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EXHIBIT 10.1
 

 
LAREDO OIL, INC.
 
NOTE AND WARRANT PURCHASE AGREEMENT
 
This NOTE AND WARRANT PURCHASE AGREEMENT (this “Agreement”) is made as of
___________ (the “Effective Date”), by and among LAREDO OIL, INC. a Delaware
corporation (the “Company”), and the parties listed on the Schedule of Investors
attached to this Agreement as Exhibit A (individually an “Investor” and
collectively the “Investors”).
 
RECITALS
 
A.           The Company is currently in need of funds to help finance its
operations until the closing of its next round of equity financing.
 
B.           The Investors are willing to advance funds to the Company in
exchange for the issuance to them of (i) certain subordinated convertible
promissory notes evidencing the Company’s obligation to repay the Investors’
loans of the advanced funds and (ii) certain warrants to purchase shares of the
Company’s capital stock, all as provided in this Agreement.
 
NOW THEREFORE, the parties hereby agree as follows:
 
1.           PURCHASE AND SALE OF NOTES AND WARRANTS.
 
1.1           Note Purchase.  Subject to the terms and conditions of this
Agreement, the Company agrees to sell to each Investor, and each Investor
severally agrees to purchase from the Company, a Subordinated Convertible
Promissory Note in the form attached to this Agreement as Exhibit B
(individually a “Note” and collectively the “Notes”) in the principal amount set
forth opposite such Investor’s name on Exhibit A.
 
1.2           Warrant Issuance.  Subject to the terms and conditions of this
Agreement, the Company further agrees to sell and issue to each Investor or his
designee a warrant to purchase shares of the Company’s capital stock (“Warrant
Stock”) in the form attached hereto as Exhibit C (individually a “Warrant” and
collectively the “Warrants”) at the price set forth opposite such Investor’s
name on Exhibit A.
 
2.           CLOSING.
 
2.1           The Initial Closing.  The purchase and sale of the Notes in the
aggregate principal amount of up to $300,000 will take place remotely via the
exchange of documents and signatures, at 10:00 a.m. Pacific Time on the
Effective Date, or at such other time and place as may be mutually agreed upon
by the Company and the Investors who have agreed to purchase a majority of the
aggregate principal amount of the Notes listed on Exhibit A (which time and
place are referred to as the “Initial Closing”).  At the Initial Closing, each
Investor will deliver to the Company payment in full for the Note and the
Warrant in the amount set forth opposite such Investor’s name on Exhibit A,
which such Investor agrees to purchase at the Initial Closing by wire transfer
of funds to the Company (see Exhibit E for instructions).  At the Initial
Closing, the Company will deliver to each Investor a duly executed Note in the
principal amount set forth opposite such Investor’s name on Exhibit A and a duly
executed Warrant.
 
3.           REPRESENTATIONS AND WARRANTIES OF THE COMPANY.  The Company hereby
represents and warrants to each Investor that, except as set forth in the
Schedule of Exceptions (the “Schedule of Exceptions”) attached to this Agreement
as Exhibit D (which Schedule of Exceptions shall be deemed to be representations
and warranties to the Investors by the Company under this Section 3), the
statements in the following paragraphs of this Section 3 are all true and
complete as of immediately prior to the Closing:
 
 
 
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3.1           Organization, Good Standing and Qualification.  The Company has
been duly incorporated and organized, and is validly existing in good standing,
under the laws of the State of Delaware.  The Company has the corporate power
and authority to own and operate its properties and assets and to carry on its
business as currently conducted and as presently proposed to be conducted.  The
Company is duly qualified to do business as a foreign corporation in good
standing in each jurisdiction in which the failure to be so qualified would have
a material adverse effect on the business, operations, assets (intangible or
otherwise), properties, liabilities, financial condition, or prospects of the
Company (a “Material Adverse Effect”).
 
3.2           Due Authorization.  All corporate action on the part of the
Company’s directors and shareholders necessary for the authorization, execution,
delivery of, and the performance of all obligations of the Company under, this
Agreement, the Notes and the Warrants has been taken or will be taken prior to
the Closing, and this Agreement constitutes, and the Notes and Warrants, when
executed and delivered, will constitute, valid and legally binding obligations
of the Company, enforceable in accordance with their respective terms, except as
may be limited by (i) applicable bankruptcy, insolvency, reorganization or other
laws of general application relating to or affecting the enforcement of
creditor’s rights generally and (ii) the effect of rules of law governing the
availability of equitable remedies.
 
3.3           Corporate Power.  The Company has the corporate power and
authority (i) to execute and deliver this Agreement and the Notes and Warrants
to be purchased by the Investors hereunder, (ii) to issue the Notes and the
Warrants, and (iii) to carry out and perform all its obligations under this
Agreement and the Notes and Warrants.
 
3.4           Valid Issuance.
 
(a)           The Notes and the shares of the Company’s capital stock issuable
upon the conversion of the Notes (the “Conversion Stock”), the Warrants and the
Warrant Stock, when issued, sold and delivered in accordance with the terms of
this Agreement, the Notes and the Warrants for the consideration provided for
herein and therein, will be duly and validly issued, fully paid and
nonassessable.
 
(b)           Based in part on the representations made by the Investors in
Section 4 hereof, the offer and sale of the Notes and the Warrants solely to the
Investors in accordance with this Agreement are exempt from the registration and
prospectus delivery requirements of the U.S. Securities Act of 1933, as amended
(the “1933 Act”) and the securities registration and qualification requirements
of the currently effective provisions of the securities laws of the states in
which the Investors are resident based upon their addresses set forth on the
Schedule of Investors attached hereto as Exhibit A.
 
3.5           Capitalization.  The capitalization of the Company immediately
prior to the Initial Closing consists of the following:
 
(a)           Common Stock.  A total of 90,000,000 authorized shares of common
stock at .0001 par value per share (the “Common Stock”), of which 50,000,013
shares are issued and outstanding.
 
(b)           Preferred Stock.  A total of 10,000,000 authorized shares of
preferred stock at .0001 par value per share (the “Preferred Stock”), of which
no shares are issued and outstanding.
 
 
 
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(c)           Options, Warrants, Reserved Shares.  There are no outstanding
options, warrants, rights (including conversion or preemptive rights) or
agreements for the purchase or acquisition from the Company of any shares of its
capital stock or any securities convertible into or ultimately exchangeable or
exercisable for any shares of the Company’s capital stock.  No shares of the
Company’s outstanding capital stock, or stock issuable upon exercise or exchange
of any outstanding options, warrants or rights, or other stock issuable by the
Company, are subject to any preemptive rights, rights of first refusal or other
rights to purchase such stock (whether in favor of the Company or any other
person), pursuant to any agreement or commitment of the Company.
 
3.6           Compliance with Law.  To the Company’s knowledge, the Company is
in compliance with all applicable statutes, laws, regulations and executive
orders of the United States of America and all states, foreign countries or
other governmental bodies and agencies having jurisdiction over the Company’s
business or properties where such violation would have a material and adverse
impact on the Company’s business.  The Company has not received any notice of
any violation of any such statute, law, regulation or order that has not been
remedied prior to the date hereof.  The execution, delivery and performance of
this Agreement and the Notes and Warrants and the consummation of the
transactions contemplated hereby or thereby will not result in any such
violation.
 
3.7           Permits.  The Company has all franchises, permits, business
licenses, and any similar authority necessary for the conduct of its business as
now being conducted by it, the lack of which could have a Material Adverse
Effect, and believes it can obtain, without undue burden or expense, any similar
authority for the conduct of its business as presently planned to be
conducted.  The Company is not in default in any material respect under any of
such franchises, permits, business licenses or other similar authority.
 
3.8           Compliance with Documents.  The Company is not in violation or
default of any provisions of its Articles of Incorporation or Bylaws, both as
amended to-date.  The execution, delivery and performance of this Agreement and
the Notes and Warrants and the consummation of the transactions contemplated
hereby or thereby will not (a) be in conflict with or result in a violation or
breach of, with or without the passage of time or the giving of notice or both,
the Company’s Articles of Incorporation or Bylaws, or any judgment, order or
decree of any court or arbitrator to which the Company is a party or is subject,
or (b) constitute an event that results in the creation of any lien, charge or
encumbrance upon any asset of the Company.
 
3.9           Litigation.  There is no action, suit, proceeding, claim,
arbitration or investigation pending (or, to the Company’s knowledge, currently
threatened) against the Company, its activities or its properties before any
court or governmental agency.
 
4.           REPRESENTATIONS, WARRANTIES AND CERTAIN AGREEMENTS OF
INVESTORS.  Each Investor hereby represents and warrants to, and agrees with,
the Company, that:
 
4.1           Authorization.  This Agreement constitutes such Investor’s valid
and legally binding obligation, enforceable in accordance with its terms except
as may be limited by (i) applicable bankruptcy, insolvency, reorganization or
other laws of general application relating to or affecting the enforcement of
creditors’ rights generally and (ii) the effect of rules of law governing the
availability of equitable remedies.  Each Investor represents that such Investor
has full power and authority to enter into this Agreement.
 
4.2           Purchase for Own Account.  The Notes and the Conversion Stock and
the Warrants and the Warrant Stock, and the Company’s Common Stock issuable upon
conversion of such Conversion Stock and Warrant Stock (collectively, the
“Securities”) will be acquired for investment for such Investor’s own account,
not as a nominee or agent, and not with a view to the public resale or
distribution thereof within the meaning of the 1933 Act, and such Investor has
no present intention of selling, granting any participation in, or otherwise
distributing the same.
 
 
 
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4.3           Disclosure of Information.  Such Investor has received or has had
full access to all the information it considers necessary or appropriate to make
an informed investment decision with respect to the Securities.  Such Investor
further has had an opportunity to ask questions and receive answers from the
Company regarding the terms and conditions of the offering of the Securities and
to obtain additional information (to the extent the Company possessed such
information or could acquire it without unreasonable effort or expense)
necessary to verify any information furnished to such Investor or to which such
Investor had access.  The foregoing, however, does not in any way limit or
modify the representations and warranties made by the Company in Section 3.
 
4.4           Investment Experience.  Such Investor understands that the
purchase of the Securities involves substantial risk.  Such Investor (i) has
experience as an investor in securities of companies in the development stage
and acknowledges that such Investor is able to fend for itself, can bear the
economic risk of such Investor’s investment in the Securities and has such
knowledge and experience in financial or business matters that such Investor is
capable of evaluating the merits and risks of this investment in the Securities
and protecting its own interests in connection with this investment and/or
(ii) has a preexisting personal or business relationship with the Company and
certain of its officers, directors or controlling persons of a nature and
duration that enables such Investor to be aware of the character, business
acumen and financial circumstances of such persons.
 
4.5           Accredited Investor Status.  Such Investor is an “accredited
investor” within the meaning of Regulation D promulgated under the 1933 Act.
 
4.6           Restricted Securities.  Such Investor understands that the
Securities are characterized as “restricted securities” under the 1933 Act and
Rule 144 promulgated thereunder inasmuch as they are being acquired from the
Company in a transaction not involving a public offering, and that under the
1933 Act and applicable regulations thereunder such securities may be resold
without registration under the 1933 Act only in certain limited
circumstances.  In this connection, such Investor is familiar with Rule 144, as
presently in effect, and understands the resale limitations imposed thereby and
by the 1933 Act.  Such Investor understands that the Company is under no
obligation to register any of the securities sold hereunder.  Such Investor
understands that a very limited public market now exists for any of the
Securities and that it is uncertain whether a robust public market will ever
exist for the Securities.
 
4.7           No Solicitation.  At no time was the Investor presented with or
solicited by any publicly issued or circulated newspaper, mail, radio,
television or other form of general advertising or solicitation in connection
with the offer, sale and purchase of the Securities.
 
4.8           Further Limitations on Disposition.  Without in any way limiting
the representations set forth above, such Investor 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 1933
Act covering such proposed disposition and such disposition is made in
accordance with such registration statement; or
 
(b)           such Investor shall have notified the Company of the proposed
disposition, and shall have furnished the Company with a statement of the
circumstances surrounding the proposed disposition, and, at the expense of such
Investor or its transferee, with an opinion of counsel, reasonably satisfactory
to the Company, that such disposition will not require registration of such
securities under the 1933 Act.
 
 
 
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Notwithstanding the provisions of paragraphs (a) and (b) above, no such
registration statement or opinion of counsel shall be required:  (i) for any
transfer of any Notes or Conversion Stock or Warrants or Warrant Stock in
compliance with Rule 144 or Rule 144A; (ii) for any transfer of any Notes or
Conversion Stock or Warrants or Warrant Stock by an Investor that is a
partnership or a corporation to (A) a partner of such partnership or shareholder
of such corporation, (B) a controlled affiliate of such partnership or
corporation, (C) a retired partner of such partnership who retires after the
date hereof, (D) the estate of any such partner or shareholder; or (iii) for the
transfer by gift, will or in testate succession by any Investor to his or her
spouse or lineal descendants or ancestors or any trust for any of the foregoing;
provided that in each of the foregoing cases the transferee agrees in writing to
be subject to the terms of this Section 4 to the same extent as if the
transferee were an original Investor hereunder.
 
4.9           Legends.  Such Investor understands and agrees that the
certificates evidencing the Securities will bear legends substantially similar
to those set forth below in addition to any other legend that may be required by
applicable law, by the Company’s Articles of Incorporation or Bylaws, or by any
agreement between the Company and such Investor:
 
(a)              THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR UNDER THE
SECURITIES LAWS OF APPLICABLE STATES.  THESE SECURITIES ARE SUBJECT TO
RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD
EXCEPT AS PERMITTED UNDER THE ACT AND THE APPLICABLE STATE SECURITIES LAWS,
PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM.  INVESTORS SHOULD BE AWARE THAT
THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN
INDEFINITE PERIOD OF TIME.  THE ISSUER OF THESE SECURITIES MAY REQUIRE AN
OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER TO THE
EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE ACT AND
ANY APPLICABLE STATE SECURITIES LAWS.
 
(b)              Any legend required by the laws of the State of Delaware or any
other state securities laws.
 
The legend set forth in (a) above shall be removed by the Company from any
certificate evidencing the Securities upon delivery to the Company of an opinion
of counsel, reasonably satisfactory to the Company, that a registration
statement under the 1933 Act is at that time in effect with respect to the
legended security or that such security can be freely transferred in a public
sale (other than pursuant to Rule 144 or Rule 145 under the 1933 Act) without
such a registration statement being in effect and that such transfer will not
jeopardize the exemption or exemptions from registration pursuant to which the
Company issued the Securities.
 
5.           CONDITIONS TO CLOSING.
 
5.1           Conditions to Investors’ Obligations.  The obligations of each
Investor under Section 2 of this Agreement are subject to the fulfillment or
waiver, on or before the applicable Closing, of each of the following
conditions, the waiver of which shall not be effective against any Investor who
does not consent to such waiver, which consent may be given by written, oral or
telephone communication to the Company, its counsel or to special counsel to the
Investors:
 
(a)           Except as otherwise specifically set forth in Section 3 hereof,
each of the representations and warranties of the Company contained in Section 3
shall be true and correct on and as of such Closing with the same effect as
though such representations and warranties had been made on and as of the date
of such Closing;
 
 
 
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(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 before such Closing and shall have
obtained all approvals, consents and qualifications necessary to complete the
purchase and sale described herein; and
 
5.2           Condition to Company’s Obligations.  The obligations of the
Company to each Investor under this Agreement are subject to the fulfillment or
waiver on or before the applicable Closing of the following condition by such
Investor:
 
(a)           Each of the representations and warranties of such Investor
contained in Section 4 shall be true and correct on the date of such Closing
with the same effect as though such representations and warranties had been made
on and as of such Closing;
 
(b)           such Investor 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 such Closing and
shall have obtained all approvals, consents and qualifications necessary to
complete the purchase and sale described herein; and
 
6.           GENERAL PROVISIONS.
 
6.1           Survival of Warranties.  The representations, warranties and
covenants of the Company and the Investors contained in or made pursuant to this
Agreement shall survive the execution and delivery of this Agreement and shall
in no way be affected by any investigation of the subject matter thereof made by
or on behalf of any of the Investors or the Company, as the case may be.
 
6.2           Successors and Assigns.  The terms and conditions of this
Agreement shall inure to the benefit of and be binding upon the respective
successors and assigns of the parties.
 
6.3           Governing Law.  This Agreement shall be governed by and construed
under the internal laws of the State of Delaware.
 
6.4           Counterparts.  This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
 
6.5           Headings.  The headings and captions used in this Agreement are
used only for convenience and are not to be considered in construing or
interpreting this Agreement.  All references in this Agreement to sections,
paragraphs, exhibits and schedules shall, unless otherwise provided, refer to
sections and paragraphs hereof and exhibits and schedules attached hereto, all
of which exhibits and schedules are incorporated herein by this reference.
 
6.6           Notices.  Unless otherwise provided, any notice required or
permitted under this Agreement shall be given in writing and shall be deemed
effectively given (a) at the time of personal delivery, if delivery is in
person; (b) one business day after deposit with an express overnight courier for
United States deliveries, or two business days after such deposit for deliveries
outside of the United States, with proof of delivery from the courier requested;
or (c) three business days after deposit in the United States mail by certified
mail (return receipt requested) for United States deliveries when addressed to
the Investor to be notified at the address indicated for such party on Exhibit A
or, in the case of the Company, at 9452 East Heritage Trail Drive; Scottsdale,
Arizona 85255, or at such other address as any party may designate by giving ten
days’ advance written notice to all other parties.
 
 
 
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6.7           No Finder’s Fees.  Each Investor agrees to indemnify and to hold
harmless the Company from any liability for any commission or compensation in
the nature of a finders’ or broker’s fee (and any asserted liability) for which
the Investor or any of its officers, partners, employees, or representatives is
responsible.  The Company agrees to indemnify and hold harmless each Investor
from any liability for any commission or compensation in the nature of a
finder’s or broker’s fee (and any asserted liability) for which the Company or
any of its officers, employees or representatives is responsible.
 
6.8           Amendments and Waivers.  Any term of this Agreement, the Notes,
and the Warrants may be amended and the observance of any term of this Agreement
may be waived (either generally or in a particular instance and either
retroactively or prospectively), only with the written consent of the Company
and the holders of Notes representing at least 60% of the aggregate principal
amount of the Notes at the time outstanding; provided, however, that New
Investors may become parties to this Agreement in accordance with Section 2.3
without any amendment of this Agreement or any consent or approval of any
Investor.  Any amendment or waiver effected in accordance with this Section 6.8
shall be binding upon each holder of Notes or Warrants at the time outstanding,
each future holder of such securities, and the Company.
 
6.9           Severability.  If one or more provisions of this Agreement are
held to be unenforceable under applicable law, such provision(s) shall be
excluded from this Agreement and the balance of the Agreement shall be
interpreted as if such provision(s) were so excluded and shall be enforceable in
accordance with its terms.
 
6.10           Entire Agreement.  This Agreement, together with all exhibits and
schedules hereto and the Notes and Warrants issued pursuant hereto, constitutes
the entire agreement and understanding of the parties with respect to the
subject matter hereof and supersedes any and all prior negotiations,
correspondence, agreements, understandings duties or obligations between the
parties with respect to the subject matter hereof.
 
6.11           Further Assurances.  From and after the date of this Agreement,
upon the request of any Investor or the Company, the Company and the Investors
shall execute and deliver such instruments, documents or other writings as may
be reasonably necessary or desirable to confirm and carry out and to effectuate
fully the intent and purposes of this Agreement.
 
[Signature Pages Follow]
 
 
 
 
 
 
 
 
 
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first written above.
 
THE COMPANY
LAREDO OIL, INC.
By:
 
Name:
Bradley E. Sparks
Title:
Chief Financial Officer

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first written above.
 
THE INVESTORS
By:
 
Name:
 
Title:
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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Attachments:
 
Exhibit A 
-           Schedule of Investors

Exhibit B 
-           Form of Note

Exhibit C 
-           Form of Warrant

Exhibit D 
-           Schedule of Exceptions

Exhibit E 
-           Wire Instructions

 
 
 
 
 
 
 

 
 

 
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EXHIBIT A
 
Schedule of Investors
 
 

Name Address $Amount Warrant Price       $2.00

 
 
 
 
 
 
 
 
 
 
 

 
A-1

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EXHIBIT D

Schedule of Exceptions
 
None.
 

 

 
D-1

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EXHIBIT E

Wire Instructions
 
Wells Fargo Bank
 
Routing Number:  _____________
 
Account:  _________________
 
For the Benefit of:  Laredo Oil, Inc.
 
NOTIFY UPON RECEIPT OF FUNDS:

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
E-1

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