PETROSEARCH ENERGY CORPORATION
Exhibit
10.1
This
NOTE
AND WARRANT PURCHASE AGREEMENT, dated as of November 9, 2007 (this
“Agreement”) is entered into by and among Petrosearch Energy Corporation,
a Nevada corporation (the “Company”), and those individuals and entities
listed on Schedule “A” (each a “Purchaser” and collectively, the
“Purchasers”).
WHEREAS,
the Company desires to raise an aggregate of $8,100,000 through the sale
of a
series of 8% Senior Secured Convertible Promissory Notes and three-year Warrants
to purchase an aggregate of 1,928,575 shares of Common Stock (the
“Financing”) to the Purchasers in the amounts listed on Schedule
“A”; and
WHEREAS,
it is a condition to the Purchasers’ purchase of the Note and Warrant (as
hereinafter defined) that the Purchasers be provided with certain registration
rights with respect to the shares of Common Stock into which the Note is
convertible and the shares of Common Stock underlying the Warrant.
NOW
THEREFORE, in consideration of the mutual covenants and agreements set forth
herein and for good and valuable consideration, the receipt and sufficiency
of
which are hereby acknowledged, the Company and the Purchasers hereby agree
as
follows:
ARTICLE
I
DEFINITIONS
Section
1.01 Definitions. As
used in this Agreement, and unless the context requires a different meaning,
the
following terms have the meanings indicated:
“Action”
against a Person means any lawsuit, action, proceeding or complaint before
any
Governmental Authority, mediator or arbitrator.
“Acts”
means the Securities Act and the Exchange Act.
“Affiliate”
means, with respect to a specified Person, any other Person, whether now
in
existence or hereafter created, directly or indirectly controlling, controlled
by or under direct or indirect common control with such specified
Person. For purposes of this definition, “control” (including, with
correlative meanings, “controlling,” “controlled by,” and “under common control
with”) means the power to direct or cause the direction of the management and
policies of such Person, directly or indirectly, whether through the ownership
of voting securities, by contract or otherwise.
“Agreement”
shall have the meaning specified in the introductory paragraph.
“Business
Day” means any day other than a Saturday, Sunday, or a legal holiday for
commercial banks in New York, New York.
“Closing”
shall have the meaning specified in Section 2.03.
“Closing
Date” shall have the meaning specified in Section
2.03.
“Code”
means the Internal Revenue Code of 1986, as amended.
“Collateral
Agent” means Ironman PI Fund (QP), LP.
“Commission”
means the United States Securities and Exchange Commission.
“Common
Stock” means the Company’s common stock, par value $0.001.
“Company
Material Adverse Effect” means a material and adverse effect on (i) the
assets, liabilities, financial condition, business, or affairs of the Company
or
(ii) the ability of the Company to consummate the transactions under any
Transaction Document.
“Company
Related Parties” shall have the meaning specified in Section
7.02.
“Company
SEC Documents” shall have the meaning specified in Section
3.06.
“Conversion
Price” shall have the meaning specified in the Notes.
“Exchange
Act” means the Securities Exchange Act of 1934, as amended from time to
time, and the rules and regulations of the Commission promulgated
thereunder.
“GAAP”
means generally accepted accounting principles in the United States of America
in effect from time to time.
“Governmental
Authority” shall include the country, state, county, city and political
subdivisions in which any Person or such Person’s Property is located or which
exercises valid jurisdiction over any such Person or such Person’s Property, and
any court, agency, department, commission, board, bureau or instrumentality
of
any of them and any monetary authorities that exercise valid jurisdiction
over
any such Person or such Person’s Property. Unless otherwise specified, all
references to Governmental Authority herein shall mean a Governmental Authority
having jurisdiction over, where applicable, the Company or any of its Property
or the Purchasers.
“Holders”
means the record holders of the Notes, Warrants, Note Shares or Warrant
Shares.
“Indemnified
Party” shall have the meaning specified in Section 7.03.
“Indemnifying
Party” shall have the meaning specified in Section 7.03.
“Interest
Shares” means the number of shares of Common Stock that could be paid as
interest pursuant to Section 2(a) of the Notes at a rate of 8.5% under the
Notes
during the term of the Notes.
“Law”
means any federal, state, local or foreign order, writ, injunction, judgment,
settlement, award, decree, statute, law, rule or regulation.
“Lien”
means any interest in Property securing an obligation owed to, or a claim
by, a
Person other than the owner of the Property, whether such interest is based
on
the common law, statute or contract, and whether such obligation or claim
is
fixed or contingent, and including but not limited to the lien or security
interest arising from a mortgage, encumbrance, pledge, security agreement,
conditional sale or trust receipt or a lease, consignment or bailment for
security purposes. For the purpose of this Agreement, a Person shall
be deemed to be the owner of any Property that it has acquired or holds subject
to a conditional sale agreement, or leases under a financing lease or other
arrangement pursuant to which title to the Property has been retained by
or
vested in some other Person in a transaction intended to create a
financing.
“Notes”
shall have the meaning specified in Section 2.01.
“Note
Shares” means (i) the shares of Common Stock to which the Holders are
entitled upon conversion of the Notes and (ii) the Interest Shares.
“Offering
Notice” shall have the meaning specified in Section
5.04.
“OTC
BB” shall mean the OTC Bulletin Board, on which the Company’s Common Stock
is traded.
“Party”
or “Parties” means the Company and the Purchasers party to this
Agreement, individually or collectively, as the case may be.
“Person”
means any individual, corporation, company, voluntary association, partnership,
joint venture, trust, limited liability company, unincorporated organization
or
government or any agency, instrumentality or political subdivision thereof,
or
any other form of entity.
“Pledge
and Security Agreement” means the pledge and security agreement between the
Company, the Purchasers and Collateral Agent in substantially the form attached
hereto as Exhibit C pursuant to which the Company agrees to pledge as
collateral securing the Notes 5.00% of the membership interests in Exploration
Holding Co., L.L.C. which owns 100% of ▇▇▇▇▇▇▇ Petrosearch, L.L.C.
“Preferred
Stock” means, collectively, the Series A 8% convertible preferred stock and
the Series B convertible preferred stock of the Company.
“Property”
means any interest in any kind of property or asset, whether real, personal
or
mixed, or tangible or intangible.
“Proposed
Financing” shall have the meaning specified in Section 5.04.
“Purchase
Price” means an aggregate of $8,100,000 as paid by the Purchasers in their
respective pro rata portions as described on Schedule “A”.
“Purchased
Securities” means, collectively, the Notes and the Warrants.
“Purchaser”
shall have the meaning specified in the introductory paragraph.
“Purchasers”
shall mean all of the purchasers listed on Schedule “A”.
“Purchaser
Material Adverse Effect” means any material and adverse effect on (i) the
ability of a Purchaser to meet its obligations under the Transaction Documents
on a timely basis or (ii) the ability of a Purchaser to consummate the
transactions under any Transaction Document.
“Purchaser
Related Parties” shall have the meaning specified in Section
7.01.
“Registration
Rights Agreement” means the Registration Rights Agreement, substantially in
the form attached to this Agreement as Exhibit D, to be entered into at
the Closing, between the Company and the Purchasers.
“Representatives”
of any Person means the Affiliates, control persons, officers, directors,
employees, agents, counsel, investment bankers and other representatives
of such
Person.
“Securities
Act” means the Securities Act of 1933, as amended from time to time, and the
rules and regulations of the Commission promulgated thereunder.
“Terminating
Breach” shall have the meaning specified in Section
8.09(a)(ii).
“Transaction
Documents” means, collectively, this Agreement, the Registration Rights
Agreement, the Pledge and Security Agreement, the Notes and the Warrants
and any
and all other agreements or instruments executed and delivered by the Parties
on
even date herewith or at Closing, or any amendments, supplements, continuations
or modifications thereto.
“Transfer”
shall have the meaning specified in Section 5.08(b).
“Warrants”
shall have the meaning specified in Section 2.02.
“Warrant
Shares” means the shares of Common Stock underlying the
Warrants.
Section
1.02 Accounting
Procedures and Interpretation. Unless
otherwise specified in this Agreement, all accounting terms used herein shall
be
interpreted, all determinations with respect to accounting matters under
this
Agreement shall be made, and all financial statements and certificates and
reports as to financial matters required to be furnished to the Purchasers
under
this Agreement shall be prepared, in accordance with GAAP applied on a
consistent basis during the periods involved (except, in the case of unaudited
statements, as permitted by Form 10-QSB promulgated by the Commission) and
in compliance as to form in all material respects with applicable accounting
requirements and with the published rules and regulations of the Commission
with
respect thereto.
ARTICLE
II
SALE
AND PURCHASE
Section
2.01 Sale and Issuance
of the Notes. Subject to the terms and conditions of this
Agreement, the Purchasers agree to purchase and the Company agrees to sell
to
the Purchasers the series of 8% Senior Secured Convertible Promissory Notes
in
an aggregate original principal amount of $8,100,000 substantially the form
attached hereto as Exhibit A (collectively, the “Notes”) and in
the respective amounts listed on Schedule “A” for the Purchase
Price.
Section
2.02 Issuance of
Warrants. As additional consideration for the Purchasers’
agreement to the terms and conditions of this Agreement and other valuable
consideration, the Company shall issue to the Purchasers three-year warrants
to
purchase an aggregate of 1,928,572 shares of Common Stock in the amounts
listed
on Schedule “A”, with the exercise price and other additional terms and
conditions set forth in the form of Warrant attached hereto as Exhibit B
(collectively, the “Warrants”).
Section
2.03 Closing. The
execution and delivery of the Transaction Documents (other than this Agreement)
and execution and delivery of all other instruments, agreements, and other
documents required by this Agreement (the “Closing”) shall take place on
or before November 9, 2007 (the “Closing Date”). The
Closing shall take place at the offices of ▇▇▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇.
ARTICLE
III
REPRESENTATIONS
AND WARRANTIES OF THE COMPANY
The
Company represents and warrants to the Purchasers, on and as of the date
of this
Agreement and on and as of the Closing Date, as follows:
Section
3.01 Valid
Existence. Each
of the Company and its subsidiaries is duly organized, validly existing and
in
good standing under the laws of its state of incorporation or formation,
and is
duly qualified to do business in all jurisdictions in which the failure to
be so
qualified would result in a Company Material Adverse Effect. Each of the
Company
and its subsidiaries has all requisite power and authority (i) to own and
lease
the properties and assets it currently owns and leases and it contemplates
owning and leasing and (ii) to conduct its activities as such activities
are
currently conducted and as currently contemplated to be conducted.
Section
3.02 Ownership of
Exploration Holding Co. L.L.C. The Company owns 100% of the
issued and outstanding membership interests in Exploration Holding Co. L.L.C.,
a
Texas limited liability company (“Exploration Holding”); such membership
interests are duly authorized and validly issued in accordance with the Company
Agreement of Exploration Holding (the Exploration Holding LLC Agreement)
and
fully paid (to the extent required under the Exploration Holding LLC Agreement)
and non-assessable (except as such nonassessability may be affected by the
Texas
Business Organizations Code (the “TBOC”)); and, except as set forth in
Exhibit 3.02, the Company owns such membership interests free and clear of
all
Liens.
Section
3.03 Ownership of
▇▇▇▇▇▇▇ Petrosearch, L.L.C. Exploration Holding owns 100% of the
issued and outstanding membership interests in ▇▇▇▇▇▇▇ Petrosearch, L.L.C.,
a
Texas limited liability company (“▇▇▇▇▇▇▇”); such membership interests
are duly authorized and validly issued in accordance with ▇▇▇▇▇▇▇’▇ limited
liability company agreement (the “▇▇▇▇▇▇▇ LLC Agreement”) and fully paid
(to the extent required under the ▇▇▇▇▇▇▇ LLC Agreement) and non-assessable
(except as such nonassessability may be affected by the TBOC); and Exploration
Holding owns such membership interests free and clear of all Liens.
Section
3.04 Ownership of
DDJET. ▇▇▇▇▇▇▇ owns a 5.54455% limited partnership interest in
DDJET Limited, LLP, a Texas limited liability limited partnership (“DDJET”);
such partnership interest is duly authorized and validly issued in accordance
with DDJET’s partnership agreement (the “DDJET Partnership Agreement”)
and fully paid (to the extent required under the DDJET Partnership Agreement
)
and non-assessable (except as such nonassessability may be affected by the
TBOC); and ▇▇▇▇▇▇▇ owns such partnership interest free and clear of all
Liens.
Section
3.05 Capitalization and
Valid Issuance.
(a) As
of the date of this Agreement, the issued and outstanding equity of the Company
consists of 39,742,653 shares of Common Stock, 483,416 shares
of Series A 8% convertible preferred stock and 43,000 shares of
Series B convertible preferred stock. All of the outstanding Common Stock
and
Preferred Stock have been duly authorized and validly issued and are fully
paid
and nonassessable. The rights, privileges and preferences of the Preferred
Stock
are as stated in the Company’s Articles of Incorporation (the
“Articles”).
(b) Except
for (i) the conversion privileges of the Preferred Stock, (ii) the
conversion privileges of the Notes to be issued under this Agreement, (iii)
the
Warrants being issued in connection with this Agreement, (iv) the conversion
privileges provided in the 8% Senior Secured Convertible Note dated February
7,
2007, by and between the Company and RCH Petro Investors, LP (the “RCH Note”),
(v) the exercise privileges provided in the Warrant to Purchase Common Stock
dated February 7, 2007 issued by the Company to RCH Petro Investors, LP (the
“RCH Warrant”), (vi) stock which may be issued pursuant to an Asset Purchase
Agreement dated November 15, 2005, for the purchase of Quinduno Water Flood
Project (vii) warrants issued in February 2006 to certain investors, (viii)
the
shares of Common Stock issuable upon exercise of warrants granted pursuant
to
the Company’s incentive plan, and (ix) all warrants disclosed in the
Company’s SEC Documents, there are no outstanding options, warrants, rights
(including conversion, preemptive rights or similar rights) or agreements
for
the purchase or acquisition from the Company of any shares of its capital
stock. The Company is not a party or subject to any agreement or
understanding, and, to the Company’s knowledge, there is no agreement or
understanding between any persons and/or entities, which affects or relates
to
the voting or giving of written consents with respect to any security or
by a
director of the Company, except as provided for in the Articles.
(c) The
issuance, offer and sale of the Notes and the issuance of the Warrants have
been
duly authorized by the Company and, when issued and delivered to the Purchasers
against payment therefor in accordance with the terms of this Agreement,
will be
validly issued, fully paid and nonassessable and will be free of any and
all
Liens and restrictions on transfer, other than under applicable state and
federal securities Laws and other than such Liens as are created by the
Purchasers.
(d) The
Company’s currently outstanding Common Stock is quoted on the OTC
BB.
(e) The
Company has reserved the Note Shares and the Warrant Shares for issuance
and has
adequate authorized capital under its Articles to issue such shares when
the
Notes are converted or the Warrants are exercised.
Section
3.06 Company SEC
Documents. The
Company has timely filed with the Commission all reports, schedules
and statements required to be filed by it under the Exchange Act since the
filing of its Form 8-A12G on August 10, 2005 (all such documents filed on
or
prior to the date of this Agreement, collectively, the “the Company SEC
Documents”). The Company SEC Documents, including any audited or
unaudited financial statements and any notes thereto or schedules included
therein, at the time filed (except to the extent corrected by a
subsequently filed the Company SEC Document filed prior to the date of this
Agreement) (i) did not contain any untrue statement of a material fact or
omit 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, (ii) complied in all material respects with
the applicable requirements of the Exchange Act, (iii) complied as to form
in all material respects with applicable accounting requirements and with
the
published rules and regulations of the Commission with respect thereto,
(iv) were prepared in accordance with GAAP applied on a consistent basis
during the periods involved (except as may be indicated in the notes thereto
or,
in the case of unaudited statements, as permitted by
Form 10-QSB of the Commission) and (v) fairly present
(subject in the case of unaudited statements to normal, recurring and year-end
audit adjustments) in all material respects the consolidated financial position
and the consolidated results of its operations and cash flows for the periods
then ended. ▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, L.L.P. is an independent
registered public accounting firm with respect to the Company and has not
resigned or been dismissed as independent registered public accountants of
the
Company as a result of or in connection with any disagreement with the Company
on any matter of accounting principles or practices, financial statement
disclosure or auditing scope or procedures.
Section
3.07 No Material
Adverse Change. Except
as set forth in or contemplated by the Company SEC Documents, since June
30,
2007, the Company has conducted its business in the ordinary course, consistent
with past practice, and there has been no (i) change that has had or would
reasonably be expected to have a Company Material Adverse Effect, (ii)
acquisition or disposition of any material asset by the Company or any contract
or arrangement therefor, otherwise than for fair value in the ordinary course
of
business, (iii) material change in the Company’s accounting principles,
practices or methods or (iv) incurrence of material indebtedness.
Section
3.08 Litigation. Except
as set forth in the Company SEC Documents, there is no Action pending or,
to the
knowledge of the Company, contemplated or threatened against the Company
or any
of its officers (in their capacity as such), directors (in their capacity
as
such), Properties, which (individually or in the aggregate) reasonably would
be
expected to have a Company Material Adverse Effect or which challenges the
validity of this Agreement or which would reasonably be expected to adversely
affect or restrict the Company’s ability to consummate the transactions
contemplated by the Transaction Documents.
Section
3.09 No
Conflict. Except
as set forth in Exhibit 3.09, the execution, delivery and performance by
the Company of the Transaction Documents to which it is a party and all other
agreements and instruments to be executed and delivered by the Company pursuant
hereto or thereto or in connection herewith and therewith, and compliance
by the
Company with the terms and provisions hereof and thereof, do not and will
not
(a) violate any provision of any Law, governmental permit, determination or
award having applicability to the Company or any of its Properties,
(b) conflict with or result in a violation of any provision of the articles
of incorporation or bylaws of the Company (c) require any consent, approval
or notice under or result in a violation or breach of or constitute (with
or
without due notice or lapse of time or both) a default (or give rise to any
right of termination, cancellation or acceleration) under (i) any note,
bond, mortgage, license, or loan or credit agreement to which the Company
is a
party or by which the Company or any of its Properties may be bound or
(ii) any other agreement, instrument or obligation, or (d) result in
or require the creation or imposition of any Lien upon or with respect to
any of
the Properties now owned or hereafter acquired by the Company, except in
the
cases of clauses (a), (c) and (d) where such violation, default, breach,
termination, cancellation, failure to receive consent or approval, or
acceleration with respect to the foregoing provisions of this Section 3.09
would
not, individually or in the aggregate, reasonably be expected to have a Company
Material Adverse Effect.
Section
3.10 Authority. The
execution and delivery of, and the performance by the Company of its obligations
under the Transaction Documents have been duly and validly authorized by
the
Company, and the Transaction Documents have been duly executed and delivered
by
the Company and constitute the valid and legally binding agreements of the
Company, enforceable against the Company in accordance with their terms,
except
as rights to indemnity and contribution hereunder and thereunder may be limited
by federal or state securities laws or principles of public policy and subject
to the qualification that the enforceability of the Company’s obligations
hereunder and thereunder may be limited by bankruptcy, fraudulent conveyance,
insolvency, reorganization, moratorium and other laws relating to or affecting
creditors’ rights generally and by general equitable principles, regardless
whether enforcement is considered in a proceeding in equity or at
law.
Section
3.11 Compliance with
Laws. The
Company is not in violation of any judgment, decree or order or any Law
applicable to the Company, except as would not, individually or in the
aggregate, have a Company Material Adverse Effect. The Company
possess all certificates, authorizations and permits issued by the appropriate
regulatory authorities necessary to conduct its business, except where the
failure to possess such certificates, authorizations or permits would not
have,
individually or in the aggregate, a Company Material Adverse Effect, and
the
Company has not received any notice of proceedings relating to the revocation
or
modification of any such certificate, authorization or permit, except where
such
potential revocation or modification would not have, individually in the
aggregate, a Company Material Adverse Effect.
Section
3.12 Preemptive Rights
or Registration Rights. Except
for as set forth on Exhibit 3.12, there are no preemptive rights or other
rights to subscribe for or to purchase, nor any restriction upon the voting
or
transfer of, any capital stock of the Company pursuant to any agreement or
instrument to which the Company is a party and is bound. Neither the execution
of this Agreement nor the issuance of the Notes and Warrants as contemplated
by
this Agreement gives rise to any rights for or relating to the registration
of
any Common Stock, other than as set forth on Exhibit 3.12.
Section
3.13 Approvals. Except
as set forth in Exhibit 3.13 and as required by the Commission in
connection with the Company’s obligations under the Registration Rights
Agreement, no authorization, consent, approval, waiver, license, qualification
or written exemption from, nor any filing, declaration, qualification or
registration with, any Governmental Authority or any other Person is required
in
connection with the execution, delivery or performance by the Company of
any of
the Transaction Documents to which it is a party, except (i) as may be required
under the state securities or “Blue Sky” Laws, (or (ii) where the failure to
receive such authorization, consent, approval, waiver, license, qualification
or
written exemption or to make such filing, declaration, qualification or
registration would not, individually or in the aggregate, reasonably be expected
to have a Company Material Adverse Effect.
Section
3.14 Offering. Assuming
the accuracy of the representations and warranties of the Purchasers contained
in this Agreement, the sale and issuance of the Purchased Securities pursuant
to
this Agreement is exempt from the registration requirements of the Securities
Act, and neither the Company nor, to the Company’s knowledge, any authorized
Representative acting on its behalf has taken or will take any action hereafter
that would cause the loss of such exemption.
Section
3.15 Certain
Fees. Except
for fees payable to Scarsdale Equities, LLC in its capacity as placement
agent,
no fees or commissions will be payable by the Company to brokers, finders,
or
investment bankers with respect to the sale of any of the Purchased Securities
or the consummation of the transactions contemplated by this
Agreement. The Company agrees that it will indemnify and hold
harmless the Purchasers from and against any and all claims, demands, or
liabilities for broker’s, finder’s, placement, or other similar fees or
commissions incurred by the Company or alleged to have been incurred by the
Company in connection with the sale of Purchased Securities or the consummation
of the transactions contemplated by this Agreement.
Section
3.16 No Side
Agreements. There
are no other agreements by, among or between the Company or its Affiliates,
on
the one hand, and the Purchasers, on the other hand, with respect to the
transactions contemplated hereby nor promises or inducements for future
transactions between or among any of such parties.
Section
3.17 Investment Company
Status. The
Company is not an “investment company” within the meaning of the Investment
Company Act of 1940, as amended.
ARTICLE
IV
REPRESENTATIONS
AND WARRANTIES OF THE PURCHASERS
Each
Purchaser represents and warrants to the Company, on and as of the date of
this
Agreement and on and as of the Closing Date, as follows:
Section
4.01 Valid
Existence. The
Purchaser: (i) is either (x) duly organized, validly existing and in good
standing under the Laws of its jurisdiction of organization or (y) an individual
of full age of majority, with full power, capacity, and authority to enter
into
this Agreement and perform the obligations contemplated hereby by and for
himself/herself and his/her spouse; and (ii) has all requisite power, and
has all material governmental licenses, authorizations, consents and approvals
necessary to own its Properties and carry on its business as its business
is now
being conducted, except where the failure to obtain such licenses,
authorizations, consents and approvals would not reasonably be expected to
have
a Purchaser Material Adverse Effect.
Section
4.02 No
Conflicts. The
execution, delivery and performance by the Purchaser of the Transaction
Documents to which it is a party and all other agreements and instruments
to be
executed and delivered by the Purchaser pursuant hereto or thereto or in
connection herewith or therewith, compliance by the Purchaser with the terms
and
provisions hereof and thereof, and the purchase of the Purchased Securities
by
the Purchaser do not and will not (a) violate any provision of any Law,
governmental permit, determination or award having applicability to the
Purchaser or any of its Properties, (b) conflict with or result in a
violation of any provision of the organizational documents of the Purchaser,
or
(c) require any consent (other than standard internal consents), approval
or notice under or result in a violation or breach of or constitute (with
or
without due notice or lapse of time or both) a default (or give rise to any
right of termination, cancellation or acceleration) under (i) any note,
bond, mortgage, license, or loan or credit agreement to which the Purchaser
is a
party or by which the Purchaser or any of its Properties may be bound or
(ii) any other such agreement, instrument or obligation, except in the case
of clauses (a) and (c), where such violation, default, breach, termination,
cancellation, failure to receive consent or approval, or acceleration with
respect to the foregoing provisions of this Section 4.02 would not,
individually or in the aggregate, reasonably be expected to have a Purchaser
Material Adverse Effect.
Section
4.03 Authority. The
execution and delivery of, and the performance by the Purchaser of its
obligations under the Transaction Documents have been duly and validly
authorized by the Purchaser, and the Transaction Documents have been duly
executed and delivered by the Purchaser and constitute the valid and legally
binding agreements of the Purchaser, enforceable against the Purchaser in
accordance with their terms, except as rights to indemnity and contribution
hereunder and thereunder may be limited by federal or state securities laws
or
principles of public policy and subject to the qualification that the
enforceability of the Purchaser’s obligations hereunder and thereunder may be
limited by bankruptcy, fraudulent conveyance, insolvency, reorganization,
moratorium and other laws relating to or affecting creditors’ rights generally
and by general equitable principles, regardless whether enforcement is
considered in a proceeding in equity or at law.
Section
4.04 Investment. The
Purchased Securities are being acquired for the Purchaser’s own account, or the
accounts of clients for whom the Purchaser exercises discretionary investment
authority, not as a nominee or agent, and with no present intention of
distributing the Purchased Securities or any part thereof, and that the
Purchaser has no present intention of selling or granting any participation
in
or otherwise distributing the same in any transaction in violation of the
securities Laws of the United States of America or any state, without prejudice,
however, to the Purchaser’s right at all times (subject to the Purchaser’s
agreement contained in Section 4.07) to sell or otherwise dispose
of all or any part of the Purchased Securities under a registration statement
under the Acts and applicable state securities Laws or under an exemption
from
such registration available thereunder (including, without limitation, if
available, Rule 144 promulgated thereunder). If the Purchaser should in the
future decide to dispose of any of the Purchased Securities, the Purchaser
understands and agrees (a) that it may do so only (i) in compliance
with the Acts and applicable state securities law, as then in effect, or
(ii) in the manner contemplated by any registration statement pursuant to
which such securities are being offered, and (b) that stop-transfer
instructions to that effect will be in effect with respect to such
securities.
Section
4.05 Nature of
Purchaser. The
Purchaser represents and warrants to, and covenants and agrees with, the
Company
that, (a) it is an “accredited investor” within the meaning of
Rule 501 of Regulation D promulgated by the Commission pursuant to the
Securities Act and (b) by reason of its business and financial experience
it has such knowledge, sophistication and experience in business and financial
matters so as to be capable of evaluating the merits and risks of the
prospective investment in the Purchased Securities, is able to bear the economic
risk of such investment and, at the present time, would be able to afford
a
complete loss of such investment.
Section
4.06 Receipt of
Information; Authorization. The
Purchaser acknowledges that it (a) has access to the Company SEC Documents
and
(b) has been provided a reasonable opportunity to ask questions of and receive
answers from Representatives of the Company regarding such
matters.
Note
and Warrant Purchase Agreement
Page
10
Section
4.07 Restricted
Securities. The
Purchaser understands that the Purchased Securities it is purchasing 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
only
in certain limited circumstances. In this connection, Purchaser represents
that
it is knowledgeable with respect to Rule 144 of the Commission promulgated
under the Securities Act. Purchaser further understands that a restrictive
legend will be placed on the Purchased Securities, the Note Shares and the
Warrant Shares. To assist in implementing the above provisions, the
Purchaser hereby consents to the placement of the legend, or a substantially
similar legend, set forth below, on all certificates representing ownership
of
the Purchased Securities, the Note Shares and the Warrant Shares acquired
hereby
until such securities have been sold, transferred, or otherwise disposed
of,
pursuant to the requirements hereof. The legend shall read
substantially as follows:
|
|
“THESE
SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS
AMENDED, OR ANY APPLICABLE STATE SECURITIES ACTS. THESE
SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT, ARE RESTRICTED AS
TO
TRANSFERABILITY, AND MAY NOT BE SOLD, HYPOTHECATED, OR OTHERWISE
TRANSFERRED WITHOUT COMPLIANCE WITH THE REGISTRATION AND QUALIFICATION
PROVISIONS OF APPLICABLE FEDERAL AND STATE SECURITIES LAWS OR APPLICABLE
EXEMPTIONS THEREFROM.”
|
|
Section
4.08 Certain
Fees. No
fees or commissions will be payable by the Purchaser to brokers, finders,
or
investment bankers with respect to the sale of any of the Purchased Securities
or the consummation of the transactions contemplated by this
Agreement. The Purchaser agrees that it will indemnify and hold
harmless the Company from and against any and all claims, demands, or
liabilities for broker’s, finder’s, placement, or other similar fees or
commissions incurred by the Purchaser or alleged to have been incurred by
the
Purchaser in connection with the purchase of Purchased Securities or the
consummation of the transactions contemplated by this Agreement.
Section
4.09 Short
Sales. The Purchaser has not engaged in short sales of the
Company’s Common Stock during the three months preceding the Closing
Date.
ARTICLE
V
COVENANTS
Section
5.01 Notice of
Default. So long as any amounts remain outstanding under the
Notes, the Company covenants that it shall give the Holders written notice
of
the occurrence of any Event of Default (as defined in Section 8 of the Notes)
promptly upon the occurrence thereof.
Section
5.02 Observation and
Information Rights. So long as any amounts remain outstanding
under the Notes, the Company covenants that, in the event that the Company
has
not timely filed the necessary Company SEC Documents, it shall notify each
Holder when quarterly financial information becomes available and shall,
upon
subsequent request from any Holder, provide such Holder quarterly financial
information, quarterly updates regarding the Company’s business, and other
information which would have otherwise been filed with the
Commission.
Note
and Warrant Purchase Agreement
Page
11
Section
5.03 Price
Protection. Without limiting any Holder’s right set forth in
Section 5.04, if the Company issues and sells capital in the Company any
time
during the six months following the Closing Date with an equity price less
than
the Conversion Price, each Holder will have the option to: (i) participate
up to
the amount invested in this offering; (ii) demand that the Company redeem
100%
of the par value of the then outstanding balance plus any accrued unpaid
interest; or (iii) choose to take no action. The Company agrees that
in the event any Holder acts pursuant to (i) or (ii), the Company shall take
or
cause to take all necessary action to effect such Holder’s participation in such
a transaction or the redemption of the Notes. In the event the Notes are
redeemed, the Company agrees that payment will be due to each Holder making
such
election in immediately available cash within 45 days of receipt of the Holder’s
demand for redemption.
Section
5.04 Integration. The
Company shall not sell, offer for sale or solicit offers to buy or otherwise
negotiate in respect of any security (as defined in Section 2 of the Securities
Act) that would be integrated with the offer or sale of the Purchased Securities
in a manner that would require the registration under the Securities Act
of the
sale of the Purchased Securities.
Section
5.05 Short
Sales. Each Holder agrees that it will not engage in short sales
of the Company’s Common Stock while any amount is outstanding under the
Notes.
Section
5.06 Taking of
Necessary Action. Each of the Parties hereto shall use its
commercially reasonable efforts promptly to take or cause to be taken all
action
and promptly to do or cause to be done all things necessary, proper or advisable
under applicable Law and regulations to consummate and make effective the
transactions contemplated by this Agreement. Without limiting the
foregoing, the Company and each Holder will use its commercially reasonable
efforts to make all filings and obtain all consents of Governmental Authorities
that may be necessary or, in the reasonable opinion of each Holder or the
Company, as the case may be, advisable for the consummation of the transactions
contemplated by the Transaction Documents.
Section
5.07 Publicity. Except
for such disclosure as the Company is advised by counsel is required by law,
the
Company shall not use the name of, or make reference to, any Purchaser or
any of
its affiliates or any investment adviser of any Purchaser in any press release
or in any public manner, including, without limitation, on the Company’s
website, without the prior written consent of each affected party.
Section
5.08 Disclosure of
Transaction. Within one (1) business day following the completion
of all funding requirements for the Financing, the Company will issue a press
release describing the terms of the transactions contemplated by this Agreement,
but shall not include the names of the Purchasers or any investment adviser
or
affiliate of any Purchaser, or the individual amounts of Purchased Securities
purchased hereby without each affected party’s consent.
Section
5.09 Collateral
Agent. Each of the Purchasers hereby agrees to appoint
Ironman PI Fund (QP), LP as the Collateral Agent for purposes of the Pledge
and
Security Agreement. The Collateral Agent may employ agents and
attorneys-in-fact in connection herewith and shall not be responsible for
the
gross negligence or willful misconduct of any such agents or attorneys-in-fact
selected by it in good faith.
Note
and Warrant Purchase Agreement
Page
12
ARTICLE
VI
CLOSING
CONDITIONS
Section
6.01 Conditions to the
Closing.
(a) Mutual
Conditions. The respective obligation of each Party to consummate
the purchase and issuance and sale of the Purchased Securities shall be subject
to the satisfaction on or prior to the Closing Date of each of the following
conditions (any or all of which may be waived by a particular Party on behalf
of
itself in writing, in whole or in part, to the extent permitted by applicable
Law):
(i) no
Law shall have been enacted or promulgated, and no action shall have been
taken,
by any Governmental Authority of competent jurisdiction which temporarily,
preliminarily or permanently restrains, precludes, enjoins or otherwise
prohibits the consummation of the transactions contemplated by this Agreement
or
makes the transactions contemplated by this Agreement illegal;
and
(ii) there
shall not be pending any Action by any Governmental Authority seeking to
restrain, preclude, enjoin or prohibit the transactions contemplated by this
Agreement.
(b) Purchasers’
Conditions. The obligation of the Purchasers to consummate the
purchase of the Purchased Securities shall be subject to the satisfaction
on or
prior to the Closing Date of each of the following conditions (any or all
of
which may be waived by a particular Purchaser on behalf of itself in writing,
in
whole or in part, to the extent permitted by applicable Law):
(i) The
Company shall have performed and complied in all material respects with the
covenants and agreements contained in this Agreement that are required to
be
performed and complied with by the Company on or prior to the Closing
Date;
(ii) the
representations and warranties of the Company contained in this Agreement
shall
be true and correct when made and as of the Closing Date;
(iii) since
the date of this Agreement, no Company Material Adverse Effect shall have
occurred and be continuing;
(iv) the
Company shall have delivered, or caused to be delivered, to the Purchasers
at
the Closing, the Company’s closing deliveries described in Section
6.02.
(c) The
Company’s Conditions. The obligation of the Company to
consummate the sale of the Purchased Securities to each the Purchaser shall
be
subject to the satisfaction on or prior to the Closing Date of each of the
following conditions (any or all of which may be waived by the Company in
writing, in whole or in part, to the extent permitted by applicable
Law):
Note
and Warrant Purchase Agreement
Page
13
(i) each
Purchaser shall have performed and complied with in all material respects
the
covenants and agreements contained in this Agreement that are required to
be
performed and complied with by that Purchaser on or prior to the Closing
Date;
(ii) the
representations and warranties of each Purchaser contained in this Agreement
shall be true and correct when made and as of the Closing Date;
(iii) since
the date of this Agreement, no Purchaser Material Adverse Effect shall have
occurred and be continuing;
(iv) all
necessary consents and approvals of lenders or other third parties shall
have
been obtained; and
(v) each
Purchaser shall have delivered, or caused to be delivered, to the Company
at the
Closing, the Purchaser’s closing deliveries described in Section 6.03, except
that funding shall occur immediately upon delivery of such Purchaser’s Note and
Warrant.
Section
6.02 Company
Deliveries. At
the Closing, subject to the terms and conditions of this Agreement, the Company
will deliver, or cause to be delivered, to the Purchasers:
(a) the
Purchased Securities, free and clear of any Liens, encumbrances or interests
of
any other party other than restrictions on transfer imposed by federal and
state
securities Laws and those imposed by Purchasers;
(b) the
Registration Rights Agreement in substantially the form attached to this
Agreement as Exhibit D, which shall have been duly executed by the
Company;
(c) the
Pledge and Security Agreement in substantially the form attached to this
Agreement as Exhibit C, which shall have been duly executed by the
Company;
(d) the
original certificate representing a 5.00% interest in Exploration Holding
Co.,
L.L.C. along with a unit power executed in blank;
(e) copies
of the UCC-1s evidencing that the same has been filed as required by the
Pledge
and Security Agreement;
(f) the
consent required pursuant to Section 3.03 of the Company Agreement of
Exploration Holding Co, L.L.C. permitting the pledge of the interests under
the
Pledge and Security Agreement;
(g) waiver
of Fortuna Energy LP’s right to participate in this offering;
Note
and Warrant Purchase Agreement
Page
14
(h) waiver
of RCH Petro Investor LP’s rights to participate in this offering and RCH Petro
Investor LP’s consent to this transaction;
(i) a
cross-receipt, dated the Closing Date, executed by the Company and delivered
to
the Purchasers certifying that it has received the Purchase Price with respect
to the Purchased Securities issued and sold to the Purchasers;
(j) an
officer’s certificate of the Company substantially in the form attached to this
Agreement as Exhibit E; and
(k) a
legal opinion substantially in the form attached to this Agreement as Exhibit
“F”.
Section
6.03 Purchasers’
Deliveries. At
the Closing, subject to the terms and conditions of this Agreement, the
Purchasers will deliver, or cause to be delivered to the Company:
(a) Payment
to the Company of the Purchase Price by wire transfer(s) of immediately
available funds to an account designated by the Company in writing immediately
upon receipt by Purchasers of the Notes and Warrants;
(b) the
Registration Rights Agreement in substantially the form attached to this
Agreement as Exhibit D, which shall have been duly executed by each of
the Purchasers;
(c) the
Pledge and Security Agreement in substantially the form attached to this
Agreement as Exhibit C which shall have been duly executed by each of the
Purchasers;
(d) a
cross-receipt, dated the Closing Date, executed by each of the Purchasers,
and
delivered to the Company certifying that each of the Purchasers has received
the
Purchased Securities; and
(e) an
Officer’s Certificate substantially in the form attached to this Agreement as
Exhibit G.
ARTICLE
VII
INDEMNIFICATION,
COSTS AND EXPENSES
Section
7.01 Indemnification by
the Company. The
Company agrees to indemnify the Purchasers and their Representatives
(collectively, “Purchaser Related Parties”) from, and hold each of them
harmless against any and all actions, suits, proceedings (including any
investigations, litigation or inquiries), demands and causes of action, and,
in
connection therewith, and promptly on demand, pay and reimburse each of them
costs, losses, liabilities, damages, or expenses of any kind or
nature whatsoever, including the reasonable fees and disbursements of counsel
and all other reasonable expenses incurred in connection with investigating,
defending or preparing to defend any such matter that may be incurred by
them or
asserted against or involve any of them as a result of, arising out of, or
in
any way related to the breach of any of the representations, warranties or
covenants of the Company contained herein; provided that such claim for
indemnification relating to a breach of a representation or warranty is made
prior to the expiration of such representation or warranty.
Note
and Warrant Purchase Agreement
Page
15
Section
7.02 Indemnification by
Purchasers. The
Purchasers, severally and not jointly, agree to indemnify the Company and
its
Representatives (collectively, “the Company Related Parties”) from, and
hold each of them harmless against, any and all actions, suits, proceedings
(including any investigations, litigation, or inquiries), demands and causes
of
action and, in connection therewith, and promptly upon demand, pay and reimburse
each of them costs, losses, liabilities, damages, or expenses of any
kind or nature whatsoever, including, without limitation, the reasonable
fees
and disbursements of counsel and all other reasonable expenses incurred in
connection with investigating, defending or preparing to defend any such
matter
that may be incurred by them or asserted against or involve any of them as
a
result of, arising out of, or in any way related to the breach of any of
the
representations, warranties or covenants of the Purchaser contained herein;
provided that such claim for indemnification relating to a breach of a
representation or warranty is made prior to the expiration of such
representation or warranty.
Section
7.03 Indemnification
Procedure. Promptly
after any of the Company Related Party or Purchaser Related Party (hereinafter,
the “Indemnified Party”) has received notice of any indemnifiable claim
hereunder, or the commencement of any action or proceeding by a third party,
which the Indemnified Party believes in good faith is an indemnifiable claim
under this Agreement, the Indemnified Party shall give the indemnitor hereunder
(the “Indemnifying Party”) written notice of such claim or the
commencement of such action or proceeding, but failure to so notify the
Indemnifying Party will not relieve the Indemnifying Party from any liability
it
may have to such Indemnified Party hereunder except to the extent that the
Indemnifying Party is materially prejudiced by such failure. Such notice
shall
state the nature and the basis of such claim to the extent then
known. The Indemnifying Party shall have the right to defend and
settle, at its own expense and by its own counsel who shall be reasonably
acceptable to the Indemnified Party, any such matter as long as the Indemnifying
Party pursues the same diligently and in good faith. If the Indemnifying
Party
undertakes to defend or settle, it shall promptly notify the Indemnified
Party
of its intention to do so, and the Indemnified Party shall cooperate with
the
Indemnifying Party and its counsel in all commercially reasonable respects
in
the defense thereof and the settlement thereof. Such cooperation shall include
furnishing the Indemnifying Party with any books, records and other information
reasonably requested by the Indemnifying Party and in the Indemnified Party’s
possession or control. Such cooperation of the Indemnified Party
shall be at the cost of the Indemnifying Party. After the
Indemnifying Party has notified the Indemnified Party of its intention to
undertake to defend or settle any such asserted liability, and for so long
as
the Indemnifying Party diligently pursues such defense, the Indemnifying
Party
shall not be liable for any additional legal expenses incurred by the
Indemnified Party in connection with any defense or settlement of such asserted
liability; provided, however, that the Indemnified Party shall be
entitled (i) at its expense, to participate in the defense of such asserted
liability and the negotiations of the settlement thereof and (ii) if (A)
the
Indemnifying Party has failed to assume the defense or employ counsel reasonably
acceptable to the Indemnified Party or (B) if the defendants in any such
action
include both the Indemnified Party and the Indemnifying Party and counsel
to the
Indemnified Party shall have concluded that there may be reasonable defenses
available to the Indemnified Party that are different from or in addition
to
those available to the Indemnifying Party or if the interests of the Indemnified
Party reasonably may be deemed to conflict with the interests of the
Indemnifying Party, then the Indemnified Party shall have the right to select
a
separate counsel and to assume such legal defense and otherwise to participate
in the defense of such action, with the expenses and fees of such separate
counsel and other expenses related to such participation to be reimbursed
by the
Indemnifying Party as incurred. Notwithstanding any other provision
of this Agreement, the Indemnifying Party shall not settle any indemnified
claim
without the consent of the Indemnified Party, unless the settlement thereof
imposes no liability or obligation on, involves no admission of wrongdoing
or
malfeasance by, and includes a complete release from liability of, the
Indemnified Party.
Note
and Warrant Purchase Agreement
Page
16
ARTICLE
VIII
MISCELLANEOUS
Section
8.01 Interpretation. Article,
Section, Schedule, and Exhibit references are to this Agreement, unless
otherwise specified. All references to instruments, documents, contracts,
and
agreements are references to such instruments, documents, contracts, and
agreements as the same may be amended, supplemented, and otherwise modified
from
time to time, unless otherwise specified. The word “including” shall mean
“including but not limited to.” Whenever any determination, consent
or approval is to be made or given by the Company under the Transaction
Documents, such action shall be in the Company’s sole discretion unless
otherwise specified therein. Whenever the Company has an obligation
under the Transaction Documents, the expense of complying with such obligation
shall be an expense of the Company, as applicable, unless otherwise specified
therein. Whenever any determination, consent or approval is to be
made or given by the Purchasers under the Transaction Documents, such action
shall be in the Purchasers’ sole discretion unless otherwise specified
therein. If any provision in the Transaction Documents is held to be
illegal, invalid, not binding, or unenforceable, such provision shall be
fully
severable and the Transaction Documents shall be construed and enforced as
if
such illegal, invalid, not binding, or unenforceable provision had never
comprised a part of the Transaction Documents, and the remaining provisions
shall remain in full force and effect. The Transaction Documents have been
reviewed and negotiated by sophisticated parties with access to legal counsel
and shall not be construed against the drafter.
Section
8.02 Survival of
Provisions. The
representations and warranties set forth in Sections3.01,
3.02, 3.03, 3.04, 3.05, 3.10, 3.11,
3.13,
4.01,
4.03,
4.04,
4.05,
4.06,
4.07, 4.08 and 4.09 of this Agreement shall survive the
execution and delivery of this Agreement for the maximum amount of time allowed
by law, and the other representations and warranties set forth in this Agreement
shall survive for a period of twelve (12) months following the Closing Date
regardless of any investigation made by or on behalf of the Company, or the
Purchasers. The covenants made in this Agreement or any other
Transaction Document shall survive the closing of the transactions described
herein and remain operative and in full force and effect regardless of
acceptance of any of the Purchased Securities and payment therefor and
repayment, conversion or repurchase thereof. All indemnification obligations
of
the Company, and the Purchasers pursuant to this Agreement shall remain
operative and in full force and effect unless such obligations are expressly
terminated in a writing by the Parties, regardless of any purported general
termination of this Agreement.
Section
8.03 No Waiver;
Modifications in Writing.
(a) Delay. No
failure or delay on the part of any Party in exercising any right, power,
or
remedy hereunder shall operate as a waiver thereof, nor shall any single
or
partial exercise of any such right, power, or remedy preclude any other or
further exercise thereof or the exercise of any right, power, or remedy.
The
remedies provided for herein are cumulative and are not exclusive of any
remedies that may be available to a Party at Law or in equity or
otherwise.
Note
and Warrant Purchase Agreement
Page
17
(b) Specific
Waiver. Except as otherwise provided herein, no amendment, waiver, consent,
modification, or termination of any provision of this Agreement or any other
Transaction Document shall be effective unless signed by each of Parties
or each
of the original signatories thereto affected by such amendment, waiver, consent,
modification, or termination. Any amendment, supplement or modification of
or to
any provision of this Agreement or any other Transaction Document, any waiver
of
any provision of this Agreement or any other Transaction Document, and any
consent to any departure by the Company from the terms of any provision of
this
Agreement or any other Transaction Document shall be effective only in the
specific instance and for the specific purpose for which made or
given. Except where notice is specifically required by this
Agreement, no notice to or demand on the Company in any case shall entitle
the
Company to any other or further notice or demand in similar or other
circumstances.
Section
8.04 Binding Effect;
Assignment.
(a) Binding
Effect. This Agreement shall be binding upon the Company, the Purchasers,
and their respective successors and permitted assigns. Except as expressly
provided in this Agreement, this Agreement shall not be construed so as to
confer any right or benefit upon any Person other than the Parties to this
Agreement and as provided in Article VII, and their respective successors
and
permitted assigns.
(b) Assignment
of Purchased Securities. All or any portion of the Purchased Securities
purchased pursuant to this Agreement may be sold, assigned or pledged by
the
Purchasers, subject to compliance with applicable securities Laws.
(c) Assignment
of Rights. The Purchasers may assign all or any portion of their rights
hereunder; provided the assignee shall be deemed to be a Purchaser hereunder
with respect to such assigned rights and shall agree to be bound by the
provisions of this Agreement.
Section
8.05 Communications. All
notices and demands provided for hereunder shall be in writing and shall
be
given by registered or certified mail, return receipt requested, telecopy,
air
courier guaranteeing overnight delivery, electronic mail or personal delivery
to
the addresses listed on the signature pages hereto or to such other address
as
the Company or any of the Purchasers may designate in writing. All notices
and
communications shall be deemed to have been duly given: at the time delivered
by
hand, if personally delivered; at the time of transmittal, if sent via
electronic mail; upon actual receipt if sent by registered or certified mail,
return receipt requested, or regular mail, if mailed; when receipt acknowledged,
if sent via telecopy; and upon actual receipt when delivered to an air courier
guaranteeing overnight delivery.
Section
8.06 Entire
Agreement. This
Agreement and the other Transaction Documents are intended by the Parties
as a
final expression of their agreement and intended to be a complete and exclusive
statement of the agreement and understanding of the Parties hereto and thereto
in respect of the subject matter contained herein and therein. There
are no restrictions, promises, warranties or undertakings, other than those
set
forth or referred to herein and therein with respect to the rights granted
by
the Company or any of the Purchasers set forth herein and
therein. This Agreement and the other Transaction Documents supersede
all prior agreements and understandings between the Parties with respect
to such
subject matter.
Note
and Warrant Purchase Agreement
Page
18
Section
8.07 Governing
Law. This
Agreement will be construed in accordance with and governed by the Laws of
the
State of Texas without regard to principles of conflicts of Laws.
Section
8.08 Execution in
Counterparts. This
Agreement may be executed in two or more counterparts, all of which when
taken
together shall be considered one and the same agreement and shall become
effective when counterparts have been signed by each party and delivered
to the
other party, it being understood that both parties need not sign the same
counterpart. In the event that any signature is delivered by
facsimile transmission or by e-mail delivery of a “.pdf” format data file, such
signature shall create a valid and binding obligation of the party executing
(or
on whose behalf such signature is executed) with the same force and effect
as if
such facsimile or “.pdf” signature page were an original thereof.
Section
8.09 Termination.
(a) Notwithstanding
anything herein to the contrary, this Agreement may be terminated with respect
to a Purchaser at any time at or prior to the Closing:
(i) by
the mutual written consent of any Purchaser and the Company;
(ii) by
the written consent of any Purchaser or by the Company, (A) if any
representation or warranty of the other party set forth in this Agreement
shall
be untrue in any material respect when made, or (B) upon a breach in any
material respect of any covenant or agreement on the part of the other party
set
forth in this Agreement (either clause (A) or (B) above being a
“Terminating Breach”); provided, that, each Terminating Breach
would cause the conditions to the non-terminating party’s obligations not to be
satisfied and such Terminating Breach is not cured within 30 days after written
notice from the non-breaching party; or
(b) Notwithstanding
anything herein to the contrary, this Agreement shall automatically terminate
at
any time at or prior to the Closing:
(i) if
a statute, rule, order, decree or regulation shall have been enacted or
promulgated, or if any action shall have been taken by any Governmental
Authority of competent jurisdiction which permanently restrains, precludes,
enjoins or otherwise prohibits the consummation of the transactions contemplated
by this Agreement or makes the transactions contemplated by this Agreement
illegal; or
(ii) if
the Closing shall not have occurred on or before November 9, 2007.
(c) In
the event of the termination of this Agreement as provided in Section
8.09(a) or Section 8.09(b), this Agreement shall forthwith become
null and void. In the event of such termination, there shall be no
liability on the part of any party hereto, except with respect to the
requirement to comply with any confidentiality agreement in favor of the
Company; provided that nothing herein shall relieve any party from any
liability or obligation with respect to any willful breach of this
Agreement.
Note
and Warrant Purchase Agreement
Page
19
Section
8.10 Expenses. If
any action at law or equity is necessary to enforce or interpret the terms
of
the Transaction Documents, the prevailing party shall be entitled to reasonable
attorney’s fees, out-of-pocket costs and necessary disbursements in addition to
any other relief to which such party may be entitled.
[Signature
pages to follow]
Note
and Warrant Purchase Agreement
Page
20
IN
WITNESS WHEREOF, the Parties hereto execute this Note and Warrant Purchase
Agreement, effective as of the date first above written.
|
|
PETROSEARCH
ENERGY CORPORATION
|
||
|
By:
|
/s/
▇▇▇▇▇▇▇ ▇▇▇▇
|
||
| Name: |
▇▇▇▇▇▇▇
▇▇▇▇, President and CEO
|
||
| PURCHASERS | |||
|
|
IRONMAN
PI FUND (QP), LP
|
||
|
By:
|
Ironman
Energy Partners, LP,
|
||
|
By:
|
Ironman
Capital Management, LLC,
|
||
|
its
General Partner
|
|||
|
By:
|
/s/
G. ▇▇▇▇▇ ▇▇▇▇
|
||
|
G.
▇▇▇▇▇ ▇▇▇▇, President
|
|||
|
WELLINGTON
TRUST COMPANY, N.A.
ON
BEHALF OF MULTIPLE COLLECTIVE INVESTMENT FUNDS TRUST,
MICRO
CAP EQUITY PORTFOLIO
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By:
Wellington Management Company, LLP as investment
adviser
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By:
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Name:
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Title:
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Vice
President and Counsel
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Address:
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WELLINGTON
TRUST COMPANY, N.A.
ON
BEHALF OF MULTIPLE COLLECTIVE INVESTMENT FUNDS TRUST,
MICRO
CAP EQUITY PORTFOLIO
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By:
Wellington Management Company, LLP as investment
adviser
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By:
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Name:
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Title:
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Vice
President and Counsel
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Address:
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Signature
Page to Note and Warrant Purchase Agreement
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CROSSCAP
PARTNERS, LP
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By:
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Address:
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CROSSCAP
PARTNERS ENHANCED, LP
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By:
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Address:
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▇. ▇’▇▇▇▇▇▇, Individually
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Address:
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▇.
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Address:
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Address:
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Address:
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Signature
Page to Note and Warrant Purchase Agreement
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▇. ▇▇▇▇▇ III AND ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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By:
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▇▇▇▇ ▇. ▇▇▇▇▇, III
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▇. ▇▇▇▇▇ III, Individually, and on behalf of ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇, his Wife
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Address:
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HOLDINGS, LP
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By:
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Title:
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Address:
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/s/
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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▇. ▇▇▇▇▇▇▇, Individually
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Address:
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Signature
Page to Note and Warrant Purchase Agreement
SCHEDULE
“A”
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Purchaser/
Address
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Purchase
Price for Convertible Note
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Number
of Warrants Purchased
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Percentage
of Security Interest in Collateral
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Ironman
PI Fund (QP), LP
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$ |
3,000,000
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714,286
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1.86 | % | |||||||
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Wellington
Trust Company— Client ID 9537
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295,000
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70,238
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0.18 | % | ||||||||
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Wellington
Trust Company— Client ID 0611
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2,205,000
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525,000
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1.36 | % | ||||||||
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CrossCap
Partners, LP
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98,947
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23,559
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0.06 | % | ||||||||
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CrossCap
Partners Enhanced, LP
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901,053
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214,536
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0.56 | % | ||||||||
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▇▇▇▇▇▇▇
▇. ▇’▇▇▇▇▇▇
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1,000,000
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238,096
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0.62 | % | ||||||||
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▇.
▇▇▇▇▇ ▇’▇▇▇▇▇▇
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100,000
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23,810
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0.06 | % | ||||||||
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▇▇▇
▇. ▇▇▇▇
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100,000
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23,810
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0.06 | % | ||||||||
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Van
▇. ▇▇▇▇
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100,000
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23,810
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0.06 | % | ||||||||
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▇▇▇▇
▇. and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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100,000
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23,810
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0.06 | % | ||||||||
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▇▇▇▇▇▇▇▇▇
Holdings, LP
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100,000
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23,810
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0.06 | % | ||||||||
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▇▇▇▇▇
▇. ▇▇▇▇▇▇▇
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100,000
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23,810
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0.06 | % | ||||||||
| $ |
8,100,000.00
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1,928,575
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5.00 | % | ||||||||
Schedule
A