INVESTMENT AGREEMENT
THIS INVESTMENT AGREEMENT (this "Agreement"), dated as of February 8, 2006,
is made by and among BARNABUS ENERGY, INC., a Nevada corporation (the
"Company"), and the purchasers listed on the signature page hereto (each a
"Purchaser" and collectively the "Purchasers").
RECITALS
WHEREAS, on the terms and subject to the conditions set forth in this
Agreement, the Company desires to issue and sell the Purchased Securities to the
Purchasers; and
WHEREAS, subject to the terms and conditions set forth in this Agreement,
the Purchasers wish to acquire the Purchased Securities;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained in this Agreement, the parties agree as follows:
ARTICLE I
DEFINITIONS
For all purposes of this Agreement the following terms have the meanings
set forth in this Article I.
"Business Day" means any day other than a Saturday, Sunday or other day on
which commercial banks in the State of California are authorized or required by
law or executive order to close.
"Charter" means the articles or certificate of incorporation or formation,
statute, constitution, joint venture or partnership agreement, limited liability
company agreement or articles or other organizational document of any Person
other than an individual, each as from time to time amended or modified.
"Closing" has the meaning specified in Section 2.2.
"Closing Date" has the meaning specified in Section 2.2.
"Common Stock" means the common stock of the Company, par value $0.001 per
share, and any securities into which such common stock may hereafter be
converted or reclassified.
"Company" has the meaning specified in the introduction to this Agreement.
"Debentures" means an aggregate of $5 million in principal amount of 0%
30-month subordinated debentures in substantially the form set forth on Exhibit
A-I issued to the respective Purchasers in the respective principal amounts set
forth opposite each such Purchaser's name on the signature page hereto.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Person" means an individual, partnership, corporation, limited liability
company, association, trust, joint venture, unincorporated organization or other
entity and any government, governmental department or agency or political
subdivision thereof.
"Purchased Securities" means the Debentures and the Warrants.
"Purchaser" and "Purchasers" has the meaning specified in introduction to
this Agreement.
"Registration Rights Agreement" means that certain Registration Rights
Agreement of even date herewith by and between the Company and the Purchasers,
substantially in the form set forth on Exhibit A-III.
"Securities Act" means the United States Securities Act of 1933, as
amended.
"Warrants" means warrants to purchase shares of Common Stock in
substantially the form set forth on Exhibit A-II issued to the respective
Purchasers in the respective l amounts set forth opposite each such Purchaser's
name on the signature page hereto.
ARTICLE II
SALE AND PURCHASE OF PURCHASED SECURITIES
SECTION 2.1. Investment Transactions.
(a) Sale and Purchase of the Purchased Securities. For value received,
and on the terms and subject to all of the conditions set forth herein, at the
Closing, the Company shall issue and sell to the Purchasers, and the Purchasers
shall purchase, the Purchased Securities in exchange for a payment to the
Company at the Closing of FIVE MILLION DOLLARS ($5,000,000.00), less fees
payable under Section 2.3..
(b) Deliveries. At the Closing, the Company shall deliver to the
Purchasers the following:
(i) the Debentures, duly executed by the Company; and
(ii) the Warrants duly executed by the Company;
and the Purchasers shall deliver to the Company the aggregate sum of FIVE
MILLION DOLLARS ($5,000,000.00) less fees payable under Section 2.3 by wire
transfer in immediately available funds to an account designated by the Company
to the Purchasers.
SECTION 2.2. Closing. The closing of the purchase and sale of Purchased
Securities (the "Closing") hereunder shall take place remotely by means of mail,
facsimile and electronic mail (with originally executed documents to be
exchanged immediately thereafter). The Closing shall be held on February 8, 2006
or on such other date as may be agreed to by the Purchasers and the Company (the
"Closing Date"). At the Closing, (i) the Company shall issue, sell and deliver
to each Purchaser the Purchased Securities to be issued to such Purchaser at
such Closing by executing one or more Debentures and Warrants that in the
aggregate represent such Purchased Securities, a copy of this Agreement and of
the Registration Rights Agreement, sending a copy of the executed signature page
of a copy of such Purchased Securities, this Agreement and the Registration
Rights Agreement to each such Purchaser by facsimile at the number provided by
such Purchaser for such purpose and placing executed copies of such executed
Purchased Securities, this Agreement and the Registration Rights Agreement in
the hands of a reputable private delivery service for delivery to such
Purchaser, and (ii) each such Purchaser shall pay the aggregate purchase price
therefor by instructing counsel to wire transfer immediately available funds to
an account designated in writing by the Company, shall execute the signature
page to this Agreement and the Registration Rights Agreement and send the same
by facsimile to the Company at (000) 000-0000 in the United States of America
and shall place such executed signature pages in the hands of a reputable
private delivery service for delivery to the Company.
-2-
SECTION 2.3. Attorneys Fees. The Purchasers and the Company acknowledge that the
Purchasers' counsel will deduct, prior to forwarding the $5,000,000 to the
Company pursuant to Section 2.1(b), outstanding fees to a maximum of $25,000.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
In order to induce the Purchasers to enter into this Agreement and to
induce the Purchasers to purchase the Purchased Securities, the Company hereby
represents and warrants, as of the date hereof and as each Closing Date, that:
SECTION 3.1. Organization and Good Standing. The Company is duly organized,
validly existing and in good standing in its jurisdiction of organization and is
duly qualified and authorized to do business in all other jurisdictions in which
the nature of its business or property makes such qualification necessary. The
Company has the power to own its properties and to carry on its business as now
conducted and as proposed to be conducted.
SECTION 3.2. Authorization. The execution, delivery and performance by the
Company of this Agreement, the Registration Rights Agreement, and the issuance
and sale by the Company of the Purchased Securities hereunder: (a) are within
the Company's power and authority; (b) have been duly authorized by all
necessary corporate and other proceedings; (c) has been duly executed and
delivered by an authorized officer of the Company; and (d) do not and will not
result in the creation of any lien upon any of the Company's property or
conflict with or result in any breach of any provision of the Company's Charter,
or any law, regulation, order, judgment, writ, injunction, license, permit,
agreement or instrument to which the Company is subject.
SECTION 3.3. Enforceability. The execution and delivery by the Company of
this Agreement, the Registration Rights Agreement, and the issuance and sale by
the Company of the Purchased Securities hereunder, will result in legally
binding obligations of the Company, enforceable against it in accordance with
the respective terms and provisions hereof and thereof except (i) as limited by
applicable bankruptcy, insolvency, reorganization, moratorium, and other laws of
general application affecting enforcement of creditors' rights generally, (ii)
as limited by laws relating to the availability of specific performance,
injunctive relief or other equitable remedies, and (iii) to the extent the
indemnification provisions contained in this Agreement and/or in the
Registration Rights Agreement may be limited by applicable federal or state
securities laws.
-3-
SECTION 3.4. SEC Reports. The Company has filed all reports required to be
filed by it under the Securities Act and the Exchange Act, including pursuant to
Section 13(a) or 15(d) thereof, for the year preceding the date hereof (the
foregoing reports, including the exhibits thereto, being collectively referred
to herein as the "SEC Reports"). As of their respective dates, the SEC Reports
complied in all material respects with the requirements of the Securities Act
and the Exchange Act and the rules and regulations of the U.S. Securities
Exchange Commission promulgated thereunder, and none of the SEC Reports, when
filed, 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 light of the circumstances under which they were made,
not misleading.
ARTICLE IV
REPRESENTATIONS OF THE PURCHASERS
SECTION 4.1. Investment Intent. Each Purchaser hereby represents, warrants
and covenants to the Company that such Purchaser will acquire the Purchased
Securities to be purchased by the Purchaser hereunder (and the securities
received upon exercise or conversion thereof) for investment only for the
Purchaser's own account, not as a nominee or agent and not with a view to the
sale or distribution of any part thereof. The Purchaser hereby agrees that it
will not transfer the Purchased Securities or any securities received upon
conversion or exercise thereof in a manner that will violate the Securities Act.
SECTION 4.2. Authorization. Each Purchaser hereby represents and warrants
to the Company that each of this Agreement and the Registration Rights Agreement
has been executed by a duly authorized Person on its behalf; and its execution,
delivery and performance hereof have been duly authorized by all appropriate
action and do not and will not conflict with or result in any breach of any
provision of any law, regulation, order, judgment, writ, injunction, license,
permit, agreement or instrument to which it is subject.
SECTION 4.3. Enforceability. Each Purchaser hereby represents and warrants
that the execution and delivery by it of this Agreement and the Registration
Rights Agreement will result in legally binding obligations of it enforceable
against it in accordance with the respective terms and provisions hereof and
thereof except (i) as limited by applicable bankruptcy, insolvency,
reorganization, moratorium, and other laws of general application affecting
enforcement of creditors' rights generally, (ii) as limited by laws relating to
the availability of specific performance, injunctive relief or other equitable
remedies, and (iii) to the extent the indemnification provisions contained in
the Registration Rights Agreement may be limited by applicable federal or state
securities laws.
SECTION 4.4. Exemption. Each Purchaser understands that the Purchased
Securities and any securities received upon exercise or conversion of the
Purchased Securities are not registered under the Securities Act on the grounds
that the sale provided for in this Agreement and the issuance of securities
hereunder is exempt from registration under the Securities Act pursuant to
section 4(2) thereof and Regulation S thereunder, and that the Company's
reliance on such exemptions is predicated on the Purchaser's representations set
forth herein.
-4-
SECTION 4.5. Experience. Each Purchaser represents that it has substantial
experience in evaluating and investing in private placement transactions of
securities in companies similar to the Company, is familiar with the risks
associated with the business and operations of the Company, has such knowledge
and experience in financial and business matters as to be capable of evaluating
the merits and risks of its investment, and has the ability to bear the economic
risks of its investment for an indefinite period of time, including the risk of
a complete loss of the Purchaser's investment in the Purchased Securities. The
Purchaser represents that it has had, during the course of the transaction and
prior to the purchase of the Purchased Securities, the opportunity to request
information from and ask questions of the Company and its officers, employees
and agents, concerning the Company, its assets, business and operations and to
receive information and answers to such requests and questions.
SECTION 4.6. Restricted Securities. The Purchaser understands that the
Purchased Securities and any securities received upon exercise or conversion
thereof are "restricted securities" under the U.S. federal securities laws
inasmuch as they are being acquired from the Company in a transaction not
involving a public offering and that under such laws and applicable regulations
the Purchased Securities and any securities received upon exercise or conversion
thereof may be resold without registration under the Securities Act only in
certain limited circumstances. The Purchaser acknowledges that the Purchased
Securities and any securities received upon exercise or conversion thereof must
be held indefinitely unless subsequently registered under the Securities Act and
under applicable state securities laws or an exemption from such registration is
available. The Purchaser acknowledges that each certificate representing the
Purchased Securities or any securities issuable upon exercise or conversion
thereof shall bear a legend substantially in the following form:
"THE SECURITY REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. SUCH
SHARES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION IN
EFFECT UNDER SUCH ACT UNLESS THE COMPANY RECEIVES AN OPINION OF COUNSEL OR OTHER
EVIDENCE REASONABLY ACCEPTABLE TO IT DEMONSTRATING THAT SUCH SALE OR TRANSFER IS
EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SAID ACT OR
UNLESS SOLD PURSUANT TO RULE 144 OF SUCH ACT.
The foregoing legend shall be removed from the certificates representing
any Purchased Securities, at the request of the holder thereof, at such time as
(i) they become eligible for resale pursuant to an effective registration
statement or Rule 144(k) under the Securities Act or (ii) the Company shall have
received an opinion of counsel or other evidence reasonably acceptable to the
Company to the effect that any transfer of the Purchased Securities represented
by such certificates or the securities issued upon conversion or exercise
thereof will not violate the Securities Act and applicable state securities
laws.
-5-
SECTION 4.7. Further Limitations on Disposition. Without in any way
limiting the representations set forth above, Purchaser will not to make any
disposition of all or any portion of the Purchaser's Purchased Securities and
any securities received upon exercise or conversion thereof unless and until one
of the following conditions have been satisfied:
(i) There is then in effect a Registration Statement under the
Securities Act covering the shares intended to be disposed of, and such
disposition is made in accordance with such Registration Statement; or
(ii) The Purchaser shall have notified the Company of the proposed
disposition and shall have furnished the Company with a reasonably detailed
statement of the circumstances surrounding the proposed disposition, and if
reasonably requested by the Company, the Purchaser shall have furnished the
Company with an opinion of counsel, reasonably satisfactory to the Company to
the effect that such disposition will not require registration under the
Securities Act, or the Purchaser shall have otherwise sold such shares pursuant
to Rule 144 under the Securities Act.
SECTION 4.8. Accredited Investor. Each Purchaser hereby represents and
warrants that:
(i) such Purchaser is an accredited investor as defined in Rule 501(a)
of Regulation D promulgated under the Securities Act or
(ii) (A) such Purchaser (if a natural person) is NOT a resident of the
United States of America or any State of the United States, or territory or
possession of the United States, or the District of Columbia (collectively, the
"USA") and is NOT purchasing or considering purchasing the Securities for the
account or benefit of a resident of the USA, or (B) such Purchaser (if not a
natural person) is NOT organized or incorporated under the laws of the United
States of America or any State of the United States, or territory or possession
of the United States, or the District of Columbia (collectively, the "USA"), and
is NOT organized by a natural person resident in the USA, or by a partnership or
corporation organized under the laws of the USA, or by any estate governed under
USA law of which any executor or administrator is a resident or organized under
the laws of the USA, or by any trust of which any trustee is a resident or
organized under the laws of the USA.
SECTION 4.9. Brokers or Finders. The Purchaser hereby represents that it
has not taken any action that would result in the Company incurring any
liability for brokerage or finders' fees or agents' commissions for any similar
charges in connection with the transactions contemplated by this Agreement.
SECTION 4.10. Purchase for Own Account. The Purchased Securities acquired
by each Purchaser, and any securities acquired upon exercise or conversion of
the same, will be acquired by such Purchaser for such Purchaser's own account,
not as a nominee or agent, and not with a view to or in connection with the sale
or distribution of any part thereof.
-6-
ARTICLE V
CONDITIONS TO THE PURCHASER'S OBLIGATIONS TO PURCHASE THE INITIAL OR REQUESTED
SHARES
The Purchaser's obligation to purchase Purchased Securities pursuant to
Section 2.1 of this Agreement is subject to compliance by the Company with its
agreements and representations herein contained, and to the satisfaction, on or
prior to the applicable Closing Date, of the following conditions (except to the
extent any such conditions may be waived in writing by a particular Purchaser):
SECTION 5.1. Representations and Warranties. The Company's representations
and warranties contained in Article III hereof shall be true and correct in all
material respects on and as of the Closing Date with the same force and effect
as though made on and as of the Closing Date and the Company shall have
performed and complied with all conditions and agreements required to be
performed or complied with by each of them prior to the Closing.
SECTION 5.2. Legality; Governmental and Other Authorizations. The purchase
of the Purchased Securities to be acquired on such Closing Date by the
Purchasers shall not be prohibited by any law or governmental order or
regulation, and shall not subject the Purchasers to any penalty, special tax or
other onerous condition. All necessary consents, approvals, licenses, permits,
orders and authorizations of, or registrations, declarations and filings with,
any governmental or administrative agency or of or with any other Person, with
respect to any of the transactions contemplated by this Agreement shall have
been duly obtained or made and shall be in full force and effect other than any
applicable state securities law or blue sky filings.
ARTICLE VI
CONDITIONS TO THE COMPANY'S OBLIGATIONS
The Company's obligation to sell and issue the Purchased Securities
pursuant to this Agreement is subject to compliance by the Purchaser with the
agreements herein contained, and to the satisfaction on or prior to the
applicable Closing Date, of the following conditions:
SECTION 6.1. Representations. The representations made by the Purchasers in
Article IV hereof shall be true and correct in all material respects on and as
of the Closing Date with the same force and effect as though made on and as of
the Closing Date.
SECTION 6.2. Legality; Governmental and Other Authorizations. The issuance
and sale of the Purchased Securities by the Company at such Closing shall not be
prohibited by any law or governmental order or regulation, and shall not subject
the Company to any penalty, special tax, or other onerous condition. All
necessary consents, approvals, licenses, permits, orders and authorizations of,
or registrations, declarations and filings with, any governmental or
administrative agency or of or with any other Person, with respect to any of the
transactions contemplated by this Agreement shall have been duly obtained or
made and shall be in full force and effect other than any applicable state
securities law or blue sky filings.
ARTICLE VII
MISCELLANEOUS
SECTION 7.1. Notices. All demands, notices, requests, consents and other
communications required or permitted under this Agreement shall be in writing
and shall be personally delivered or sent by facsimile machine (with a
confirmation copy sent by one of the other methods authorized in this Section),
commercial (including FedEx) or U.S. Postal Service overnight delivery service,
or, deposited with the U.S. Postal Service mailed first class, registered or
certified mail, postage prepaid, as set forth below:
-7-
If to the Company, addressed to:
Xxxxx Xxxxxxx
President and CEO
Barnabus Energy, Inc.
000 Xxx Xx Xx Xxxxx
Xxxxx 000
Xxxxxx Xxxxx, XX 00000
Fax: (000) 000-0000
with a copy to:
Xxxxxxx Xxxxxx Xxxxxx & Dodge LLP
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: D. Xxxxx Xxxxx
Fax: (000) 000-0000
If to Purchasers at the addresses set forth on the signature page hereto.
Notices shall be deemed given upon the earlier to occur of (i) receipt by the
party to whom such notice is directed; (ii) if sent by facsimile machine, on the
day (other than a Saturday, Sunday or legal holiday in the jurisdiction to which
such notice is directed) such notice is sent if sent (as evidenced by the
facsimile confirmed receipt) prior to 5:00 p.m. Eastern Time and, if sent after
5:00 p.m. Eastern Time, on the day (other than a Saturday, Sunday or legal
holiday in the jurisdiction to which such notice is directed) after which such
notice is sent; (iii) on the first business day (other than a Saturday, Sunday
or legal holiday in the jurisdiction to which such notice is directed) following
the day the same is deposited with the commercial carrier if sent by commercial
overnight delivery service; or (iv) the fifth day (other than a Saturday, Sunday
or legal holiday in the jurisdiction to which such notice is directed) following
deposit thereof with the U.S. Postal Service as aforesaid. Each party, by notice
duly given in accordance therewith may specify a different address for the
giving of any notice hereunder.
SECTION 7.2. Amendments and Waivers, Joinder. Except as otherwise expressly
provided herein, any term of this Agreement may be amended only with the written
consent of the Company and the Purchaser. Any amendment or waiver effected in
accordance with this Section shall be binding upon the Company and each holder
of any Purchased Securities sold pursuant to this Agreement.
SECTION 7.3. WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY
VOLUNTARILY AND IRREVOCABLY WAIVES TRIAL BY JURY IN ANY ACTION OR OTHER
PROCEEDING BROUGHT IN CONNECTION WITH THIS AGREEMENT, ANY OF THE RELATED
AGREEMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
-8-
SECTION 7.4. Counterparts. This Agreement may be executed in any number of
counterparts, each of which will be deemed an original and all of which will
constitute one and the same agreement.
SECTION 7.5. Entire Agreement. This Agreement and the other writings
referred to herein or delivered pursuant hereto which form a part hereof contain
the entire agreement and understanding of the parties hereto with respect to the
subject matter hereof. This Agreement supersedes all prior and contemporaneous
discussions, agreements and understandings related to said subject matter.
SECTION 7.6. Survival of Representations and Warranties, etc. All
representations and warranties contained herein shall survive until 12 months
from the date hereof.
SECTION 7.7. Assignment. All of the terms and provisions of this Agreement
shall be binding upon and inure to the benefit of and be enforceable by the
respective successors and assigns of the parties hereto, whether so expressed or
not, and, in particular, shall inure to the benefit of and be enforceable by the
holder or holders at the time of any of the Purchased Securities.
SECTION 7.8. Governing Law. This Agreement shall be governed by the laws of
the State of Nevada, without regard to the conflicts of law provisions
thereunder.
SECTION 7.9. Fees and Expenses of Counsel. At the Closing, the Company
shall pay up to $25,000 of bona fide expenses, including legal fees, incurred by
the Purchasers upon delivery by the Purchasers to the Company of appropriate and
customary documentation thereof.
[remainder of page intentionally left blank]
-9-
IN WITNESS WHEREOF, this Agreement is executed and delivered as of the date
first written above by the undersigned who hereby agrees to be bound by the
terms and provisions set forth in the Agreement.
BARNABUS ENERGY, INC.
By:
---------------------------------
Name: Xxxxx Xxxxxxx
Title: President and CEO
PURCHASERS
------------------------------------
Name: Coach Capital LLC
Address: EPS - D (2016)
X.X. Xxx 00-0000
Xxxxx, XX 00000
Fax number: (000) 000-0000
Amount of investment: $1,500,000
Number of Warrants: 672,646
EXHIBIT A-I
Form of Debenture
EXHIBIT A-II
Form of Warrant
EXHIBIT A-III
Form of Registration Rights Agreement
