NOTE AND WARRANT PURCHASE AGREEMENT
Exhibit 10.1
THIS NOTE AND WARRANT PURCHASE
AGREEMENT (this “Agreement”),
dated as of January 27, 2010, is entered into by and between Helix Wind, Corp.,
a Nevada corporation (the “Company”),
with its principal executive office at 0000 Xxxxxxxxxx Xxxxxx, Xxx Xxxxx, XX
00000, and St. Xxxxxx Investments, LLC, an Illinois limited liability company,
its successors or assigns (the “Investor”),
with its principal executive office at 000 Xxxx Xxxxxx Xxxxx, Xxxxx 000,
Xxxxxxx, Xxxxxxxx 00000. Each of the Company and the Investor are
referred to herein individually as a “Party” and
collectively as the “Parties.”
A. The
Company has duly authorized the sale and issuance to the Investor of a
convertible secured promissory note in the principal amount of Seven Hundred
Eighty Thousand and 00/100 Dollars ($780,000.00) in the form attached hereto as
Exhibit
A (the “Note”) and
a warrant to purchase 300,000 shares of the Company’s common stock (the “Common
Stock”) in the form attached hereto as Exhibit
B (the “Warrant,”
and together with the Note, the “Securities”).
B. On
the terms and subject to the conditions set forth herein, the Investor is
willing to purchase from the Company, and the Company is willing to sell to the
Investor, the Securities.
NOW
THEREFORE, in consideration of the foregoing, and the representations,
warranties, and conditions set forth below, the parties hereto, intending to be
legally bound, hereby agree as follows:
1. The Securities and the
Closings.
(a) Issuance of
Securities. At the Initial Closing (as defined below), the
Company agrees to issue and sell to the Investor, and, subject to all of the
terms and conditions hereof, the Investor agrees to purchase, the
Securities.
(b) Closing;
Delivery. The sale and purchase of the Securities shall take
place in two closings, an Initial Closing (defined below), to be held at such
time as the Company and the Investor may determine, and a Second Closing
(defined below) as provided below (each, a “Closing”
and together the “Closings”). Each
of the Closings is to be held at the offices of the Investor. The
“Initial
Closing Date” shall signify the date on which the Initial Closing is
completed and the “Second Closing
Date” shall signify the date on which the Second Closing is completed
(each a “Closing
Date” and together the “Closing
Dates”).
(c) At
the “Initial
Closing”, the Parties, and other parties to the Transaction Documents (as
defined below) (the “Other
Parties”), will take the following steps in the following
order:
(i) the
Parties and the Other Parties, as applicable, shall sign and deliver to each
other copies of the Transaction Documents including, without limiting the
foregoing, the Assignments of Shares in Exhibit A of the Stock Purchase
Agreement, via email;
(ii) the
Pledgor (as defined in the Pledge Agreement (defined below)) shall send via
overnight courier the Pledged Shares (as defined and set forth in the Pledge
Agreement) to the Investor at the Investor’s address provided
below;
(iii) the
Investor shall deposit (a) Five Hundred Eighty-Five Thousand and 00/100 Dollars
($585,000.00) (the “Note and Warrant
Purchase Price”), and (b) Five Hundred and 00/100 Dollars ($500.00) (the
“Stock
Purchase Price”), into the attorney trust account (the “Trust
Account”) at Xxxxxxx Xxxxxxx Xxxxxxx & Deere, P.C. (the “Investor’s
Counsel”) (the Note and Warrant Purchase Price together with the Stock
Purchase Price, the “Trust
Deposit”), whereupon the Investor’s Counsel shall notify the Company via
email at xxx@xxxxxxxxx.xxx that
the Note and Warrant Purchase Price and the Stock Purchase Price has been
received into the Trust Account;
(iv) the
Seller (as defined in the Stock Purchase Agreement) shall transmit via
Depository Trust Company (“DTC”)
50,000 shares of Common Stock (the “First
Shares”) to the following brokerage account (the “Brokerage
Account”) belonging to the Investor:
Ridge /
Blue Trading, LLC
000
Xxxxxxxxxx Xxx. Xxxxx X
Xxxxxxxxxx
XX 00000
DTC:
0158
Account:
00000000
Account
Name: St. Xxxxxx Investments, LLC
whereupon,
the Investor shall notify the Company via email at xxx@xxxxxxxxx.xxx and
the Seller via email at xxxxx@xxxxxxxxx.xx that the First Shares have been
received into the Brokerage Account;
(v) so
long as all of the closing conditions in the Transaction Documents are
satisfied, the Investor shall direct the Investor’s Counsel to deliver and send
(a) Four Hundred Thousand and 00/100 Dollars ($400,000.00) (the “Initial Closing
Tranche”) to the Company via wire transfer to the following account
belonging to the Company (the “Company
Account”):
Xxxxx
Fargo Bank, N.A.
La Jolla, California
ABA Routing
No.: 000000000
Swift
No.:
XXXXXX0X
Account
No.: 9763454080
Account
Name: Helix
Wind, Corp.,
and (b)
one half (1/2) of the Stock Purchase Price to the Seller to an account
designated by the Seller in writing; and
(vi) The
Investor’s Counsel shall hold the Second Closing Tranche (as defined below) in
the Trust Account awaiting further instructions from the
Investor.
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(d) Failure of the Initial
Closing. In the event the Initial Closing does not occur for whatever
reason, then the following shall occur:
(i)
the Investor shall immediately return the Pledged Shares to
the Pledgor;
(ii) the
Investor’s Counsel shall immediately return the Trust Deposit to the Investor;
and
(iii) the
Investor shall immediately return the First Shares to the Seller.
(e) At
the “Second
Closing”, which shall occur, if at all, no sooner than thirty (30) days
but no later than thirty five (35) days from the Initial Closing Date, the
Parties, and the Other Parties, will take the following steps in the following
order:
(i)
the Company shall send written notice to the Investor and the
Seller that the Company is ready to complete the Second Closing;
(ii) the
Seller shall transmit via DTC 50,000 shares of Common Stock (the “Second
Shares”) to the Brokerage Account, whereupon the Investor shall notify
the Company via email at xxx@xxxxxxxxx.xxx and
the Seller via email at xxxxx@xxxxxxxxx.xx that the Second Shares have been
received into the Brokerage Account; and
(iii) so
long as (a) all of the closing conditions in the Transaction Documents are
satisfied, and (b) neither a Trigger Event (as defined in the Note) nor an Event
of Default (as defined in the Note) has occurred, in the reasonable discretion
of the Investor, the Investor shall direct its counsel to send (y) One Hundred
Eighty-Five Thousand and 00/100 Dollars ($185,000.00) (the “Second Closing
Tranche”) to the Company via wire transfer to the Company Account, and
(z) one half (1/2) of the Stock Purchase Price to the Seller. For the
avoidance of doubt, if a Trigger Event or an Event of Default has occurred, or
if any closing condition including, without limitation, the receipt of the
Second Shares as set forth above, is not satisfied, then the Investor shall have
no obligation to complete the Second Closing.
(f) Failure of the Second
Closing. In the event the Second Closing does not occur for
whatever reason, then the following shall occur:
(i)
the Investor’s Counsel shall return the Second Closing Tranche to
the Investor;
(ii) the
Outstanding Amount (as defined in the Note) of the Note shall be automatically,
and without any further action, reduced by the amount of the Second Closing
Tranche; and
(iii) The
Warrant Shares (as defined in the Warrant) shall be reduced to
200,000.
(g) Use of
Proceeds. The Company shall use the proceeds from the sale of
the Securities for working capital and general corporate
purposes.
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2. Representations and Warranties of the
Company. The Company represents and warrants to the Investor as of each
Closing Date that:
(a) Due Organization, Qualification,
etc. Each of the Company and its subsidiaries (i) is duly organized,
validly existing and in good standing under the laws of its state of formation;
(ii) has the power and authority to own, lease and operate its properties
and carry on its business as now conducted; and (iii) is duly qualified,
licensed to do business and in good standing as a foreign corporation in each
jurisdiction where the failure to be so qualified or licensed could reasonably
be expected to have a Material Adverse Effect. For purposes of this
Agreement the term “Material Adverse
Effect” means a change, event or occurrence that individually, or
together with any other change, event or occurrence, has or would reasonably be
expected to have a material adverse impact on the financial position, business
results, operations or prospects of the Company, taken as a whole.
(b) Authority. The execution,
delivery and performance by the Company of each Transaction Document (as defined
below), and the consummation of the transactions contemplated hereby and thereby
(i) are within the power of the Company and (ii) have been duly
authorized by all necessary actions on the part of the Company.
(c) Enforceability. Each
Transaction Document executed, or to be executed, by the Company has been, or
will be, duly executed and delivered by the Company and constitutes, or will
constitute, a legal, valid and binding obligation of the Company, enforceable
against the Company in accordance with its terms, except as limited by
bankruptcy, insolvency or other laws of general application relating to or
affecting the enforcement of creditors’ rights generally and general principles
of equity.
(d) Non-Contravention. The
execution and delivery by the Company of the Transaction Documents executed by
the Company and the performance and consummation of the transactions
contemplated thereby do not and will not (i) violate its articles of
incorporation or bylaws or other organizational documents or any material
judgment, order, writ, decree, statute, rule or regulation applicable to the
Company; (ii) violate any provision of, or result in the breach or the
acceleration of, or entitle any other person to accelerate (whether after the
giving of notice or lapse of time or both), any material mortgage, indenture,
agreement, instrument or contract to which the Company is a party or by which it
is bound; or (iii) result in the creation or imposition of any lien upon
any property, asset or revenue of the Company or the suspension,
revocation, impairment, forfeiture, or nonrenewal of any material permit,
license, authorization or approval applicable to the Company, its business or
operations, or any of its assets or properties.
(e) Approvals. No consent,
approval, order or authorization of, or registration, declaration or filing
with, any governmental authority or other person or entity (including, without
limitation, the shareholders of any person) is required in connection with the
execution and delivery of the Transaction Documents executed by the Company and
the performance and consummation of the transactions contemplated
thereby.
(f) No Violation or Default.
Neither the Company nor any of the Company’s subsidiaries is in violation of or
in default with respect to (i) its articles of incorporation or
bylaws or other organizational documents or any material judgment, order, writ,
decree, statute, rule or regulation applicable to such entity; or (ii) any
material mortgage, indenture, agreement, instrument or contract to which such
entity is a party or by which it is bound (nor is there any waiver in effect
which, if not in effect, would result in such a violation or
default).
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(g) Litigation. Other than as
disclosed in the SEC Documents (defined below), no actions (including, without
limitation, derivative actions), suits, proceedings or investigations are
pending or, to the knowledge of the Company, threatened against the Company or
the Company’s subsidiaries at law or in equity in any court or before any other
governmental authority which if adversely determined (i) would (alone or in
the aggregate) result in a material liability or have a Material Adverse Effect
or (ii) seeks to enjoin, either directly or indirectly, the execution,
delivery or performance by the Company of the Transaction Documents or the
transactions contemplated thereby.
(h) Title. The Company and the
Company’s subsidiaries own and have good and marketable title in fee simple
absolute to, or a valid leasehold interest in, all their respective real
properties and good title to their other respective assets and properties,
subject to no liens except as have been disclosed to the Investor.
(i) Intellectual
Property.
(i) Ownership. The
Company owns or possesses or can obtain on commercially reasonable terms
sufficient legal rights to all patents, trademarks, service marks, trade names,
copyrights, trade secrets, licenses (software or otherwise), information,
processes and similar proprietary rights (“Intellectual
Property”) necessary to the business of the Company as presently
conducted, the lack of which could reasonably be expected to have a Material
Adverse Effect. Except for agreements with its own employees or
consultants, standard end-user license agreements, support/maintenance
agreements and agreements entered in the ordinary course of the Company’s
business, all of which have been made available for review by the Investor,
there are no outstanding options, licenses or agreements relating to the
Intellectual Property, and the Company is not bound by or a party to any
options, licenses or agreements with respect to the Intellectual Property of any
other person or entity. The Company has not received any written
communication alleging that the Company has violated or, by conducting its
business as currently conducted, would violate any of the Intellectual Property
of any other person or entity, nor is the Company aware of any basis
therefor. The Company is not obligated to make any payments by way of
royalties, fees or otherwise to any owner or licensor of or claimant to any
Intellectual Property with respect to the use thereof in connection with the
present conduct of its business other than in the ordinary course of its
business. There are no agreements, understandings, instruments,
contracts, judgments, orders or decrees to which the Company is a party or by
which it is bound which involve indemnification by the Company with respect to
infringements of Intellectual Property, other than in the ordinary course of its
business.
(ii) No Breach by
Employees. The Company is not aware that any of its employees
is obligated under any contract or other agreement, or subject to any judgment,
decree or order of any court or administrative agency, that would materially
interfere with the use of his or her efforts to promote the interests of the
Company or that would conflict with the Company’s business as presently
conducted. Neither the execution nor delivery of this Agreement, nor
the carrying on of the Company’s business by the employees of the Company, nor
the conduct of the Company’s business as presently conducted, will, to the
Company’s knowledge, conflict with or result in a breach of the terms,
conditions or provisions of, or constitute a default under, any contract,
covenant or instrument under which any of such employee is now
obligated. The Company does not believe it is or will be necessary to
use any inventions of any of its employees made prior to their employment by the
Company of which it is aware.
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(j) Accuracy of Information
Furnished. None of the Transaction Documents and none of the other
certificates delivered by the Company to the Investor pursuant to the
Transaction Documents contains or will contain any untrue statement of a
material fact or omits or will omit to state a material fact necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading.
(k) SEC Documents; Financial
Statements. The Company has filed all reports, schedules,
forms, statements and other documents required to be filed by it with the U.S.
Securities and Exchange Commission (the “SEC”)
under the Securities Exchange Act of 1934, as amended (the “Exchange
Act”), for the two years preceding the date hereof (or such shorter
period as the Company was required by law or regulation to file such material)
(all of the foregoing filed prior to the date hereof or amended after the date
hereof and all exhibits included therein and financial statements and schedules
thereto and documents incorporated by reference therein, being hereinafter
referred to as the “SEC
Documents”) on timely basis or has received a valid extension of such
time of filing and has filed any such SEC Document prior to the expiration of
any such extension. The Company has made available through the SEC’s website at
xxxx://xxx.xxx.xxx., true and complete copies of the SEC
Documents. As of their respective dates, the SEC Documents complied
in all material respects with the requirements of the Exchange Act and the rules
and regulations of the SEC promulgated thereunder applicable to the SEC
Documents, and none of the SEC Documents, at the time they were filed with the
SEC, contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading. As of their respective dates, the financial statements of
the Company included in the SEC Documents complied as to form in all material
respects with applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto. Such financial
statements have been prepared in accordance with generally accepted accounting
principles, consistently applied, during the periods involved (except (i) as may
be otherwise indicated in such financial statements or the notes thereto, or
(ii) in the case of unaudited interim statements, to the extent they may exclude
footnotes or may be condensed or summary statements) and fairly present in all
material respects the financial position of the Company as of the dates thereof
and the results of its operations and cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal year-end audit
adjustments). No other information provided by or on behalf of the
Company to the Investor which is not included in the SEC Documents, including,
without limitation, information referred to in this Agreement, contains any
untrue statement of a material fact or omits to state any material fact
necessary in order to make the statements therein, in the light of the
circumstance under which they are or were made, not misleading.
(l) No
Commissions. Except as set forth in Schedule 2(l), the Company
has not incurred any obligation for any finder’s or broker’s or agent’s fees or
commissions or similar compensation in connection with the transactions
contemplated by the Transaction Documents. Any such compensation
shall be given, if at all, only in accordance with applicable law.
(m) Authorized
Shares. The Company has, as of each Closing Date, and shall at
all times until full repayment of the Note maintain, sufficient authorized but
unissued shares of Common Stock to meet its obligations, as they may arise from
time to time, under the Note and the Warrant. The Company’s failure
to fulfill this covenant shall be deemed, without limiting other remedies, an
immediate Event of Default under the Note.
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(n)
Listing
Approval. The Company’s Common Stock is registered pursuant to
Section 12(b) or 12(g) of the Exchange Act and the Company has taken no action
designed to terminate, or which to its knowledge is likely to have the effect
of, terminating the registration of the Common Stock under the Exchange Act nor
has the Company received any notification that the SEC is contemplating
terminating such registration. The Company has not, in the twelve
(12) months preceding the date hereof, received notice from any primary trading
market on which the Common Stock is or has been listed or quoted to the effect
that the Company is not in compliance with the listing or maintenance
requirements of such primary trading market. The Company is, and has no reason
to believe that it will not in the foreseeable future continue to be, in
compliance with all such listing and maintenance requirements.
(o) No Integrated Offering.
Neither the Company, nor any of its affiliates, nor any person acting on its or
their behalf has, directly or indirectly, made any offers or sales of any
security or solicited any offers to buy any security, under circumstances that
would require registration of the Securities under the Securities Act of 1933,
as amended (the “Securities
Act”), or cause this offering of the Securities to be integrated with
prior offerings by the Company for purposes of the Securities Act.
3. Representations, Warranties and
Covenants of the Investor. The Investor represents and warrants to the
Company as of each Closing Date as follows:
(a) Binding Obligation. The
Investor has full legal capacity, power and authority to execute and deliver
this Agreement and to perform its obligations hereunder. This
Agreement is a valid and binding obligation of the Investor, enforceable in
accordance with its terms, except as limited by bankruptcy, insolvency or other
laws of general application relating to or affecting the enforcement of
creditors’ rights generally and general principles of equity.
(b) Access to Information. The
Investor acknowledges that the Company has offered the Investor access to the
corporate records and accounts of the Company and to all information in its
possession relating to the Company, has made its officers and representatives
available for interview by the Investor, and has furnished the Investor with all
documents and other information required for the Investor to make an informed
decision with respect to the purchase of the Securities.
(c) Short Sales. The Investor
covenants that, so long as the Note is outstanding and not in default, neither
it nor any of its affiliates shall at any time engage in any short sales of, or
sell put options or similar instruments with respect to, the Company’s Common
Stock.
(d) Confession. The Investor
agrees it will not file the Confession (defined below) unless and until an Event
of Default under the Note has occurred; provided, however, that upon
such an Event of Default, the Investor shall be entitled to immediately file
such Confession in ex
parte fashion.
4. Conditions to Closing of the
Investor.
(a) Generally. The
Investor’s obligations at the Closings are subject to the fulfillment, on or
prior to each Closing Date, of all of the following conditions, any of which may
be waived in whole or in part by the Investor:
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(i)
Representations and
Warranties. The representations and warranties made by the Company in
Section 2 hereof shall have been true and correct when made, and shall be
true and correct on the Closing Date.
(ii) Approvals and
Filings. Except for any notices required or permitted to be filed after
the Closing Date with certain federal and state securities commissions, the
Company shall have obtained (a) all governmental approvals required in
connection with the lawful sale and issuance of the Securities, and (b) all
third party approvals required to be obtained by the Company in connection with
the execution and delivery of the Transaction Documents by the Company or the
performance of the Company’s obligations thereunder.
(iii) Legal Requirements.
At the Closing, the sale and issuance by the Company, and the purchase by the
Investor, of the Securities shall be legally permitted by all laws and
regulations to which the Investor or the Company are subject.
(iv) Proceedings and
Documents. All corporate and other proceedings in connection with the
transactions contemplated at the Closing and all documents and instruments
incident to such transactions shall be reasonably satisfactory in substance and
form to the Investor.
(v) Opinion Letter. The
Company shall cause its legal counsel to deliver a written opinion letter (the
“Opinion
Letter”), addressed and acceptable to the Investor and the Company’s
transfer agent in their sole and individual discretions, indicating that the
Pledged Shares may be resold pursuant to Rule 144 without volume or
manner-of-sale restrictions or current public information
requirements.
(vi) Transaction
Documents. The Company shall deliver, or cause to be
delivered, the following documents, which shall have been executed by all of the
parties thereto (collectively, the “Transaction
Documents”):
(1) This
Agreement;
(2) The
Note;
(3) The
Warrant;
(4) Action by
Written Consent of the Board of Directors In Lieu of Meeting substantially in
the form attached hereto as Exhibit
C (the “Board
Action”);
(5) A Consent
to Entry of Judgment by Confession substantially in the form attached hereto as
Exhibit
D (the “Confession”);
(6) An
Irrevocable Letter of Instructions to Transfer Agent substantially in the form
attached hereto as Exhibit
E (the “Transfer Agent
Instructions”);
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(7) A Stock
Pledge Agreement substantially in the form attached hereto as Exhibit
F (the “Pledge
Agreement”);
(8) A Stock
Purchase Agreement substantially in the form attached hereto as Exhibit
G (the “Stock Purchase
Agreement”); and
(9) The Opinion
Letter substantially in the form attached hereto as Exhibit
H.
5. Conditions to Obligations of the
Company. The Company’s obligation to issue and sell the Securities at the
Closing is subject to the fulfillment, on or prior to each Closing Date, of the
following conditions, any of which may be waived in whole or in part by the
Company:
(a) Representations and
Warranties. The representations and warranties made by the Investor in
Section 3 hereof shall be true and correct when made, and shall be true and
correct on the Closing Date.
(b) Governmental Approvals and
Filings. Except for any notices required or permitted to be filed after
the Closing Date with certain federal and state securities commissions, the
Company shall have obtained all governmental approvals required in connection
with the lawful sale and issuance of the Securities.
(c) Legal
Requirements. At the Closing, the sale and issuance by the
Company, and the purchase by the Investor, of the Securities shall be legally
permitted by all laws and regulations to which the Investor or the Company are
subject.
(d) Purchase
Price. The Investor shall have delivered to the Company the
Note and Warrant Purchase Price in respect of the Securities.
6. Limitations on Shares Issued as
Payment of Interest or Principal or on Conversion of Note or Exercise of
Warrants.
If at any time after a Closing, the Investor shall receive (or shall
attempt to convert the Note into) shares of the Company’s Common Stock in
payment of interest or principal or on conversion of the Note, or the Investor,
shall exercise or attempt to exercise the Warrant, so that the Investor would
hold by virtue of such action or receipt of shares of Common Stock under or
pursuant to conversion of the Note or exercise of the Warrant a number of shares
exceeding 9.99% of the number of shares of the Company’s Common Stock
outstanding on such date (the “9.99%
Cap”), the Company shall not be obligated and shall not issue to the
Investor shares of its Common Stock which would exceed the 9.99%
Cap.
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7. Expenses; Affirmative and Negative
Covenants of the Company.
(a) Expenses. The Company,
without regard to whether any Closing is effectuated, will pay the reasonable
transaction and legal expenses of the Investor’s Counsel incurred in this
transaction, subject to an aggregate cap of $15,000.00, which the parties
acknowledge has been deducted from the Purchase Price for the Securities; provided, however, that in
the event the Company or the Investor elects not to effect a Closing for any
reason, the Company shall pay such expenses to the Investor in
cash. Except as provided in the immediately preceding sentence, the
Company and the Investor shall be responsible for paying such party’s own fees
and expenses (including legal expenses) incurred in connection with the
preparation and negotiation of this Agreement and the closing of the
transactions contemplated hereby.
(b) Affirmative Covenants of the
Company. Until all of the Company’s obligations hereunder and the Note
are paid and performed in full, or within the timeframes set forth below, the
Company shall comply with the following affirmative covenants:
(i) The
Company will maintain and preserve in full force and effect its existence as a
corporation and comply with all reporting requirements of Rule 144, the
Securities Act, and the Exchange Act.
(ii) The
Company shall comply in all material respects with all laws and regulations
applicable to its business.
(iii) Within
four business days following the date of this Agreement, the Company shall file
a current report on Form 8-K describing the terms of the transactions
contemplated by this Agreement, the Note, the Warrant and the Transaction
Documents in the form required by the Exchange Act and attaching the material
transaction documents as exhibits to such filing.
(iv) The
Company shall execute such documents and perform such further acts (including,
without limitation, obtaining any consents, exemptions, authorizations or other
actions by, or giving any notices to, or making any filings with, any
governmental entity or any other person) as may be reasonably required by the
Investor or desirable to carry out or to perform the provisions of this
Agreement or the Transaction Documents.
(v) The
Company shall take all action reasonably necessary to at all times have
authorized, and reserved for the purpose of issuance, such number of shares of
Common Stock as shall be necessary to effect the full conversion of the Note and
exercise of the Warrant (the “Share
Reserve”). If at any time the Share Reserve is insufficient to effect the
full conversion of the Note and/or the full exercise of the Warrant, the Company
shall increase the Share Reserve accordingly. If the Company does not have
sufficient authorized and unissued shares of Common Stock available to increase
the Share Reserve, the Company shall call and hold a special meeting of the
shareholders within thirty days of such occurrence, for the sole purpose of
increasing the number of shares authorized. The Company’s management shall
recommend to the shareholders to vote in favor of increasing the number of
shares of Common Stock authorized. Management shall also vote all of its shares
in favor of increasing the number of authorized shares of Common
Stock.
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(vi) The
Company shall promptly and in a timely fashion perform and honor all demands,
notices, requests and obligations that exist or may arise under this Agreement
or the other Transaction Documents.
(vii) The
Company shall furnish to the Investor so long as the Investor owns shares of
Common Stock, promptly upon request, (i) a written statement by the Company that
it has complied with the reporting requirements of Rule 144, the Securities Act
and the Exchange Act, (ii) if not available on the SEC’s XXXXX system, a copy of
the most recent annual or quarterly report of the Company and such other reports
and documents so filed by the Company and (iii) such other information as may be
reasonably requested to permit the Investor to sell such securities pursuant to
Rule 144 without registration.
(viii) The
Company’s Common Stock shall be listed or quoted for trading on any of (a) the
American Stock Exchange, (b) New York Stock Exchange, (c) the Nasdaq Global
Market, (d) the Nasdaq Capital Market, or (e) the Nasdaq OTC Bulletin Board. The
Company shall promptly secure the listing of all of the Securities upon each
national securities exchange and automated quotation system, if any, upon which
the Common Stock is then listed (subject to official notice of issuance) and
shall maintain such listing of all securities from time to time issuable under
the terms of the Transaction Documents.
(ix) The
Company shall not terminate its status as an issuer required to file reports
under the Exchange Act even if the Exchange Act or the rules and regulations
thereunder would otherwise permit such termination.
(x)
The Company agrees to permit the Investor to participate in registrations
of the Company’s securities for the Company’s own account (i.e., piggyback
registrations) (which registration may include shares registered for the benefit
of others in addition to those registered for the Company’s own account) and the
shares of Common Stock issuable upon conversion of the Note or exercise of the
Warrant shall be deemed “registrable securities” or otherwise entitled to
piggyback registration rights. If at any time prior to (i) the repayment
in full of the Note, or (ii) the Expiration Date (as defined in the Warrant) of
the Warrant, the Company files any registration statement under the Securities
Act covering the offer and sale of the Company’s securities, the Company shall
give written notice to the Investor at least sixty (60) days prior to the
declaration of effectiveness of such registration statement by the SEC and shall
offer, in such written notice, to include in such registration (and any related
qualifications including compliance with applicable state securities laws) and
in any underwriting involved therein, the Company’s securities issued to the
Investor upon conversion of the Note or exercise of the Warrant. To the
extent the registration involves an underwriting, the Company shall so advise
the Investor and the Investor’s right to participate in such registration shall
be conditioned upon the Investor’s participation in the underwriting and
inclusion of securities in the underwriting.
(xi) In
the event the Company, in violation of the covenants contained herein, ever
ceases to be a reporting company for purposes of the Exchange Act for any period
of time, then the Company, for so long as Rule 144 of the Securities Act is not
available to the Investor as an exemption from registration, shall cause any of
its shareholders who at such time are in possession of Common Stock tradable
under Section 3(a)(10) of the Securities Act (“3(a)(10)
Shares”) to cease to sell such such 3(a)(10) Shares.
11
(xii) The
foregoing affirmative covenants and agreements shall survive the
Closings.
(c) Negative Covenants of the
Company. From and after the date hereof and until all of the Company’s
obligations hereunder and the Note are paid and performed in full, the Company
shall not:
(i)
Incur any new indebtedness for borrowed money without the
prior written consent of the Investor; provided, however the Company
may incur obligations under trade payables in the ordinary course of business
consistent with past practice without the consent of the Investor.
(ii) Grant
or permit any security interest (or other lien or other encumbrance) in or on
any of its assets.
(iii) Enter
into any transaction, including, without limitation, any purchase, sale, lease
or exchange of property or the rendering of any service, with any Affiliate (as
defined in the Securities Act) of the Company, or amend or modify any agreement
related to any of the foregoing, except on terms that are no less favorable, in
any material respect, than those obtainable from any Person who is not an
Affiliate of the Company.
8. Miscellaneous.
(a) Waivers and Amendments. Any
provision of this Agreement may be amended, waived or modified only upon the
written consent of the Company and the Investor. Any such amendment,
waiver, discharge or termination effected in accordance with this paragraph
shall be binding upon each holder of any securities purchased under the
Transaction Documents at the time outstanding (including the Note and the
Warrant) and each future holder of all such securities.
(b) Governing Law; Venue. This
Agreement and all actions arising out of or in connection with this Agreement
shall be governed by and construed in accordance with the laws of the State of
Illinois, without regard to the conflicts of law provisions of the State of
Illinois or of any other state. With respect to any disputes arising
out of or related to this Agreement, the parties consent to the exclusive
jurisdiction of, and venue in, the state courts in Illinois (or in the event of
exclusive federal jurisdiction, the United States District Court Northern
District of Illinois).
(c) Survival. The
representations, warranties, covenants and agreements made herein shall survive
the execution and delivery of this Agreement.
(d) Successors and Assigns.
Subject to the restrictions on transfer described in Sections 8(e)
and 8(f) below, the rights and obligations of the Company and the
Investor shall be binding upon and benefit the successors, assigns, heirs,
administrators and transferees of the parties.
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(e) Registration, Transfer and
Replacement of the Securities. The Securities issuable under this
Agreement shall be registered on the books and records of the
Company. The Company will keep, at its principal executive office,
books for the registration and registration of transfer of the
Securities. Prior to presentation of the Securities for registration
of transfer, the Company shall treat the person or entity in whose name the
Securities are registered as the owner and holder of the Securities for all
purposes whatsoever, whether or not the Securities shall be overdue, and the
Company shall not be affected by notice to the contrary. Subject to
any restrictions on or conditions to transfer set forth in the Note, the holder
of the Note, at its option, may in person or by duly authorized attorney
surrender the same for exchange at the Company’s chief executive office, and
promptly thereafter and at the Company’s expense, except as provided below,
receive in exchange therefor one or more new Note(s), each in the principal
requested by such holder, dated the date to which interest shall have been paid
on the Note so surrendered or, if no interest shall have yet been so paid, dated
the date of the Note so surrendered and registered in the name of such person or
persons as shall have been designated in writing by such holder or its attorney
for the same principal amount as the then unpaid principal amount of the Note so
surrendered. Upon receipt by the Company of evidence reasonably satisfactory to
it of the ownership of and the loss, theft, destruction or mutilation of the
Note and (a) in the case of loss, theft or destruction, of indemnity
reasonably satisfactory to it; or (b) in the case of mutilation, upon
surrender thereof, the Company, at its expense, will execute and deliver in lieu
thereof a new Note executed in the same manner as the Note being replaced, in
the same principal amount as the unpaid principal amount of the Note and dated
the date to which interest shall have been paid on the Note or, if no interest
shall have yet been so paid, dated the date of the Note.
(f) Assignment by the Company.
The rights, interests or obligations hereunder may not be assigned, by operation
of law or otherwise, in whole or in part, by the Company without the prior
written consent of the Investor, which consent may be withheld at the sole
discretion of the Investor; provided, however, that in
the case of a merger, sale of substantially all of the Company’s assets or other
corporate reorganization, the Investor shall not unreasonably withhold,
condition or delay such consent.
(g) Advice of Counsel. In
connection with the preparation of this Agreement and all other Transaction
Documents, each of the Company, its shareholders, officers, agents, and
representatives acknowledges and agrees that the attorney that prepared this
Agreement and all of the other Transaction Agreements acted as legal counsel to
Investor only. Each of the Company, its shareholders, officers,
agents, and representatives (i) hereby acknowledges that he/she/it has been, and
hereby is, advised to seek legal counsel and to review this Agreement and all of
the other Transaction Documents with legal counsel of his/her/its choice, and
(ii) either has sought such legal counsel or hereby waives the right to do
so.
(h) Agent
Liability. Investor acknowledges and agrees that Xxxxxxxx
& Xxxxxxxx LLC assumes no responsibility or liability of any nature for the
accuracy, adequacy or completeness of any information provided to the Investor
concerning the Company, nor does Xxxxxxxx & Xxxxxxxx LLC make any
representation or warranty of any nature regarding the Company or its current
and future viability. Xxxxxxxx & Xxxxxxxx LLC is deemed to be a third party
beneficiary of this Agreement for the limited purpose of this Subsection
8(h).
(i) No Strict Construction. The
language used in this Agreement is the language chosen mutually by the parties
hereto and no doctrine of construction shall be applied for or against any
party.
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(j) Entire Agreement. This
Agreement together with the other Transaction Documents constitute and contain
the entire agreement between the Company and the Investor and supersede any and
all prior agreements, negotiations, correspondence, understandings and
communications among the parties, whether written or oral, respecting the
subject matter hereof.
(k) Notices. All notices,
requests, demands, consents, instructions or other communications required or
permitted hereunder shall be in writing and faxed, mailed, emailed or delivered
to each party as follows: (i) if to the Investor, at the
Investor’s address set forth below, or at such other address as the Investor
shall have furnished the Company in writing, or (ii) if to the Company, at
the Company’s address set forth below, or at such other address as the Company
shall have furnished to the Investor in writing. All such notices and
communications shall be effective (a) when sent by Federal Express or other
overnight service of recognized standing, on the business day following the
deposit with such service; (b) when mailed, by registered or certified mail,
first class postage prepaid and addressed as aforesaid through the United States
Postal Service, upon receipt; (c) when delivered by hand, upon delivery; and (d)
when faxed or sent by electronic mail, upon confirmation of
receipt.
If to the Company:
c/o Xxx Xxxxxxx
0000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxx,
Xxxxxxxxxx 00000
With a copy to (which shall not
constitute notice):
Xxxxx Xxxxx & Associates,
PLLC
0 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxxxx Xxxxxx, XX 00000
If to the Investor:
St. Xxxxxx Investments,
LLC
Attn: Xxxx X. Xxxx
000 Xxxx Xxxxxx Xxxxx, Xxxxx
000
Xxxxxxx,
Xxxxxxxx 00000
with a copy to (which shall not
constitute notice):
Xxxxxxx Xxxxxxx Xxxxxxx & Deere,
P.C.
Attn: Xxxxxxxx X. Xxxxxx
0000 Xxxx Xxxxxxxx Xxxxx, Xxxxx
000
Xxxx Xxxx Xxxx, Xxxx 00000
(l) Severability of this
Agreement. If any part of this Agreement is construed to be in violation
of any law, such part shall be modified to achieve the objective of the parties
to the fullest extent permitted by law and the balance of this Agreement shall
remain in full force and effect.
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(m) Counterparts. This Agreement
may be executed in any number of counterparts, each of which shall be an
original, but all of which together shall be deemed to constitute one
instrument. Facsimile and email copies of signed signature pages will
be deemed binding originals.
(n) Indemnification, Release and
Waiver. The Company and the Other Parties acknowledge and
agree as follows: (i) the Note and Warrant Purchase Price, so long as it is in
the Trust Account, is the sole property of the Investor; (ii) the Investor’s
Counsel and Xxxxxxxx X. Xxxxxx (a) owe fiduciary and other duties to the
Investor arising from their relationship of legal counsel to the Investor, (b)
shall at all times act under the sole direction of the Investor as it pertains
to the handling of the Note and Warrant Purchase Price, (c) are not acting in
the capacity of escrow agent, trustee or other similar arrangement, and (d) do
not owe any duties of any kind to the Company or the Other Parties, whether
arising by law or by contract; (iii) the Company and the Other Parties shall
indemnify, defend and hold harmless, to the fullest extent permitted by law, the
Investor’s Counsel and Xxxxxxxx X. Xxxxxx for any and all action or failure to
act in any particular way as it relates to the handling and/or disbursement of
the Note and Warrant Purchase Price; (iv) the Company and the Other Parties
release and waive any and all claims against the Investor’s Counsel and Xxxxxxxx
X. Xxxxxx which may arise in any way in connection with the Trust Account or the
Note and Warrant Purchase Price; and (v) the Company and the Other Parties
shall, in the event of a breach of any duty under any of the Transaction
Documents, pursue any claims or remedies solely against one or more of the
Parties or the Other Parties.
[Signature
Page to Follow]
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IN
WITNESS WHEREOF, the parties have caused this Agreement to be duly executed and
delivered by their proper and duly authorized officers as of the date and year
first written above.
Exhibits
Exhibit A
– Note
Exhibit B
– Warrant
Exhibit C
– Board Action
Exhibit D
– Confession
Exhibit E
– Transfer Agent Instruction
Exhibit F
– Pledge Agreement
Exhibit G
– Stock Purchase Agreement
Exhibit H
– The Opinion Letter
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THE COMPANY:
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a
Nevada corporation
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By:
/s/ Xxx
Xxxxxxx
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Name: Xxx
Xxxxxxx
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Title: CEO
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THE INVESTOR:
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ST. XXXXXX INVESTMENTS,
LLC,
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an
Illinois limited liability company
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By: /.s/ Xxxx
Xxxx
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Xxxx
Xxxx, Manager
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ACKNOWLEDGED
AND AGREED:
By: /s/ Xxx
Xxxxxxx
Xxx Xxxxxxx, an
individual
BLUEWATER
PARTNERS, S.A.
By: /s/ Xxxxx
Gushlak
Name: Xxxxx
Gushlak
Its:
Managing
Director
16
