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EXHIBIT 10.8
SWISS MEDICA, INC.
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Note and Warrant Purchase Agreement
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Dated: December 6, 2004
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NOTE AND WARRANT PURCHASE AGREEMENT
THIS NOTE AND WARRANT PURCHASE AGREEMENT (this "Agreement") is effective
as of December 6, 2004, by and between Swiss Medica, Inc., a Delaware
corporation (the "Company") and Strategic Equity Corp. (the "Lender").
1. The Loans, Notes and Warrant.
1.1 The Loans and Notes. Subject to the terms and conditions of this
Agreement, Lender agrees to loan the Company an aggregate of $600,000 CAD, in
two equal installments of $300,000 CAD (less the Financing Fee (as defined
below)) with the first installment being delivered to the Company on or before
December 6, 2004 (the "First Advance"), and the second installment being
delivered to the Company on or before January 3, 2005 (the "Second Advance," and
together with the First Advance, the "Advances" or the "Loan"). The Loan shall
be governed by the terms and conditions of, and repaid in accordance with, this
Agreement and two Promissory Notes each in the principal amount of $300,000 CAD
(the "Notes"), in the forms attached hereto as Exhibit A and Exhibit B, to be
issued by the Company to Lender to evidence each of the Advances the first of
which such Notes (the "December Note"), shall be executed concurrently with the
December Closing (as defined below) and the second of which such Notes (the
"January Note") shall be executed concurrently with the January Closing.1.2
Security. The Notes will be secured by a Security Agreement in the form attached
hereto as Exhibit C (the "Security Agreement"). Pursuant to the Security
Agreement, the Company shall file on behalf of the Lender, UCC-1 Financing
Statements and such equivalent forms pursuant to the Personal Property Security
Act (the "Filings"), as applicable, in (a) Delaware, and (b) each of the states
in the United States and provinces in Canada listed on Schedule 1.2, which
constitute all states and provinces in which the Company owns personal and real
property assets (the "Assets"). The Company shall provide Lender with file
stamped copies of all Filings within five (5) days after receipt thereof from
the applicable government office
1.3 The Financing Fee. In connection with each of the First Advance
and the Second Advance, the Company shall pay Lender a financing fee equal to
two percent (2%) of the amount of such Advance, or $6,000 CAD (the "Financing
Fee"), and such amount shall be deducted directly from the principal amount of
such advance.
1.4 The Warrant. Subject to the terms of this Agreement, the Company
shall issue to Lender a warrant to purchase 350,000 shares of the Company's
Class A Common Stock, having an exercise price per share equal to the average
closing bid price of the Company's Class A Common Stock (the "Warrants"), as
shown on the Over-the-Counter Bulletin Board, for the five trading days
immediately preceding the date of the December Closing. The Warrant shall be in
the form attached hereto as Exhibit D and issued on, and dated as of, the date
of the December Closing. The Company agrees to, within ninety (90) days after
the December Closing, file with the United States Securities and Exchange
Commission, and to use its best efforts to cause to be declared effective within
one hundred eighty (180) days after the December Closing, a registration
statement in such form that the Company is eligible to use to register the Class
A Common Stock underlying the Warrant for resale under the Securities Act of
1933.
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2. Representations and Warranties of the Company. The Company hereby
represents and warrants to Lender as follows:
2.1 Organization, Standing and Power. The Company is a corporation
duly incorporated, validly existing and in good standing under the laws of the
State of Delaware and has all requisite corporate power and authority to own,
lease and operate its properties and to carry on its business as contemplated to
be conducted.
2.2 Authority and Enforceability. The Company has all requisite
corporate power and authority to execute and deliver this Agreement and to
perform fully its obligations hereunder. The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby have been
duly authorized by all necessary corporate action on the part of the Company.
This Agreement has been duly executed and delivered by the Company and, assuming
this Agreement constitutes a valid and binding agreement of the other parties
hereto, this Agreement constitutes a legal, valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms, subject
to applicable bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect relating to creditors' rights and
remedies generally and subject, as to enforceability, to general principles of
equity, regardless of whether enforceability is considered in a proceeding at
law or in equity. When executed and delivered, the Notes and the Warrant shall
be duly executed and delivered by the Company and, shall constitute legal, valid
and binding obligations of the Company, enforceable against the Company in
accordance with their terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to creditors' rights and remedies generally and subject, as to
enforceability, to general principles of equity, regardless of whether
enforceability is considered in a proceeding at law or in equity.
2.3 Compliance With Other Instruments. The Company is not in
violation or default of any term of its charter documents, each as amended, or
of any provision of any mortgage, indenture, agreement, instrument or contract
to which it is party or by which it is bound or of any judgment, decree, order
or writ other than any such violation that would not, individually or in the
aggregate, have a material adverse effect on the Company. The execution,
delivery, and performance of and compliance with this Agreement, and the
transactions contemplated herein, will not result in any such material
violation, or be in conflict with or constitute a material default under any
such term, or result in the creation of any mortgage, pledge, lien, encumbrance
or charge upon any of the properties or assets of the Company or the suspension,
revocation, impairment, forfeiture or nonrenewal of any permit, license,
authorization or approval applicable to the Company, its business or operations
or any of its assets or properties.
2.4 Location of Assets and Liens. Schedule 2.4 sets forth each state
in the United States and each province in Canada, in which Assets are located.
The Company has good and marketable title to the Assets and there is no lien or
encumbrance on any of the Assets except for such liens or encumbrances listed on
Schedule 2.4 hereto, or any lien or encumbrance imposed by law in the ordinary
course of business for assessments not yet due and payable.
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2.5 Brokers. The Company has no contract, arrangement or
understanding with any broker, finder or similar agent with respect to the
transactions contemplated by this Agreement.
2.6 Litigation. There is no pending or, to the best knowledge of the
Company, threatened action, suit, proceeding or investigation before any court,
governmental agency or body, or arbitrator having jurisdiction over the Company,
or any of its affiliates that would affect the execution by the Company or the
performance by the Company of its obligations under the Agreement other than the
Gleiss ▇▇▇▇ Hootz action referred to in the Company's 10QSB filed with the
United States Securities and Exchange Commission on November 10, 2004. The
Company agrees to provide a Litigation search for the states of Delaware and
Texas and the Canadian provinces of British Columbia and Ontario within five (5)
days of the December Closing to the Lender in support of this
2.7 Reporting Company. The Company is a publicly-held company
subject to reporting obligations pursuant to the Securities and Exchange Act of
1934, as amended (the "Act"), and has a class of common shares registered
pursuant to the Act. Pursuant to the provisions of the Act, the Company has
timely filed all reports and other materials required to be filed thereunder
with the United States Securities and Exchange Commission during the preceding
twelve (12) months.
3. Representations and Warranties of Lender. Lender hereby represents and
warrants that:
3.1 Authorization. Lender has full power and authority to enter into
this Agreement, and when executed, this Agreement will constitute a valid and
legally binding obligation of Lender, enforceable in accordance with its terms.
3.2 Purchase Entirely for Own Account. The Notes and the Warrant and
any Common Stock issuable upon conversion of the Warrant (collectively, the
"Securities") will be acquired for investment for Lender's own account, not as a
nominee or agent, and not with a view to the resale or distribution of any part
thereof, and the Lender has no present intention of selling, granting any
participation in, or otherwise distributing the same. The Lender does not have
any contract, undertaking, agreement or arrangement with any person to sell,
transfer or grant participation in any of the Securities to such person or to
any third person. The Lender has full power and authority to enter into this
Agreement.
3.3 Disclosure of Information. The Lender has received all of the
information it considers necessary or appropriate for deciding whether to
purchase the Note and the Warrant. The Lender has had an opportunity to ask all
questions and receive all answers from the Company regarding the terms and
conditions of the offering and sale of the Note and the Warrant.
3.4 Investment Experience. The Lender is an investor in securities
of bulletin board and small cap companies and acknowledges that it is able to
fend for itself and bear the economic risk of its investment, including the
complete loss thereof, and has such knowledge and experience in financial or
business matters that it is capable of evaluating the merits and risks of the
investment in the Note and the Warrant. The Lender has not been organized for
the purpose of acquiring the Securities.
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3.5 Accredited Lender. The Lender is an "accredited investor" within
the meaning of the Securities and Exchange Rule 501(a) of Regulation D, as
presently in effect.
3.6 Restricted Securities. The Lender understands that the Warrant
and the common stock underlying the Warrant are characterized as "restricted
securities" under the 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, such securities may be resold
without registration under the Securities Act of 1933, as amended (the
"Securities Act"), only in certain limited circumstances. In this connection,
the Lender is familiar with Rule 144, as presently in effect, and understands
the resale limitations imposed thereby and by the Securities Act. The Lender
understands Rule 144 is not currently available for the sale of the Securities
and may never be so available.
3.7 Further Limitations on Disposition. Without in any way limiting
the representations set forth above, the Lender further agrees not to make any
disposition of all or any portion of the Securities (other than the valid
exercise or conversion thereof in accordance with their respective terms) unless
and until:
(a) There is then in effect a Registration Statement under the
Securities Act covering such proposed disposition, and such disposition is made
in accordance with such Registration Statement; or
(b) (i) the Lender shall have notified the Company of the
proposed disposition and shall have furnished the Company with a detailed
statement of the circumstances surrounding the proposed disposition, and (ii) if
requested by the Company, the Lender shall have furnished the Company with an
opinion of counsel, reasonably satisfactory to the Company, that such
disposition will not require registration of such shares under the Securities
Act or registration or qualification under any applicable state securities laws.
3.8 Legends. Lender understands and agrees that the certificates
evidencing the Securities may bear the following legend or a similar legend of
like tenor:
"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE. THEY MAY NOT BE
SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF A
REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THE SECURITIES UNDER SUCH
ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH
REGISTRATION IS NOT REQUIRED."
4. The Closings4.1 Time and Place. The purchase and sale of the December
Note shall take place on December 6, 2004 (the "December Closing") at such time
and place as the parties shall mutually agree. The purchase and sale of the
January Note shall take place on January 3, 2005 (the "January Closing," and
together with the December Closing, the "Closings") at such time and place as
the parties shall mutually agree.
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4.2 Closing Deliveries. At the December Closing, the Company will
deliver to Lender the duly executed December Note and the Warrant, and Lender
shall wire transfer $294,000.00 CAD to the Company's bank account according to
the wire transfer instructions attached hereto as Exhibit E (the "Wire Transfer
Instructions"). At the January Closing, the Company will deliver to Lender the
duly executed January Note, and Lender shall wire transfer $294,000.00 CAD to
the Company's bank account according to the Wire Transfer Instructions.
4.3 Conditions to Lender's Obligations at the Closings. The
obligations of Lender at the Closings are subject to the fulfillment, on or
prior to the Closings, of each of the following conditions, any of which may be
waived in whole or in part by the Lender:
(a) The representations and warranties made by the Company in
this Agreement shall be true and correct when made, and shall be true and
correct on the dates of the Closings with the same force and effect as if they
had been made on and as of such dates.
(b) The Company shall have performed and complied with all
agreements, obligations and conditions contained in this Agreement that are
required to be performed or complied with by it on or prior to the dates of the
Closings.
(c) Except for the notices required or permitted to be filed
after the dates of Closings pursuant to applicable federal and state securities
laws, the Company shall have obtained all governmental approvals required in
connection with the lawful sale and issuance of the Notes and the Warrant.
(d) At the Closings, the sale and issuance by the Company, and
the purchase by Lender, of the Notes and the Warrant shall be legally permitted
by all laws and regulations to which the Lender and/or the Company are subject.
4.4 Conditions to the Company's Obligations at the Closings. The
Company's obligation to issue and sell the Notes and the Warrant at the Closings
is subject to the fulfillment, to the Company's satisfaction, on or prior to the
dates of the Closings, of the following conditions, any of which may be waived
in whole or in part by the Company:
(a) The representations and warranties made by the Lender in
this Agreement shall be true and correct when made, and shall be true and
correct on the dates of the Closings with the same force and effect as if they
had been made on and as of such dates.
(b) Except for any notices required or permitted to be filed
after the dates of Closings pursuant to applicable federal or state securities
laws, the Company shall have obtained all governmental approvals required in
connection with the lawful sale and issuance of the Securities.
(c) At the Closings, the sale and issuance by the Company, and
the purchase by Lender, of the Notes and the Warrant shall be legally permitted
by all laws and regulations to which the Lender and/or the Company are subject.
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5. Expenses. The Company shall reimburse the Lender for legal fees
incurred by Lender in completing the transactions contemplated by this
Agreement, within 10 days of receiving proper documentation for such expenses.
6. Default. The Company agrees that if any representation or
warranty made by the Company herein is found or deemed to be breached by the
Company such breach shall be considered an event of Default and the Lender shall
have the remedies available in accordance with the Agreement, the Notes, and the
Security Agreement dated December 6, 2004.
7. Miscellaneous.
7.1Waivers and Amendments. Any provision of this Agreement, any of
the Notes, and the Warrant may be amended, waived or modified (either generally
or in a particular instance, either retroactively or prospectively, and either
for a specified period of time or indefinitely), upon the written consent of the
Company and the Lender.
7.2 Governing Law. This Agreement, the Notes and the Warrant shall
be governed by and construed in accordance with Delaware law, without regard to
the conflict of laws provisions thereof.
7.3 Successors and Assigns. Except as otherwise expressly provided
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successors, assigns, heirs, executors and administrators of the
parties hereto.
7.4 Entire Agreement. This Agreement (including the exhibits
attached hereto), the Notes and the Warrant constitute the full and entire
understanding and agreement between the parties with regard to the subjects
hereof and thereof.
7.5 Notices. Any notice or communication required to be given
hereunder may be delivered by hand, deposited with an overnight courier, sent by
confirmed facsimile, or mailed by registered or certified mail, if to the
Company, to its Chief Executive Officer at its corporate headquarters, and if to
the Lender, to its President at ▇▇▇▇▇ ▇▇▇, ▇▇▇ - ▇▇▇ ▇▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇. Notice shall be deemed received on the date sent if sent by facsimile
or personal delivery; three days after the date sent if sent by registered or
certified mail; and one day after the date it is sent by overnight courier.
7.6 Severability of this Agreement. If any provision of this
Agreement shall be judicially determined to be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.
7.7 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.
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IN WITNESS WHEREOF, the parties have caused this Note and Warrant
Purchase Agreement to be duly executed and delivered by their proper and duly
authorized officers as of the date and year first written above.
COMPANY:
SWISS MEDICA, INC.
a Delaware corporation
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Chief Executive Officer
Swiss Medica, Inc.
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇▇
LENDER:
STRATEGIC EQUITY CORP.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
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▇▇▇▇▇ ▇▇▇▇▇▇▇
Title:
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Strategic Equity Corp.
▇▇▇▇▇ ▇▇▇, ▇▇▇ - ▇▇▇ ▇▇▇▇▇▇ ▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇▇
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EXHIBIT A
DECEMBER NOTE
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EXHIBIT B
JANUARY NOTE
B-1
EXHIBIT C
SECURITY AGREEMENT
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EXHIBIT E
WIRE TRANSFER INSTRUCTIONS
Bank of Montreal
First ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
Bank No.: 001
Transit: 00022
Account No.: ▇▇▇▇▇▇▇
Account Name: Swiss Medica Inc.
E-1
Security
Texas
Ontario
British Columbia
Schedule 1.2
Schedule 2.4
Location of Assets and Liens
Texas, USA - no liens or encumbrances Ontario, Canadano liens or
encumbrances
British Columbia, Canada no liens or encumbrances