Document:

Exhibit 10.14

 

COMMON
STOCK PURCHASE AGREEMENT

 

THIS COMMON
STOCK PURCHASE AGREEMENT (the “Agreement”) is entered into this    
day of              ,
2004 between Vista Exploration Corporation, a Colorado corporation ( the “Company”),
and the individuals purchasing the securities offered hereby (“Purchaser”).

 

RECITALS

 

WHEREAS, the
Company has authorized the sale and issuance of an aggregate of 5,000,000
shares of common stock (the “Common Stock”); and

 

WHEREAS, the
Purchasers desire  to purchase shares of
Common Stock, and the Company desires to issue and sell shares of Common Stock
to the Purchasers, on the terms and conditions set forth herein.

 

NOW,
THEREFORE, in consideration of the foregoing recitals and the mutual promises
hereinafter set forth, the parties hereto agree as follows:

 

ARTICLE 1

 

AGREEMENT TO SELL AND PURCHASE

 

Section 1.1                                      Agreement to Sell and Purchase.  Subject to the terms and conditions hereof,
at the Closing (as defined in Section 2.1 below) the Company hereby agrees
to issue and sell to the Purchaser, and the Purchaser agrees to purchase from
the Company, that number of shares of Common Stock (the “Shares”) for the
aggregate price as set forth on the signature page hereof for $1.00 per
share.

 

Section 1.2                                      Payment and Delivery of Purchase
Price and Shares.  The purchase price shall be paid in full by
Purchaser at or prior to Closing.

 

ARTICLE 2

 

CLOSING AND DELIVERY

 

Section 2.1                                      Closing. The closing of the purchase
and sale of the Shares under this Agreement (the “Closing”) shall take place on
the date of acceptance of the subscription by the Company.

 

Section 2.2                                      Delivery.  Subject to the terms and conditions hereof,
at the Closing the Company will deliver to the Purchasers one or more
certificates representing the Shares, against payment of the purchase price
therefor by check or wire transfer made payable to the order of the

 

 

Company.  It is understood that
the certificate(s) evidencing the Shares may bear one or all of the following
legends:

 

(1)                                  “THE
SECURITIES REPRESENTED BY THIS STOCK CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”) OR APPLICABLE
STATE SECURITIES LAWS (“STATE ACTS”) AND SHALL NOT BE SOLD, PLEDGED,
HYPOTHECATED, DONATED, OR OTHERWISE TRANSFERRED (WHETHER OR NOT FOR
CONSIDERATION) BY THE HOLDER, EXCEPT UPON THE ISSUANCE TO THE COMPANY OF A
FAVORABLE OPINION OF ITS COUNSEL OR THE SUBMISSION TO THE COMPANY OF SUCH OTHER
EVIDENCE AS MAY BE SATISFACTORY TO COUNSEL FOR THE COMPANY, TO THE EFFECT
THAT ANY SUCH TRANSFER SHALL NOT BE IN VIOLATION OF THE SECURITIES ACT AND THE
STATE ACTS.”

 

(2)                                  Any
legend imposed or required by applicable federal or state securities laws.

 

ARTICLE 3

 

REPRESENTATIONS AND WARRANTIES

 

Section 3.1                                      Representations and Warranties
of the Company.  The Company hereby represents and warrants to
the Purchasers, as of the Closing, as follows:

 

(1)          Organization and Standing of the
Company.  The Company is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Colorado.  It has all requisite corporate
power and authority to carry on its business as now being conducted, to enter
into this Agreement and to carry out and perform the terms and provisions of
this Agreement.  The Company is duly
qualified to do business and is in good standing in each jurisdiction in which
the failure to be so qualified would have a material adverse effect on the
condition (financial or otherwise), business, net worth, assets (including
intangible assets), properties or operations of the Company.  The Company has no direct or indirect
interest, either by way of stock ownership or otherwise, in any other firm,
corporation, association, or business.

 

(2)          Capitalization and Indebtedness for Borrowed Moneys.

 

(a)          The
Company is duly and lawfully authorized by its Articles to issue (i) 50,000,000
shares of no par value Common Stock, of which 16,062,000 shares are issued and
outstanding; and (ii) 5,000,000 shares of preferred stock, of which
183,333 shares of Series A Preferred stock are issued and
outstanding.  Each share of Series A
Preferred stock can be converted into eight (8) shares of common
stock.  The Company has no treasury stock
and no other authorized series or class of stock.  All the outstanding shares of Common Stock
have been duly authorized and validly issued and are fully paid and
nonassessable and free of preemptive rights. 
All Shares to be issued to the Purchasers pursuant to this Agreement
shall be duly

 

 

authorized, validly issued,
fully paid, nonassessable, and issued in compliance with state and federal
securities laws.

 

(b)         The
Company has duly executed and delivered this Agreement, which is a legal, valid
and binding obligation of the Company, enforceable in accordance with its
terms, except as such enforceability may be limited by applicable bankruptcy,
insolvency and similar laws relating to creditors’ rights generally and by
general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).  The execution, delivery and performance of
this Agreement by the Company does not require the consent or approval of any
other person, entity or governmental agency.

 

(c)          There
are no outstanding subscriptions, options, warrants, calls, contracts, demands,
commitments, convertible securities, or other agreements or arrangements of any
character or nature whatever under which the Company is or may be obligated to
issue or purchase shares of its capital stock except 2,300,000 options for
$1.00 per share and 1,466,664 warrants to purchase Common Shares at $1.80 per
share. There are also 183,333 Preferred shares that may be converted to
1,466,664 Common shares.

 

(3)          Litigation.  There are no legal actions, suits,
arbitrations, or other legal or administrative proceedings pending or
threatened against the Company which would affect it, its properties, assets,
or business.  The Company is not aware of
any facts which, to its knowledge, might result in any action, suit,
arbitration, or other proceeding which, in turn, might result in a material
adverse change in the business or condition (financial or otherwise),
properties or assets of the Company.  The
Company is not in default with respect to any judgment, order, or decree of any
court, government agency or instrumentality.

 

(4)          Compliance With the Law and
Other Instruments.  To the best of the Company’s knowledge, the
business operations of the Company have been and are being conducted in
accordance with all applicable laws, rules, and regulations of all
authorities.  The Company is not in
violation of, or in default under, any term or provision of the Articles or
Bylaws, or of any lien, mortgage, lease, agreement, instrument, order,
judgment, or decree, or subject to any restriction, contained in any of the
foregoing, of any kind or character which materially adversely affects in any
way the business, properties, assets, or prospects of the Company, or which
would prohibit the Company from entering into this Agreement or prevent
consummation of the issuance of securities contemplated by this Agreement.

 

(5)          SEC Reports.  The Company is subject to Section 13 and
15 of the Securities Exchange Act of 1934 and has filed all reports required
thereunder.  All of the information
contained in said reports is true and correct in all material respects as of
the date of the filing of said reports. 
No material information necessary to present or provide a reviewer with
information necessary to form an understanding of the business and prospects of
the Company has been excluded from the reports so as to make the reports
misleading.

 

(6)          Title to Properties and Assets.  The Company has good and marketable title to
all its properties and assets, including without limitation those used or
located on property controlled by the Company in its business (except assets
sold in the ordinary course of business),

 

 

subject to no mortgage, pledge, lien, charge,
security interest, encumbrance, or restriction except those which do not
materially adversely affect the use thereof.

 

(7)          Records.  The books of account, minute books, stock
certificate books, and stock transfer ledgers of the Company are complete and
correct, and there have been no transactions involving the business of the
Company which properly should have been set forth in said respective books,
other than those set forth therein.

 

(8)          Brokers or Finders. All negotiations on the part of the Company relative to this
Agreement and the transactions contemplated hereby have been carried on by the
Company without the intervention of any person or as the result of any act of
the Company in such manner as to give rise to any valid claim for a brokerage
commission, finder’s fee, or other like payment.  The Company reserves the right in the future
to pay a fee to registered broker/dealers if any such person should assist the
Company in soliciting the sale or purchase of our Common Stock. It is
anticipated that the placement agents would be retained on a best efforts
basis, and receive a fee not to exceed 8% of any investment in Common Stock
made by the investors introduced by the placement agent. In addition, the
Company may transfer to a placement agent and option or warrant to purchase
shares of Common Stock equal to 10% of the number of shares placed by the
agent, exercisable at a price of $1.00 per share.

 

(9)          Taxes. The Company has duly filed all
federal, state, county and local income, franchise, excise, real and personal
property and other tax returns and reports (including, but not limited to,
those relating to social security, withholding, unemployment insurance, and
occupation (sales) and use taxes) required to have been filed by the Company up
to the date hereof.  All of the foregoing
returns are true and correct in all material respects and the Company has paid
all taxes, interest and penalties shown on such returns or reports as being
due. The Company has no liability for any taxes, interest or penalties of any
nature whatsoever, except for those taxes which may have arisen up to the
Closing in the ordinary course of business and are properly accrued on the
books of the Company as of the Closing.

 

Section 3.2                                      Representations and Warranties
of the Purchaser.  Each Purchaser represents and warrants to the
Company, as of the Closing as follows:

 

(1)          Accredited Investor Status. The Purchaser is an “accredited
investor” within the meaning of Securities and Exchange Commission Rule 501
of Regulation D, as presently in effect and the Accredited Investor Declaration
attached hereto as Exhibit A is true and correct in all respects.

 

(2)          Purchase Entirely for Own
Account.  This Agreement is made with the Purchaser in
reliance upon the Purchaser’s representation to the Company, which by the
Purchaser’s execution of this Agreement he hereby confirms, that the Shares to
be received by the Purchaser will be acquired for investment for the Purchaser’s
own account, not as a nominee or agent, and not with a view to the resale or
distribution of any part thereof, and that the Purchaser has no present
intention of selling, granting any participation in, or otherwise distributing
the same.  By executing this Agreement,
the Purchaser further represents that he 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 the
Shares.

 

 

(3)          Disclosure of Information.  The Purchaser has reviewed all reports filed
with the SEC including financial statements and believes he has received all
the information he considers necessary or appropriate for deciding whether to
purchase the Shares.  The Purchaser
further represents that he has had an opportunity to ask questions and receive
answers from the Company regarding the terms and conditions of the offering of
the Shares and the business, properties, prospects and financial condition of
the Company and to obtain additional information (to the extent the Company
possessed such information or could acquire it without unreasonable effort or
expense) and/or conduct his own independent investigation necessary to verify the
accuracy of any information furnished to the Purchaser or to which the
Purchaser had access.

 

(4)          Investment Experience.  The Purchaser is experienced in evaluating
and investing in private placement transactions in securities of companies in
the development stage and acknowledges that he is able to fend for himself, can
bear the economic risk of his investment, and has such knowledge and experience
in financial or business matters that he is capable of evaluating the merits
and risks of the investment in the Shares.

 

(5)          Restricted Securities. The Purchaser understands that
the Shares are being sold pursuant to an exemption from registration under Section 4(2) of
the Securities Act of 1933, as amended (the “Securities Act”).  The Purchaser also understands that the
Shares may not be sold, transferred or otherwise disposed of by him without
registration under the Securities Act or an exemption therefrom, and that in
the absence of an effective registration statement covering the Shares or an
available exemption from registration under the Securities Act, the Shares must
be held indefinitely.  In particular, the
Purchaser is aware that the Shares may not be sold pursuant to Rule 144
promulgated under the Securities Act unless all of the conditions of that rule are
met.  Among the conditions for use of Rule 144
may be the availability of current information to the public about the
Company.  In this connection, the
Purchaser represents that he is familiar with Rule 144, as presently in
effect, and understands the resale limitations imposed thereby and by the
Securities Act.

 

(6)          Transfer Restrictions.  Without in any way limiting the
representations set forth above, the Purchaser further agrees not to make any
disposition of all or any portion of the Shares unless and until the transferee
has agreed in writing for the benefit of the Company to be bound by this Section 3.2,
provided and to the extent this Section and such agreement are then
applicable.  

 

(7)          Illiquid Investment.  The Purchaser further understands that no
market exists for the Shares, and there can be no assurance that a market will
develop for the Shares.  Accordingly, the
Shares represent a very illiquid investment with no assurance of an available
exit strategy for the Purchaser.

 

(8)          Residence.  The Purchaser resides at the address listed
below his signature to this Agreement.

 

(9)          Brokers or Finders.  All negotiations on the part of the Purchaser
relative to this Agreement and the transactions contemplated hereby have been
carried on by the Purchaser

 

 

without the intervention of any person or as
the result of any act of the Purchaser in such manner as to give rise to any
valid claim for a brokerage commission, finder’s fee, or other like payment.

 

ARTICLE 4

 

CONDITIONS TO CLOSING

 

Except as may
be waived in writing by the parties, all of the obligations of the parties
under this Agreement are subject to the fulfillment, prior to or at the Closing
of each of the following conditions:

 

(1)          Representations and Warranties
True.  The representations and warranties of the
Company and each Purchaser set forth in Sections 3.1 and 3.2, respectively,
shall be true and correct in all material respects as of the Closing, subject
to any changes contemplated by this Agreement.

 

(2)          Directors’ Approval.  Consummation of the transactions contemplated
herein shall have been approved by the Board of Directors of the Company at a
meeting of the Board of Directors to be held for the purpose of obtaining such
approval or by unanimous written consent.

 

(3)          Third-Party Consents.  On or before the Closing, all material
consents or approvals by any third party, if any, which are required to be
obtained by the Company in connection with the execution, delivery or
performance of this Agreement or the consummation of the transactions
contemplated herein shall have been obtained.

 

(4)          Compliance with Agreements. The Company shall have
performed and complied with all agreements or conditions required by this
Agreement to be performed and complied with by it prior to or on the Closing.

 

ARTICLE 5

 

NATURE AND SURVIVAL OF REPRESENTATIONS AND
WARRANTIES:

 

All statements
of fact contained herein, or in any certificate or schedule delivered by
or on behalf of the Company or the Purchaser pursuant to the terms hereof,
shall be deemed representations and warranties made by the Company and the
Purchaser, respectively, to each other under this Agreement.  The representations and warranties of the
Company and the Purchaser shall survive the Closing for a period of one year.

 

ARTICLE 6

 

MISCELLANEOUS

 

Section 6.1                                      Amendment. This Agreement may be amended
in any manner as may be determined in the judgment of the Board of Directors of
the Company and the Purchaser to be necessary, desirable, or expedient in order
to clarify the intention of the parties hereto or to effect

 

 

or facilitate the purpose and intent of this Agreement, subject to the
provision herein that any amendment shall be ineffective unless in writing and
executed by the parties hereto.

 

Section 6.2                                      Counterparts and Facsimile Signatures.  In order to facilitate the execution of this
Agreement, it may be executed in any number of counterparts and signature pages may
be delivered by facsimile.

 

Section 6.3                                      Waiver of Conditions.  Either party may waive any condition
precedent, term or condition of this Agreement but such a waiver shall be
ineffective unless in writing and executed by an authorized representative of
both parties hereto.

 

Section 6.4                                      Registration Rights: 
The Company agrees to register the Shares being sold pursuant to this
agreement in a registration statement to be filed with the Securities and
Exchange Commission (“SEC”) within sixty (60) days after the Closing of the
sale of $2 million of Shares pursuant to this form of Agreement (“Registration
Filing Date”).  The Company agrees to pay
all expenses of registration and the Purchaser agrees to cooperate in all
reasonable respects with the Company and its counsel as required to file the
Registration Statement registering the resale of the Shares.  The Company agrees to use its reasonable best
efforts to have said Registration Statement declared effective at the earliest
practicable date after filing.  The
Company represents that the securities being registered for the Purchaser will
be included in the first Registration Statement filed subsequent to the
Closing.

 

Section 6.5                                      Assignment.  Neither this Agreement nor any right created
hereby shall be assignable by the Company or the Purchaser without the prior
written consent of the other party. 
Nothing in this Agreement, express or implied, is intended to confer
upon any person, other than the parties hereby and their respective successors,
assigns, heirs, executors, administrators, or personal representatives, any
rights or remedies under or by reason of this Agreement.

 

Section 6.6                                      Entire Agreement.  This Agreement and the certificates delivered
pursuant hereby constitute the full and entire understanding and agreement
between the parties with regard to the subject hereof and no party shall be
liable or bound to any other in any manner by any representations, warranties,
covenants or agreements except as specifically set forth herein.  All prior agreements and understandings are
superseded by this Agreement and the Exhibit thereto.

 

Section 6.7                                      Governing Law.  This Agreement shall be governed by the laws
of the State of Kansas, except that the General Corporation Law of Colorado
shall govern as to matters of corporate law pertaining to the Company.

 

Section 6.8                                      Severability.  In case any provision of this Agreement shall
be invalid, illegal or unenforceable, the validity, legality and enforceability
of the remaining provisions shall not in any way be affected or impaired
thereby.

 

Section 6.9                                      Notices.  All notices and other communications required
or permitted under this Agreement must be in writing and may be given by
personal delivery or U.S. mail, or confirmed facsimile.  If given by mail, such notice must be sent by
registered or certified mail, postage prepaid, mailed to the party at the
respective address set forth below, and shall be

 

 

effective only if and when received by the party to be notified.  For purposes of notice, the addresses of the
parties shall, until changed as hereinafter provided, be as follows:

 

(1)          If to the Company:

 

Vista Exploration Corporation

11011 King Street, Suite 260

Overland Park, KS  66210

Facsimile No.: (913) 469.1662

Phone No. to Confirm Fax: (913) 469.5614

 

With a copy to:

 

Ballard Spahr Andrews & Ingersoll,
LLP

1225 17th Street, Suite 2300

Denver, CO 80202

Attn: Roger V. Davidson, Esq.

Facsimile No.: (303) 382-4607

Phone No. to Confirm Fax: (303) 299-7307

 

(2)          If to the Purchaser:

 

or at such
other address or facsimile number as any party may have advised the other in
writing.

 

Section 6.10                                Attorney Fees.  If any action at law or in equity, including
an action for declaratory relief, is brought to enforce or interpret the
provisions of this Agreement, the prevailing party shall be entitled to recover
reasonable attorney fees from the other party or parties, which fees shall be
in addition to any other relief which may be awarded.

 

Section 6.11                                Indemnification by the Company.  The Company agrees to indemnify and hold the
Purchaser harmless against any loss, liability, damage or expense (including
reasonable attorney fees and costs) which the Purchaser may suffer, sustain or
become subject to as a result of or in connection with the breach by the
Company of any representation, warranty, covenant or agreements of the Company
contained in this Agreement

 

Section 6.12                                Indemnification by the Purchaser.  The Purchaser agrees to indemnify and hold
the Company harmless against any loss, liability, damage or expense (including
reasonable attorney fees and costs) which the Company may suffer, sustain or
become subject to as a result of or in connection with the breach by the
Purchaser of any representation, warranty, covenant or agreements of the
Purchaser contained in this Agreement.

 

 

IN WITNESS WHEREOF, this Common Stock
Purchase Agreement is hereby duly executed by each party hereto as of the date
first written above.

 

 

	
  PURCHASER:

  	
   

  	
  Number of Shares Subscribed for:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   Purchase Price Tendered: $

  
	
   

  	
   

  	
   

  
	
  Signature

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  (Print Name
  of Purchaser)

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Address:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  SSI/Tax ID No.

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Acceptance Dated:
              ,
  2004

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  VISTA EXPLORATION CORPORATION,

  	
   

  	
   

  
	
  a Colorado corporation

  	
   

  	
   

  
	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
  David C. Owen, President & CEO

  	
   

  
					

 

 

EXHIBIT A

ACCREDITED INVESTOR DECLARATION

 

THE SECURITIES BEING OFFERED BY THE COMPANY
ARE SECURITIES AS THAT TERM HAS BEEN DEFINED IN THE SECURITIES ACT OF 1933, AS
AMENDED.  THESE SECURITIES HAVE NOT BEEN
REGISTERED UNDER THAT ACT IN RELIANCE UPON THE EXEMPTION FROM REGISTRATION
PROVIDED BY SECTIONS 3(b), 4(2) AND AS PROVIDED BY REGULATION D OF THAT
ACT, AND ARE SUBJECT TO RESTRICTIONS ON TRANSFER.  FURTHER, THESE SECURITIES MAY BE SOLD
PURSUANT TO EXEMPTIONS FROM REGISTRATION IN THE VARIOUS STATES, AND MAY BE
SUBJECT TO ADDITIONAL RESTRICTIONS ON TRANSFER IN SUCH JURISDICTIONS.

 

The undersigned represents that he qualifies
as an “Accredited Investor,” as defined in Rule 501 of Regulation D
promulgated by the Securities and Exchange Commission under the Securities Act
of 1933, because he is (check the appropriate numbered paragraphs):

 

o                                    (1)                                  A private business
development company as defined in Section 202(a)(22) of the Investment
Advisors Act of 1940;

 

o                                    (2)                                  An organization
described in Section 501(c)(3) of the Internal Revenue Code,
Corporation, Massachusetts or similar business trust, or Partnership not formed
for the purpose of investing in the Securities, with total assets in excess of
$5,000,000;

 

o                                    (3)                                  A director, executive
officer, or general partner of the issuer of the Securities being offered or
sold, or any director, executive officer, or general partner of a general
partner of that issuer;

 

o                                    (4)                                  A natural person
whose individual net worth, or joint net worth with that person’s spouse, at
the time of his purchase, exceeds $1,000,000;

 

o                                    (5)                                  A natural person who
had an individual income in excess of $200,000 in each of the two most recent
years, or joint income with that person’s spouse of $300,000 in each of those
years and has a reasonable expectation of reaching those levels in the current
year;

 

o                                    (6)                                  Any trust, with total
assets in excess of $5,000,000, not formed for the specific purpose of
acquiring the Securities offered, whose purchase is directed by a sophisticated
person as described in Section 506(b)(2)(ii); or

 

o                                    (7)                                  Any entity in which
all of the equity owners are accredited investors.

 

	
  Date:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Signed:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Please print name:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Address:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Tax I.D. No.:

  	
   

  	
   

  

 

 

VISTA
EXPLORATION CORPORATION

STOCK ISSUANCE LETTER

 

Instructions as to how Stock Certificate is
to be issued and held.

 

	
  Name(s):

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Street Address:

  	
   

  
	
   

  	
   

  
	
  City, State, Zip Code:

  	
   

  
	
   

  	
   

  
	
  Social Security or Tax ID Number(s):

  	
   

  
	
   

  	
   

  
	
  Phone/Fax Number(s):

  	
   

  
	
   

  	
   

  
	
  E-Mail Address:

  	
   

  
								

 

	
  o

  	
  Individual

  	
  o

  	
  Joint
  Tenancy

  	
  o

  	
  Tenants in
  Common

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  o

  	
  Corporation

  	
  o

  	
  Limited
  Liability Company

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  o

  	
  Limited
  Partnership

  	
  o

  	
  Trust

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  o

  	
  Gift to
  Minor

  	
  o

  	
  Other
  (please specify below)

  	
   

  	
   

  

 

Special Instructions:EXHIBIT 10.15

 

FINANCING TERMS AGREEMENT

 

ICOP
DIGITAL, INC.

11011
King Street, Suite 260

Overland Park,
KS 66210

Tel:
913  338-5550

Fax:
913 469-1662

Email:
dowen@icopdigital.com

 

SALE
OF SECURED PROMISSORY NOTES AND WARRANTS

 

PRINCIPAL
TERMS

 

Issuer:                                                                                                                                                                                                      Icop Digital, Inc. (“ICPD” or the “Company”)

 

Amount:                                                                                                                                                                                              Up
to $2,000,000.00 in twenty (20) Units of $100,000 in exchange for bridge notes
(“Bridge Note(s)”) and warrants to
purchase the Company’s Common Stock (“Warrant(s)”).  The Placement Agent has agreed with the Company
to allow a creditor to convert its $200,000 debt to identical Bridge Note(s) and Warrants.

 

Lender(s):                                                                                                                                                                                    All
“accredited” investors as defined in Regulation D of the Securities Act of
1933.  See signature pages hereto
for names, addresses, and principal amounts of Bridge Note(s) being purchased.

 

Term of Note:                                                                                                                                                                  Interest and Pre-Payment: 
Interest will accrue on the principal amount of the Bridge Note(s) at the rate of eight (8%)
percent per annum, based on a 365-day year. 
The Company will have the right to prepay without penalty any amount
owed under the Bridge
Note(s) in whole or in part at any time.

 

Maturity Date:  The principal amount and accrued and unpaid
interest on the Bridge
Note(s) will be due and payable six months from the first Closing (as defined herein),
except that in the event of the closing of a Public Offering (as defined herein), the
principal amount and accrued and unpaid interest will become immediately due
and payable.  The Company plans to raise
approximately $10 Million in a secondary offering of units (consisting of two
shares of common stock and one warrant) (the “Public Offering”).

 

 

Closing Date/Escrow:                                                                                                                      The
first Closing
of the Bridge Note(s)
Offering will be on the second business day following the receipt by First National
Bank of Olathe, KS, as Escrow
Agent of not less than $1,200,000 of the loan principal from the
Lender(s)
(the “Closing).  In the event such amount has not been
received into Escrow on
or before January 21, 2005, unless extended by agreement between the
Placement Agent and ICOP for up to an additional 30 days, the Escrow Agent shall
promptly return all of the funds on deposit with it to the respective Lender(s).

 

Conversion Right:                                                                                                                                         In
the event there is no Public
Offering of the Company’s common stock and/or warrants within
twelve (12) months from the first Closing, the Lender(s) shall have the right to
convert the  principal and unpaid interest of the Bridge
Note(s) into shares of Common Stock at a conversion price of
$5.00 per share (assuming a 1:10 reverse stock split).

 

Security:                                                                                                                                                                                          Repayment
of the Bridge Note(s)  shall
be secured by a lien on all tangible and intangible assets of the Company.

 

Warrants:                                                                                                                                                                                   75 % warrant coverage:  At Closing each Lender(s) will receive Warrant(s) to
purchase a number of shares of the Company’s Common Stock equal to the quotient
of the principal amount of such Lender(s)’  Bridge
Note(s), divided by the Public Offering Unit Price and the product of
such quotient shall then be multiplied by 1.5 to yield the number of shares.  The Warrant(s)
will have an exercise price per share equal to 50% of the Public Offering Unit Price.  In the event there is no Public Offering
within twelve (12) months of the first Closing, the number of shares under the
Warrant shall equal the quotient of (a) 0.75 times the principal amount of
such Lender(s)’ Bridge
Note, divided by the lesser of $5.00 (assuming a 1:10 reverse
stock split): and   the average 4 PM NY
Time closing bid price as reported on the Bloomberg system for the 10 trading
days ending on the trading day immediately preceding the delivery of an
exercise notice to the Company. The exercise price of the Warrants shall be the
lesser of $5.00 (assuming a 1:10 reverse stock split) and the average 4 PM NY
Time closing bid price as reported on the Bloomberg system for the 10 trading
days ending on the trading day immediately preceding the delivery of an
exercise notice. The Warrants
will be exercisable for five years from the date of issuance,
provided that if the Company files a registration statement for a Public Offering, then
the  Warrant(s)
will not be exercisable until the earlier of 90 days after the Public Offering
closing and  six

 

 

months after filing of the Public Offering registration
statement.  Subject to the exercisability
limitations in the foregoing sentence, the Warrant(s) will provide for cashless exercise
if, at any time after one (1) year from the date of issuance of the Bridge Note(s) and Warrant(s), the Company does not have
available both an effective registration statement and current prospectus
covering the issuance or resale of the Company’s Common Stock issued or
issuable upon exercise of the Warrant(s).  The Warrant(s) will be
non-callable.

 

SEC Reporting                                                                                                                                                          As
long as any of the Bridge
Note(s)
and/or Warrant(s)
is outstanding the Company will maintain the listing of its common stock under Section 12
(g) of the Securities Exchange Act of 1934, as amended (Exchange Act), and
will file all reports required by the Exchange Act in a timely manner.

 

Registration Rights:                                                                                                                            The
Company will (1) file a resale registration statement within 180 days of
the Public Offering
closing and (2) cause it to be effective within 240 days of the Public Offering
closing covering the resale of the common shares underlying the Warrant(s).  If the Company fails to satisfy either or
both of these requirements, it will be subject to 2% cash late registration fee
(“Late Fee”)
(i.e. 2% of outstanding Bridge
Note(s)
principal) per month or part thereof that such failure continues. Such Late Fee shall cease
to accrue on the earliest date more than one year from the first Closing that the
Company is current in its reporting obligations under the Exchange Act and has
been subject to such reporting requirements for at least 90 days.

 

Anti
Dilution Provisions:                                                                                                    If
at any time from the date of first Closing until the conversion of the Bridge Note(s) or
exercise of the Warrant(s)
the Company issues a stock dividend, combines outstanding shares into a lesser
number of shares (reverse split) or increases the number of outstanding shares
without the receipt of new consideration (forward split), then the number of
shares into which the Bridge
Note(s) may be converted or the Warrant(s) may be exercised for and the
conversion price shall be adjusted to reflect such event so that the relative
interests of the Lender(s)
shall be fully protected from dilution resulting from such an event.  Notice of the required adjustment including
the number of shares and the new exercise/conversion price shall be promptly
mailed to each Lender(s)
subsequent to each such adjustment event.

 

 

Placement
Agent:                                                                                                                                           The
Company has retained Paulson Investment Company, Inc to assist it with
various financing matters, including the private placement of these Bridge Note(s).  Paulson Investment company, Inc will be
retained on a best efforts basis, and receive a fee not to
exceed 5% of any investment in the Bridge Note(s).  The Company also anticipates reimbursing
certain expenses of Paulson Investment Company, Inc and
indemnifying them, their directors, officers, agents, employees and
controlling persons against certain liabilities.

 

Jurisdiction/Choice of Law:                                                                                      All
transaction documents shall be governed by and construed under the laws of the
state of Colorado as applied to agreements entered into and to be performed
entirely within the state of Colorado, without giving effect to principles of
conflicts of law.  The parties irrevocably
consent to the jurisdiction and venue of the state and federal courts located
in Denver, CO in connection with any action relating to this transaction.  At or prior to any Closing, the Lender(s) shall
receive a legal  opinion from Company
counsel in form and substance satisfactory to each of them as to the validity
and enforceability of the Bridge
Note(s),  Warrants,
and Security Agreement.

 

Binding Agreement:                                                                                                                             All
parties executing this Financing Terms Agreement shall be legally bound by the
above terms and shall execute such further 
documents (“Further Documents”), including without limitation  Bridge Note(s),  Warrant(s) and a Security Agreement.  If there are any inconsistencies between  this Financing Terms Agreement and any
such  Further Documents executed in
connection with this transaction, the terms of this Financing Terms Agreement
shall govern.  This Financing Terms
Agreement may be signed in two or more counterparts, all of which taken
together shall constitute an original. 
Facsimile signatures shall be deemed to be original signatures.

 

 

SIGNATURE PAGE TO ICOP DIGITAL,
INC.

FINANCING TERMS AGREEMENT

 

ICOP Digital, Inc.

 

 

	
  By:

  	
   

  	
   

  	
   

  	
  Date:

  	
   

  	
   

  
	
   

  	
  (signature)

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (name and
  title)

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  PAULSON INVESTMENT COMPANY, INC.

  	
   

  	
  Date:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  BY:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (name &
  title)

  	
   

  	
   

  	
   

  
											

 

 

SIGNATURE
PAGE OF LENDER(S) TO ICOP DIGITAL, INC.

FINANCING
TERMS AGREEMENT

 

	
   

  	
   

  	
  Amount

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  (Name of Entity) 

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Name & Title

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Date:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Address:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Telephone No.:

  	
   

  	
   

  	
   

  
	
  Fax No.: 

  	
   

  	
   

  	
   

  
	
  Tax ID#/SS#:

  	
   

  	
   

  	
   

  
	
  Email:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
										

 

 

ACCREDITED INVESTOR DECLARATION

THE SECURITIES BEING OFFERED BY THE COMPANY
ARE SECURITIES AS THAT TERM HAS BEEN DEFINED IN THE SECURITIES ACT OF 1933, AS
AMENDED.  THESE SECURITIES HAVE NOT BEEN
REGISTERED UNDER THAT ACT IN RELIANCE UPON THE EXEMPTION FROM REGISTRATION PROVIDED
BY SECTIONS 3(b), 4(2) AND AS PROVIDED BY REGULATION D OF THAT ACT, AND
ARE SUBJECT TO RESTRICTIONS ON TRANSFER. 
FURTHER, THESE SECURITIES MAY BE SOLD PURSUANT TO EXEMPTIONS FROM
REGISTRATION IN THE VARIOUS STATES, AND MAY BE SUBJECT TO ADDITIONAL
RESTRICTIONS ON TRANSFER IN SUCH JURISDICTIONS.

 

The undersigned represents that he qualifies
as an “Accredited Investor,” as defined in Rule 501 of Regulation D
promulgated by the Securities and Exchange Commission under the Securities Act
of 1933, because he is (check the appropriate numbered paragraphs):

 

o                                    (1)                                  A private business
development company as defined in Section 202(a)(22) of the Investment
Advisors Act of 1940;

 

o                                    (2)                                  An organization
described in Section 501(c)(3) of the Internal Revenue Code,
Corporation, Massachusetts or similar business trust, or Partnership not formed
for the purpose of investing in the Securities, with total assets in excess of
$5,000,000;

 

o                                    (3)                                  A director, executive
officer, or general partner of the issuer of the Securities being offered or
sold, or any director, executive officer, or general partner of a general
partner of that issuer;

 

o                                    (4)                                  A natural person
whose individual net worth, or joint net worth with that person’s spouse, at
the time of his purchase, exceeds $1,000,000;

 

o                                    (5)                                  A natural person who
had an individual income in excess of $200,000 in each of the two most recent
years, or joint income with that person’s spouse of $300,000 in each of those
years and has a reasonable expectation of reaching those levels in the current
year;

 

o                                    (6)                                  Any trust, with total
assets in excess of $5,000,000, not formed for the specific purpose of
acquiring the Securities offered, whose purchase is directed by a sophisticated
person as described in Section 506(b)(2)(ii); or

 

o                                    (7)                                  Any entity in which
all of the equity owners are accredited investors.

 

	
  Date:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Signed:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Please print name:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Address:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Tax I.D. No.:

  	
   

  	
   

  

 

 

ICOP
DIGITAL, INC.

$2M Bridge Note

 

WIRE TRANSFER INSTRUCTIONS

 

If you wish to wire transfer your funds, the
information is provided below:

 

First National Bank of Olathe

 

Olathe, KS

 

ABA# 101001720

 

FCT: 
ICOP Digital, Inc Escrow Account

 

Acct.# # 0161799

 

Delivery
Instructions:

 

All
Subscription Documents and any checks must be delivered as follows:

 

Overnight
or Mail to:

 

ICOP
Digital, Inc.

Attn:  David C. Owen, CEO

11011 King Street, Suite 260

Overland Park, KS 66210

Phone: 
(913) 338-5550

Fax: 
(913) 469-1662

 

All checks will be immediately deposited into
our escrow accounts at First National Bank of Olathe.

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