EXHIBIT 10.26
NORD RESOURCES CORPORATION
DEBT CONVERSION AGREEMENT
THIS DEBT CONVERSION AGREEMENT (the "Agreement") is entered into and made
effective as of the 16th day of April, 2004 (the "Effective Date"), by and
between SOUTH BRANCH RESOURCES LLC, an limited liability company organized and
existing under the laws of the State of Arizona (the "Investor"), and NORD
RESOURCES CORPORATION, a corporation organized and existing under the laws of
the State of Delaware (the "Company").
RECITALS
WHEREAS, the Investor is an owner of certain leasehold rights and mining
claims as described in Exhibit A and Exhibit B of that certain Option to
Purchase the "Coyote Springs" Property, dated January 28, 2004 (the "Property
Agreement"), by and among the Company, the Investor, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ("▇▇▇▇▇▇")
and MRPGEO LLC ("MRPGEO" and, together with ▇▇▇▇▇▇ and the Investor, the
"Sellers"), wherein the Company was granted an option (the "Option") to acquire
said leasehold rights and mining claims pertaining to the Coyote Springs
property located in ▇▇▇▇▇▇ County, Arizona (the "Property"); and
WHEREAS, in accordance with the terms of the Property Agreement, the
Company is obligated to pay to each of the Sellers, separately, 133,330 shares
of its capital common stock, having a par value of One Cent ($0.01) per share (a
"Share"), of which 66,666 Shares are payable to the Investor immediately (the
"Initial Shares"); and
WHEREAS, under the terms of the Property Agreement, and at the election of
the Sellers, they may each elect to receive on the first, second, third, and
fourth anniversaries of the Agreement either: (i) an additional 66,664 Shares in
the aggregate in four installments of 16,666 Shares each or (ii) $70,000 in
cash, in four installments of $15,000, $16,670, $18,330 or $20,000,
respectively, as well as Shares or cash, at the Seller's option, payable on the
fifth anniversary of the Agreement having a dollar amount equal to $533,335 each
(these Shares to be paid under the Agreement, other than the Initial Shares,
being hereinafter referred to as the "Payment Shares"); and
WHEREAS, under the terms of the Property Agreement, each of the Sellers is
to be granted additional options (the "Share Options") to purchase an additional
99,999 common shares (the "Underlying Shares") in the aggregate, in three
installments of 33,333 Underlying Shares each, for a purchase price equal to 15%
below the quoted closing price for the Company's common stock as reported by the
stock market in which its shares are then publicly traded, on (i) the effective
date of this Agreement; (ii) the date which is twenty-four (24) months from the
date hereof; and the date which is forty-eight (48) months from the date hereof,
respectively, each of which will expire on the date that
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is thirty-six (36) months from the individual dates on which such options were
issued; and
WHEREAS, this Agreement shall serve as the subscription document to effect
the purchase of the Initial Shares and the issuance of the Share Options
described above, and shall serve as the basis for exercise of the remaining
Payment Shares and Underlying Shares (collectively referred to herein as the
"Optioned Shares"), if and to the extent elected in the sole discretion of the
Investor.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing premises, and the mutual
promises and covenants contained in this Agreement, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties, intending to be legally bound, hereby agree as
follows:
1. Subscription for Initial Shares. By its execution below, the Investor
hereby irrevocably subscribes for and accepts, in satisfaction of the
requirement of the Company to provide the Initial Shares, 66,666 Shares.
Upon receipt of this originally-signed Agreement, the Company shall deliver
to the Investor a certificate evidencing the ownership of the Initial
Shares, which Initial Shares shall be validly-issued, fully-paid and
non-assessable, and free and clear of any liens, security interests,
charges, assessments and defects in title (a "Lien"). The certificate shall
be recorded on the books and records of the Company in the name of South
Branch Resources LLC.
2. Grant of Options for Optioned Shares. By its execution of this Agreement,
the Company hereby grants to the Investor the option to receive or purchase
(as the case may be) up to the maximum amount of Payment Shares and
Underlying Shares referenced in the Recitals to this Agreement. To the
extent that the Investor shall desire to exercise its option with respect
to some or all of the Optioned Shares on or before the dates indicated in
the Property Agreement, it may do so by submitting (on each date that an
exercise of the option rights granted hereunder is made) to the Company a
signed original Updating Subscription Form, in the form attached as Exhibit
A to this Agreement (an "Updating Form") and, in the case of the Underlying
Shares, accompanied by a check in the amount of the exercise price per
share times the number of Underlying Shares being purchased thereunder,
following the receipt of which the Company shall deliver to the Investor a
certificate representing the amount of Shares exercised for and reflected
in the applicable Updating Form, which Shares shall upon delivery to the
Investor be validly-issued, fully-paid and non-assessable, and free and
clear of all Liens. Each subsequent certificate shall be recorded as set
forth in Section 1 above, unless otherwise requested by the Investor prior
to the issuance thereof by the Company as contemplated herein.
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3. Legends on Stock Certificates. Each certificate representing Shares shall
contain the following legends on the reverse of such certificate:
THIS SECURITY HAS NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE
COMMISSION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"),
NOR ANY STATE SECURITIES DEPARTMENT, IN RELIANCE UPON THE EXEMPTION
FROM REGISTRATION PROVIDED IN SECTION 4(2) OF THE ACT AND SECTION
44-1844(1) OF THE ARIZONA REVISED STATUTES. AS SUCH, THE PURCHASE OF
THIS SECURITY WAS NECESSARILY WITH THE INTENT OF INVESTMENT AND NOT
WITH A VIEW FOR DISTRIBUTION. THEREFORE, ANY SUBSEQUENT TRANSFER OF
THIS SECURITY OR ANY INTEREST THEREIN WILL BE UNLAWFUL UNLESS IT IS
REGISTERED UNDER THE ACT OR UNLESS AN EXEMPTION FROM REGISTRATION IS
AVAILABLE. FURTHERMORE, IT IS UNLAWFUL TO CONSUMMATE A SALE OR
TRANSFER OF THIS SECURITY, OR ANY INTEREST THEREIN, WITHOUT THE
OPINION OF COUNSEL FOR THE COMPANY THAT THE PROPOSED TRANSFER OR SALE
DOES NOT AFFECT THE EXEMPTIONS RELIED UPON BY THE COMPANY IN
ORIGINALLY DISTRIBUTING THIS SECURITY.
4. Investor Representations. The Investor hereby represents and warrants to
the Company, as of the date hereof, the following:
(a) the Investor is a limited liability company organized and existing
under the laws of the State of Arizona, and has full power and
authority to enter into and perform this Agreement, which Agreement,
once executed by the Investor, shall be the valid and binding
obligation of such party, enforceable against such party by any court
of competent jurisdiction in accordance with its terms;
(b) the individual signing this Agreement for and on behalf of the
Investor is the duly authorized Managing Member of the Investor, and
has full power and authority to enter into and execute this Agreement
for and on behalf of the Investor and to make the representations and
warranties relied upon by the Company in issuing Shares hereunder;
(c) with respect to all Shares being acquired by the Investor hereunder:
(i) the Investor is acquiring the Shares for its own account, and not
with a view toward the subdivision, resale, distribution, or
fractionalization thereof; the Investor has no contract,
undertaking, or arrangement with any person to sell, transfer, or
otherwise dispose of the Shares (or any portion thereof hereby
subscribed for), and has no present intention to enter into any
such contract, undertaking, agreement or arrangement;
(ii) the subscription for Shares by the Investor hereunder is not the
result of any form of general solicitation or general
advertising;
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(iii) the Investor hereby acknowledges that: (A) the offering of the
Shares was made only through direct, personal communication
between the Investor and the Company; (B) the Investor has had
full access to material concerning the Company's planned business
and operations, which material was furnished or made available to
the Investor by officers or representatives of the Company; (C)
the Company has given the Investor the opportunity to ask any
questions and obtain all additional information desired in order
to verify or supplement the material so furnished; and (D) the
Investor understands and acknowledges that the Shares are subject
to substantial restrictions upon the transfer thereof, and that a
purchaser of the Shares must be prepared to bear the economic
risk of such investment for an indefinite period;
(iv) the Investor understands that the Shares have not been registered
under the Securities Act of 1933 (the "Act") or any state
securities act (nor passed upon by the SEC or any state
securities commission), and that the Shares may never be
registered or qualified by the Investor under federal or state
securities laws solely in reliance upon an available exemption
from such registration or qualification, and hence such Shares
cannot be sold unless they are subsequently so registered or
qualified, or are otherwise subject to any applicable exemption
from such registration requirements; and
(v) the Investor further understands and acknowledges that (A) the
Shares have not been registered with the Arizona Securities
Commission, and are being issued to the Investor in that State
pursuant to and in reliance upon the exemption from such
registration provided by Section 44-1844 of the Arizona Revised
Statutes as a sale of securities within the State not involving
any public offering; (B) the Shares may not be resold to any
person unless and until such registration has occurred or
pursuant to an exemption from registration permitted by the
applicable securities laws and regulations of the State of
Arizona; and (C) that there are substantial restrictions on
transfer of the Shares, as set forth herein and by legend on the
reverse side of every certificate evidencing the ownership of the
Shares;
(d) the Investor is either (i) an "accredited investor" as such term is
defined in Rule 501 of Regulation D promulgated by the Securities and
Exchange Commission under the Act, or (ii) is a sophisticated investor
meeting the
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minimum standards for an investment in an unregistered security under
applicable state and federal securities laws and possessing such
knowledge and experience as is necessary, individually or together
with such person's financial or investment advisors, to make a
determination as to the merits and risks of investing in securities
generally, and in the Shares; and
(e) the Investor has been advised to consult with an attorney regarding
legal matters concerning the purchase and ownership of the Shares, and
with a tax advisor regarding the tax consequences of purchasing such
Shares.
5. Miscellaneous Provisions.
(a) Notices. All notices, requests, demands and other communications to be
given hereunder shall be in writing and shall be deemed to have been
duly given on the date of personal service or transmission by fax if
such transmission is received during the normal business hours of the
addressee, or on the first business day after sending the same by
overnight courier service or by telegram, or on the third business day
after mailing the same by first class mail, or on the day of receipt
if sent by certified or registered mail, addressed as set forth below,
or at such other address as any party may hereafter indicate by notice
delivered as set forth in this Section 5(a):
If to the Company: Nord Resources Corporation
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, President
If to the Investor: South Branch Resources LLC
▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ ▇▇.
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
(b) Entire Agreement. This Agreement constitutes the entire and final
agreement and understanding between the parties with respect to the
issuance of securities by the Company to the Investor in satisfaction
of its requirements under the Property Agreement, and supersedes any
and all prior oral or written agreements, statements, representations,
warranties or understandings between the parties, all of which are
merged herein and superseded hereby. Notwithstanding the foregoing,
nothing in this Agreement is intended to modify, alter, repeal,
replace or otherwise affect the legal rights and obligations among and
between the parties with respect to any other aspect of the Property
Agreement.
(c) Counterparts; Facsimiles. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, but all
of
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which together shall constitute one and the same instrument.
Facsimiles of original signatures shall be deemed original signatures
for all purposes.
(d) Further Documents and Acts. Each party agrees to execute such other
and further documents and to perform such other and further acts as
may be reasonably necessary to carry out the purposes and provisions
of this Agreement.
(e) Governing Law; Venue. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of Arizona
applicable to contracts to be performed within that state, without
giving effect to the law of conflicts of laws applied thereby. In the
event either party shall be forced to bring any legal action to
protect or defend its rights hereunder, then the prevailing party in
such proceeding shall be entitled to reimbursement from the
non-prevailing party of all fees, costs and other expenses (including,
without limitation, the reasonable expenses of its attorneys) in
bringing or defending against such action.
(f) Severable Provisions. The provisions of this Agreement are severable,
and if any one or more provisions is determined to be illegal,
indefinite, invalid or otherwise unenforceable, in whole or in part,
by any court of competent jurisdiction, then the remaining provisions
of this Agreement and any partially unenforceable provisions to the
extent enforceable in the pertinent jurisdiction, shall continue in
full force and effect and shall be binding and enforceable on the
parties.
[SIGNATURES APPEAR ON THE FOLLOWING PAGE]
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
and year first written above.
THE COMPANY:
NORD RESOURCES CORPORATION: ATTEST:
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
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▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
President Asst. Secretary
THE INVESTOR:
SOUTH BRANCH RESOURCES LLC: WITNESS:
By: /s/ Managing Member By: /s/ Witness
--------------------------------- ------------------------------------
Managing Member
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EXHIBIT A
TO SUBSCRIPTION AGREEMENT
UPDATING SUBSCRIPTION FORM
[A Separate Form To Be Completed For Each Exercise Date]
The Undersigned, by signing in the space provided below, does hereby certify to
Nord Resources Corporation as follows (capitalized terms used but not otherwise
defined in this Form have the meanings given to them in the Subscription
Agreement of which this Form constitutes a part):
1. reference is made to that certain Subscription Agreement (the "Subscription
Agreement"), dated as of April 16, 2004, between the Undersigned (the
"Investor") and Nord Resources Corporation (the "Company"), of which this
Updating Subscription Form (the "Subscription Form") is a part;
2. in accordance with the terms of the Subscription Agreement, the Undersigned
hereby irrevocably exercises its option and subscribes for ______________
shares of the Common Stock of the Company (the "Payment Shares"), in
partial exercise of the Investor's option to receive Optioned Shares and/or
purchase Underlying Shares pursuant to Section 2 of the Subscription
Agreement;
3. by executing and delivering this Subscription Form to the Company, the
Investor hereby makes and confirms each of the representations and
warranties made by the Investor in Section 4 of the Subscription Agreement,
which representations and warranties are hereby incorporated by reference
herein in their entirety as an integral part of this Subscription Form, are
expressly true and correct as of the date of this Subscription Form, and
upon which the Company may rely in issuing the Payment Shares to the
Investor without registration and pursuant to exemption therefrom under
federal and Arizona state securities laws as contemplated by the
Subscription Agreement; and
4. upon the execution and delivery of this Subscription Form to the Company,
calling for such number of Payment Shares as the Investor may then be
entitled to pursuant to the Subscription Agreement, the Company shall issue
and deliver to the Investor a certificate evidencing such number of Payment
Shares and/or Underlying Shares as owned of record by South Branch
Resources LLC, and such Payment Shares shall be validly-issued, fully-paid,
non-assessable and free and clear of any Liens thereon.
Name of Investor: South Branch Resources LLC
Signature of Investor:
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Managing Member
Date of this Subscription Form:
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