SECURITIES PURCHASE AGREEMENT

 

SECURITIES PURCHASE AGREEMENT (the " Agreement "), dated as of March , 2014, by
and among PROPELL TECHNOLOGIES GROUP, INC., a Delaware corporation, with
headquarters located at 1701 Commerce Street, Houston, Texas 77002 (the
"Company"), and the person listed on the signature page hereof ( “Buyer”).

 

WHEREAS:

 

A.           The Company and the Buyer are executing and delivering this
Agreement in reliance upon the exemption from securities registration afforded
by Section 4(a)(2) under the Securities Act of 1933, as amended (the “ 1933 Act
”).

 

B.          The Company has designated 500,000 shares of its Preferred Stock as
Series B Convertible Preferred Stock, with such terms and preferences as set
forth in the Certificate of Designation, Rights and Preferences of the Series B
Convertible Preferred Stock, in the form attached hereto as Exhibit A (the
“Certificate of Designation”) and may sell in an offering all 500,000 shares of
Series B Convertible Preferred Stock.

 

C.  The Buyer wishes to purchase, and the Company wishes to sell, upon the terms
and conditions stated in this Agreement the number of Series B convertible
preferred stock (the “Preferred Shares” of the “Securities”) pursuant to the
Certificate of Designation, which Preferred Shares are convertible into shares
of the Company’s Common Stock (the “Common Stock” and, as converted, are herein
referred to as the “Conversion Shares”).

 

D. On February 6, 2014, the Buyer deposited $100,000 with the Company based upon
an agreement with the Company that the Company would issue Shares to the Buyer
at a price of $10 per Share, and the Company agreed to issue such Shares based
upon the Buyer’s agreement to invest an aggregate of $750,000 in the Company on
or prior to March 31, 2014.

 

E. The parties now desire to memorialize their agreement.

 

NOW, THEREFORE, the Company and each Buyer hereby agree as follows:

 

1.   PURCHASE AND SALE OF PREFERRED SHARES.

 

(a)   Purchase of the Shares.

 

(i)    The Shares.   The Buyer hereby agrees to purchase from the Company and
the Company agrees to sell, an aggregate of $750,000 of the Preferred Shares, as
shown on the signature page of this Agreement, at the purchase price of Ten
Dollars ($10.00) per Share (the “Purchase Price”) on March 31, 2014 (the
“Closing”)

 

(b)   Form of Payment. Prior to the date hereof, the Buyer deposited Five
Hundred Fifty Thousand Dollars ($550,000) with the Company based upon an
agreement with the Company that the Company would issue Preferred Shares to
Buyer at a price of $10 per Preferred Share upon receipt from Buyer of an
additional Two Hundred Thousand Dollars $200,000), which Buyer agreed to pay by
March 31, 2014. The Company’s agreement to issue the Preferred Shares was based
upon the Buyer’s agreement to acquire an aggregate of $750,000 of Preferred
Shares in the Company by March 31, 2014. The Company hereby acknowledges receipt
of Five Hundred Fifty Thousand Dollars ($550,000) in consideration of the
Preferred Shares to be issued at the Closing and upon receipt of such additional
Two Hundred Thousand Dollars ($200,000) shall deliver to Buyer the Preferred
Shares, duly executed on behalf of the Company and registered in the name of
such Buyer or its designee. The Buyer shall pay the balance of the Purchase
Price to the Company for the Preferred Shares to be issued and sold to Buyer at
Closing, by wire transfer of immediately available funds in accordance with the
Company's written wire instructions and upon receipt thereof the Company shall
deliver to Buyer the Preferred Shares, duly executed on behalf of the Company
and registered in the name of such Buyer or its designee.

 

 

 

  

2.  BUYER'S REPRESENTATIONS AND WARRANTIES. Buyer represents and warrants that:

 

(a)    Organization; Authority. If an entity, Buyer is an entity duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
organization with the requisite power and authority to enter into and to
consummate the transactions contemplated by this Agreement. If an individual,
Buyer has the requisite power and authority to enter into and to consummate the
transactions contemplated by the Agreement. The execution, delivery and
performance by Buyer of the transactions contemplated by this Agreement has been
duly authorized by all necessary action on the part of such Buyer. This
Agreement has been duly executed by Buyer, and when delivered by Buyer in
accordance with the terms hereof, will constitute the valid and legally binding
obligation of Buyer, enforceable against it in accordance with its terms, except
as such enforceability may be limited by general principles of equity or
applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or
similar laws relating to, or affecting generally, the enforcement of applicable
creditors' rights and remedies.

 

(b) No Conflicts. The execution, delivery and performance by Buyer of this
Agreement and the consummation by Buyer of the transactions contemplated hereby
will not (i) result in a violation of the organizational documents of Buyer or
(ii) conflict with, or constitute a default (or an event which with notice or
lapse of time or both would become a default) under, or give to others any
rights of termination, amendment, acceleration or cancellation of, any
agreement, indenture or instrument to which Buyer is a party, or (iii) result in
a violation of any law, rule, regulation, order, judgment or decree (including
federal and state securities laws) applicable to Buyer, except in the case of
clauses (ii) and (iii) above, for such conflicts, defaults, rights or violations
which would not, individually or in the aggregate, reasonably be expected to
have a material adverse effect on the ability of Buyer to perform its
obligations hereunder.

 

(c)  Accredited Investor. At the time the Buyer was offered the Securities, it
was, and as of the date hereof it is, and it will be: an “accredited investor”
as defined in Rule 501 under the 1933 Act.

 

(d)   No Public Sale or Distribution. Buyer (i) is acquiring the Securities and
(ii) upon conversion of the Preferred Shares, will acquire the Conversion Shares
issuable upon conversion and exercise thereof, in each case, for its own account
and not with a view towards, or for resale in connection with, the public sale
or distribution thereof in violation of applicable securities laws, except
pursuant to sales registered or exempted under the 1933 Act; provided, however,
by making the representations herein, such Buyer does not agree, or make any
representation or warranty, to hold any of the Securities for any minimum or
other specific term and reserves the right to dispose of the Securities at any
time in accordance with or pursuant to a registration statement or an exemption
under the 1933 Act. Such Buyer does not presently have any agreement or
understanding, directly or indirectly, with any Person to distribute any of the
Securities in violation of applicable securities laws.  The Buyer has no
intention to distribute either directly or indirectly any of the Securities in
the.

 

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(e)   Reliance on Exemptions. Such Buyer understands that the Securities are
being offered and sold to it in reliance on specific exemptions from the
registration requirements of United States federal and state securities laws and
that the Company is relying in part upon the truth and accuracy of, and such
Buyer’s compliance with, the representations, warranties, agreements,
acknowledgments and understandings of such Buyer set forth herein in order to
determine the availability of such exemptions and the eligibility of such Buyer
to acquire the Securities.

 

(f)  Information. Such Buyer and its advisors, if any, have been furnished with
all materials relating to the business, finances and operations of the Company
and materials relating to the offer and sale of the Securities which have been
requested by such Buyer.  Such Buyer and its advisors, if any, have been
afforded the opportunity to ask questions of the Company. Such Buyer understands
that its investment in the Securities involves a high degree of risk. Such Buyer
has sought such accounting, legal and tax advice as it has considered necessary
to make an informed investment decision with respect to its acquisition of the
Securities.

 

(g)   No Governmental Review.  Such Buyer understands that no United States
federal or state agency or any other government or governmental agency has
passed on or made any recommendation or endorsement of the Securities or the
fairness or suitability of the investment in the Securities nor have such
authorities passed upon or endorsed the merits of the offering of the
Securities.

 

(h)  Transfer or Resale. Such Buyer understands that: (i) the Securities have
not been and are not being registered under the 1933 Act or any state securities
laws, and may not be offered for sale, sold, assigned or transferred unless (A)
subsequently registered thereunder, (B) such Buyer shall have delivered to the
Company (if requested by the Company) an opinion of counsel to such Buyer, in a
form reasonably acceptable to the Company, to the effect that such Securities to
be sold, assigned or transferred may be sold, assigned or transferred pursuant
to an exemption from such registration (it being acknowledged that an opinion
issued by Gracin & Marlow, LLP shall be acceptable to the Company), or (C) such
Buyer provides the Company with reasonable assurance that such Securities can be
sold, assigned or transferred pursuant to Rule 144 or Rule 144A promulgated
under the 1933 Act (or a successor rule thereto) (collectively, “ Rule 144 ”);
(ii) any sale of the Securities made in reliance on Rule 144 may be made only in
accordance with the terms of Rule 144, and further, if Rule 144 is not
applicable, any resale of the Securities under circumstances in which the seller
(or the Person (as defined below) through whom the sale is made) may be deemed
to be an underwriter (as that term is defined in the 1933 Act) may require
compliance with some other exemption under the 1933 Act or the rules and
regulations of the SEC promulgated thereunder; and (iii) neither the Company nor
any other Person is under any obligation to register the Securities under the
1933 Act or any state securities laws or to comply with the terms and conditions
of any exemption thereunder.

 

(i)  Certain Trading Activities. Such Buyer has not directly or indirectly, nor
has any Person acting on behalf of or pursuant to any understanding with such
Buyer, engaged in any transactions in the securities of the Company (including,
without limitation, any Short Sales (as defined below) involving the Company’s
securities) during the period commencing as of the time that such Buyer was
first contacted by the Placement Agent (as defined below) regarding the specific
investment in the Company contemplated by this Agreement and ending immediately
prior to the execution of this Agreement by such Buyer (it being understood and
agreed that for all purposes of this Agreement, and, without implication that
the contrary would otherwise be true, that neither transactions nor purchases
nor sales shall include the location and/or reservation of borrowable shares of
Common Stock). “Short Sales” means all “short sales” as defined in Rule 200
promulgated under Regulation SHO under the Securities Exchange Act of 1934, as
amended (the “1934 Act”).

 

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(j)   Experience of Such Buyer. Such Buyer, either alone or together with its
representatives, has such knowledge, sophistication and experience in business
and financial matters so as to be capable of evaluating the merits and risks of
the prospective investment in the Securities, and has so evaluated the merits
and risks of such investment.  Such Buyer is able to bear the economic risk of
an investment in the Securities and, at the present time, is able to afford a
complete loss of such investment.

 

(k)  General Solicitation.  Such Buyer is not purchasing the Securities as a
result of any advertisement, article, notice or other communication regarding
the Securities published in any newspaper, magazine or similar media or
broadcast over television or radio or presented at any seminar or any other
general solicitation or general advertisement.

 

3.   REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company represents and
warrants to each Buyer that, as of the date hereof and the date of each Closing
(which representations and warranties shall be deemed to apply, where
appropriate, to each Subsidiary (as defined below) of the Company):

 

(a)                Reporting Company Status. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware, and has the requisite corporate power to own its properties and to
carry on its business as now being conducted. The Company is duly qualified as a
foreign corporation to do business and is in good standing in each jurisdiction
where the nature of the business conducted or property owned by it makes such
qualification necessary other than those jurisdictions in which the failure to
so qualify would not have a material and adverse effect on the business,
operations, properties, prospects or condition (financial or otherwise) of the
Company. The Company has registered its Common Stock pursuant to Section 12 of
the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the
Common Stock is listed and traded on the OTC-QB.

 

(b)               Authorized Shares. The Company has authorized and reserved for
issuance, free from preemptive rights, shares of Common Stock equal to the
number of Conversion Shares. The Preferred Shares and the Conversion Shares have
been duly authorized and, when issued, respectively, will be duly and validly
issued, fully paid and non-assessable and will not subject the holder thereof to
personal liability by reason of being such holder. The Preferred Shares have the
rights, privileges and preferences set forth on the Certificate of Designations.

(c)                Securities Purchase Agreement. This Agreement and the
transactions contemplated hereby have been duly and validly authorized by the
Company, this Agreement is a valid and binding agreement of the Company
enforceable in accordance with their respective terms, subject as to
enforceability to general principles of equity and to bankruptcy, insolvency,
moratorium, and other similar laws affecting the enforcement of creditors’
rights generally.

 

(d)               Non-contravention. The execution and delivery of this
Agreement by the Company, the issuance of the Securities, and the consummation
by the Company of the other transactions contemplated by this Agreement do not
and will not conflict with or result in a breach by the Company of any of the
terms or provisions of, or constitute a default under (i) the certificate of
incorporation or by-laws of the Company, (ii) any indenture, mortgage, deed of
trust, or other material agreement or instrument to which the Company is a party
or by which it or any of its properties or assets are bound, (iii) to its
knowledge, any existing applicable law, rule, or regulation or any applicable
decree, judgment, or (iv) to its knowledge, order of any court, United States
federal or state regulatory body, administrative agency, or other governmental
body having jurisdiction over the Company or any of its properties or assets,
except such conflict, breach or default which would not have a material adverse
effect on the transactions contemplated herein. The Company is not in violation
of any material laws, governmental orders, rules, regulations or ordinances to
which its property, real, personal, mixed, tangible or intangible, or its
businesses related to such properties, are subject.

 

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(e)                Approvals. No authorization, approval or consent of any
court, governmental body, regulatory agency, self-regulatory organization, or
stock exchange or market is required to be obtained by the Company for the
issuance and sale of the Shares to the Buyer as contemplated by this Agreement,
except such authorizations, approvals and consents that have been obtained.

 

(f)                SEC Documents, Financial Statements. The Company has filed on
a timely basis all reports, schedules, forms, statements and other documents
required to be filed by it with the SEC pursuant to the reporting requirements
of the Exchange Act, including material filed pursuant to Section 13(a) or
15(d). The Company has not provided to the Buyer any information which,
according to applicable law, rule or regulation, should have been disclosed
publicly by the Company but which has not been so disclosed, other than with
respect to the transactions contemplated by this Agreement. As of their
respective dates, the SEC Documents complied in all material respects with the
requirements of the Act or the Exchange Act as the case may be and the rules and
regulations of the SEC promulgated thereunder and other federal, state and local
laws, rules and regulations applicable to such SEC Documents, and none of the
SEC Documents contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading. The financial statements of the Company included in the
SEC Documents comply as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC or
other applicable rules and regulations with respect thereto. Such financial
statements have been prepared in accordance with generally accepted accounting
principles applied on a consistent basis during the periods involved (except (i)
as may be otherwise indicated in such financial statements or the notes thereto
or (ii) in the case of unaudited interim statements, to the extent they may not
include footnotes or may be condensed or summary statements) and fairly present
in all material respects the financial position of the Company as of the dates
thereof and the results of operations and cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal year-end audit
adjustments).

 

4. CERTAIN COVENANTS AND ACKNOWLEDGMENTS.

 

(a) Transfer Restrictions. The Buyer acknowledges that (1) the Securities have
not been registered under the provisions of the 1933 Act and may not be
transferred unless (A) subsequently registered thereunder, as provided for
herein, or (B) the Buyer shall have delivered to the Company an opinion of
counsel, reasonably satisfactory in form, scope and substance to the Company, to
the effect that the Securities to be sold or transferred may be sold or
transferred pursuant to an exemption from such registration; and (2) any sale
any Security made in reliance on Rule 144 promulgated under the 1933 Act may be
made only in accordance with the terms of said Rule and further, if said Rule is
not applicable, any resale of that Security under circumstances in which the
seller, or the person through whom the sale is made, may be deemed to be an
underwriter, as that term is used in the 1933 Act, may require compliance with
some other exemption under the 1933 Act or the rules and regulations of the SEC
thereunder.

 

(b) Restrictive Legend. The Buyer acknowledges and agrees that the Shares until
such time as they are registered under the Securities Act as hereinafter
contemplated, the Shares shall bear a restrictive legend in substantially the
following form (and a stop-transfer order may be placed against transfer
thereof):

 

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THESE SHARESHAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE “SECURITIES ACT”), OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT
BE SOLD OR OFFERED FOR SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT OR AN OPINION OF COUNSEL OR OTHER EVIDENCE ACCEPTABLE TO THE
CORPORATION THAT SUCH REGISTRATION IS NOT REQUIRED.

 

(c) Filings. The Company undertakes and agrees to make all necessary filings in
connection with the sale of the Shares to the Buyer under any United States laws
and regulations, or by any domestic securities exchange or trading market, and
to provide a copy thereof to the Buyer promptly after such filing.

 

(d) Reporting Status. So long as the Buyer beneficially owns the Shares, the
Company shall file all reports required to be filed with the SEC pursuant to
Section 13 or 15(d) of the 1934 Act, and the Company shall not terminate its
status as an issuer required to file reports under the Exchange Act or the rules
and regulations thereunder would permit such termination.

 

(e) Use of Proceeds. The Company will use the proceeds from the sale of the
Shares for working capital purposes only.

 

(f) Available Shares. The Company shall have at all times authorized and
reserved for issuance, free from preemptive rights, shares of Common Stock equal
to the number of Conversion Shares.

 

5. GOVERNING LAW, JURY TRIAL.

 

All questions concerning the construction, validity, enforcement and
interpretation of this Agreement shall be governed by the internal laws of the
State of Texas, without giving effect to any choice of law or conflict of law
provision or rule (whether of the State of Texas or any other jurisdictions)
that would cause the application of the laws of any jurisdictions other than the
State of Texas. Each party hereby irrevocably submits to the exclusive
jurisdiction of the state and federal courts sitting in the County of Harris,
for the adjudication of any dispute hereunder or in connection herewith or with
any transaction contemplated hereby or discussed herein, and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of any such court, that
such suit, action or proceeding is brought in an inconvenient forum or that the
venue of such suit, action or proceeding is improper. Each party hereby
irrevocably waives personal service of process and consents to process being
served in any such suit, action or proceeding by mailing a copy thereof to such
party at the address for such notices to it under this Agreement and agrees that
such service shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any way any right
to serve process in any manner permitted by law. EACH PARTY HEREBY IRREVOCABLY
WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE
ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF
THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.

 

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6. MISCELLANEOUS.

 

(a) This Agreement may be executed simultaneously in two or more counterparts,
any one of which need not contain the signatures of more than one party, but all
such counterparts taken together will constitute one and the same
Agreement.  This Agreement, to the extent delivered by means of a facsimile
machine or electronic mail (any such delivery, an “Electronic Delivery”), shall
be treated in all manner and respects as an original agreement or instrument and
shall be considered to have the same binding legal effect as if it were the
original signed version thereof delivered in person.  At the request of any
party hereto, each other party hereto shall re-execute original forms hereof and
deliver them in person to all other parties.  No party hereto shall raise the
use of Electronic Delivery to deliver a signature or the fact that any signature
or agreement or instrument was transmitted or communicated through the use of
Electronic Delivery as a defense to the formation of a contract, and each such
party forever waives any such defense, except to the extent such defense related
to lack of authenticity.

 

(b) The headings of this Agreement are for convenience of reference and shall
not form part of, or affect the interpretation of, this Agreement. If any
provision of this Agreement shall be invalid or unenforceable in any
jurisdiction, such invalidity or unenforceability shall not affect the validity
or enforceability of the remainder of this Agreement or the validity or
enforceability of this Agreement in any other jurisdiction. This Agreement may
be amended only by an instrument in writing signed by the party to be charged
with enforcement. This Agreement supersedes all prior agreements and
understandings among the parties hereto with respect to the subject matter
hereof.

 

(c)                 This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and permitted
assigns.

 

7. NOTICES. Any notices, consents, waivers or other communications required or
permitted to be given under the terms of this Agreement must be in writing and
will be deemed to have been delivered: (i) upon receipt, when delivered
personally; (ii) upon receipt, when sent by facsimile (provided confirmation of
transmission is mechanically or electronically generated and kept on file by the
sending party); or (iii) one Business Day after deposit with an overnight
courier service, in each case properly addressed to the party to receive the
same. The addresses and facsimile numbers for such communications shall be:

 

If to the Company:

 

Propell Technologies Group, Inc.

1701 Commerce Street

Houston, Texas 77002

 

with a copy (for informational purposes only) to:

 

Gracin & Marlow, LLP

405 Lexington Avenue, 26th Floor

New York, New York 10174

Telephone: (212) 907-6457

Facsimile: (212) 208-4657

Attention: Leslie Marlow, Esq.

 

If to each Buyer:

 

At the address listed on the signature page hereto

 

to its address and facsimile number set forth below, or to such other address
and/or facsimile number and/or to the attention of such other Person as the
recipient party has specified by written notice given to each other party five
(5) days prior to the effectiveness of such change. Written confirmation of
receipt (A) given by the recipient of such notice, consent, waiver or other
communication, (B) mechanically or electronically generated by the sender's
facsimile machine containing the time, date, recipient facsimile number and an
image of the first page of such transmission or (C) provided by an overnight
courier service shall be rebuttable evidence of personal service, receipt by
facsimile or receipt from an overnight courier service in accordance with clause
(i), (ii) or (iii) above, respectively. 

 

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IN WITNESS WHEREOF, this Agreement has been duly executed by the Buyer or one of
its officers thereunto duly authorized as of March 31, 2014.

 

For 75,000 shares of Series B Convertible Preferred Stock, the Buyer has
tendered herewith the full purchase price of $750,000 ($10.00 a Share), of which
$550,000 was received prior to the date hereof and $200,000 was received on the
date hereof.

 

Charles Eric Hoogland   Address:   Name of Buyer                           By:
/s/Charles Eric Hoogland   Fax No.   (Signature of Authorized Person)          
                Charles Eric Hoogland   Illinois Printed Name and Title or
organization   Jurisdiction of Incorporation                            
Taxpayer identification number or social security number, as applicable      

 

  

 

This Agreement has been accepted as of the date set forth below.

 

  COMPANY:      

PROPELL TECHNOLOGIES GROUP, INC.

 

      By: /s/ John Huemoeller     Name: John Huemoeller    

Title: CEO

  

[Signature Page to Securities

Purchase Agreement]

 

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EXHIBITS

   

 

Exhibit A Certificate of Designation, Rights and Preferences of the Series B
Convertible Preferred Stock            

 

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