EXHIBIT 4.9
NOTE PURCHASE AGREEMENT
THIS NOTE PURCHASE AGREEMENT (the "Agreement") is made as of this
[26th/27th] day of May, 2004 by and among Viper Motorcycle Company, a Minnesota
corporation (the "Company") and [RFJM Partners, LLC, a New York limited
liability company /Xxxxx Xxxxxxxx, III] (the "Purchaser" and collectively with
all purchasers participating in the Bridge Loan (as defined below), the
"Purchasers").
RECITALS
WHEREAS, the Company wishes to raise up to an aggregate of Six Hundred
Thousand Dollars ($600,000) (the "Bridge Loan") from a limited number of
accredited investors;
WHEREAS, in connection with the Bridge Loan the Company intends to
issue to the Purchaser and the Purchaser intends to purchase a promissory note
from the Company and will in conjunction with such purchase acquire the right to
receive Additional Securities (defined below); and
WHEREAS, the Company and the Purchaser wish to specify in this
Agreement the terms on which the Purchaser is purchasing the Note (defined
below) and the right to receive Additional Securities.
NOW, THEREFORE, in consideration of the foregoing and the mutual
promises set forth below and for good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties to this Agreement
agree as follows:
1. SALE AND PURCHASE. Subject to the terms and conditions hereof, the
Company agrees to sell to the Purchaser, and the Purchaser agrees to purchase
from the Company, a Promissory Note (the "Note") in the form attached hereto as
EXHIBIT A, in the principal amount of $300,000.00.
2. ADDITIONAL STOCK INTEREST. In the event the Company closes a
Financing (defined below) prior to the Maturity Date (as defined in the Note) of
the Note, then the Company shall, within ten (10) days following the closing of
such Financing, deliver to the holder of the Note, shares of the Company's
common stock in an amount equal to the original principal balance of the Note
divided by $4.50 (the "Issuance Price"). In the event of a Financing involving
the sale of common stock and the per share offering price of the Financing is
less than $4.50, then the Issuance Price shall equal such lesser amount. In the
event of a Financing of a security other than common stock, then the Issuance
Price shall equal the conversion or exercise price into the Company's common
stock of the security sold in such Financing. For purposes hereof a "Financing"
shall mean the sale of securities of the Company in the gross amount of at least
$2,000,000. Shares of common stock issued to the holder of the Note pursuant to
this Section 2 shall sometimes be referred to as the "Additional Securities."
3. CLOSING. The closing of the sale and purchase of the Note (the
"Closing") by the Purchaser shall occur at the date and time that this Agreement
is executed by the Company and the Purchaser, or on such other date or time as
the Purchaser and the Company shall agree upon (the "Closing Date"). At the
Closing, the Company shall deliver the duly executed Note, and the Purchaser
shall deliver to the Company payment of the purchase price, by wire transfer to
an account designated by the Company or by any other means of transferring
immediately available funds that is agreed upon by the parties.
4. REPRESENTATIONS AND WARRANTIES BY COMPANY. The Company represents
and warrants to the Purchaser that, as of the date hereof:
4.1. ORGANIZATION, STANDING, ETC. The Company is a corporation
duly organized, validly existing and in good standing under the laws of
the State of Minnesota, and has the requisite corporate power and
authority to own its properties and to carry on its business in all
material respects as it is now being conducted.
4.2. CORPORATE ACTS AND PROCEEDINGS. This Agreement and the
Note have been duly authorized by all necessary corporate action on
behalf of the Company, and has been duly executed and delivered by
authorized officers of the Company.
5. REPRESENTATIONS AND WARRANTIES OF PURCHASER. The Purchaser
represents and warrants that:
5.1 INVESTMENT INTENT. The Note being acquired by the Purchaser
hereunder is being purchased, and the Additional Securities that may be issued
to Purchaser will be acquired for the Purchaser's own account and not with the
view to, or for resale in connection with, any distribution or public offering
thereof within the meaning of the Securities Act of 1933, as amended. (the
"Securities Act") The Purchaser understands that the Note and Additional
Securities have not been registered under the Securities Act or any applicable
state laws by reason of their issuance or contemplated issuance in a transaction
exempt from the registration and prospectus delivery requirements of the
Securities Act and such laws, and that the reliance of the Company and others
upon this exemption is predicated in part upon these representations and
warranties. The Purchaser further understands that the Note and the Additional
Securities may not be transferred or resold without: (i) registration under the
Securities Act and any applicable state securities laws, or (ii) an exemption
from the requirements of the Securities Act and applicable state securities
laws. The Purchaser further acknowledges that the Note and Additional Securities
will bear a legend noting such restrictions on transfer.
5.2 LOCATION OF PRINCIPAL OFFICE AND QUALIFICATION AS ACCREDITED
INVESTOR. The state in which the Purchaser's principal office (or domicile, if
the Purchaser is an individual) is located is set forth below Purchaser's
signature to this Agreement. The Purchaser qualifies as an accredited investor
within the meaning of Rule 501 promulgated under the Securities Act. The
Purchaser has obtained, to the extent Purchaser deems necessary, professional
investment advice with respect to the tax ramifications and the risks inherent
in an investment in the Note and Additional Securities, and the suitability of
an investment in the Note and Additional Securities in light of Purchaser's
financial condition and investment needs. The Purchaser has such knowledge and
experience in financial and business matters that the Purchaser is capable of
evaluating the merits and risks of the investment to be made hereunder by the
Purchaser. The Purchaser or the Purchaser's qualified agents have had access to
all of the Company's material books and records and access to the Company's
executive officers. Further, the Purchaser has had a reasonable time and an
opportunity to ask questions of, and receive answers from, the Company
concerning the terms and conditions of the purchase of the Note and Additional
Securities and the business and affairs of the Company, and to obtain any
additional information necessary to verify such information as the Purchaser
considers necessary or advisable in order to form a decision concerning an
investment in the Company.
5.3 ACTS AND PROCEEDINGS. This Agreement has been duly authorized by
all necessary action on the part of the Purchaser, has been duly executed and
delivered by the Purchaser, and is a valid and binding agreement of the
Purchaser. The Purchaser was not formed for the purpose of this investment in
the Company.
5.4 NO BROKERS OR FINDERS. Except as set forth in Section 5.6, no
person, firm or corporation has or will have, as a result of any act or omission
by the Purchaser, any right, interest or valid claim against the Company for any
commission, fee or other compensation as a finder or broker, or in any similar
capacity, in connection with the transactions contemplated by this Agreement.
The Purchaser will indemnify and hold the Company harmless against any and all
liability with respect to any such commission, fee or other compensation which
may be payable or determined to be payable, other than as set forth in Section
5.6, as a result of the actions of the Purchaser in connection with the
transactions contemplated by this Agreement.
5.5 HIGH DEGREE OF RISK AND RISK FACTORS. Purchaser recognizes that an
investment in the Note and Additional Securities is highly speculative, illiquid
and involves a high degree of risk, including, but not limited to, the risk of a
complete loss of Purchaser's investment in the Note and Additional Securities,
and the Purchaser recognizes that the Company needs to raise additional funds
immediately to continue as a going concern and that, if sufficient funds are not
received, the Company may be required to discontinue its active operations.
Purchaser further acknowledges that Purchaser has carefully read and fully
understands the Risk Factors set forth on EXHIBIT B to this Agreement.
5.6 PLACEMENT AGENT. Purchaser hereby acknowledges that Lane Capital
Markets, LLC has been engaged as the exclusive agent for the Company in
connection with the Bridge Loan. The Company has agreed to pay Lane Capital
Markets, LLC $30,000 in consideration for services relating to the Bridge Loan.
6. REGISTRATION RIGHTS. The Company shall provide to the Purchaser
written notice of any registration statement to be filed by the Company under
the Securities Act, including a registration statement relating to any initial
public offering of the Company's securities, no later than ten (10) days prior
to the filing of such registration statement. Purchaser shall have the one-time
right, exercisable with respect to a single registration statement, to include
in such registration: (i) the Additional Securities then issued or to be issued
to Purchaser pursuant to Section 2 hereof, (ii) common stock of the Company
issued to Purchaser upon conversion of the Note (as provided in the Note), as a
result of an Event of Default (as defined in the Note) of the Note, or (iii)
shares of the Company's common stock issued to Purchaser in an Exchange Offering
(as provided on the Note). The foregoing are collectively referred to herein as
the "Bridge Loan Securities." Notwithstanding the foregoing, the Company may
fully satisfy all of the registration requirements of this Section 6 by filing a
registration statement with the U.S. Securities and Exchange Commission on the
appropriate form covering such Bridge Loan Securities simultaneously with a
registration statement filed by the Company in connection with an initial public
offering of the Company's securities.
7. RIGHT OF FIRST REFUSAL. While the Note is outstanding, the Company
shall provide to Purchaser a written notice in accordance with Section 10 hereof
(the "Financing Notice") containing the price and terms of any proposed issuance
of debt or equity securities of the Company other than an initial public
offering of the Company's securities in which Lane Capital Markets, LLC is an
underwriter (a "Subsequent Financing"). Purchaser shall have a right of first
refusal to purchase any or all of the securities offered in the Subsequent
Financing at the price and on the terms set forth in the Financing Notice. If
Purchaser desires to exercise its right to purchase securities set forth in this
Section 7, the Purchaser must deliver written notice to the Company of its
intent to so purchase within ten (10) days after the Financing Notice was sent
to Purchaser by the Company. In the event that the Company does not receive
written notice from the Purchaser of Purchaser's intent to purchase securities
offered under the Subsequent Financing within the above described ten (10) day
period, Purchaser will be deemed to have rejected its right of first refusal
with respect to the securities offered in such Subsequent Financing. Purchaser
acknowledges that this right of first refusal is granted to all Purchasers of
the Company's Notes being offered in the Bridge Loan on a pro-rata basis (based
on the original principal balance of each Note purchased by a Purchaser in the
Bridge Loan). In the event Purchasers exercise their right of first refusal
under this Section 7 to request purchases of securities in the Subsequent
Financing, in the aggregate, of more securities than are offered in the
Subsequent Financing, the Company shall allocate the securities based upon the
respective original principal amounts of the Notes issued in the Bridge Loan of
the purchasers requesting to exercise their right of first refusal.
8. LOCK-UP AGREEMENT. The Purchaser hereby agrees to not sell or
otherwise transfer, without the prior written consent of the underwriter in an
initial public offering of the Company's securities, determined in its
discretion, any Additional Securities, Bridge Loan Securities or other
securities of the Company during the one hundred and eighty (180) day period
(the "Lock-up Period") following the effective date of a registration statement
covering any securities of the Company under the Securities Act (the "Lock-Up
Provision"); provided, that (i) such restriction shall only apply to the first
registration statement of the Company to become effective under the Securities
Act which includes securities to be sold on behalf of the Company to the public
in an underwritten public offering under the Securities Act; (ii) the officers,
directors and shareholders holding more than 5%, on a fully-diluted,
as-converted basis, of the Company's outstanding common stock on the date of
this Agreement sign an agreement containing a provision restricting the sale of
securities no less restrictive than the Lock-Up Provision required of Purchaser
in this Agreement; and (iii) the Lock-up Period may be reduced at the discretion
of the Placement Agent at any time prior to the end of the Lock-up Period.
9. INDEMNIFICATION. Purchaser agrees to indemnify and hold harmless the
Company, its stockholders, directors, officers and each person, if any, who
controls the Company within the meaning of either Section 15 of the Securities
Act or Section 20 of the Securities Exchange Act of 1934, as amended, to the
full extent permitted by law, from and against all losses, claims, damages,
liabilities and expenses (including without limitation reasonable legal fees and
expenses incurred by Purchaser (collectively, the "Damages")) to which the
Company may become subject under the Securities Act or otherwise, insofar as
such Damages (or proceedings in respect thereto) arise out of or are based upon
information Purchaser furnished in writing to the Company specifically for use
in any registration statement or any prospectus.
10. NOTICES. All notices, requests, consents and other communications
required or permitted hereunder shall be in writing and shall be personally
delivered, mailed first-class postage prepaid, registered or certified mail, or
delivered by a nationally recognized overnight courier:
if to the Company:
Viper Motorcycle Company
0000 Xxxxxxxxxxxxx Xxxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxx Xxx
with a copy to:
Xxxxxxxxx & Xxxxxx P.L.L.P.
0000 XXX Xxxxxx
00 Xxxxx Xxxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000
Attn: Xxxxxx Xxxxxx
if to the Purchaser, to the address set forth below
Purchaser's signature to this Agreement.
or to such other address as the Company or the Purchaser may specify to the
other by written notice, and such notices and other communications shall be
treated as being effective or having been given when delivered, if personally
delivered, or when received, if sent by mail.
11. TIME OF THE ESSENCE. Time is of the essence in the performance of
obligations hereunder.
12. COUNTERPARTS. This Agreement may be executed simultaneously in
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
13. INVALIDITY OF PARTICULAR PROVISIONS. The Company and the Purchaser
agree that the unenforceability or invalidity of any provision or provisions of
this Agreement shall not render any other provision or provisions herein
contained unenforceable or invalid.
14. ENTIRE AGREEMENT. This Agreement, including the Exhibits attached
hereto, constitutes the entire agreement of the parties relative to the subject
matter hereof and supersedes any and all other agreements and understandings,
whether written or oral, relative to the matters discussed herein.
15. CONFLICTS. In the event that there are any inconsistencies between
the terms of this Agreement and the Note, as the case may be, the terms
contained in the Note will control.
16. MISCELLANEOUS. This Agreement shall be governed by the internal
laws of the State of Minnesota without giving application to the choice of law
provisions of any jurisdiction. No provision of this Agreement shall be modified
or waived other than by a written instrument that refers to this Agreement and
is signed by the party against whom enforcement of the modification or waiver is
charged.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY BLANK.]
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
VIPER MOTORCYCLE COMPANY
By: /s/ Xxxxx X. Xxxxxxxxx
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Its: Chief Financial Officer
PURCHASER:
Principal Amount of Note: $300,000.00 RFJM PARTNERS, LLC
/S/ Xxxxxxx Xxxxxxxxx
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Address: 000 Xxxxx Xxx, Xxxxx 000
Xxx Xxxx, Xxx Xxxx 00000
PURCHASER:
Principal Amount of Note: $300,000.00 /s/ Xxxxx Xxxxxxxx, III
---------------------------------------
Xxxxx Xxxxxxxx, III
Address: 0000 Xxxxx Xxx.
Xxxxxx, XX 00000
