MONUMENT RESOURCES, INC. UNIT PURCHASE AGREEMENT March 5, 2008
EXHIBIT
10.01
MONUMENT
RESOURCES, INC.
March 5,
2008
TABLE
OF CONTENTS
| Page | ||
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1.
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Authorization
and Reservation of Common Stock and Warrants; Purchase and Sale of
Units.
|
1
|
|
1.1.
|
Authorization
and Reservation of Common Stock and Warrants
|
1
|
|
1.2.
|
Authorization
of Warrants
|
1
|
|
1.3.
|
Purchase
and Sale of the Common Stock
|
1
|
|
1.4
|
The
Closing
|
1
|
|
2.
|
Representations
and Warranties of the Company
|
2
|
|
2.1.
|
Organization
and Corporate Power
|
2
|
|
2.2.
|
Authorization
|
2
|
|
2.3.
|
Capitalization
|
2
|
|
2.4.
|
Subsidiaries
|
3
|
|
2.5.
|
Reports
and Financial Statements
|
3
|
|
2.6.
|
Absence
of Undisclosed Liabilities
|
4
|
|
2.7.
|
Absence
of Certain Developments
|
4
|
|
2.8.
|
Title
to Properties
|
4
|
|
2.9.
|
Tax
Matters
|
4
|
|
2.10.
|
Contracts
and Commitments
|
4
|
|
2.11.
|
No
Defaults
|
4
|
|
2.12.
|
Intellectual
Property
|
5
|
|
2.13.
|
Effect
of Transactions
|
5
|
|
2.14.
|
No
Governmental Consent or Approval Required
|
5
|
|
2.15.
|
Litigation
|
6
|
|
2.16.
|
Securities
Laws
|
6
|
|
2.17.
|
Business
|
6
|
|
2.18.
|
Brokerage
|
6
|
|
2.19.
|
Employees
|
6
|
|
2.20.
|
Environmental
Matters
|
6
|
|
2.21.
|
Retirement
Obligations, etc.
|
7
|
|
2.22.
|
Transactions
with Affiliates
|
7
|
|
2.23.
|
Books
and Records
|
7
|
|
2.24.
|
Insurance
|
8
|
|
2.25.
|
No
Unlawful Payments
|
8
|
|
2.26.
|
▇▇▇▇▇▇▇▇-▇▇▇▇▇
Act
|
8
|
|
2.27.
|
Material
Facts
|
8
|
i
|
3.
|
Representations
and Warranties and other Agreements of the Investors
|
8
|
|
3.1.
|
Authorization
|
8
|
|
3.2.
|
Purchase
Entirely for Own Account
|
9
|
|
3.3.
|
Restricted
Securities
|
9
|
|
3.4.
|
Financial
Condition
|
9
|
|
3.5.
|
Experience
|
9
|
|
3.6.
|
Receipt
of Information
|
9
|
|
3.7.
|
Brokerage
|
9
|
|
3.8.
|
Address
|
9
|
|
3.9.
|
Legends
|
9
|
|
4.
|
Conditions
to an Investor’s Obligations at the Closing
|
10
|
|
4.1.
|
Representations
and Warranties of the Company
|
10
|
|
4.2.
|
Performance
|
10
|
|
4.3.
|
Compliance
Certificate
|
10
|
|
4.4.
|
Qualifications
|
10
|
|
4.5.
|
Proceedings
and Documents
|
10
|
|
4.6.
|
Other
Agreements
|
10
|
|
4.7.
|
Secretary’s
Certificate
|
10
|
|
4.8.
|
Reservation
of Conversion Units
|
11
|
|
5.
|
Conditions
to the Company’s Obligations at the Closing.
|
11
|
|
5.1.
|
Representations
and Warranties
|
11
|
|
5.2.
|
Payment
of Purchase Price
|
11
|
|
5.3.
|
Proceedings
and Documents
|
11
|
|
6.
|
Right
of First Refusal
|
11
|
|
6.1.
|
Company’s
Right of First Refusal
|
11
|
|
6.2.
|
Notice
of Proposed Transfer
|
11
|
|
6.3.
|
Exercise
of Right of First Refusal
|
12
|
|
6.4.
|
Purchase
Price
|
12
|
|
6.5.
|
Payment
of Purchase Price
|
12
|
|
6.6.
|
Selling
Stockholder’s Right to Transfer
|
12
|
|
6.7.
|
Exception
for Affiliate Transfers
|
12
|
|
6.8.
|
Assignment
of Right of First Refusal
|
12
|
|
6.9.
|
Right
to Participate Pro Rata in Future Issuances
|
13
|
ii
|
7.
|
Additional
Covenants of the Company
|
13
|
|
7.1.
|
Management
and Information Rights
|
13
|
|
7.2.
|
Directors’
and Officers’ Insurance
|
13
|
|
7.3.
|
Board
Matters
|
13
|
|
8.
|
Miscellaneous.
|
13
|
|
8.1.
|
Certain
Defined Terms
|
13
|
|
8.2.
|
Survival
of Covenants; Assignability of Rights
|
14
|
|
8.3.
|
Incorporation
by Reference
|
14
|
|
8.4.
|
Parties
in Interest
|
14
|
|
8.5.
|
Amendments
and Waivers
|
14
|
|
8.6.
|
Governing
Law
|
14
|
|
8.7.
|
Notices
|
14
|
|
8.8.
|
Effect
of Headings
|
15
|
|
8.9.
|
Entire
Agreement
|
15
|
|
8.10.
|
Severability
|
15
|
|
8.11.
|
Counterparts
|
15
|
iii
MONUMENT
RESOURCES, INC.
This UNIT
PURCHASE AGREEMENT (the “Agreement”) is made
as of the 5th day of
March, 2008 by and between Monument Resources, Inc., a Colorado corporation
(“Monument” or
the “Company”),
and MNB Energy, LLC (“MNB”) and ▇.▇. ▇▇▇▇▇
(“▇▇▇▇▇”). MNB
and ▇▇▇▇▇ are referred to herein collectively as the “Investors” however
their rights and obligations hereunder are several and not joint, as indicated
in Exhibit A
hereto.
In
consideration of the mutual promises and covenants contained in this Agreement,
the parties hereto agree as follows:
1.
Authorization and
Reservation of Common Stock and Warrants; Purchase and Sale of
Units.
1.1. Authorization and
Reservation of Common Stock and Warrants. The Company has
authorized the issuance and sale of up to 2,400,000 shares of its Common Stock,
no par value per share (the “Common Stock”) to be
issued under this Agreement. The Company has also reserved for
issuance up to 2,400,000 shares of its Common Stock for possible issuance under
the Warrants described in Section 1.2 below. The rights, privileges,
and preferences of the Common Stock are as set forth in the Company’s Articles
of Incorporation and amendments thereto the “Articles”), which the
Company has filed with the Secretary of State of the State of
Colorado.
1.2. Authorization of
Warrants. The Company has authorized the issuance of warrants
to purchase, and authorized the issuance pursuant to such warrants, of up to
2,400,000 shares of its Common Stock (the “Warrants”). The
Warrants shall be exercisable for a period of two years expiring March 4, 2010
at an exercise price of $0.40 per share of Common Stock. The Warrants
authorized and to be issued hereunder shall be in the forms attached hereto as
Exhibit B-1 and
Exhibit
B-2.
1.3. Purchase and Sale of the
Common Stock. Subject to the terms and conditions of this
Agreement and on the basis of the representations and warranties set forth
herein, the Company agrees to sell to the Investors, and the Investors agree to
purchase from the Company at a Closing (as defined below) up to 2,400,000 shares
of the Company’s Common Stock and Warrants to purchase up to 2,400,000 shares of
Common Stock. The shares of Common Stock and Warrants issued to the
Investors pursuant to this Agreement and shares of Common Stock issued or
issuable under the Warrants shall be collectively referred to in this Agreement
as the “Units”
and each Unit shall consist of one share of Common Stock and one Warrant to
purchase one share of Common Stock.
1.4. The
Closing.
(a) The closing
of the purchase and sale of the Units will take place at the offices of ▇▇▇▇▇
& ▇▇▇▇▇▇, P.C., ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ or at such
other place as the parties shall mutually agree on or about March 5, 2008
at
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1 -
10 a.m.
MST (the “Closing”). At
the Closing, the Company shall sell, and the Investors shall purchase, on the
terms and conditions contained in this Agreement, 2,400,000 Units, at a purchase
price of $0.25 per Unit. The Closing shall take place concurrently
with the execution and delivery of this Agreement or at such other time as the
parties shall mutually agree.
(b) At the
Closing, the Investors shall pay $600,000 in cash or cleared bank funds (the
“Purchase
Price”) to the Company and the Company shall deliver 2,400,000 Units to
the Investors (in the form of certificates representing a total of 2,400,000
shares of Common Stock and Warrants to purchase a total of 2,400,000 shares of
Common Stock) as allocated on Exhibit A
hereto. Other documents and certificates as described in Sections 4
and 5 below shall also be executed and delivered at Closing.
2. Representations and
Warranties of the Company. In order to induce the Investors to
enter into this Agreement and to purchase the Units hereunder, the Company
hereby represents and warrants to the Investors, as of the date hereof, each of
the following. Reference to the “Company” below refers to and
specifically includes Monument and its wholly owned subsidiary COG Transmission
Corporation (“COG”).
2.1. Organization and Corporate
Power. Monument and COG are corporations duly organized,
validly existing and in corporate good standing under the laws of the States of
Colorado and Kansas, respectively. The Company is duly qualified to
do business as a foreign corporation and is in good standing under the laws of
each jurisdiction in which either the ownership or use of its assets, or the
nature of its activities, requires such qualification, except where failure to
be so qualified would not have a material adverse effect on Monument or COG,
either collectively or individually. The Company has all required
corporate power and authority to own its property, to carry on its business as
presently conducted or contemplated to be conducted, and to carry out the
transactions contemplated hereby. The copies of the Articles of
Incorporation and By-Laws of the Company, as amended to date, which are on file
with the Colorado Secretary of State and the Kansas Secretary of State,
respectively, and which have been furnished to MNB by the Company, are correct
and complete.
2.2. Authorization. This
Agreement, and any other agreements, instruments, exhibits or documents entered
into at the Closing by the Company pursuant to this Agreement (the “Transaction
Documents”) have been duly executed and delivered by the Company and are
the legal, valid and, assuming due execution and delivery by the other parties
hereto and thereto, binding obligations of the Company, enforceable in
accordance with their terms, subject to applicable bankruptcy, insolvency,
reorganization and moratorium laws and other laws of general application
affecting enforcement of creditors’ rights generally. The execution,
delivery and performance of each of the Transaction Documents have been duly
authorized by all necessary corporate action of the Company.
2.3. Capitalization. The
entire authorized capital stock of the Company consists of 10,000,000 shares of Common Stock,
with no par value per share (the “Common Stock”), of
which 5,319,000 shares are issued and
outstanding and 1,000,000 shares of Preferred Stock, of which no shares are
issued and outstanding. The Company holds no shares of Common Stock
or Preferred Stock in its treasury. The Company has authorized the
issuance of up to 2,400,000
-
2 -
shares of
Common Stock for issuance and sale to the Investors pursuant to this Agreement
and has reserved up to another 2,400,000 shares of Common Stock for possible
issuance under the Warrants. When issued and paid for in accordance
with the terms of this Agreement or the Warrant Agreement as the case may be,
the shares of Common Stock, Warrants and shares of Common Stock underlying the
Warrants will be duly authorized, validly issued and outstanding, fully paid and
nonassessable. There are no outstanding options or other rights to
purchase or acquire from the Company, or exchangeable for or convertible into,
any shares of its capital stock. There are no preemptive rights with
respect to the issuance or sale by the Company of the shares of Common Stock or
Warrants or any other capital stock of the Company. Except as imposed
by applicable securities laws, upon the Closing there will be no restrictions on
the transfer or voting of any shares of the Company’s Common Stock or
restrictions on transfer of its Warrants, other than restrictions on transfer
necessary to preserve the exemptions pursuant to which such securities were
issued without registration under applicable securities laws. The
Company has not violated the 1933 Act or any state Blue Sky or securities laws
in connection with the issuance of any of its securities.
2.4. Subsidiaries. All
of the outstanding shares of capital stock of COG are owned by Monument and are
validly issued, fully paid, nonassessable and free of preemptive
rights. There are no subscriptions, options, warrants, rights, calls,
contracts or other commitments, understandings, restrictions or arrangements
relating to the issuance or sale with respect to any shares of capital stock of
COG, including any right of conversion or exchange under any outstanding
security, instrument or agreement. Other than COG, the Company has no
subsidiaries.
2.5. Reports and Financial
Statements. The Company has filed with the Securities and
Exchange Commission all forms, statements, reports and documents (including all
exhibits thereto) (the “Company SEC Reports”)
required to be filed by it under the Securities Exchange Act of 1934 and the
rules and regulations thereunder (“‘34 Act”), all of
which complied when filed in all material respects with requirements of the ‘34
Act. As of their respective dates, the Company SEC Reports did not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not
misleading. The audited consolidated financial statements of the
Company included in its Annual Report on Form 10-KSB for the years ended
September 30, 2007, September 30, 2006, and September 30, 2005 and its
Quarterly Report on Form 10-QSB for the quarter ended December 31, 2007 (the
“Company Financial
Statements”) have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis (except as may be indicated
therein or in the notes thereto) and present fairly in all material respects the
financial position of the Company and its subsidiary as of the dates thereof and
the results of their operations and changes in financial position for the
periods then ended.
2.6. Absence of Undisclosed
Liabilities. Except as and to the extent accurately set forth
in the Financial Statements, the Company does not have, individually or
collectively, any accrued or contingent liability in excess of
$10,000 arising out of any transaction or state of facts existing on
or prior to the date hereof.
-
3 -
2.7.
Absence
of Certain Developments. Since December 31, 2007, there has
been no (a) declaration, setting aside or payment of any dividend or other
distribution with respect to the capital stock of the Company, (b) loss,
destruction or damage to any material property of the Company, whether or not
insured, (c) labor trouble involving the Company or any material change in
any of its personnel or the terms and conditions of employment, (d) waiver
of any valuable right, (e) loan or extension of credit to any officer or
employee of the Company, (f) acquisition or disposition of any assets (or
any contract or arrangement therefor) in excess of $10,000 or any other material
transaction by the Company otherwise than for fair value in the ordinary course
of business, or (g) material adverse change in the condition, financial or
otherwise, of the Company or in its assets, liabilities, properties, business,
operations or prospects (a “Material
Adverse Change”).
2.8. Title to
Properties. Other than any lien in respect of current taxes
not yet due and payable, the Company has good title or leasehold title to all
properties and assets necessary to its business as presently conducted and to
all of its properties and assets, free and clear of all mortgages, security
interests, liens, restrictions or encumbrances. All machinery and
equipment included in such properties which is owned or leased by the business
of the Company is in good condition and repair except for reasonable wear and
tear, and all leases of real or personal property to which the Company is a
party are fully effective and afford the Company peaceful and undisturbed
possession of the subject matter of the lease. To its knowledge, the
Company is not in material violation of any zoning, building or safety
ordinance, regulation or requirement or other law or regulation applicable to
the operation of owned or leased properties likely to impede the normal
operation of the business of the Company, and the Company has not received any
written or oral notice of violation with which it has not complied.
2.9. Tax
Matters. There are no federal, state, county, local or foreign
taxes due and payable by the Company that have not been paid. There
have been no examinations or audits of any tax returns or reports by any
applicable federal, state, local or foreign governmental agency and there is no
material tax deficiency that has been, or would reasonably be expected to be,
asserted against the Company or any of their respective
properties. The Company has duly filed all federal, state, county,
local and foreign tax returns required to have been filed by it and there are in
effect no waivers of applicable statutes of limitations with respect to taxes
for any year.
2.10. Contracts and
Commitments. The Company has made available to the Investors
copies of each contract, obligation or commitment of the Company which
(a) involves by its terms a commitment in excess of $10,000 or is otherwise
material, (b) which by their terms expire one year or more after the date
hereof, or (c) not made in the ordinary course of
business.
-
4 -
2.11.
No
Defaults. The Company is not in default and has not violated
or breached any provision (a) under its Articles of Incorporation or its By-laws
or any note, indenture, mortgage, lease, agreement, contract, purchase order or
other instrument, document or agreement to which it is a party or (b) with
respect to any order, writ, injunction or decree of any court or any federal,
state, municipal or other governmental department, commission, board, bureau,
agency or instrumentality, domestic or foreign, that specifically names the
Company. To the best of the Company’s knowledge, there exists no
condition, event or act which after notice, lapse of time, or both, could
constitute a default by the Company under any of the foregoing. To
the best of the Company’s knowledge, no third party is in default under any
agreement, contract or other instrument, document, or agreement to which the
Company is a party, which default could cause a Material Adverse Change to the
Company or the business of the Company, as presently conducted or proposed to be
conducted.
2.12.
Intellectual
Property. The Company owns, free and clear of any mortgage,
pledge, security interest, encumbrance or other lien, or has the valid right to
use all Intellectual Property used by it in its business as currently conducted
or as proposed to be conducted. The conduct of the Company’s
businesses will not conflict in any material respect with any Intellectual
Property rights of others, and the Company has not received any notice of any
claim of infringement or conflict with any such rights of others.
2.13.
Effect of
Transactions. The execution, delivery and performance of the
Transaction Documents, the issuance, sale and delivery of the Units or the
common stock to be issued upon the exercise of the Warrants, and compliance with
the provisions hereof and thereof by the Company, do not and will not, with or
without the passage of time or the giving of notice or both, (a) violate any
provision of law, statute, rule or regulation or any ruling, writ, injunction,
order, judgment or decree of any court, administrative agency or other
governmental body or (b) conflict with, or result in any breach of, any of the
terms, conditions or provisions of, or constitute a default (or give rise to any
right of termination, cancellation or acceleration) under, or result in the
creation of any lien, security interest, charge or encumbrance upon any of the
properties or assets of the Company under its Articles of Incorporation or
By-Laws or under any note, indenture, mortgage, lease, agreement, contract,
purchase order or other instrument, document or agreement to which the Company
is a party. At the time of issuance, the Units will be duly
authorized, validly issued, fully paid and nonassessable and not subject to any
preemptive rights. The stock certificates and other instruments to be
executed and delivered by the Company to the Investors at the Closing will be
valid and binding obligations of the Company, enforceable in accordance with
their respective terms, and will effectively vest in Purchaser good title to all
the Units, free and clear of all encumbrances, except restrictions on transfer
arising under the Securities Act of 1933 or any applicable state securities
laws.
2.14.
No Governmental
Consent or Approval Required. Based in part on the
representations made by the Investors in Section 3 of this Agreement, other than
federal or state securities law filings which have been made or which will be
made in a timely manner, no authorization, consent, approval or other order of,
declaration to, or filing with, any governmental agency or body is required for
or in connection with the valid and lawful authorization, execution and delivery
by the Company of any of the Transaction Documents for, or in connection with,
the valid and lawful authorization, issuance, sale and delivery of the Units to
be issued upon the exercise of the Warrants.
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5 -
2.15. Litigation. There
is no claim, action, lawsuit, proceeding, complaint, charge or investigation
pending or, to the best knowledge of the Company, threatened against the Company
including any which questions the validity of any of the Transaction Documents
or the right of the Company to enter into them or to consummate the transactions
contemplated hereby or thereby, that could result in a Material Adverse Change
nor is the Company aware that there is any reasonable basis for the
foregoing. Neither the Company nor any of its officers or directors,
is a party to, or subject to the provisions of, any order, writ, injunction,
judgment or decree of any court or governmental agency or
instrumentality. There is no action, suit or proceeding by the
Company currently pending or which the Company presently intends to
initiate.
2.16.
Securities
Laws. Assuming that the Investors’ representations and
warranties contained in Section 3 of this Agreement are true and correct, the
offer, issuance and sale by the Company to the Investors of the Units and the
common stock to be issued upon the exercise of the Warrants are, and will be as
of the Closing, exempt from the registration and prospectus delivery
requirements of the Securities Act of 1933.
2.17.
Business. The
Company has all necessary franchises, permits, licenses and other rights and
privileges necessary to permit it to own its property and to conduct its present
business. To the best of its knowledge, the Company is not in
violation of any law, regulation, authorization or order of any public authority
relevant to the ownership of its properties or the carrying on of its present
business which, either individually or in the aggregate, would result in any
Material Adverse Change.
2.18. Brokerage. There
are no claims for brokerage commissions or finder’s fees or similar compensation
in connection with the transactions contemplated by this Agreement based on any
arrangement made by or on behalf of the Company, and the Company agrees to
indemnify and hold the Investors harmless against any damages incurred as a
result of any such claim.
2.19. Employees. There
are no controversies or labor troubles pending, or to the best knowledge of the
Company, threatened between it and its employees. To the best of the
Company’s knowledge: (a) no officer or key employee of the Company
has any present intention of terminating his or her employment therewith nor
does the Company have any present intention of terminating any such employment;
and (b) the Company has complied in all material respects with all applicable
state, federal and foreign laws and regulations respecting employment and
employment practices, terms and conditions of employment, wages and hours and
other laws related to employment, and there are no arrears in the payments of
wages, withholding or social security taxes, unemployment insurance premiums or
other similar obligations. The Company is not a party to any
agreement with any of its officers or employees with respect to such person’s
employment. The Company is not a party to any collective bargaining
agreement.
2.20. Environmental
Matters. To the best of its knowledge:
(a) The
Company is and has been in compliance with all applicable federal, state and
local laws, rules, requirements, decisions, orders and regulations relating to
the protection of human health and safety, the environment or hazardous or toxic
substances or wastes, pollutants or contaminants (the “Environmental Laws”)
applicable to the Company including but not limited to requirements contained in
and to obtain and maintain any permits, licenses, certificates or other
authorizations or approvals required pursuant to such Environmental Laws, and
there is not now pending or, to the Company’s knowledge, threatened, nor does
there exist any reasonable basis
-
6 -
for, any
actual or pending action, suit, lien, investigation or proceeding against the
Company in connection with any past or present action or inactions of the
Company or any noncompliance with such Environmental Laws, except with respect
to non-compliance that is not reasonably expected to result, either individually
or in the aggregate, in any Material Adverse Change.
(b) There
has been no storage, generation, transportation, handling, treatment, disposal,
discharge, emission, or other release of any kind of toxic wastes or hazardous
substances, including, but not limited to, any naturally occurring radioactive
materials, brine, drilling mud, crude oil, natural gas liquids and other
petroleum materials, by, due to or caused by the Company (or, to the best of the
Company’s knowledge, any other entity (including any predecessor) for whose acts
or omissions the Company is or would reasonably be expected to be liable) upon
any of the property now or previously owned or leased by the Company, in
violation of any Environmental Laws or in a manner or to a location that would
reasonably be expected to give rise to any liability under any Environmental
Laws, except for any violation or liability which would not, individually or in
the aggregate, cause a Material Adverse Change.
(c) There
are no proceedings that are pending, or that are known to be contemplated,
against the Company under any Environmental Laws in which a governmental entity
is also a party, other than such proceedings regarding which it is reasonably
believed no monetary sanctions of $10,000 or more will be imposed, and (ii) the
Company does not anticipate material capital expenditures relating to any
Environmental Laws.
2.21.
Retirement
Obligations, etc. The Company has no pension, retirement or
similar plan or obligation or any employee benefit plan as defined in Section
3(3) of the Employee Retirement Income Security Act of 1974, as amended.
2.22.
Transactions with
Affiliates. Except to the extent that ▇▇▇▇▇ is an Investor and
a party to the Transaction Documents, no stockholder, officer or director of the
Company nor any “affiliate” or “associate” of such Persons (as such terms are
defined in the rules and regulations promulgated under the ▇▇▇▇ ▇▇▇) (herein, a
“Related
Party”) is a party to any agreement with the Company, including, without
limitation, any contract, agreement or other arrangement providing for the
rental of real or personal property from, or otherwise requiring payments to,
any Related Party. No employee of the Company nor any Related Party
is indebted to the Company and, except for accrued payroll obligations, the
Company is not indebted to any of its employees or any Related
Party.
2.23.
Books and
Records. The minute book of the Company contains complete and
accurate records of all meetings and other corporate actions of its
stockholders, Board of Directors and all committees, if any, appointed by its
Board of Directors. The stock ledger of the Company is complete and
reflects all issuances, transfers, repurchases and cancellations of shares of
capital stock of the Company. The books of account, ledgers, order
books, records and documents of the Company accurately and completely reflect
all material information relating to its business, the nature, acquisition,
maintenance, location and collection of its assets and the nature of all
transactions giving rise to its obligations and accounts
receivable.
2.24.
Insurance. The
Company has insurance covering its respective properties,
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7 -
operations,
personnel and businesses, which insurance is in amounts and insures against such
losses and risks as are customary in the oil and gas business and adequate, in
all material respects, to protect the Company and its respective business; and
has not (i) received notice from any insurer or agent of such insurer that
capital improvements or other expenditures are required or necessary to be made
in order to continue such insurance or (ii) any reason to believe that it will
not be able to renew its existing insurance coverage as and when such coverage
expires or to obtain similar coverage at reasonable cost from similar insurers
as may be necessary to continue its business.
2.25.
No Unlawful
Payments. Neither the Company nor, to the knowledge of the Company, any
director, officer, agent, employee or other person acting on behalf of the
Company has (i) used any corporate funds for any unlawful contribution, gift,
entertainment or other unlawful expense relating to political activity; (ii)
made any direct or indirect unlawful payment to any foreign or domestic
government official or employee from corporate funds; (iii) violated or is in
violation of any provision of the Foreign Corrupt Practices Act of 1977; or (iv)
made any bribe, rebate, payoff, influence payment, kickback or other unlawful
payment.
2.26.
▇▇▇▇▇▇▇▇-▇▇▇▇▇
Act. There is and has been no failure on the part of the
Company or any of the Company’s directors or officers, in their capacities as
such, to comply in all material respects with any applicable provision of the
▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002 and the rules and regulations promulgated in
connection therewith, including Section 402 related to loans and Sections 302
and 906 related to certifications.
2.27.
Material
Facts. This Agreement and each other agreement, document,
certificate or written statement furnished or to be furnished to the Investors
through the Closing by or on behalf of the Company in connection with the
Closing, do not contain any untrue statement of a material fact or, when taken
as a whole, omit to state a material fact necessary to make the statements
contained therein or herein, in light of the circumstances in which they were
made, not misleading.
3.
Representations and
Warranties and other Agreements of the Investors. Each
Investor severally, not jointly, hereby represents and warrants as of the date
hereof that:
3.1. Authorization. The
Investor has full power and authority to execute, deliver and perform each of
the Transaction Documents and to acquire the Units. Each of the
Transaction Documents constitute the valid and legally binding obligation of the
Investor, enforceable against the Investor in accordance with their respective
terms. The Investor is an “accredited investor” within the meaning of
that term as defined in Rule 501(a) promulgated under the Securities Act of 1933
(“1933
Act”).
3.2. Purchase Entirely for Own
Account. The Units will be acquired for investment for the
Investor’s own account and not with a view to the distribution of any part
thereof. The Investor does not have any contract, undertaking,
agreement or arrangement with any person to sell, transfer, or grant
participations to such person or to any third person, with respect to any of the
Units.
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8 -
3.3. Restricted
Securities. The Investors understand that the Units may not be
sold, transferred, or otherwise disposed of without registration under the 1933
Act, or an exemption therefrom, and that in the absence of an effective
registration statement covering the Units or an available exemption from
registration under the 1933 Act, the Units must be held
indefinitely.
3.4. Financial
Condition. The Investor’s financial condition is such that
it/he is able to bear the risk of holding the Units for an indefinite period of
time and can bear the loss of its entire investment in its Units.
3.5. Experience. The
Investor has such knowledge and experience in financial and business matters and
in making high-risk investments of this type that it/he is capable of evaluating
the merits and risks of the purchase of the Units.
3.6. Receipt of
Information. The Investor has been furnished access to the
business records of the Company and such additional information and documents as
the Investor has requested and has been afforded an opportunity to ask questions
of and receive answers from representatives of the Company concerning the terms
and conditions of this Agreement, the purchase of the Units, the Company’s
business, operations, market potential, capitalization, financial condition and
prospects, and all other matters deemed relevant by the Investor. In
particular: (i) the Investor has received and carefully reviewed the
Company’s Annual Report on Form 10-KSB for the year ended September 30, 2007 and
its Report on Form 10-QSB for the quarter ended December 31, 2007 and
understands that the oil and gas business in which the Company is engaged is one
of extremely high risk; (ii) that the refusal of the Company’s single customer
to purchase gas during the first and last parts of 2007 has had a Material
Adverse Effect on the Company’s financial position and results of operations;
(iii) the Company’s single customer is not obligated to purchase any specified
amount of gas under the Gas Purchase Contract with that customer dated May 3,
2007; and (iv) it would be difficult if not impossible to find an alternative
customer to purchase the Company’s gas.
3.7. Brokerage. There
are no claims for brokerage commissions or finder’s fees or similar compensation
in connection with the transactions contemplated by this Agreement based on any
arrangement or agreement made by or on behalf of the Investor, and the Investor
agrees to indemnify and hold the Company harmless against any damages incurred
as a result of any such claims.
3.8. Address. The
Investor has provided the Company with its/his true and correct
address.
3.9. Legends. It
is understood that the certificates evidencing the Units may bear substantially
the following legends:
(a) “These
securities have not been registered under the Securities Act of
1933. 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 exemption from such registration (including
pursuant to Rule 144 of such Act).”
(b) Any
legend required by the laws of any applicable jurisdiction.
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9 -
4.
Conditions to an Investor’s
Obligations at the Closing. The obligations of an Investor
under Section 1 of this Agreement to purchase the Units at the Closing are
subject to the fulfillment on or before such Closing of each of the following
conditions unless waived by such Investor in the sole discretion of such
Investor:
4.1. Representations and
Warranties of the Company. The representations and warranties
of the Company contained in Section 2 shall be true and correct on and as of the
date hereof and on and as of the date of Closing with the same effect as though
such representations and warranties had been made on and as of the date of
Closing.
4.2. Performance. 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 before Closing.
4.3. Compliance
Certificate. The President and Chief Executive Officer of the
Company shall deliver to the Investors at Closing a certificate certifying that
the conditions specified in this Section 4 have been fulfilled (excluding
Section 4.5).
4.4. Qualifications. All
authorizations, approvals, or permits, if any, of any governmental authority or
regulatory body of the United States or of any state or municipality or other
governmental entity that are required in connection with the lawful issuance and
sale of the Units to the Investors pursuant to this Agreement shall have been
duly obtained and shall be effective on and as of Closing other than those which
are not required to be obtained before Closing, which the Company will obtain in
a timely manner.
4.5. Proceedings and
Documents. All corporate and other proceedings and approvals
in connection with the transactions contemplated at Closing and all documents
incident thereto shall be reasonably satisfactory in form and substance to the
Investors and the Investors’ counsel, and they shall have received all such
counterpart original and certified or other copies of such documents as they may
reasonably request.
4.6. Other
Agreements. On or prior to Closing, the Warrant Certificates
and Registration Rights Agreement, in the forms attached hereto as Exhibit ▇-▇, ▇▇▇▇▇▇▇ ▇-▇, and
Exhibit C,
respectively, shall have been executed and delivered by the parties thereto,
which shall continue to be in full force and effect as of Closing.
4.7. Secretary’s
Certificate. The Secretary of the Company shall deliver to the
Investors purchasing Units at Closing a Certificate, dated as of the Closing,
certifying that attached thereto is a true and complete copy of all resolutions
adopted by the Board of Directors of the Company authorizing the execution,
delivery and performance of each of the Transaction Documents, the issuance,
sale and delivery of Units and the Common Stock issuable upon the exercise of
the Warrants and that all such resolutions are in full force and effect and are
all the resolutions adopted in connection with the transactions contemplated by
the Transaction Documents.
4.8. Reservation of Conversion
Units. The shares of Common Stock issuable
upon
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10 -
exercise
of the Warrants described in Section 1.2 above shall have been duly authorized
and reserved for issuance.
5.
Conditions to the Company’s
Obligations at the Closing.
The
obligations of the Company under Section 1 of this Agreement are subject to the
fulfillment on or before Closing of each of the following conditions unless
waived by the Company:
5.1. Representations and
Warranties. The representations and warranties of such
Investor contained in Section 3 shall be true and correct on and as of the date
hereof and on and as of the date of the Closing with the same effect as though
such representations and warranties had been made on and as of the date of the
Closing.
5.2. Payment of Purchase
Price. Both Investors shall have delivered payment of the
aggregate purchase price of the Units to be purchased by it/him at the Closing
as set forth in Section 1.3 and Exhibit A
hereto.
5.3. Proceedings and
Documents. All corporate and other proceedings in connection
with the transactions contemplated at the Closing and all documents incident
thereto shall be reasonably satisfactory in form and substance to the Company
and the Company’s counsel, and they shall have received all such counterpart
original and certified or other copies of such documents as they may reasonably
request.
6.
Right of First
Refusal.
6.1. Company’s Right of First
Refusal. Before any Units (which shall be deemed to include
the Common Stock and Warrants issued and sold hereunder and any Common Stock
later acquired by an Investor upon exercise of the Warrants) held by an Investor
(a “Selling
Stockholder”) or any transferee (either being referred to herein as the
“Holder”) may
be sold or otherwise transferred (except transfer by gift or operation of law),
the Company and the other Investor shall each have a right of first refusal to
purchase the Units on the terms and conditions set forth in this Section (the
“Right of First
Refusal”).
6.2. Notice of Proposed
Transfer. The Selling Stockholder shall (a) deliver to the
Company and the other Investor a written notice (the “Notice”) stating: (i)
the Selling Stockholder’s bona fide intention to sell or otherwise transfer such
Units; (ii) the name of each proposed purchaser or other transferee (“Proposed
Transferee”); (iii) the number of Units to be transferred to the Proposed
Transferee; (iv) the bona fide cash price or other consideration for which the
Selling Stockholder proposes to transfer the Units (the “Offered Price”); and
(v) the material terms and conditions of the proposed transfer (the “Offer Terms”) and (b)
offer the Units at the Offered Price and on the Offer Terms to the Company and
the other Investor.
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11 -
6.3. Exercise
of Right of First Refusal. At any time within 15 days after
receipt of the Notice, the Company and/or its assignee(s) may, by giving written
notice to the Selling Stockholder and the other Investor, elect to purchase some
or all of the Units proposed to be transferred to any one or more of the
Proposed Transferees, at the purchase price and on the terms determined in
accordance with subsection 6.4 below. In the event the Company does
not elect to purchase all of such Units, the other Investor may by giving
written notice to the Company, and the Selling Stockholder, elect within 15 days
after the Company’s election to purchase some or all of such Units, at the
purchase price and on the terms determined in accordance with
subsection 6.4 below.
6.4. Purchase
Price. The purchase price (“Purchase Price”) for
the Units purchased by the Company or its assignee(s) and/or by the other
Investor under this Section shall be the Offered Price, and the terms and
conditions of the transfer shall be identical in all material respects to the
Offer Terms. If the Offered Price includes consideration other than
cash, the equivalent value of the non-cash consideration will be determined by
an independent third party valuation firm with expertise in valuing such
non-cash consideration chosen by the Board of Directors of the Company in good
faith.
6.5. Payment of Purchase
Price. Payment of the Purchase Price will be made in
accordance with the Offer Terms within thirty (30) days after delivery of the
written notice by the Company and the written notice of the other Investor as
set forth in Section 6.3.
6.6. Selling Stockholder’s Right
to Transfer. If the Units proposed in the Notice to be
transferred to a given Proposed Transferee are not purchased by the Company
and/or the other Investor as set forth in this Section, then the Selling
Stockholder may sell or otherwise transfer such Units to the Proposed Transferee
at the Offered Price or at a greater price and on the Offer Terms, provided that
such sale or other transfer be consummated within sixty (60) days after the date
of the Notice and provided further that any such sale or other transfer is
effected in accordance with applicable securities laws and the Proposed
Transferee agrees in writing that the provisions of this Section shall continue
to apply to the Units in the hands of such Proposed Transferee. If
the Units described in the Notice are not transferred to the Proposed Transferee
within such period, a new right shall be given to the Company and the other
Investor, and the Company and the other Investor shall be offered the Right of
First Refusal before any Units held by the Selling Stockholder may be sold or
otherwise transferred.
6.7. Exception for Affiliate
Transfers. Anything contrary contained in this Section
notwithstanding, the transfer of Units to an affiliate of an Investor (including
members of MNB) shall be exempt from the provisions of this
Section. In such case, the transferee or other recipient shall
receive and hold the Units transferred subject to the provisions of this
Agreement, and there shall be no further transfer of such Units except in
accordance with the terms of this Section 6.
6.8. Assignment of Right of First
Refusal. The First Refusal shall not be assignable
by any party hereto.
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12 -
6.9. Right
to Participate Pro Rata in Future Issuances. Both Investors
shall have a pro rata right, based on their percentage equity ownership in the
Company purchased pursuant to this Agreement and on a fully diluted basis to
participate in subsequent issuances of equity securities of the Company
(excluding those issuances under the Warrants being sold
hereunder. In addition, should any Investor choose not to purchase
its full pro rata share, the remaining Investor shall have the right to purchase
the equity securities not purchased by the other Investor.
7. Additional Covenants of the
Company.
7.1. Management and Information
Rights. The Investors will be granted access to Company
facilities and personnel during normal business hours and with reasonable
advance notification. The Company will promptly deliver to the
Investors annual and quarterly financial statements, and other information as
reasonably requested by such Investor if the Investor is subject to a customary
Confidentiality Agreement containing a standstill provision. MNB
shall have the right, in its sole discretion, to appoint one member or other
representative to observe operations or actively participate on the management
team for so long as MNB owns 20% or more of the Company’s outstanding Common
Stock. Any compensation for that member will be contingent on the
Company’s financial capability at that time and the Company shall use its best
efforts to provide appropriate compensation to such person with the amount of
such compensation to be determined by the Board based on its assessment of the
value of the person’s contribution to the Company.
7.2. Directors’ and Officers’
Insurance. The Company agrees to use its commercially
reasonable efforts to obtain adequate D&O insurance as soon as reasonably
practicable after Closing.
7.3. Board
Matters. ▇▇▇▇▇ shall take all actions necessary and desirable,
including voting all shares of capital stock of the Company over which he has
ownership or control, whether currently owned or later acquired, to appoint one
member designated by MNB to the Company’s three person Board of Directors for so
long as MNB owns 20% or more of the Company’s outstanding Common
Stock. ▇▇▇▇▇ shall take all actions necessary and desirable,
including voting all shares of capital stock of the Company over which he has
ownership or control to, whether currently owned or later acquired, to have the
Company’s Board of Directors increased to five (5) members, and to appoint a
second member designated by MNB to the Board, for so long as MNB owns 40% or
more of the Company’s outstanding Common Stock.
8.
Miscellaneous.
8.1. Certain Defined
Terms. As used in this Agreement, the term “Person” shall mean
an individual, corporation, trust, partnership, limited liability company, joint
venture, unincorporated organization, government agency or any agency or
political subdivision thereof, or other entity; and the terms “knowledge,”
“known,” “awareness,” “aware,” and similar expressions, when used with reference
to the Company, shall mean the actual knowledge or awareness of the executive
officers of the Company.
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13 -
8.2. Survival
of Covenants; Assignability of Rights. Subject to the last
clause of this Section, all covenants, agreements, representations and
warranties of the Company made herein and in the certificates, lists, Exhibits
or other written information delivered or furnished to the Investors in
connection with the Closing shall be deemed material and to have been relied
upon by the Investors, and, except as provided otherwise in this Agreement,
shall survive the delivery of the Units, and shall bind the Company’s successors
and assigns, whether so expressed or not; provided however, that all
representations and warranties made by the Company in Section 2 hereof shall
survive for a period of one year from the date of this Agreement.
8.3. Incorporation by
Reference. All Exhibits appended to this Agreement are herein
incorporated by reference and made a part hereof.
8.4. Parties in
Interest. All covenants, agreements, representations,
warranties and undertakings in this Agreement made by and on behalf of any of
the parties hereto shall bind and inure to the benefit of the respective
successors and permitted assigns of the parties hereto and to permitted
transferees of the Units whether so expressed or not.
8.5. Amendments and
Waivers. Except as set forth in this Agreement, changes in or
additions to this Agreement may be made, or compliance with any term, covenant,
agreement, condition or provision set forth herein may be omitted or waived
(either generally or in a particular instance and either retroactively or
prospectively) upon the written consent of the Company and the Investors, acting
or voting together as a single class based on the number of shares of Common
Stock then owned; provided, however, that no
Investor shall, without its consent, be materially adversely affected by any
amendment, change or waiver in which all Investors are not likewise adversely
affected.
8.6. Governing
Law. This Agreement shall be deemed a contract made under the
laws of the State of Colorado, together with the rights and obligations of the
parties hereunder, shall be construed under and governed by the laws of such
state.
8.7. Notices. All
notices, requests, consents and demands shall be in writing and shall be
personally delivered (effective upon receipt), mailed, postage prepaid
(effective three business days after dispatch), telecopied or telegraphed
(effective upon receipt of the telecopy in complete, readable form), or sent via
a reputable overnight courier service (effective the following business day), to
the Company at:
▇.▇.
▇▇▇▇▇, President
Monument
Resources, Inc.
▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇
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14 -
with a
copy sent at the same time and by the same means to:
▇▇▇▇▇▇ ▇.
▇▇▇▇, Esq.
▇▇▇▇▇
& ▇▇▇▇▇▇, P.C.
▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Tel: (▇▇▇)
▇▇▇-▇▇▇▇
Fax: (▇▇▇)
▇▇▇-▇▇▇▇
or to MNB
Energy, LLC at:
MNB
Energy, LLC
▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, #▇▇▇
▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Tel.: (▇▇▇)
▇▇▇-▇▇▇▇
Fax: (▇▇▇)
▇▇▇-▇▇▇▇
with a
copy sent at the same time and by the same means to:
▇▇▇▇▇,
▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇, Esq.
Tel: (▇▇▇)
▇▇▇-▇▇▇▇
Fax: (▇▇▇)
▇▇▇-▇▇▇▇
or such
other address as is set forth on the Exhibits hereto, as the case may be, or as
may be furnished in writing to the other parties hereto.
8.8. Effect of
Headings. The section and paragraph headings herein are for
convenience only and shall not affect the construction hereof.
8.9.
Entire
Agreement. This Agreement and the Exhibits hereto together
with any other agreement referred to herein (the “Additional
Agreements”) constitute the entire agreement among the Company and the
Investors with respect to the subject matter hereof. This Agreement
and such Additional Agreements supersede all prior understandings and agreements
between the parties, whether written or oral, with respect to the Units
purchased hereunder and the subject matter hereof.
8.10. Severability. In
case any one or more of the provisions contained in this Agreement shall for any
reason be held to be invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect any other provision
of this Agreement and such invalid, illegal and unenforceable provision shall be
reformed and construed so that it will be valid, legal, and enforceable to the
maximum extent permitted by law.
8.11. Counterparts. This
Agreement may be executed in counterparts, all of which together shall
constitute one and the same agreement.
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15 -
IN WITNESS WHEREOF, the Company and the
Investors have executed this Unit Purchase Agreement as of the day and year
first above written.
COMPANY:
MONUMENT RESOURCES, INC., a Colorado
corporation
By: /s/ ▇.▇.
▇▇▇▇▇
Name: ▇.▇.
▇▇▇▇▇
Title: President
INVESTORS:
MNB ENERGY, LLC, a Colorado limited
liability company
By: /s/ ▇▇▇▇
▇▇▇▇▇
Its: Manager
▇.▇. ▇▇▇▇▇, INDIVIDUALLY
/s/ ▇. ▇.
▇▇▇▇▇
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16 -
EXHIBIT
A
|
Name of
Investor
|
Number of
Units*
|
Proceeds*
|
||||||
|
MNB
Energy, LLC
|
2,000,000 | $ | 500,000 | |||||
|
▇.▇.
▇▇▇▇▇
|
400,000 | 100,000 | ||||||
| 2,400,000 | $ | 600,000 | ||||||
__________________
*The rights and obligations of the two
Investors under the Agreement are several and not joint.
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