) and/or Regulation D (“Regulation D”) as promulgated
by the United States Securities and Exchange Commission (the “Commission”) under the
Securities Act of 1933, as amended (the “1933 Act”);
WHEREAS, the parties desire
that, upon the terms and subject to the conditions contained herein, the Company
shall issue and sell to the Subscribers, as provided herein, and the Subscribers
shall purchase for an aggregate of a minimum of $750,000 and a maximum of
$2,250,000, at a
price of 100% (par) (the “Purchase Price”) of
secured promissory notes of the Company (“Note” or “Notes”) in a like “Principal Amount”, a form of
which is annexed hereto as Exhibit A, convertible into
shares of the Company’s Common Stock, $0.0001 par value (the “Common Stock”) at a per share
conversion price set forth in the Notes (“Conversion Price”) (the “Offering”). The
Notes and shares of Common Stock issuable upon conversion of the Notes (the
“Conversion Shares”) are
collectively referred to herein as the “Securities.”; and
WHEREAS, the aggregate
proceeds of the sale of Notes in the aggregate principal amount of $750,000
contemplated hereby shall be held in escrow by Grushko & Xxxxxxx, P.C., 000
Xxxxx Xxxxxx, Xxxxx 0000, Xxx Xxxx, Xxx Xxxx 00000 (the “Escrow Agent”) pursuant to the
terms of an Escrow Agreement to be executed by the parties substantially in the
form attached hereto as Exhibit
B (the “Escrow
Agreement”).
NOW, THEREFORE, in
consideration of the mutual covenants and other agreements contained in this
Agreement the Company and the Subscribers hereby agree as follows:
2. Special
Conditions. The Closing hereunder is specifically
conditional on the closing of a reverse triangular merger with Mesa Energy,
Inc., a Nevada corporation, and Mesa Energy Acquisition Corp., a Nevada
corporation, pursuant to which Mesa Energy, Inc. will become a wholly-owned
subsidiary of the Company (the “Reverse
Merger”). The Reverse Merger must close immediately prior to
the Closing and by conducting the Closing and accepting the Purchase Price from
Subscribers, the Company represents the Reverse Merger has irrevocably closed in
accordance with the terms of the Agreement and Plan of Merger and
Reorganization, by and among the Company, Mesa Energy Acquisition Corp., a
Nevada corporation, and Mesa Energy, Inc., a Nevada corporation, annexed hereto
as Exhibit C (the “Merger
Documents”). An additional condition of Closing is the
acquisition by the Company before or contemporaneously with the Closing of the
Java Field Natural Gas Development Project in Western New York (“Working Interests”) pursuant
to the agreements annexed hereto as Exhibit D (the “Working Interest
Documents”). The Company’s acceptance of the Purchase Price
from Subscribers shall constitute a representation that the Working Interests
will have been acquired by the Company not later than as of the Closing,
pursuant to the terms and conditions of the Working Interest
Documents. Notwithstanding Sections 9(p) and 9(s) hereof, until
October 5, 2009, the Company may issue additional Notes having a Principal
Amount of up to $1,250,000 upon the same terms and conditions as described in
this Agreement (“Additional
Offering”) and grant the purchasers of such Notes substantially the same
rights and benefits granted to the Subscribers pursuant to this Agreement except
where otherwise indicated.
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"THE ISSUANCE AND SALE OF THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, NOR APPLICABLE STATE SECURITIES
LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED
OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR
THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION
OF COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER), IN A GENERALLY
ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS
SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID
ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN
CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING
ARRANGEMENT SECURED BY THE SECURITIES."
"NEITHER THE ISSUANCE AND SALE OF THE
SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE
SECURITIES ARE [CONVERTIBLE –OR-EXERCISABLE] HAVE BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES
LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED
OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR
THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION
OF COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER), IN A GENERALLY
ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS
SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID
ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN
CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING
ARRANGEMENT SECURED BY THE SECURITIES."
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(l)
No Governmental
Review. Subscriber understands that no United States federal
or state agency or any other governmental or state agency has passed on or made
recommendations or endorsement of the Securities or the suitability of the
investment in the Securities nor have such authorities passed upon or endorsed
the merits of the offering of the Securities.
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(i) violate,
conflict with, result in a breach of, or constitute a default (or an event which
with the giving of notice or the lapse of time or both would be reasonably
likely to constitute a default) under (A) the articles or certificate of
incorporation, charter or bylaws of the Company, (B) to the Company's knowledge,
any decree, judgment, order, law, treaty, rule, regulation or determination
applicable to the Company of any court, governmental agency or body, or
arbitrator having jurisdiction over the Company or over the properties or assets
of the Company or any of its Affiliates, (C) the terms of any bond, debenture,
note or any other evidence of indebtedness, or any agreement, stock option or
other similar plan, indenture, lease, mortgage, deed of trust or other
instrument to which the Company or any of its Affiliates is a party, by which
the Company or any of its Affiliates is bound, or to which any of the properties
of the Company or any of its Affiliates is subject, or (D) the terms of any
"lock-up" or similar provision of any underwriting or similar agreement to which
the Company, or any of its Affiliates is a party except the violation, conflict,
breach, or default of which would not have a Material Adverse Effect;
or
(ii) result
in the creation or imposition of any lien, charge or encumbrance upon the
Securities or any of the assets of the Company or any of its Affiliates except
in favor of Subscribers as described herein; or
(iii) result
in the activation of any anti-dilution rights or a reset or repricing of any
debt, equity or security instrument of any creditor or equity holder of the
Company, or the holder of the right to receive any debt, equity or security
instrument of the Company nor result in the acceleration of the due date of any
obligation of the Company; or
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(iv) result
in the triggering of any piggy-back or other registration rights of any person
or entity holding securities of the Company or having the right to receive
securities of the Company.
(i)
are, or will
be, free and clear of any security interests, liens, claims or other
encumbrances, subject only to restrictions upon transfer under the 1933 Act and
any applicable state securities laws;
(ii)
have been, or will
be, duly and validly authorized and on the dates of issuance of the Conversion
Shares upon conversion of the Notes, such Conversion Shares will be duly and
validly issued, fully paid and non-assessable and if registered pursuant to the
1933 Act and resold pursuant to an effective registration statement or exempt
from registration will be free trading, unrestricted and
unlegended;
(iii) will
not have been issued or sold in violation of any preemptive or other similar
rights of the holders of any securities of the Company or rights to acquire
securities of the Company;
(iv) will
not subject the holders thereof to personal liability by reason of being such
holders; and
(v) assuming
the representations and warranties of the Subscribers as set forth in Section 4
hereof are true and correct, will not result in a violation of Section 5 under
the 1933 Act.
(i)
No Market
Manipulation. The Company and its Affiliates have not taken,
and will not take, directly or indirectly, any action designed to, or that might
reasonably be expected to, cause or result in stabilization or manipulation of
the price of the Common Stock to facilitate the sale or resale of the Securities
or affect the price at which the Securities may be issued or
resold.
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(a) Upon
the conversion of a Note or part thereof, the Company shall, at its own cost and
expense, take all necessary action, including obtaining and delivering an
opinion of counsel, to assure that the Company's transfer agent shall issue
stock certificates in the name of a Subscriber (or its permitted nominee) or
such other persons as designated by Subscriber and in such denominations to be
specified at conversion representing the number of shares of Common Stock
issuable upon such conversion. The Company warrants that no
instructions other than these instructions have been or will be given to the
transfer agent of the Company's Common Stock and that the certificates
representing such shares shall contain no legend other than the legend set forth
in Section 4(h). If and when a Subscriber sells the Conversion
Shares, assuming (i) a registration statement including such Conversion Shares
for registration has been filed with the Commission, is effective and the
prospectus, as supplemented or amended, contained therein is current and (ii)
Subscriber or its agent confirms in writing to the transfer agent that
Subscriber has complied with the prospectus delivery requirements, the Company
will reissue the Conversion Shares without restrictive legend and the Conversion
Shares will be free-trading, and freely transferable. In the event
that the Conversion Shares are sold in a manner that complies with an exemption
from registration, the Company will promptly instruct its counsel to issue to
the transfer agent an opinion permitting removal of the
legend indefinitely, if pursuant to Rule 144(b)(1)(i) of the 1933 Act,
provided that Subscriber delivers all reasonably requested representations in
support of such opinion.
(b) Each
Subscriber will give notice of its decision to exercise its right to convert its
Note, interest, or part thereof by telecopying or otherwise delivering a
completed Notice of Conversion (a form of which is annexed as Exhibit A to the Note) to the
Company via confirmed telecopier transmission or otherwise pursuant to Section
13(a) of this Agreement. Subscriber will not be required to surrender
the Note until the Note has been fully converted or satisfied. Each
date on which a Notice of Conversion is telecopied to the Company in accordance
with the provisions hereof by 6 PM Eastern Time (“ET”) (or if received by the
Company after 6 PM ET, then the next business day) shall be deemed a “Conversion
Date.” The Company will itself or cause the Company’s transfer
agent to transmit the Company's Common Stock certificates representing the
Conversion Shares issuable upon conversion of the Note to Subscriber via express
courier for receipt by Subscriber within five (5) business days after the
Conversion Date (such fifth day being the "Delivery Date"). In
the event the Conversion Shares are electronically transferable, then delivery
of the Shares must be made by
electronic transfer provided request for such electronic transfer has been made
by the Subscriber. A Note representing the balance of the Note
not so converted will be provided by the Company to Subscriber if requested by
Subscriber, provided Subscriber delivers the original Note to the
Company.
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(c) The
Company understands that a delay in the delivery of the Conversion Shares in the
form required pursuant to Section 7.1 hereof later than the Delivery Date could
result in economic loss to the Subscribers. As compensation to
Subscribers for such loss, the Company agrees to pay (as liquidated damages and
not as a penalty) to each applicable Subscriber for late issuance of Conversion
Shares in the form required pursuant to Section 7.1 hereof upon Conversion of
the Note, the amount of $100 per business day after the Delivery Date for each
$10,000 of Note principal amount and interest (and proportionately for other
amounts) being converted of the corresponding Conversion Shares which are not
timely delivered. The Company shall pay any payments incurred under
this Section upon demand. Furthermore, in addition to any other
remedies which may be available to the Subscribers, in the event that the
Company fails for any reason to effect delivery of the Conversion Shares within
five (5) business days after the Delivery Date, the relevant Subscriber will be
entitled to revoke all or part of the relevant Notice of Conversion by delivery
of a notice to such effect to the Company whereupon the Company and Subscriber
shall each be restored to their respective positions immediately prior to the
delivery of such notice, except that the damages payable in connection with the
Company’s default shall be payable through the date notice of revocation or
rescission is given to the Company.
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(b) Listing/Quotation. The
Company shall promptly secure the quotation or listing of the Conversion Shares
upon each national securities exchange, or automated quotation system upon which
the Company’s Common Stock is quoted or listed and upon which such Conversion
Shares are or become eligible for quotation or listing (subject to official
notice of issuance) and shall maintain same so long as any Notes are
outstanding. The Company will maintain the quotation or listing of
its Common Stock on the American Stock Exchange, Nasdaq Capital Market, Nasdaq
Global Market, Nasdaq Global Select Market, Bulletin Board, or New York Stock
Exchange (whichever of the foregoing is at the time the principal trading
exchange or market for the Common Stock (the “Principal Market”), and will
comply in all respects with the Company's reporting, filing and other
obligations under the bylaws or rules of the Principal Market, as applicable.
The Company will provide Subscribers with copies of all notices it receives
notifying the Company of the threatened and actual delisting of the Common Stock
from any Principal Market. As of the date of this Agreement and the
Closing Date, the Bulletin Board is and will be the Principal
Market.
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(i) create,
incur, assume or suffer to exist any pledge, hypothecation, assignment, deposit
arrangement, lien, charge, claim, security interest, security title, mortgage,
security deed or deed of trust, easement or encumbrance, or preference, priority
or other security agreement or preferential arrangement of any kind or nature
whatsoever (including any lease or title retention agreement, any financing
lease having substantially the same economic effect as any of the foregoing, and
the filing of, or agreement to give, any financing statement perfecting a
security interest under the Uniform Commercial Code or comparable law of any
jurisdiction) (each, a “Lien”) upon any of its
property, whether now owned or hereafter acquired except for: (A) the
Excepted Issuances (as defined in Section 12 hereof), and (B) (a) Liens imposed
by law for taxes that are not yet due or are being contested in good faith and
for which adequate reserves have been established in accordance with generally
accepted accounting principles; (b) carriers’, warehousemen’s, mechanics’,
material men’s, repairmen’s and other like Liens imposed by law, arising in the
ordinary course of business and securing obligations that are not overdue by
more than 30 days or that are being contested in good faith and by appropriate
proceedings; (c) pledges and deposits made in the ordinary course of business in
compliance with workers’ compensation, unemployment insurance and other social
security laws or regulations; (d) deposits to secure the performance of bids,
trade contracts, leases, statutory obligations, surety and appeal bonds,
performance bonds and other obligations of a like nature, in each case in the
ordinary course of business; (e) Liens created with respect to the financing of
the purchase of new property in the ordinary course of the Company’s business up
to the amount of the purchase price of such property; and (f) easements, zoning
restrictions, rights-of-way and similar encumbrances on real property imposed by
law or arising in the ordinary course of business that do not secure any
monetary obligations and do not materially detract from the value of the
affected property (each of (a) through (f), a “Permitted Lien”);
(ii) amend
its certificate of incorporation, bylaws or its charter documents so as to
materially and adversely affect any rights of the Subscribers (an increase in
the amount of authorized shares and an increase in the number of directors will
not be deemed adverse to the rights of the Subscribers);
(iii) repay,
repurchase or offer to repay, repurchase or otherwise acquire or make any
dividend or distribution in respect of any of its Common Stock, preferred stock,
or other equity securities other than to the extent permitted or required under
the Transaction Documents;
(iv) except
as described on Schedule
9(p)(iv), engage in any transactions with any officer, director, employee
or any Affiliate of the Company, 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 entity in which any officer, director, or any such employee has a
substantial interest or is an officer, director, trustee or partner, in each
case in excess of $100,000 other than (i) for payment of salary, or fees for
services rendered, (ii) reimbursement for expenses incurred on behalf of the
Company, and (iii) for other employee benefits, including stock option
agreements under any stock option plan of the Company; or
(v) prepay
or redeem any financing related debt or past due obligations or securities
outstanding as of the Closing Date, or past due obligations (except with respect
to vendor obligations, or any such obligations which in management’s good faith,
reasonable judgment must be repaid to avoid disruption of the Company’s
businesses).
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(a) The
Company agrees to indemnify, hold harmless, reimburse and defend the
Subscribers, the Subscribers’ officers, directors, agents, counsel, Affiliates,
members, managers, control persons, and principal shareholders, against any
claim, cost, expense, liability, obligation, loss or damage (including
reasonable legal fees) of any nature, incurred by or imposed upon the
Subscribers or any such person which results, arises out of or is based upon (i)
any material misrepresentation by Company or breach of any material
representation or warranty by Company in this Agreement or in any Exhibits or
Schedules attached hereto in any Transaction Document, or other agreement
delivered pursuant hereto or in connection herewith, now or after the date
hereof; or (ii) after any applicable notice and/or cure periods, any breach or
default in performance by the Company of any covenant or undertaking to be
performed by the Company hereunder, or any other agreement entered into by the
Company and Subscribers relating hereto.
(b) In
no event shall the liability of the Subscribers or permitted successor hereunder
or under any Transaction Document or other agreement delivered in connection
herewith be greater in amount than the dollar amount of the net proceeds
actually received by such Subscriber or successor upon the sale of Registrable
Securities (as defined herein).
(c) The
procedures set forth in Section 11.6 shall apply to the indemnification set
forth in Section 10(a).
11.1. Registration Rights.
The Company hereby grants the following registration rights to holders of
the Securities.
(i) On
one occasion, commencing 181 days after the Closing Date, but not later than two
years after the Closing Date, upon a written request therefor from any record
holder or holders of more than 50% of the Conversion Shares issued and issuable
upon conversion of the outstanding Notes to the Subscribers to the Offering
(without regard to the Additional Offering), the Company shall prepare and file
with the Commission a registration statement under the 1933 Act registering the
Registrable Securities, as defined in Section 11.1(iv) hereof, which are the
subject of such request for unrestricted public resale by the holder
thereof. For purposes of Sections 11.1(i) and 11.1(ii), Registrable
Securities shall not include Securities which are (A) registered for resale in
an effective registration statement, (B) included for registration in a pending
registration statement, (C) which have been issued without further transfer
restrictions after a sale or transfer pursuant to Rule 144 under the 1933 Act or
(D) which may be resold under Rule 144 without volume
limitations. Registrable Securities shall not include common stock
issuable in connection with the Additional Offering. Upon the receipt
of such request, the Company shall promptly give written notice to all other
record holders of the Registrable Securities that such registration statement is
to be filed and shall include in such registration statement Registrable
Securities for which it has received written requests within ten days after the
Company gives such written notice. Such other requesting record
holders shall be deemed to have exercised their demand registration right under
this Section 11.1(i).
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(ii) If
the Company at any time proposes to register any of its securities under the
1933 Act for sale to the public, whether for its own account or for the account
of other security holders or both, except with respect to registration
statements on Forms X-0, X-0 or another form not available for registering the
Registrable Securities for sale to the public, provided the Registrable
Securities are not otherwise registered for resale by the Subscribers or Holder
pursuant to an effective registration statement, each such time it will give at
least ten (10) days' prior written notice to the record holder of the
Registrable Securities of its intention so to do. Upon the written request of
the holder, received by the Company within ten (10) days after the giving of any
such notice by the Company, to register any of the Registrable Securities not
previously registered, the Company will cause such Registrable Securities as to
which registration shall have been so requested to be included with the
securities to be covered by the registration statement proposed to be filed by
the Company, all to the extent required to permit the sale or other disposition
of the Registrable Securities so registered by the holder of such Registrable
Securities (the “Seller”
or “Sellers”). In the
event that any registration pursuant to this Section 11.1(ii) shall be, in whole
or in part, an underwritten public offering of common stock of the Company, the
number of shares of Registrable Securities to be included in such an
underwriting may be reduced by the managing underwriter if and to the extent
that the Company and the underwriter shall reasonably be of the opinion that
such inclusion would adversely affect the marketing of the securities to be sold
by the Company therein; provided, however, that the Company shall notify the
Seller in writing of any such reduction. Notwithstanding the foregoing
provisions, or Section 11.4 hereof, the Company may withdraw or delay or suffer
a delay of any registration statement referred to in this Section 11.1(ii)
without thereby incurring any liability to the Seller.
(iii) If,
at the time any written request for registration is received by the Company
pursuant to Section 11.1(i), the Company has determined to proceed with the
actual preparation and filing of a registration statement under the 1933 Act in
connection with the proposed offer and sale for cash of any of its securities
for the Company's own account and the Company actually does file such other
registration statement, such written request shall be deemed to have been given
pursuant to Section 11.1(ii) rather than Section 11.1(i), and the rights of the
holders of Registrable Securities covered by such written request shall be
governed by Section 11.1(ii).
(iv) The
Company shall file with the Commission a Form S-1 registration statement (the
“Registration
Statement”) (or such other form that it is eligible to use) in order to
register the Registrable Securities for resale and distribution under the 1933
Act within 180 calendar days after the Closing Date (the “Filing Date”), and use its
best efforts to cause the Registration Statement to be declared effective not
later than 270 days after the Closing Date (the “Effective
Date”). The Company will register not less than a number of
shares of common stock in the aforedescribed registration statement that is
equal to 125% of the Conversion Shares issued and issuable upon conversion of
all of the Notes (the “Registrable Securities”). The
Registrable Securities shall be reserved and set aside exclusively for the
benefit of each Subscriber, pro rata, and not issued,
employed or reserved for anyone other than each Subscriber. The
Registration Statement will immediately be amended or additional registration
statements will be immediately filed by the Company as necessary to register
additional shares of Common Stock to allow the public resale of all Common Stock
included in and issuable by virtue of the Registrable
Securities. Except as set forth on Schedule
11.1 in connection with the Notes issued in the Additional Offering or
with the written consent of the Subscribers, no securities of the Company other
than the Registrable Securities will be included in the Registration
Statement. It shall be deemed a Non-Registration Event if at any time
after the date the Registration Statement is declared effective by the
Commission (“Actual Effective
Date”) the Company has registered for unrestricted resale on behalf of
the Subscribers fewer than 110% of the amount of Common Shares issuable upon
full conversion of all sums due under the Notes (the difference between such
110% and the actual amount of shares registered being the “Shortfall”). In
such event, the Company shall take all actions necessary to cause at least 125%
of the amount of shares of Common Stock issuable upon full conversion of all
sums due under the Notes to be registered within ninety (90) days after the
first day such Shortfall exists. Failure to file the Registration
Statement within thirty (30) days after the first day such Shortfall first
exists or failure to cause such registration to become effective within ninety
(90) days after such Shortfall first exists shall be a Non-Registration
Event.
(v) The
registration rights granted to the Subscribers hereunder shall take precedence
over and be superior to any registration rights granted in connection with
closings under the Additional Offering that occur more than forty-five (45) days
after the Closing Date.
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11.2. Registration
Procedures. If and whenever the Company is required by the provisions of
Section 11.1 to effect the registration of any Registrable Securities under
the 1933 Act, the Company will, as expeditiously as possible:
(a) subject
to the timelines provided in this Agreement, prepare and file with the
Commission a registration statement required by Section 11.1 with respect to
such securities and use its best efforts to cause such registration statement to
become and remain effective for the period of the distribution contemplated
thereby (determined as herein provided), promptly provide to the holders of the
Registrable Securities copies of all filings and Commission letters of comment
and notify the Sellers (by telecopier and by e-mail addresses
provided by the Subscribers) and Grushko & Xxxxxxx, P.C. (by telecopier and
by email to Xxxxxxxxx@xxx.xxx) on
or before the second business day thereafter that the Company
receives notice that (i) the Commission has no comments or no further comments
on the registration statement, and (ii) the registration statement has been
declared effective;
(b) prepare
and file with the Commission such amendments and supplements to such
registration statement and the prospectus used in connection therewith as may be
necessary to keep such registration statement effective until such registration
statement has been effective for a period of one (1) year, and comply with the
provisions of the 1933 Act with respect to the disposition of all of the
Registrable Securities covered by such registration statement in accordance with
the Sellers’ intended method of disposition set forth in such registration
statement for such period;
(c) furnish
to the Sellers, at the Company’s expense, such number of copies of the
registration statement and the prospectus included therein (including each
preliminary prospectus) as such persons reasonably may request in order to
facilitate the public sale or their disposition of the securities covered by
such registration statement or make them electronically available;
(d) use
its reasonable best efforts to register or qualify the Registrable Securities
covered by such registration statement under the securities or “blue sky” laws
of New York and such jurisdictions as the Sellers shall request in writing,
provided, however, that the Company shall not for any such purpose be required
to qualify generally to transact business as a foreign corporation in any
jurisdiction where it is not so qualified or to consent to general service of
process in any such jurisdiction;
(e) list
the Registrable Securities covered by such registration statement with any
securities exchange on which the Common Stock of the Company is then
listed;
(f) notify
the Sellers within twenty-four (24) hours of the happening of any event of which
the Company has knowledge as a result of which the prospectus contained in such
registration statement, as then in effect, includes an untrue statement of a
material fact or omits to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in light of the
circumstances then existing or which becomes subject to a Commission, state or
other governmental order suspending the effectiveness of the registration
statement covering any of the Registrable Securities;
(g) provided
same would not be in violation of the provision of Regulation FD under the 1934
Act, make available for inspection by the Sellers during reasonable business
hours, and any attorney, accountant or other agent retained by the
Sellers, all publicly available, non-confidential financial and other records,
pertinent corporate documents and properties of the Company, and cause the
Company's officers, directors and employees to supply all publicly available,
non-confidential information reasonably requested by the Sellers, attorney,
accountant or agent in connection with such registration statement at such
requesting Seller’s expense; and
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(h) provide
to the Sellers copies of the Registration Statement and amendments thereto five
(5) business days prior to the filing thereof with the
Commission. Any Seller’s failure to comment on any registration
statement or other document provided to a Subscriber or its counsel shall not be
construed to constitute approval thereof nor the accuracy thereof.
11.3. Provision of
Documents. In connection with each registration described in
this Section 11, each Seller will furnish to the Company in writing such
information and representation letters with respect to itself and the proposed
distribution by it as reasonably shall be necessary in order to assure
compliance with federal and applicable state securities laws. Each Seller agrees
to furnish to the Company a completed questionnaire in the form attached to this
Agreement as Exhibit
L
(a “Selling Shareholder
Questionnaire”) not later than seven (7) Business Days following the date
on which such Seller receives draft materials of such Registration Statement
unless the information provided in the Investor Questionnaire delivered in
connection with this Agreement by the Subscriber who is a Selling Shareholder
continues to be accurate as of the date the draft materials are
received.
11.4. Non-Registration
Events. The Company agrees that the Sellers will suffer
damages if the Registration Statement is not filed by the Filing Date and not
declared effective by the Commission by the Effective Date, and any registration
statement required under Section 11.1(i) or 11.1(ii) is not filed within 60 days
after written request and declared effective by the Commission within 120 days
after such request, and maintained in the manner and within the time periods
contemplated by Section 11 hereof, and it would not be feasible to ascertain the
extent of such damages with precision. Accordingly, if (A) the
Registration Statement is not filed on or before the Filing Date, (B) the
Registration Statement is not declared effective on or before the required
Effective Date, (C) due to the action or inaction of the Company the
Registration Statement is not declared effective within three (3) business days
after receipt by the Company or its attorneys of a written or oral communication
from the Commission that the Registration Statement will not be reviewed or that
the Commission has no further comments, (D) if the registration statement
described in Section 11.1(i) or 11.1(ii) is not filed within 60 days after such
written request, or is not declared effective within 120 days after such written
request, or (E) any registration statement described in Sections 11.1(i),
11.1(ii) or 11.1(iv) is filed and declared effective but shall thereafter cease
to be effective without being succeeded within twenty-five (25) business days by
an effective replacement or amended registration statement or for a period of
time which shall exceed forty (45) days in the aggregate per year (defined as
every rolling period of 365 consecutive days commencing on the Actual Effective
Date) (each such event referred to in clauses A through E of this Section 11.4
is referred to herein as a "Non-Registration Event"), the
Company shall deliver to the holder of Registrable Securities, as Liquidated Damages, an amount
equal to one percent (1%) for each full thirty (30) days of the principal amount
of the outstanding Notes and purchase price of Conversion Shares issued upon
conversion of Notes held by Subscribers which are subject to such
Non-Registration Event. The Company must pay the Liquidated Damages
in cash. The Liquidated Damages must be paid within ten (10) days
after the end of each full thirty (30) day period for which Liquidated
Damages are payable. In the event a Registration Statement is filed
by the Filing Date but is withdrawn prior to being declared effective by the
Commission, then such Registration Statement will be deemed to have not been
filed and Liquidated Damages will be calculated accordingly. All oral
or written comments received from the Commission relating to a registration
statement must be responded to within ten (10) business days after receipt of
comments from the Commission. Failure to timely respond to Commission
comments is a Non-Registration Event for which Liquidated Damages shall accrue
and be payable by the Company to the holders of Registrable Securities at the
same rate and amounts set forth above calculated from the date the response was
required to have been made. Liquidated Damages shall not be payable
pursuant to this Section 11.4 in connection with Registrable Securities for such
times as such Registrable Securities may be sold by the holder thereof without
restriction pursuant to Section 144(b)(1)(i) of the 1933 Act. To the extent
that the registration of any or all of the Registrable Securities by the Company
on a registration statement is prohibited (the “Non-Registered
Shares”) as a result of rules, regulations, positions or releases issued
or actions taken by the Commission pursuant to its authority with respect to
Rule 415 and the Company has registered at such time the maximum number of
Registrable Securities permissible upon consultation with the Commission
(applied on a pro rata basis based on the total number of unregistered
Registrable Securities held by each Seller), then the Liquidated Damages
described in this Section 11.4 shall not be applicable to such Non-Registered
Shares for so long as such Rule 415 related impediment is
extant.
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11.5. Expenses. All
expenses incurred by the Company in complying with Section 11, including,
without limitation, all registration and filing fees, printing expenses (if
required), fees and disbursements of counsel and independent public accountants
for the Company, fees and expenses (including reasonable counsel fees) incurred
in connection with complying with state securities or “blue sky” laws, fees of
FINRA, transfer taxes, and fees of transfer agents and registrars, are called
“Registration Expenses.”
All underwriting discounts and selling commissions applicable to the sale of
Registrable Securities are called "Selling
Expenses." The Company will pay all Registration Expenses in
connection with any registration statement described in Section
11. Selling Expenses in connection with each such registration
statement shall be borne by the Seller and may be apportioned among the Sellers
in proportion to the number of shares included on behalf of the Seller relative
to the aggregate number of shares included under such registration statement for
all Sellers, or as all Sellers thereunder may agree.
11.6. Indemnification and
Contribution.
(a) In
the event of a registration of any Registrable Securities under the 1933 Act
pursuant to Section 11, the Company will, to the extent permitted by law,
indemnify and hold harmless the Seller, each of the officers, directors,
agents, Affiliates, members, managers, control persons, and principal
shareholders of the Seller, each underwriter of such Registrable Securities
thereunder and each other person, if any, who controls such Seller or
underwriter within the meaning of the 1933 Act, against any losses, claims,
damages or liabilities, joint or several, to which the Seller, or such
underwriter or controlling person may become subject under the 1933 Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in any registration statement
under which such Registrable Securities was registered under the 1933 Act
pursuant to Section 11, any preliminary prospectus or final prospectus contained
therein, or any amendment or supplement thereof, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading
in light of the circumstances when made, and will subject to the provisions of
Section 11.6(c) reimburse the Seller, each such underwriter and each such
controlling person for any legal or other expenses reasonably incurred by them
in connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the Company shall not be liable to
the Seller to the extent that any such damages arise out of or are based upon an
untrue statement or omission made in any preliminary prospectus if (i) the
Seller failed to send or deliver a copy of the final prospectus delivered by the
Company to the Seller with or prior to the delivery of written confirmation of
the sale by the Seller to the person asserting the claim from which such damages
arise, (ii) the final prospectus would have corrected such untrue statement or
alleged untrue statement or such omission or alleged omission, or (iii) to the
extent that any such loss, claim, damage or liability arises out of or is based
upon an untrue statement or alleged untrue statement or omission or alleged
omission so made in conformity with information furnished by any such Seller in
writing specifically for use in such registration statement or
prospectus.
22
(b) In
the event of a registration of any of the Registrable Securities under the 1933
Act pursuant to Section 11, each Seller severally but not jointly will, to the
extent permitted by law, indemnify and hold harmless the Company, and each
person, if any, who controls the Company within the meaning of the 1933 Act,
each officer of the Company who signs the registration statement, each
director of the Company, each underwriter and each person who controls any
underwriter within the meaning of the 1933 Act, against all losses, claims,
damages or liabilities, joint or several, to which the Company or such officer,
director, underwriter or controlling person may become subject under the 1933
Act or otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any untrue statement
or alleged untrue statement of any material fact contained in the registration
statement under which such Registrable Securities were registered under the 1933
Act pursuant to Section 11, any preliminary prospectus or final prospectus
contained therein, or any amendment or supplement thereof, or arise out of or
are based upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, and will reimburse the Company and each such officer, director,
underwriter and controlling person for any legal or other expenses reasonably
incurred by them in connection with investigating or defending any such loss,
claim, damage, liability or action; provided, however, that the Seller will be
liable hereunder in any such case if and only to the extent that any such loss,
claim, damage or liability arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in reliance upon
and in conformity with information pertaining to such Seller, as such, furnished
in writing to the Company by such Seller specifically for use in such
registration statement or prospectus, and provided, further, however, that the
liability of the Seller hereunder shall be limited to the net proceeds actually
received by the Seller from the sale of Registrable Securities pursuant to such
registration statement.
(c) Promptly
after receipt by an indemnified party hereunder of notice of the commencement of
any action, such indemnified party shall, if a claim in respect thereof is to be
made against the indemnifying party hereunder, notify the indemnifying party in
writing thereof, but the omission so to notify the indemnifying party shall not
relieve it from any liability which it may have to such indemnified party other
than under this Section 11.6(c) and shall only relieve it from any liability
which it may have to such indemnified party under this Section 11.6(c), except
and only if and to the extent the indemnifying party is prejudiced by such
omission. In case any such action shall be brought against any indemnified party
and it shall notify the indemnifying party of the commencement thereof, the
indemnifying party shall be entitled to participate in and, to the extent it
shall wish, to assume and undertake the defense thereof with counsel
satisfactory to such indemnified party, and, after notice from the indemnifying
party to such indemnified party of its election so to assume and undertake the
defense thereof, the indemnifying party shall not be liable to such indemnified
party under this Section 11.6(c) for any legal expenses subsequently incurred by
such indemnified party in connection with the defense thereof other than
reasonable costs of investigation and of liaison with counsel so selected,
provided, however, that, if the defendants in any such action include both the
indemnified party and the indemnifying party and the indemnifying party shall
have reasonably concluded that there may be reasonable defenses available to
indemnified party which are different from or additional to those available to
the indemnifying party or if the interests of the indemnified party reasonably
may be deemed to conflict with the interests of the indemnifying party, the
indemnified parties, as a group, shall have the right to select one separate
counsel, reasonably satisfactory to the indemnified and indemnifying party, and
to assume such legal defenses and otherwise to participate in the defense of
such action, with the reasonable expenses and fees of such separate counsel and
other expenses related to such participation to be reimbursed by the
indemnifying party as incurred.
(d) In
order to provide for just and equitable contribution in the event of joint
liability under the 1933 Act in any case in which either (i) a Seller, or any
controlling person of a Seller, makes a claim for indemnification pursuant to
this Section 11.6 but it is judicially determined (by the entry of a final
judgment or decree by a court of competent jurisdiction and the expiration of
time to appeal or the denial of the last right of appeal) that such
indemnification may not be enforced in such case notwithstanding the fact that
this Section 11.6 provides for indemnification in such case, or (ii)
contribution under the 1933 Act may be required on the part of the Seller or
controlling person of the Seller in circumstances for which indemnification is
not provided under this Section 11.6; then, and in each such case, the Company
and the Seller will contribute to the aggregate losses, claims, damages or
liabilities to which they may be subject (after contribution from others) in
such proportion so that the Seller is responsible only for the portion
represented by the percentage that the public offering price of its securities
offered by the registration statement bears to the public offering price of all
securities offered by such registration statement, provided, however, that, in
any such case, (y) the Seller will not be required to contribute any amount in
excess of the public offering price of all such securities sold by it pursuant
to such registration statement; and (z) no person or entity guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the 0000 Xxx) will be
entitled to contribution from any person or entity who was not guilty of such
fraudulent misrepresentation and provided, further, however, that the liability
of the Seller hereunder shall be limited to the net proceeds actually received
by the Seller from the sale of Registrable Securities pursuant to such
registration statement.
23
(a) Within
five (5) business days (such fifth business day being the “Unlegended Shares Delivery
Date”) after the business day on which the Company has received (i) a
notice that Conversion Shares or any other Common Stock held by Subscriber has
been sold pursuant to the Registration Statement or Rule 144 under the 1933 Act,
(ii) a representation that the prospectus delivery requirements, or the
requirements of Rule 144, as applicable and if required, have been satisfied,
(iii) the original share certificates representing the shares of Common Stock
that have been sold, (iv) complete delivery instructions, and (v) in the case of
sales under Rule 144, customary representation letters of the Subscriber and, if
required, Subscriber’s broker regarding compliance with the requirements of Rule
144, the Company at its expense, (y) shall deliver, and shall cause legal
counsel selected by the Company to deliver to its transfer agent (with copies to
Subscriber) an appropriate instruction and opinion of such counsel, directing
the delivery of shares of Common Stock without any legends including the legend
set forth in Section 4(i) above (the “Unlegended Shares”); and (z)
cause the transmission of the certificates representing the Unlegended Shares
together with a legended certificate representing the balance of the submitted
Common Stock certificate, if any, to the Subscriber at the address specified in
the notice of sale, via express courier, by electronic transfer or otherwise on
or before the Unlegended Shares Delivery Date.
(b) In
lieu of delivering physical certificates representing the Unlegended Shares,
upon request of Subscribers, so long as the certificates therefor do not bear a
legend and the Subscriber is not obligated to return such certificate for the
placement of a legend thereon, the Company shall cause its transfer agent to
electronically transmit the Unlegended Shares by crediting the account of
Subscriber’s prime broker with the Depository Trust Company through its Deposit
Withdrawal Agent Commission system, if such transfer agent participates in such
DWAC system. Such delivery must be made on or before the Unlegended
Shares Delivery Date.
(c) The
Company understands that a delay in the delivery of the Unlegended Shares
pursuant to Section 11.7 hereof later than the Unlegended Shares Delivery Date
could result in economic loss to a Subscriber. As compensation to a
Subscriber for such loss, the Company agrees to pay late payment fees (as
liquidated damages and not as a penalty) to the Subscriber for late delivery of
Unlegended Shares in the amount of $100 per business day after the Unlegended
Shares Delivery Date for each $10,000 of purchase price of the Unlegended Shares
subject to the delivery default. If during any 360 day period, the Company
fails to deliver Unlegended Shares as required by this Section 11.7 for an
aggregate of thirty days, then each Subscriber or assignee holding Securities
subject to such default may, at its option, require the Company to redeem all or
any portion of the Shares subject to such default at a price per share equal to
the greater of (i) 110%, or (ii) a fraction in which the numerator is the
highest closing price of the Common Stock during the aforedescribed thirty day
period and the denominator of which is the lowest conversion price during such
thirty day period, multiplied by the price paid by Subscriber for such Common
Stock (“Unlegended Redemption
Amount”). The Company shall pay any payments incurred under
this Section in immediately available funds upon demand.
(d) In
the event a Subscriber shall request delivery of Unlegended Shares as described
in Section 11.7 and the Company is required to deliver such Unlegended Shares
pursuant to Section 11.7, the Company may not refuse to deliver Unlegended
Shares based on any claim that such Subscriber or any one associated or
affiliated with such Subscriber has been engaged in any violation of law, or for
any other reason, unless, an injunction or temporary restraining order from a
court, on notice, restraining and or enjoining delivery of such Unlegended
Shares shall have been sought and obtained by the Company and the Company has
posted a surety bond for the benefit of such Subscriber in the amount of 120% of
the amount of the aggregate purchase price of the Common Stock which is subject
to the injunction or temporary restraining order, which bond shall remain in
effect until the completion of arbitration/litigation of the dispute and the
proceeds of which shall be payable to such Subscriber to the extent Subscriber
obtains judgment in Subscriber’s favor.
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(e)
In addition to any other rights available to Subscriber, if the Company fails to
deliver to a Subscriber Unlegended Shares as required pursuant to this Agreement
and after the Unlegended Shares Delivery Date the Subscriber, or a broker on the
Subscriber’s behalf, purchases (in an open market transaction or otherwise)
shares of common stock to deliver in satisfaction of a sale by such Subscriber
of the shares of Common Stock which the Subscriber was entitled to receive from
the Company (a "Buy-In"), then the Company
shall pay in cash to the Subscriber (in addition to any remedies available to or
elected by the Subscriber) the amount by which (A) the Subscriber's total
purchase price (including brokerage commissions, if any) for the shares of
common stock so purchased exceeds (B) the aggregate purchase price of the shares
of Common Stock delivered to the Company for reissuance as Unlegended Shares
together with interest thereon at a rate of 15% per annum accruing until such
amount and any accrued interest thereon is paid in full (which amount shall be
paid as liquidated damages and not as a penalty). For example, if a
Subscriber purchases shares of Common Stock having a total purchase price of
$11,000 to cover a Buy-In with respect to $10,000 of purchase price of shares of
Common Stock delivered to the Company for reissuance as Unlegended Shares, the
Company shall be required to pay the Subscriber $1,000, plus interest. The
Subscriber shall provide the Company written notice indicating the amounts
payable to the Subscriber in respect of the Buy-In.
11.8. In
the event commencing twelve months after
the Closing Date and ending twenty-four (24) months thereafter, the
Subscriber is not permitted to resell any of the Conversion Shares without any
restrictive legend or if such sales are permitted but subject to volume
limitations or further restrictions on resale as a result of the unavailability
to Subscriber of Rule 144(b)(1)(i) under the 1933 Act or any successor rule
(a “144 Default”), for
any reason including but not limited to failure by the Company to file
quarterly, annual or any other filings by the required filing dates, except for
Subscriber’s status as an Affiliate or “control person” of the Company or as a
result of a change in current applicable securities laws, then the Company shall
pay such Subscriber as liquidated damages and not as a penalty for each full
thirty days an amount equal to 1% of the purchase price of the Conversion
Shares subject to such 144 Default. Liquidated Damages shall
not be payable pursuant to this Section 11.8 in connection with Shares for such
times as such Shares may be sold by the holder thereof without volume or other
restrictions pursuant to Section 144(b)(1)(i) of the 1933 Act or
pursuant to an effective registration statement.
12. (a) Favored Nations
Provision. Other than in connection with (i) full or partial
consideration in connection with a strategic merger, acquisition, consolidation
or purchase of substantially all of the securities or assets of a corporation or
other entity which holders of such securities or debt are not at any time
granted registration rights, (ii) the Company’s issuance of securities in
connection with strategic license agreements and other partnering arrangements
so long as such issuances are not for the purpose of raising capital and which
holders of such securities or debt are not at any time granted registration
rights, (iii) the Company’s issuance of Common Stock or the issuances or grants
of options to purchase Common Stock to employees, directors, and consultants,
pursuant to plans described on Schedule
5(d) as such plans are constituted on the Closing Date, (iv) upon the
exercise or exchange of or conversion of any securities exercisable or
exchangeable for or convertible into shares of Common Stock issued and
outstanding on the date of this Agreement on the terms in effect on the Closing
Date which are described on Schedule
5(d), and (v) as a result of the conversion of Notes which are granted or
issued pursuant to this Agreement or the Additional Offering (collectively, the
foregoing (i) through (v) are “Excepted Issuances”), if at
any time the Notes are outstanding, the Company shall agree to or issue (the
“Lower Price Issuance”)
any Common Stock or securities convertible into or exercisable for shares of
Common Stock (or modify any of the foregoing which may be outstanding) to any
person or entity at a price per share or conversion or exercise price per share
which shall be less than the Conversion Price in effect at such time, without
the consent of the Subscribers, then the Conversion Price shall automatically be
reduced to such other lower price. Common Stock issued or issuable by
the Company for no consideration or for consideration that cannot be determined
at the time of issue will be deemed issuable or to have been issued for $0.0001
per share of Common Stock. The rights of Subscribers set forth in
this Section 12 are in addition to any other rights the Subscribers have
pursuant to this Agreement, the Notes, any Transaction Document, and any other
agreement referred to or entered into in connection herewith or to which
Subscribers and Company are parties.
25
(b) Maximum Exercise of
Rights. In the event the exercise of the rights
described in Section 12(a) would or could result in the issuance of an amount of
Common Stock of the Company that would exceed the maximum amount that may be
issued to Subscribers calculated in the manner described in Section 7.3 of this
Agreement, then the issuance of such additional shares of Common Stock of the
Company to Subscribers will be deferred in whole or in part until such time as a
Subscriber notifies the Company that such Subscriber is able to beneficially own
such Common Stock without exceeding the applicable maximum amount set forth
calculated in the manner described in Section 7.3 of this
Agreement.
(a) Notices. All
notices, demands, requests, consents, approvals, and other communications
required or permitted hereunder shall be in writing and, unless otherwise
specified herein, shall be (i) personally served, (ii) deposited in the mail,
registered or certified, return receipt requested, postage prepaid, (iii)
delivered by reputable air courier service with charges prepaid, or (iv)
transmitted by hand delivery, telegram, or facsimile, addressed as set forth
below or to such other address as such party shall have specified most recently
by written notice. Any notice or other communication required or
permitted to be given hereunder shall be deemed effective (a) upon hand delivery
or delivery by facsimile, with accurate confirmation generated by the
transmitting facsimile machine, at the address or number designated below (if
delivered on a business day during normal business hours where such notice is to
be received), or the first business day following such delivery (if delivered
other than on a business day during normal business hours where such notice is
to be received) or (b) on the second business day following the date of mailing
by express courier service, fully prepaid, addressed to such address, or upon
actual receipt of such mailing, whichever shall first occur. The addresses for
such communications shall be: (i) if to the Company, to: Mesa Energy Holdings,
Inc., 0000 Xxxxxx Xxxxxx Xxxx, Xxxxx 000, Xxxxxx, XX 00000, Attn: Xxxxx X.
Xxxxxxx, CEO, facsimile: (760) ___________, with a copy to: Gottbetter &
Partners, LLP, 000 Xxxxxxx Xxxxxx, 00xx Xxxxx,
Xxx Xxxx, XX 00000, Attn: Xxxx X. Xxxxxxxxxx, Esq., facsimile: (000) 000-0000,
and (ii) if to the Subscribers, to: the addresses and fax numbers indicated on
the signature pages hereto, with an additional copy by fax only to: Grushko
& Xxxxxxx, P.C., 000 Xxxxx Xxxxxx, Xxxxx 0000, Xxx Xxxx, Xxx Xxxx 00000,
facsimile: (000) 000-0000.
(b) Entire Agreement;
Assignment. This Agreement and other documents delivered in
connection herewith represent the entire agreement between the parties hereto
with respect to the subject matter hereof and may be amended only by a writing
executed by both parties. Neither the Company nor the Subscribers has
relied on any representations not contained or referred to in this Agreement and
the documents delivered herewith. No right or obligation of the
Company shall be assigned without prior notice to and the written consent of the
Subscribers.
(c) Counterparts/Execution. This
Agreement may be executed in any number of counterparts and by the different
signatories hereto on separate counterparts, each of which, when so executed,
shall be deemed an original, but all such counterparts shall constitute but one
and the same instrument. This Agreement may be executed by facsimile
signature and delivered by electronic transmission.
26
(d) Law Governing this
Agreement. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York without regard to
principles of conflicts of laws. Any action brought by either party against the
other concerning the transactions contemplated by this Agreement shall be
brought only in the state courts of New York or in the federal courts located in
the state and county of New York. The parties to this Agreement
hereby irrevocably waive any objection to jurisdiction and venue of any action
instituted hereunder and shall not assert any defense based on lack of
jurisdiction or venue or based upon forum non
conveniens. The parties executing this Agreement
and other agreements referred to herein or delivered in connection herewith on
behalf of the Company agree to submit to the in personam jurisdiction of such
courts and hereby irrevocably waive trial by jury. The
prevailing party shall be entitled to recover from the other party its
reasonable attorney's fees and costs. In the event that any provision
of this Agreement or any other agreement delivered in connection herewith is
invalid or unenforceable under any applicable statute or rule of law, then such
provision shall be deemed inoperative to the extent that it may conflict
therewith and shall be deemed modified to conform with such statute or rule of
law. Any such provision which may prove invalid or unenforceable
under any law shall not affect the validity or enforceability of any other
provision of any agreement. Each party hereby irrevocably waives
personal service of process and consents to process being served in any suit,
action or proceeding in connection with this Agreement or any other Transaction
Document by mailing a copy thereof via registered or certified mail or overnight
delivery (with evidence of delivery) to such party at the address in effect for
notices to it under this Agreement and agrees that such service shall constitute
good and sufficient service of process and notice thereof. Nothing
contained herein shall be deemed to limit in any way any right to serve process
in any other manner permitted by law.
(e) Specific Enforcement,
Consent to Jurisdiction. The Company and Subscribers
acknowledge and agree that irreparable damage would occur in the event that any
of the provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed
that the parties shall be entitled to seek an injunction or injunctions to
prevent or cure breaches of the provisions of this Agreement and to enforce
specifically the terms and provisions hereof, this being in addition to any
other remedy to which any of them may be entitled by law or
equity. Subject to Section 13(d) hereof, the Company hereby
irrevocably waives, and agrees not to assert in any such suit, action or
proceeding, any claim that it is not personally subject to the jurisdiction in
New York of such court, that the suit, action or proceeding is brought in an
inconvenient forum or that the venue of the suit, action or proceeding is
improper. Nothing in this Section shall affect or limit any right to
serve process in any other manner permitted by law.
(f) Damages. In
the event the Subscriber is entitled to receive any liquidated damages pursuant
to the Transactions Documents, the Subscriber may elect to receive the greater
of actual damages or such liquidated damages.
(g) Maximum
Payments. Nothing contained herein or in any document
referred to herein or delivered in connection herewith shall be deemed to
establish or require the payment of a rate of interest or other charges in
excess of the maximum permitted by applicable law. In the event that
the rate of interest or dividends required to be paid or other charges hereunder
exceed the maximum permitted by such law, any payments in excess of such maximum
shall be credited against amounts owed by the Company to the Subscribers and
thus refunded to the Company.
(h) Calendar
Days. All references to “days” in the Transaction
Documents shall mean calendar days unless otherwise stated. The terms
“business days” and “trading days” shall mean days that the New York Stock
Exchange is open for trading for three or more hours. Time periods
shall be determined as if the relevant action, calculation or time period were
occurring in New York City. Any deadline that falls on a non-business
day in any of the Transaction Documents shall be automatically extended to the
next business day and interest, if any, shall be calculated and payable through
such extended period.
(i) Captions: Certain
Definitions. The captions of the various sections and
paragraphs of this Agreement have been inserted only for the purposes of
convenience; such captions are not a part of this Agreement and shall not be
deemed in any manner to modify, explain, enlarge or restrict any of the
provisions of this Agreement. As used in this Agreement the term
“person” shall
mean and include an individual, a partnership, a joint venture, a corporation, a
limited liability company, a trust, an unincorporated organization and a
government or any department or agency thereof.
27
(j) Consent. As
used in this Agreement and the Transaction Documents and any other agreement
delivered in connection herewith, “consent of the Subscribers” or similar
language means the consent of holders of not less than 70% of the outstanding
principal amount of the Notes on the date consent is requested which must
include the Subscribers to the Offering so long as either of the name holds not
less than $100,000 of Note Principal (such amount being a “Majority in
Interest”). A Majority in Interest may consent to take or
forebear from any action permitted under or in connection with the Transaction
Documents, modify any Transaction Documents or waive any default or requirement
applicable to the Company, Subsidiaries or Subscribers under the Transaction
Documents provided the effect of such action does not waive any accrued interest
or damages and further provided that the relative rights of the Subscribers to
each other remains unchanged.
(k) Severability. In
the event that any term or provision of this Agreement shall be finally
determined to be superseded, invalid, illegal or otherwise unenforceable
pursuant to applicable law by an authority having jurisdiction and venue, that
determination shall not impair or otherwise affect the validity, legality or
enforceability: (i) by or before that authority of the remaining terms and
provisions of this Agreement, which shall be enforced as if the
unenforceable term or provision were deleted, or (ii) by or before any other
authority of any of the terms and provisions of this Agreement.
(l) Successor
Laws. References in the Transaction Documents to laws, rules,
regulations and forms shall also include successors to and functionally
equivalent replacements of such laws, rules, regulations and forms. A
successor rule to Rule 144(b)(1)(i) shall include any rule that would be
available to a non-Affiliate of the Company for the sale of Common Stock not
subject to volume restrictions and after a six month holding
period.
(m) Omnibus Signature
Page. This Agreement is intended to be read and construed in
conjunction with the Escrow Agreement, the Security Agreement, Collateral Agent
Agreement and the Guaranties. Accordingly, pursuant to the terms and
conditions of this Agreement and the Escrow Agreement, it is hereby agreed that
the execution by the Subscriber of this Agreement, in the place set forth
herein, shall constitute agreement to be bound by the terms and conditions
hereof and the terms and conditions of the Escrow Agreement, Collateral Agent
Agreement, the Security Agreement and the Guaranties, with the same effect as if
each of such separate but related agreements were separately
signed.
[SIGNATURE
PAGE FOLLOWS]
28
Please
acknowledge your acceptance of the foregoing Subscription Agreement by signing
and returning a copy to the undersigned whereupon it shall become a binding
agreement between us.
MESA
ENERGY HOLDINGS, INC.
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a
Delaware corporation
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By:
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Name:
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Title:
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Dated: _______, 2009 |
SUBSCRIBER
|
PURCHASE PRICE AND
NOTE
PRINCIPAL |
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By:
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29
Exhibit
A
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Form
of Note
|
Exhibit
B
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Escrow
Agreement
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Exhibit
C
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Merger
Documents
|
Exhibit
D
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Working
Interest Documents
|
Exhibit
E
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Form
of Security Agreement
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Exhibit
F
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Form
of Guaranty
|
Exhibit
G
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Form
of Collateral Agent Agreement
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Exhibit
H
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Working
Interest Security Documents
|
Exhibit
I
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Investor
Questionnaire
|
Exhibit
J
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Form
of Legal Opinion
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Exhibit
K
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Super
Form 8-K
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Exhibit
L
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Selling
Shareholder Questionnaire
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Schedule
5(a)
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Subsidiaries
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Schedule
5(d)
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Capitalization
and Additional Issuances
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Schedule
5(q)
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Banking
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Schedule
5(x)
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Transfer
Agent
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Schedule
8(a)
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Brokers
|
Schedule
9(e)
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Use
of Proceeds
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Schedule
9(p)(iv)
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Exceptions
to Negative Covenants
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Schedule
11.1
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Registration
Rights
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30
EXHIBIT I
INVESTOR
QUESTIONNAIRE
All
prospective investors in Mesa Energy Holdings, Inc., a Delaware corporation (the
“Company”
herein) are required to complete this questionnaire in order to purchase secured
promissory notes. In addition, supplemental information may be required, at the
Company’s discretion, in order to confirm the investor’s eligibility to invest
in the Company as an accredited investor under the Securities Act of 1933, as
amended (the “Act”).
Prospective
investors must initial those representations applicable to the investor and
hereby represents and warrants that those representations which are initialed
are true and correct.
____________
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1.
|
Investor
represents that he or she has an individual net worth, or together with
his or her spouse a combined net worth, in excess of $1,000,000. For
purposes of this representation, “net worth” means the excess of total
assets at fair market value, including, home,1 home furnishings and
automobiles, over total liabilities.
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____________
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2.
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Investor
represents that he or she had an individual income of more than $200,000
in each of the last two calendar years or joint income with his or her
spouse in excess of $300,000 in each of those years and reasonably expects
to reach the same income level in the current calendar
year.
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FOR CORPORATIONS, PARTNERSHIPS OR LIMITED
LIABILITY COMPANIES:
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||
____________
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3.
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Investor
represents that it is a corporation, Massachusetts or similar business
trust, or partnership not formed for the specific purpose of acquiring
Units with total assets in excess of
$5,000,000.
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1
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For
purposes of determining “net worth,” the principal residence owned by an
individual must be valued either at (A) cost, including the cost of
improvements, net of current encumbrances upon the property, or (B) the
appraised value of the property as determined upon a written appraisal
used by an institutional lender making a loan to the individual secured by
the property, including the cost of subsequent improvements, net of
current encumbrances upon the property. “Institutional lender” means a
bank, savings and loan company, industrial loan company, credit union or
personal property broker or a company whose principal business is as a
lender upon loans secured by real property and that has such loans
receivable in the amount of $2,000,000 or
more.
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31
____________
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4.
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Investor
represents that all of its equity owners meet the standard set out in
Statement (1) above ($ 1,000,000 net worth) or Statement (2) above
($200,000 individual income or $300,000 joint income). For purposes of
this representation, “net worth” means the excess of total tangible assets
at current value less total liabilities. Please list below the names of
all equity owners of Investor. EACH SUCH
EQUITY OWNER MUST COMPLETE AN INVESTOR
QUESTIONNAIRE.
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Name
of All Equity Owners
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_____________________________________________
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_____________________________________________
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_____________________________________________
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FOR
TRUSTS OTHER THAN EMPLOYEE BENEFIT TRUSTS:
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||
____________
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5.
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Investor
represents that it has total assets in excess of $5,000,000, was not
formed for the specific purpose of acquiring Units and that the investment
is being directed by a sophisticated person as defined below. For purposes
of this representation, a “sophisticated person” means a person who has
such knowledge and experience in financial and business matters that he or
she is capable of evaluating the merits and risks of the prospective
investment.
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____________
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6.
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Investor
represents that it is (a) a bank as defined in Section 3(a)(2) of the Act,
(b) acting in its fiduciary capacity as trustee, (c) subscribing for the
purchase of the securities being offered on behalf of a
trust.
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____________
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7.
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Investor
represents that it is a revocable trust that may be amended or revoked at
any time by its grantors and that all of its grantors meet the standard
set out in Statement (1) above ($1,000,000 net worth) or statement (2)
(above $200,000 individual income or $300,000 joint income). Please list
below the names of all grantors. EACH
SUCH GRANTOR MUST COMPLETE AN INVESTOR
QUESTIONNAIRE.
|
Name
of Grantors
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||
_____________________________________________
|
||
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_____________________________________________
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_____________________________________________
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32
FOR
EMPLOYEE BENEFIT PLAN; OR STATE PLANS:
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||
____________
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8.
|
Investor
represents that it is an employee benefit plan within the meaning of Title
I of the Employee Retirement Income Security Act of 1974, as amended
(“ERISA”), with respect to which the decision to invest was made by a plan
fiduciary as defined in Section 3(21) of ERISA that is a bank, savings and
loan association, insurance company or investment adviser registered under
the Investment Advisers Act of 1940, as amended (the “1940
Act”).
|
____________
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9.
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Investor
represents that it is an employee benefit plan within the meaning of Title
I of ERISA and it has total assets in excess of
$5,000,000.
|
____________
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10.
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Investor
represents that it is a self-directed plan with respect to which the
decision to invest was made solely by persons who are “accredited
investors” within the meaning of Regulation D under the
Act.
|
____________
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11.
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Investor
represents that it is a plan established and maintained by a state, its
political subdivisions, or an agency or instrumentality of a state or its
political subdivisions, for the benefit of its employees, and that it has
total assets in excess of $5,000,000.
|
FOR
CHARITABLE ORGANIZATIONS:
|
||
____________
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12.
|
Investor
represents that it is an organization described in Section 501(c)(3) of
the Code not formed for the specific purpose of acquiring Units with total
assets in excess of $5,000,000.
|
OTHER
ACCREDITED INVESTORS:
|
||
____________
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13.
|
Investor
represents that it is either a non-resident alien of the United States, a
foreign entity (i.e., not formed under the laws of any state of the United
States or its territories) or a bank as defined in Section 3 (a)(2) of the
Act whether acting in its individual or fiduciary
capacity.
|
____________
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14.
|
Investor
represents that it is a savings and loan association or other institution
specified in Section 3(a)(5)(A) of the Act whether acting in its
individual or fiduciary capacity.
|
____________
|
15.
|
Investor
represents that it is a broker or dealer registered pursuant to Section 15
of the Securities Exchange Act of 1934.
|
____________
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16.
|
Investor
represents that it is an insurance company as defined in
Section 2(13) of the Act.
|
____________
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17.
|
Investor
represents that it is an investment company registered under the 1940
Act.
|
____________
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18.
|
Investor
represents that it is a business development company as defined in Section
2(a)(48) of the 1940
Act.
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33
____________
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19.
|
Investor
represents that it is a Small Business Investment Company licensed by the
U.S. Small Business Administration under Section 301(c) or (d) of the
Small Business Investment Act of 1958, as amended.
|
____________
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20.
|
Investor
represents that it is a private business development company as defined in
Section 202(a)(22) of the 1940
Act.
|
A.
Primary
Contact Person for General Notices:
Name:
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|||||
Address:
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|
|||||
|
||||||
Telephone:
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|
|||||
Fax:
|
|
|||||
E-mail:
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|
B.
Contact
Person for Financial Information and Reporting (including quarterly and annual
financial reports), Distributions and Tax Matters (including Form K-1) if
different from A, above:
Name:
|
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|||||
Address:
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|
|||||
|
||||||
Telephone:
|
|
|||||
Fax:
|
|
|||||
E-mail:
|
|
C.
Address
of Investor (if different from A, above):
|
||
|
||
|
For
distributions of cash, please wire funds to the following bank
account:
Bank
Name:
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|
||||||
Bank
Location:
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|
||||||
Account
Number:
|
|||||||
For
further credit to (if any):
|
|
||||||
Reference:
|
|
34
For
distributions in kind, please credit securities to my brokerage account at the
following firm:
Firm
Name:
|
|
|||||
Address:
|
|
|||||
Account
Name:
|
|
|||||
Account
Number:
|
|
|||||
DTC
Number:
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|
Dated: ___________,
2009
|
|||
|
|||
Name,
if individual
|
|||
|
|||
Signature,
if individual
|
|||
|
|||
Name,
if Entity
|
|||
By:
|
|
||
Title:
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35
EXHIBIT
L
Selling
Securityholder Notice and Questionnaire
The
undersigned beneficial owner of Registrable Common Shares of Mesa Energy
Holdings, Inc., a Delaware corporation (the “Company”), understands that
the Company intends to file with the Securities and Exchange Commission a
registration statement (the “Registration Statement”) for
the registration and resale under Rule 415 of the Securities Act of 1933, as
amended, of the Registrable Common Shares, in accordance with the terms of the
Subscription Agreement to which this document is annexed. A copy of
the Subscription Agreement is available from the Company upon request at the
address set forth below. All capitalized terms not otherwise defined
herein shall have the meanings ascribed thereto in the Subscription
Agreement.
Certain
legal consequences arise from being named as a selling securityholder in the
Registration Statement and the related prospectus. Accordingly,
holders and beneficial owners of Registrable Common Shares are advised to
consult their own securities law counsel regarding the consequences of being
named or not being named as a selling securityholder in the Registration
Statement and the related prospectus.
The
undersigned beneficial owner (the “Selling Securityholder”) of
Registrable Common Shares hereby elects to include the Registrable Common Shares
owned by it in the Registration Statement.
The
undersigned hereby provides the following information to the Company and
represents and warrants that such information is accurate:
QUESTIONNAIRE
1.
|
Name:
|
|
(a)
|
Full
Legal Name of Selling Securityholder
|
|
(b)
|
Full
Legal Name of Registered Holder (if not the same as (a) above) through
which Registrable Common Shares are held:
|
|
(c)
|
Full
Legal Name of Natural Control Person (which means a natural person who
directly or indirectly alone or with others has power to vote or dispose
of the securities covered by the questionnaire):
|
2.
|
Address
for Notices to Selling
Securityholder:
|
|
|
|
|
Telephone:
_________________________________ Fax:
__________________________________________
|
Email:
____________________________________________________________________________________________
|
Contact
Person:
____________________________________________________________________________________
|
36
3.
|
Broker-Dealer
Status:
|
|
(a)
|
Are
you a broker-dealer?
|
Yes ¨ No ¨
|
(b)
|
If
“yes” to Section 3(a), did you receive your Registrable Common Shares as
compensation for investment banking services to the
Company?
|
Yes ¨ No ¨
Note:
|
If
no, the Commission’s staff has indicated that you should be identified as
an underwriter in the Registration
Statement.
|
|
(c)
|
Are
you an affiliate of a
broker-dealer?
|
Yes ¨ No ¨
|
(d)
|
If
you are an affiliate of a broker-dealer, do you certify that you bought
the Registrable Common Shares in the ordinary course of business, and at
the time of the purchase of the Registrable Common Shares to be resold,
you had no agreements or understandings, directly or indirectly, with any
person to distribute the Registrable Common
Shares?
|
Yes ¨ No ¨
Note:
|
If
no, the Commission’s staff has indicated that you should be identified as
an underwriter in the Registration
Statement.
|
4.
|
Beneficial
Ownership of Securities of the Company Owned by the Selling
Securityholder:
|
Except
as set forth below in this Item 4, the undersigned is not the beneficial or
registered owner of any securities of the Company other than the securities
issuable pursuant to the PPO.
|
(a)
|
Type
and Amount of other securities (other than the Registrable Common Shares)
beneficially owned by the Selling Securityholder:
|
5.
|
Relationships
with the Company:
|
Except
as set forth below, neither the undersigned nor any of its affiliates, officers,
directors or principal equity holders (owners of 5% or more of the equity
securities of the undersigned) has held any position or office or has had any
other material relationship with the Company (or its predecessors or affiliates)
during the past three years.
|
State
any exceptions here:
|
37
The
undersigned agrees to promptly notify the Company of any inaccuracies or changes
in the information provided herein that may occur subsequent to the date hereof
at any time while the Registration Statement remains effective.
By
signing below, the undersigned consents to the disclosure of the information
contained herein in its answers to Items 1 through 5 and the inclusion of such
information in the Registration Statement and the related prospectus and any
amendments or supplements thereto. The undersigned understands that
such information will be relied upon by the Company in connection with the
preparation or amendment of the Registration Statement and the related
prospectus.
Dated:
|
|
Beneficial Owner:
|
|
||
By:
|
|
||||
Name:
|
|||||
Title:
|
PLEASE
FAX A COPY OF THE COMPLETED AND EXECUTED NOTICE AND QUESTIONNAIRE, AND RETURN
THE ORIGINAL BY OVERNIGHT MAIL, TO:
Gottbetter
& Partners, LLP
000
Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx,
XX 00000
Attention: Xxxxxx
X. XxXxxxxx
Facsimile: (000)
000-0000
38