Exhibit 10.31
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SWISS MEDICA, INC.
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NOTE PURCHASE AGREEMENT
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Dated: June 5, 2005
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NOTE PURCHASE AGREEMENT
THIS NOTE PURCHASE AGREEMENT (this "Agreement") is effective as of June 5,
2005 by and between Swiss Medica, Inc., a Delaware corporation (the "Company")
and Strategic Equity Corp. (the "Lender").
1. The Loan and Note.
1.1 The Loan and Note. Subject to the terms and conditions of this
Agreement, Lender agrees to loan the Company an aggregate of $660,000 CAD, in
one installments of $660,000 CAD (less the Financing Fee (as defined below))
being delivered to the Company on or before June 5, 2005 (the "Loan"). The Loan
shall be governed by the terms and conditions of, and repaid in accordance with,
this Agreement and a Promissory Note in the principal amount of $660,000 CAD
(the "Note"), in the form attached hereto as Exhibit A to be issued by the
Company to Lender to evidence the Loan. The Note shall be executed concurrently
with the Closing (as defined below).
1.2 Security. The Note will be secured by a Security Agreement, as
amended, dated December 6, 2004 amended on December 7, 2004 and June 5, 2005,
attached hereto as Exhibit B (the "Security Agreement"). Pursuant to the
Security Agreement, the Company shall file on behalf of the Lender, UCC-1
Financing Statements (or a UCC-3 amendment to previously filed UCC-1 Financing
Statements) and such equivalent forms pursuant to the Personal Property Security
Act (the "Filings"), as applicable, in (a) Delaware, and (b) each of the states
in the United States and provinces in Canada listed on Schedule 1.1, which
constitute all states and provinces in which the Company owns personal and real
property assets (the "Assets"). The Company shall provide Lender with file
stamped copies of all Filings within five (5) days after receipt thereof from
the applicable government office.
1.3 The Financing Fee. The Company shall pay Lender a financing fee
equal to $60,000 CAD (the "Financing Fee") and such amount shall be deducted
directly from the principal amount of such advance.
1.4 The Shares. Subject to the terms of this Agreement, the Company
shall issue to Lender 100,000 shares of the Company's Class A Common Stock
("Lender's Shares"). The Company agrees in their next filing with the United
States Securities and Exchange Commission of a registration statement in such
form that the Company is eligible to use to register Lender's Shares for resale
under the Securities Act of 1933 (the "Registration Statement") to include the
Shares in such Registration Statement.
1.5 Termination of Existing Notes. At Closing, issuance of the Note
shall constitute payment in full of: (1) the Secured Promissory Note dated
December 6, 2004 in the amount of $300,000 (CAD), and (2) the Secured Promissory
Note dated January 3, 2005 in the amount of $300,000 (CAD). The Company shall
pay Lender $9,165.00 (USD) and as a result, the Secured Promissory Note dated
December 7, 2004 in the amount of $105,000 (USD) and the Secured Promissory Note
dated December 6, 2004 in the amount of $105,000 (USD) (all foregoing notes
shall be referred to as "Prior Notes") will also be deemed paid in full. The
original executed Prior Notes shall be delivered to the Company at Closing.
2. Representations and Warranties of the Company. The Company hereby
represents and warrants to Lender as follows:
2.1 Organization, Standing and Power. The Company is a corporation
duly incorporated, validly existing and in good standing under the laws of the
State of Delaware and has all requisite corporate power and authority to own,
lease and operate its properties and to carry on its business as contemplated to
be conducted.
2.2 Authority and Enforceability. The Company has all requisite
corporate power and authority to execute and deliver this Agreement and to
perform fully its obligations hereunder. The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby have been
duly authorized by all necessary corporate action on the part of the Company.
This Agreement has been duly executed and delivered by the Company and, assuming
this Agreement constitutes a valid and binding agreement of the other parties
hereto, this Agreement constitutes a legal, valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms, subject
to applicable bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect relating to creditors' rights and
remedies generally and subject, as to enforceability, to general principles of
equity, regardless of whether enforceability is considered in a proceeding at
law or in equity. When executed and delivered, the Note shall be duly executed
and delivered by the Company and, shall constitute legal, valid and binding
obligations of the Company, enforceable against the Company in accordance with
their terms, subject to applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect relating to
creditors' rights and remedies generally and subject, as to enforceability, to
general principles of equity, regardless of whether enforceability is considered
in a proceeding at law or in equity.
2.3 Compliance With Other Instruments. The Company is not in
violation or default of any term of its charter documents, each as amended, or
of any provision of any mortgage, indenture, agreement, instrument or contract
to which it is party or by which it is bound or of any judgment, decree, order
or writ other than any such violation that would not, individually or in the
aggregate, have a material adverse effect on the Company. The execution,
delivery, and performance of and compliance with this Agreement, and the
transactions contemplated herein, will not result in any such material
violation, or be in conflict with or constitute a material default under any
such term, or result in the creation of any mortgage, pledge, lien, encumbrance
or charge upon any of the properties or assets of the Company or the suspension,
revocation, impairment, forfeiture or nonrenewal of any permit, license,
authorization or approval applicable to the Company, its business or operations
or any of its assets or properties.
2.4 Location of Assets and Liens. Schedule 2.4 sets forth each state
in the United States and each province in Canada, in which Assets are located.
The Company has good and marketable title to the Assets and there is no lien or
encumbrance on any of the Assets except for such liens or encumbrances listed on
Schedule 2.4 hereto, or any lien or encumbrance imposed by law in the ordinary
course of business for assessments not yet due and payable.
2.5 Brokers. The Company has no contract, arrangement or
understanding with any broker, finder or similar agent with respect to the
transactions contemplated by this Agreement.
2.6 Litigation. There is no pending or, to the best knowledge of the
Company, threatened action, suit, proceeding or investigation before any court,
governmental agency or body, or arbitrator having jurisdiction over the Company,
or any of its affiliates that would affect the execution by the Company or the
performance by the Company of its obligations under the Agreement. The Company
agrees to provide a Litigation search for the states of Delaware and Texas and
the Canadian provinces of British Columbia and Ontario within five (5) days of
the Closing to the Lender in support of this
2.7 Reporting Company. The Company is a publicly-held company
subject to reporting obligations pursuant to the Securities and Exchange Act of
1934, as amended (the "Act"), and has a class of common shares registered
pursuant to the Act. Pursuant to the provisions of the Act, the Company has
timely filed all reports and other materials required to be filed thereunder
with the United States Securities and Exchange Commission during the preceding
twelve (12) months.
3. Representations and Warranties of Lender. Lender hereby represents and
warrants that:
3.1 Authorization. Lender has full power and authority to enter into
this Agreement, and when executed, this Agreement will constitute a valid and
legally binding obligation of Lender, enforceable in accordance with its terms.
3.2 Purchase Entirely for Own Account. The Note and any Common Stock
issuable (collectively, the "Securities") will be acquired for investment for
Lender's own account, not as a nominee or agent, and not with a view to the
resale or distribution of any part thereof, and the Lender has no present
intention of selling, granting any participation in, or otherwise distributing
the same. The Lender does not have any contract, undertaking, agreement or
arrangement with any person to sell, transfer or grant participation in any of
the Securities to such person or to any third person. The Lender has full power
and authority to enter into this Agreement.
3.3 Disclosure of Information. The Lender has received all of the
information it considers necessary or appropriate for deciding whether to
purchase the Note. The Lender has had an opportunity to ask all questions and
receive all answers from the Company regarding the terms and conditions of the
offering and sale of the Note.
3.4 Investment Experience. The Lender is an investor in securities
of bulletin board and small cap companies and acknowledges that it is able to
fend for itself and bear the economic risk of its investment, including the
complete loss thereof, and has such knowledge and experience in financial or
business matters that it is capable of evaluating the merits and risks of the
investment in the Note. The Lender has not been organized for the purpose of
acquiring the Securities.
3.5 Accredited Lender. The Lender is an "accredited investor" within
the meaning of the Securities and Exchange Rule 501(a) of Regulation D, as
presently in effect.
3.6 Restricted Securities. The Lender understands that the Shares
are characterized as "restricted securities" under the federal securities laws
inasmuch as they are being acquired from the Company in a transaction not
involving a public offering and that, under such laws and applicable
regulations, such securities may be resold without registration under the
Securities Act of 1933, as amended (the "Securities Act"), only in certain
limited circumstances. In this connection, the Lender is familiar with Rule 144,
as presently in effect, and understands the resale limitations imposed thereby
and by the Securities Act. The Lender understands Rule 144 is not currently
available for the sale of the Securities and may never be so available.
3.7 Further Limitations on Disposition. Without in any way limiting
the representations set forth above, the Lender further agrees not to make any
disposition of all or any portion of the Securities unless and until:
(a) There is then in effect a Registration Statement under the
Securities Act covering such proposed disposition, and such disposition is made
in accordance with such Registration Statement; or
(b) (i) the Lender shall have notified the Company of the
proposed disposition and shall have furnished the Company with a detailed
statement of the circumstances surrounding the proposed disposition, and (ii) if
requested by the Company, the Lender shall have furnished the Company with an
opinion of counsel, reasonably satisfactory to the Company, that such
disposition will not require registration of such shares under the Securities
Act or registration or qualification under any applicable state securities laws.
3.8 Legends. Lender understands and agrees that the certificates
evidencing the Securities may bear the following legend or a similar legend of
like tenor:
"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF
ANY STATE. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR
HYPOTHECATED IN THE ABSENCE OF A REGISTRATION STATEMENT IN
EFFECT WITH RESPECT TO THE SECURITIES UNDER SUCH ACT OR AN
OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH
REGISTRATION IS NOT REQUIRED."
4. The Closing.
4.1 Time and Place. The purchase and sale of the Note shall take
place on June 5, 2005 (the "Closing") at such time and place as the parties
shall mutually agree.
4.2 Closing Deliveries. At the Closing, the Company will deliver to
Lender the duly executed Note and a copy of the letter sent to the Company's
Transfer Agent instructing the issuance and delivery of the Lender's Shares to
Lender, and Lender shall deliver Prior Notes.
4.3 Conditions to Lender's Obligations at the Closings. The
obligations of Lender at the Closing are subject to the fulfillment, on or prior
to the Closing, of each of the following conditions, any of which may be waived
in whole or in part by the Lender:
(a) The representations and warranties made by the Company in
this Agreement shall be true and correct when made, and shall be true and
correct on the dates of the Closing with the same force and effect as if they
had been made on and as of such dates.
(b) The Company shall have performed and complied with all
agreements, obligations and conditions contained in this Agreement that are
required to be performed or complied with by it on or prior to the dates of the
Closing.
(c) Except for the notices required or permitted to be filed
after the dates of Closing pursuant to applicable federal and state securities
laws, the Company shall have obtained all governmental approvals required in
connection with the lawful sale and issuance of the Note.
(d) At the Closing, the sale and issuance by the Company, and
the purchase by Lender, of the Note shall be legally permitted by all laws and
regulations to which the Lender and/or the Company are subject.
4.4 Conditions to the Company's Obligations at the Closing. The
Company's obligation to issue and sell the Note at the Closing is subject to the
fulfillment, to the Company's satisfaction, on or prior to the dates of the
Closings, of the following conditions, any of which may be waived in whole or in
part by the Company:
(a) The representations and warranties made by the Lender in
this Agreement shall be true and correct when made, and shall be true and
correct on the date of the Closing with the same force and effect as if they had
been made on and as of such date.
(b) Except for any notices required or permitted to be filed
after the dates of Closing pursuant to applicable federal or state securities
laws, the Company shall have obtained all governmental approvals required in
connection with the lawful sale and issuance of the Securities.
(c) At the Closing, the sale and issuance by the Company, and
the purchase by Lender, of the Note shall be legally permitted by all laws and
regulations to which the Lender and/or the Company are subject.
5. Expenses. The Company shall reimburse the Lender for legal fees
incurred by Lender in completing the transactions contemplated by this
Agreement, within 10 days of receiving proper documentation for such expenses.
6. Default. The Company agrees that if any representation or warranty made
by the Company herein is found or deemed to be breached by the Company such
breach shall be considered an event of Default and the Lender shall have the
remedies available in accordance with the Agreement, the Note, and the Security
Agreement, as amended, dated June 5, 2005.
7. Miscellaneous.
7.1 Waivers and Amendments. Any provision of this Agreement and the
Note may be amended, waived or modified (either generally or in a particular
instance, either retroactively or prospectively, and either for a specified
period of time or indefinitely), upon the written consent of the Company and the
Lender.
7.2 Governing Law. This Agreement, the Notes and the Warrant shall
be governed by and construed in accordance with Delaware law, without regard to
the conflict of laws provisions thereof.
7.3 Successors and Assigns. Except as otherwise expressly provided
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successors, assigns, heirs, executors and administrators of the
parties hereto.
7.4 Entire Agreement. This Agreement (including the exhibits
attached hereto) and the Note constitute the full and entire understanding and
agreement between the parties with regard to the subjects hereof and thereof.
7.5 Notices. Any notice or communication required to be given
hereundermay be delivered by hand, deposited with an overnight courier, sent by
confirmed facsimile, or mailed by registered or certified mail, if to the
Company, to its Chief Executive Officer at 00 Xxxxx Xxxxxx, 0xx Xxxxx, Xxxxxxx,
Xxxxxxx, Xxxxxx X0X 0X0, and if to the Lender, to its President at Xxxxx 000,
000 - 0xx Xxxxxx XX, Xxxxxxx, Xxxxxxx X0X 0X0. Notice shall be deemed received
on the date sent if sent by facsimile or personal delivery; three days after the
date sent if sent by registered or certified mail; and one day after the date it
is sent by overnight courier.
7.6 Severability of this Agreement. If any provision of this
Agreement shall be judicially determined to be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.
7.7 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall be deemed to constitute one instrument.
(this space left intentionally blank)
IN WITNESS WHEREOF, the parties have caused this Note Purchase Agreement
to be duly executed and delivered by their proper and duly authorized officers
as of the date and year first written above.
COMPANY:
SWISS MEDICA, INC.
a Delaware corporation
By /s/ Xxxxx X. Xxxxxxx
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Xxxxx X. Xxxxxxx, Chief Executive Officer
Swiss Medica, Inc.
00 Xxxxx Xxxxxx, 0xx Xxxxx
Xxxxxxx, Xxxxxxx, Xxxxxx X0X 0X0
Attn: Xxxxx Xxxxxxx
LENDER:
STRATEGIC EQUITY CORP.
By /s/ Xxxx Xxxxxxx
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Xxxx Xxxxxxx, Director Business
Development
Strategic Equity Corp.
Xxxxx 000, 000 - 0xx Xxxxxx XX
Xxxxxxx, Xxxxxxx X0X 0X0
Attn: Xxxx Xxxxxxx
EXHIBIT A
NOTE
EXHIBIT B
SECURITY AGREEMENT
Schedule 1.1
Security
Texas
Ontario
British Columbia
Schedule 2.4
Location of Assets and Liens
Texas, USA - no liens or encumbrances
Ontario, Canada -- no liens or encumbrances
British Columbia, Canada -- no liens or encumbrances
