CHAPEAU, INC. PROMISSORY NOTE CONVERSION AND COMMON STOCK PURCHASE AGREEMENT
Exhibit
10.1
CHAPEAU,
INC.
PROMISSORY
NOTE CONVERSION AND
COMMON
STOCK PURCHASE AGREEMENT
This
Promissory Note Conversion And Common Stock Purchase Agreement (“Agreement”) is
entered into on December 31, 2006, with an effective date of December 31,
2006
(“Effective Date”), by and between Chapeau, Inc., a Utah corporation (the
“Company”), and _____________________________ (“Purchaser”).
For
good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Conversion;
and Issuance of Common Stock.
Subject
to the terms and conditions of this Agreement:
(a) The
Company and the Purchaser hereby agree that on the Effective Date any and
all
principal sum outstanding as of the Effective Date owing by the Company to
the
Purchaser under that certain Convertible Promissory Note, effective _____________________,
by and
between the Company, as debtor, and the Purchaser, as lender (the “Note”), shall
be converted into shares of the Company’s common stock, par value $0.001 per
share (“Common Stock”), at a conversion price equal to $1.25
per
share, upon the execution of this Agreement by the Company and the Purchaser
and
the receipt by the Company of the original of the Note for cancellation by
the
Company.
(b) The
Company hereby agrees to issue to and in the name of the Purchaser and cause
such issuance to be recorded on the books and records of the Company, and
the
Purchaser hereby agrees to receive and accept from the Company, ____________
(_____________)
shares
of Common Stock, in consideration for conversion and cancellation of the
Note
representing an aggregate of ___________________
($___________)
of
principal on the Note. No fractional shares of Common Stock shall be issued
upon
conversion of the Note. In lieu of the Company issuing any fractional shares
of
Common Stock to the Purchaser upon the conversion, the Company shall pay
to the
Purchaser in cash an amount equal to the product obtained by multiplying
the
applicable conversion price set forth in Section 1(a) above, by the fractional
interest of shares of Common Stock otherwise owing to the Purchaser upon
conversion.
(c) In
further consideration for the cancellation of the Note, the Company hereby
agrees to pay the Purchaser an aggregate of ______________
($___________)
in
installments on such dates and in such dollar amounts as is set forth on
Appendix I attached hereto and incorporated herein.
(d) In
conjunction with the conversion, Company and Purchaser agree to take any
and all
such actions as shall be necessary to release the security interest in the
Company’s assets created upon execution, including, but not limited to, all
requisite filings under the Uniform Commercial Code.
Page
1
(e) Upon
conversion in accordance with this Section 1, the Note shall be of no further
force and effect and the Company shall be forever released from any and all
of
its obligations and liabilities under the Note.
2. Restriction
Against Transfer.
Purchaser agrees that it will not transfer, assign, hypothecate, or in any
way
dispose of any of the Common Stock, or any right or interest therein, whether
voluntarily or by operation of law, or by gift or otherwise, without the
prior
written consent of the Company, except to the extent that a transfer is made
in
accordance with the terms of this Agreement. Any purported transfer in violation
of any provision of this Agreement shall be void and ineffectual, and shall
not
operate to transfer any interest or title to the purported
transferee.
3. Obligations
of Subsequent Transferees.
On the
occurrence of a transfer of any Common Stock pursuant to the terms of this
Agreement, the transferee shall execute an agreement to be bound by the
restrictions on transfer set forth in this Agreement.
4. Notices.
All
notices required or desired to be given pursuant to this Agreement shall
be in
writing and shall be personally served (including by commercial delivery
or
courier service) or given by mail. Any notice given by mail shall be deemed
to
have been given and received when ninety-six (96) hours have elapsed from
the
time such notice was deposited in the United States mails, certified or
registered and first-class postage prepaid, addressed, if intended to a party
to
this Agreement, at the address set forth below its signature or to such other
address as such party may have designated by like written notice to each
of the
other parties from time to time.
5. Restriction
on Certificates.
All
certificates representing Common Stock subject to the provisions of this
Agreement shall have endorsed thereon, among others, the following
legends:
(a) “THESE
SHARES OF COMMON STOCK HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR THE
SECURITIES LAWS OF THE VARIOUS STATES, AND HAVE BEEN ISSUED AND SOLD PURSUANT
TO
AN EXEMPTION FROM THE ACT, AND MAY NOT BE SOLD, PLEDGED OR OTHERWISE TRANSFERRED
BY THE HOLDER THEREOF AT ANY TIME, EXCEPT (1) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT, FILED UNDER THE ACT COVERING THE SHARES OF COMMON
STOCK,
OR (2) UPON DELIVERY TO THE CORPORATION OF AN OPINION OF COUNSEL
SATISFACTORY TO THE CORPORATION THAT THE SHARES OF COMMON STOCK MAY BE
TRANSFERRED WITHOUT REGISTRATION”; and
Page
2
(b) Any
other
legend required to be placed thereon by state and federal securities
authorities.
6. Purchaser
Representations and Warranties.
Purchaser acknowledges that the Common Stock has not been registered under
the
Securities Act of 1933, as amended, (the “Act”) in reliance upon certain
exemptions from registration under the Act. In connection therewith, Purchaser
represents and warrants to the Company as follows:
(a) Purchaser
either has a preexisting personal or business relationship with the Company
or
its officers, directors or controlling persons, or by reason of its business
or
financial experience or the business or financial experience of its professional
advisors who are unaffiliated with and who are not compensated by the Company
or
any affiliate or selling agent of the Company, directly or indirectly, could
be
reasonably assumed to have the capacity to protect its own interests in
connection with the transaction contemplated by this Agreement.
(b) Purchaser
is an “accredited investor” as defined in Regulation D promulgated under the
Act.
(c) Purchaser
recognizes that an investment in the Company involves substantial risks.
Purchaser has taken full cognizance of and understands all of the risks related
to the acquisition of the Common Stock. Purchaser acknowledges that it has
successfully considered and has, to the extent Purchaser believes such
discussion necessary, discussed with Purchaser’s professional, legal, financial
and tax advisers, the suitability of an investment in the Company’s Common Stock
for Purchaser’s particular financial and tax situation and has determined that
the Common Stock is a suitable investment for him.
(d) Purchaser
acknowledges that it has had the opportunity to ask questions of, and receive
answers from, representatives of the Company concerning the terms and conditions
of this Agreement and its investment in the Common Stock of the Company.
Any
questions raised by Purchaser have been answers to the satisfaction of
Purchaser. The Company has made available to Purchaser all documents and
information that Purchaser has requested relating to an investment in the
Common
Stock of the Company.
(e) Purchaser
represents and warrants to the Company that it is acquiring the Common Stock
for
its own account, for investment only, and not with a view to, or for resale
in
connection with, any distribution thereof. Purchaser represents and warrants
that it does not have any present intention of selling or otherwise transferring
the Common Stock or any interest therein. Purchaser acknowledges and agrees
that
the Common Stock may not be sold, transferred, pledged or otherwise disposed
of
without registration under the Act and applicable state securities laws or
in
accordance with applicable exemptions therefrom.
Page
3
(f) Purchaser
acknowledges that no representations, warranties, covenants or promises have
been made concerning the marketability or value of the Common Stock. The
Company
has not agreed with, represented or covenanted to Purchaser that the Common
Stock will be purchased or redeemed from Purchaser at any time in the future.
There have been no representations, warranties, promises, covenants or
agreements that the Common Stock will be registered under the Act at any
time in
the future or otherwise qualified for sale under applicable securities laws.
Purchaser acknowledges that it may be required to bear the economic risk
of an
investment in the Company’s Common Stock for an indefinite period of
time.
(g) The
representations and warranties made by Purchaser herein are made by Purchaser
with the intent that they be relied upon by the Company in determining the
suitability of Purchaser as an acquirer of the Common Stock. In addition,
Purchaser undertakes to notify the Company immediately of any change in any
representation, warranty or other information relating to Purchaser set forth
herein. Purchaser hereby agrees that such representations and warranties
and any
agreement, undertakings and acknowledgments herein shall survive the acquisition
of the Common Stock, and Purchaser hereby agrees to indemnify the Company,
each
of its affiliates and each of its and their respective officers and directors
and hold them harmless from and against any and all loss, damages, liability
or
expense, including costs and reasonable attorneys’ fees, which they may incur by
reason of or in connection with any misrepresentation or breach of
representation, warranty or covenant of Purchaser set forth in this
Agreement.
7. Federal
Law Restrictions on Transfer.
Without
in any way limiting the representations and warranties set forth above or
reducing any rights of the Company herein, Purchaser agrees not to make any
disposition of all or any portion of the Common Stock unless and
until:
(a) There
is
then in effect a registration statement under the Act covering such proposed
disposition and such disposition is made in accordance with said registration
statement; or
(b) Purchaser
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, if so requested by the Company, shall have
furnished the Company with an opinion of Purchaser’s counsel to the effect that
such disposition will not require registration of such shares under the Act,
and
such opinion of counsel shall have been concurred in by counsel for the Company
and the Company shall have advised Purchaser of such concurrence.
8. Stop
Transfer Instructions; Refusal to Transfer.
Purchaser agrees that in order to ensure compliance with the restrictions
referred to herein, the Company may issue appropriate “stop transfer”
instructions to its transfer agent, if any, with respect to such certificates
or
instruments and, if the Company transfers its own securities, it may make
appropriate notations to the same effect in its own records. The Company
shall
not be required (i) to transfer on its books any Common Stock that has been
sold or otherwise transferred in violation of any of the provisions of this
Agreement or any other restrictions on transfer then applicable to the Common
Stock or (ii) to treat as owner of such Common Stock or to accord the right
to vote or pay dividends to any purchaser or other transferee to whom such
Common Stock shall have been so transferred.
Page
4
9. Market
Stand-Off.
In
connection with any underwritten public offering by the Company of its equity
securities pursuant to an effective registration statement filed under the
Act,
Purchaser agrees not to sell, make any short sale of, loan, hypothecate,
pledge,
grant any option for the purchase of, or otherwise dispose of or transfer
for
value or otherwise agree to engage in any of the foregoing transactions with
respect to the Common Stock without the prior written consent of the Company
or
its underwriters, for such period of time from and after the effective date
of
such registration statement as may be requested by the Company or such
underwriters.
10.
Piggy-back
Registration Rights.
(a) If
(but
without any obligation to do so) the Company proposes to register (including
for
this purpose a registration effected by the Company for stockholders other
than
Purchaser) any of its securities under the Act in connection with the public
offering of such securities solely for cash (other than a registration (i)
on
Form S-8 or any form which does not include substantially the same information
as would be required to be included in a registration statement covering
the
sale of the Common Stock, or (ii) with respect to an employee benefit plan,
or
(iii) solely in connection with a Rule 145 transaction under the Act), the
Company shall, each such time, promptly give Purchaser written notice of
such
registration together with a list of the jurisdictions in which the Company
intends to attempt to qualify such securities under applicable state securities
laws. Upon the written request of Purchaser given within twenty (20) business
days after delivery of such written notice by the Company, the Company shall
use
its reasonable efforts to cause to be registered under the Act all of the
Common
Stock that Purchaser has requested to be registered.
(b) In
connection with an offering pursuant to Section 10(a) including an underwriting
of shares of the Company’s capital stock, the right of Purchaser to registration
pursuant to Section 10(a) shall be conditioned upon Purchaser’s participation in
such underwriting and the inclusion of Purchaser’s Common Stock in the
underwriting to the extent provided herein. Purchaser shall (together with
the
Company and any other stockholders distributing their securities through
such
underwriting) enter into an underwriting agreement in customary form with
the
underwriter or underwriters selected by the Company. Notwithstanding any
other
provision of Section 10(a), if the underwriter determines that market factors
require a limitation of the number of shares to be underwritten, the underwriter
may exclude some or all of the Common Stock from such registration and
underwriting and the Company shall so advise all persons requesting
registration.
Page
5
11. THE
SALE OF THE SECURITIES WHICH ARE THE SUBJECT OF THIS AGREEMENT HAS NOT BEEN
QUALIFIED WITH THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA,
AND
THE ISSUANCE OF SUCH SECURITIES OR THE PAYMENT OR RECEIPT OF ANY PART OF
THE
CONSIDERATION THEREFOR PRIOR TO SUCH QUALIFICATION IS UNLAWFUL UNLESS THE
SALE
OF SECURITIES IS EXEMPT FROM QUALIFICATION BY SECTIONS 25100, 25102 OR 25105
OF
THE CALIFORNIA CORPORATIONS CODE. THE RIGHTS OF ALL PARTIES TO THIS AGREEMENT
ARE EXPRESSLY CONDITIONED UNLESS THE SALE IS SO EXEMPT.
|
12.
|
Miscellaneous.
|
(a) Further
Assurances.
The
parties agree to execute any additional instruments and to take any additional
action as may reasonably be necessary to carry out the intent of this
Agreement.
(b) Successors
and Assigns.
This
Agreement shall inure to the benefit of the successors and assigns of the
Company and, subject to the restrictions on transfer set forth in this
Agreement, be binding upon Purchaser, its heirs, executors, administrators,
successors, and assigns.
(c) Entire
Agreement; Amendment.
This
Agreement, together with any exhibits hereto, constitute the entire agreement
of
the parties with respect to the subject matter hereof and thereof. No amendment
or variation of the terms of this Agreement, with or without consideration,
shall be valid unless made in writing and signed by all of the parties to
this
Agreement at the time of such amendment.
(d) Governing
Law; Severability.
This
Agreement shall be governed by and construed in accordance with the laws
of the
State of California as such laws are applied to agreements between California
residents entered into and to be performed entirely in California. To the
extent
that any of the agreements set forth herein, or any word, phrase, clause,
or
sentence thereof shall be found to be illegal or unenforceable for any reason,
such agreement, word, phrase, clause, or sentence shall be modified or, if
necessary, deleted in such a manner so as to make the Agreement, as modified,
legal and enforceable under applicable laws.
(e) Counterparts.
This
Agreement may be executed in counterparts, each of which when executed and
delivered will be deemed to be an original but all of which taken together
will
constitute one and the same Agreement.
[Remainder
of Page Intentionally Left Blank]
Page
6
IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date
first written above.
|
Chapeau,
Inc.
|
||
|
Signed
by: ▇▇▇
▇▇▇▇▇▇▇▇
|
||
|
Title: Chief
Executive Officer
|
||
|
Address: ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇
|
||
| ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇ | ||
|
Purchaser
|
||
|
Signed
by: _______________
|
||
|
|
Title:
|
|
|
|
Address:
|
|
Page
7
APPENDIX
I
Payment
Schedule
|
DATE
OF PAYMENT
|
AMOUNT
OF PAYMENT
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
Total
|
$
|
Page
8