Document:

ex10.2

 

 Exhibit 10.2
 

 THE SECURITIES REPRESENTED BY THIS WARRANT HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (“1933 ACT”) OR ANY STATE SECURITIES LAWS. SUCH SECURITIES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER THE 1933 ACT AND ANY APPLICABLE STATE SECURITIES LAWS. 
 THE SALE, ASSIGNMENT, CONVEYANCE, PLEDGE, HYPOTHECATION OR TRANSFER OF THE SECURITIES REPRESENTED BY THIS WARRANT IS PROHIBITED EXCEPT PURSUANT TO REGISTRATION UNDER THE 1933 ACT; OR PURSUANT TO AN AVAILABLE EXEMPTION FROM REGISTRATION UNDER THE 1933 ACT, AND ANY CERTIFICATE REPRESENTING WARRANT SHARES SHALL BEAR A LEGEND TO SUCH EFFECT. 
 

 ____________
 WARRANT TO PURCHASE 25,000 SHARES
OF THE COMMON STOCK OF
BLUE EARTH, INC.
 (Void after Expiration Date – December 31, 2013) 
 Issue Date as of ______________
 

      This certifies that _______________., or its successors or assigns (“Holder”) shall be entitled to purchase from Blue Earth, Inc., a Nevada corporation (“Company”), having its principal place of business at 2298 Horizon Ridge Parkway, Suite 205, Henderson, NV 89052, __________________ fully paid and non-assessable shares (“Warrant Shares”) of the Company’s common stock, par value $.001 per share (“Common Stock”), at a price per share equal to the Exercise Price (as defined below). 
 

      This Warrant is being issued to the Holder in connection with the Series C Convertible Stock offering (the “Offering”) of a maximum of $9,100,000.  Each share of preferred stock, with a face value of $10.00 per share, is convertible into ten (10) shares of Common Stock.  This Warrant is exercisable for one share for every two shares of Common Stock issuable (50% warrant coverage) upon conversion of the Preferred Stock.  This Warrant is one of several which will be identical except for names and amounts. 
 

      The initial exercise price (“Exercise Price”) of this Warrant will be equal to $3.00 per share, subject to redemption and/or a temporary reduction by the Company as described in Sections 16 and 2.1, respectively, below. 
 

      This Warrant shall be immediately exercisable into shares of Common Stock at any time, or from time-to-time, commencing upon the effective date (the “Effective Date”) of a Registration Statement including the Warrant Shares and up to and including 5:00 p.m. (Pacific Coast time) on December 31, 2013  (“Expiration Date”), unless previously called or extended by the Company on thirty (30) days’ prior written notice; provided, however, if such date is not a Business Day, then on the Business Day immediately following such date. This Warrant is exercisable in whole or in part upon the surrender to the Company at its principal place of business (or at such other location as the Company may advise the Holder in writing) of this Warrant properly endorsed with a form of subscription in substantially the form attached hereto duly filled in and signed and, if applicable, upon payment in cash or by check of the aggregate Exercise Price for the number of shares for which this Warrant is being exercised as determined in accordance with the provisions hereof. 
 

      Upon the exercise of this Class A Warrant for the $3.00 Exercise Price, the Holder shall receive one share of Common Stock and a Class B Common Stock Purchase Warrant (“Class B Warrant”) to purchase one share of Common Stock at $6.00 per share, subject to redemption and/or temporary reduction by the Company. The Class B Warrant shall be exercisable into shares of Common Stock at any time, or from time-to-time, up to and including 5:00 p.m. (Pacific Coast time) on the third anniversary date from the date of the last issuance of the Class B Warrants (“Class B Expiration Date”), unless previously called or extended by the Company on thirty (30) days’ prior written notice; provided, however, if such date is not a Business Day, then on the Business Day immediately following such date. 
 

 

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      Upon the exercise of the Class B Warrant for the $6.00 Exercise Price, the Holder shall receive one share of Common Stock and a Class C Common Stock Purchase Warrant (“Class C Warrant”) to purchase one share of Common Stock at $12.00 per share, subject to redemption and/or temporary reduction by the Company. The Class C Warrant shall be exercisable into shares of Common Stock at any time, or from time-to-time, up to and including 5:00 p.m. (Pacific Coast time) on the third anniversary date from the date of the last issuance of the Class C Warrants (“Class C Expiration Date”), unless previously called or extended by the Company on thirty (30) days’ prior written notice; provided, however, if such date is not a Business Day, then on the Business Day immediately following such date. 
 

 	 1.
	  
	 EXERCISE; ISSUANCE OF CERTIFICATES; PAYMENT FOR SHARES.

	  
	 1.1
	  
	 General.  This Warrant is exercisable in full, or in part, in increments of 1,000 shares, except for the holders of less than 1,000 Warrant Shares (which shall be exercised in full), or the final exercise which shall be for the remainder, at the option of the Holder of record at any time or from time, to time, up to the Expiration Date for all of the shares of Common Stock (but not for a fraction of a share) which may be purchased hereunder. In the case of the exercise of less than all of the Warrants represented hereby, the Company shall cancel this Warrant Certificate upon the surrender hereof and shall execute and deliver a new Warrant Certificate or Warrant Certificates of like tenor for the balance of such Warrants. The Company agrees that the shares of Common Stock purchased under this Warrant shall be and are deemed to be issued to the Holder hereof as the record owner of such shares as of the close of business on the date on which the exercise notice (attached hereto as Schedule A or B) is delivered to the Company via facsimile; provided, however, that in such case this Warrant shall be surrendered to the Company within three (3) business days. Certificates for the shares of Common Stock so purchased, together with any other securities or property to which the Holder is entitled upon such exercise, shall be delivered to the Holder by the Company at the Company ’s expense within a reasonable time after the rights represented by this Warrant have been so exercised, and in any event, within three business days of such exercise and delivery of the Exercise Price. The Company shall, no later than the close of business on the first business day following the date on which the Company receives the exercise notice by facsimile transmission issue and deliver to the Company’ s Transfer Agent irrevocable instructions to issue and deliver or cause to be delivered to such Holder the number of Warrant Shares exercised within two business days thereafter by either express mail or hand delivery. Notwithstanding the foregoing, delivery of the Warrant Shares is contingent upon receipt of the Exercise Price in cleared U.S. funds within two business days following the Company’s receipt of the exercise notice. Each Common Stock certificate so delivered shall be in such denominations of 1,000 or more shares of Common Stock (except for the remainder), in increments of 100 or more, as may be requested by the Holder hereof and shall be registered on the Company’s books in the name designated by such Holder.

	  
	  
	  

	  
	  
	  
	  

	  
	 1.2
	  
	 Exercise for Cash.

	  
	  
	  
	  

	  
	  
	  
	 This Warrant may be exercised, in whole at any time or in part from time to time, prior to 5:00 P.M., Pacific Coast time, December 31, 2013, unless previously called or extended by the Company, by the Holder by the facsimile delivery of the exercise notice, as attached hereto, on the date of the exercise and by surrender of this Warrant within three (3) business days from the exercise day at the address set forth hereof, together with proper payment of the aggregate Exercise Price payable hereunder for the Warrant Shares (“Aggregate Warrant Price”), or the proportionate part thereof if this Warrant is exercised in part. Payment for the Warrant Shares shall be made by wire, certified or bank check or check payable to the order of the Company. If this Warrant is exercised in part, this Warrant must be exercised for a number of whole shares of the Common Stock, and the Holder is entitled to receive a new Warrant covering the Warrant Shares which have not been exercised and setting forth the proportionate part of the Aggregate Warrant Price applicable to such Warrant Shares. Upon such surrender of this Warrant, the Company will (a) issue a certificate or certificates in the name  of the Holder for the largest number of whole shares of the Common Stock to which the Holder shall be entitled and (b) deliver the other securities and properties receivable upon the exercise of this Warrant, or the proportionate part thereof if this Warrant is exercised in part, pursuant to the provisions of this Warrant.

 

 

 

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	 1.3
	  
	 Exercise for Non-Cash Consideration.

	  
	  
	  
	 In case any portion of the consideration to be received by the Company shall be in a form other than cash, then such Exercise Price shall be measured to that extent by the fair market value of such non-cash consideration. The Exercise Price may be tendered in the form of notes, exchanges, services, goods and any and all consideration deemed acceptable by the Company. The fair market value shall be determined solely in good faith by the Board of Directors of the Company, without need for disclosure of fair market value calculation.

	  
	  
	  
	  

	  1.4
	  
	 Shares to be Fully Paid; Reservation of Shares. The Company covenants and agrees that all shares of Common Stock which may be issued upon the exercise of the rights represented by this Warrant will, upon issuance, be duly authorized, validly issued, fully paid and nonassessable and free from all preemptive rights of any shareholder and free of all taxes, liens and charges with respect to the issue thereof. The Company further covenants and agrees that, during the period within which the rights represented by this Warrant may be exercised, the Company will at all times have authorized and reserved, for the purpose of issue or transfer upon exercise of the subscription rights evidenced by this Warrant, a sufficient number of shares of authorized but unissued Common Stock, when and as required to provide for the exercise of the rights represented by this Warrant. The Company will take all such action as may be necessary to assure that such shares of Common Stock may be issued as provided herein without violation of any applicable law or regulation, or of any requirements of any domestic securities exchange upon which the Common Stock or other securities may be listed; provided, however, that the Company shall not be required to effect a registration under federal or state securities laws with respect to such exercise other than as required by Section 7.7 herein. The Company will not take any action which would result in any adjustment of the Exercise Price if the total number of shares of Common Stock issuable after such action upon exercise of all outstanding warrants, together with all shares of Common Stock then outstanding and all shares of Common Stock then issuable upon exercise of all options and upon the conversion of all convertible securities then outstanding, would exceed the total number of shares of Common Stock or equity securities then authorized by the Company’s Certificate of Incorporation, as amended (“ Company Charter”).

	  
	  
  

	  
	  

	  
	 1.5
	  
	 Buy-In. In addition to any other rights available to a Holder, if the Company fails to deliver to the Holder a certificate representing Warrant Shares by the third Trading Day after the date on which delivery of such certificate is required by this Warrant, and if after such third Trading Day the Holder purchases (in an open market transaction or otherwise) shares of Common Stock to deliver in satisfaction of a sale by the Holder on or after the Exercise Date of the Warrant Shares that the Holder anticipated receiving from the Company (a “Buy-In”), then the Company shall, within three Trading Days after the Holder’s request and in the Holder’s discretion, either (i) pay cash to the Holder in an amount equal to the Holder’s total purchase price (including brokerage commissions, if any) for the shares of Common Stock so purchased (the “Buy-In Price”), at which point the Company’s obligation to deliver such certificate (and to issue such Common Stock) shall terminate, or (ii) promptly honor its obligation to deliver to the Holder a certificate or certificates representing such Common Stock and pay cash to the Holder in an amount equal to the excess (if any) of the Buy-In Price over the product of (A) such number of shares of Common Stock, times (B) the Closing Price on the date of the event giving rise to the Company’s obligation to deliver such certificate. Notwithstanding the foregoing, the Company shall have no liability under this subsection for the Buy-In Price if it has complied with the requirements of subsection 1.1 above and, notwithstanding it using its best efforts to have its transfer agent deliver the Warrant Shares to the Holders within three trading days of the Holder’s request, such Warrant Shares are not delivered on a timely basis.

 

 

 2.  DETERMINATION OR ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF SHARES. The Exercise Price and the number of shares purchasable upon the exercise of this Warrant shall be subject to adjustment from time to time upon the occurrence of certain events described in this Section 2. Upon each adjustment of the Exercise Price, the Holder of this Warrant shall thereafter be entitled to purchase, at the Exercise Price resulting from such adjustment, the number of shares obtained by multiplying the Exercise Price in effect immediately prior to such adjustment by the number of shares purchasable pursuant hereto immediately prior to such adjustment, and dividing the product thereof by the Exercise Price resulting from such adjustment. 
 

 

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	 2.1
	  
	 Adjustment of Exercise Price: Temporary Reduction. Upon written Notice as provided for herein, at the sole discretion of the Company, the Exercise Price of this Warrant may be temporarily reduced. At the end of such discretionary reduction period, the price shall revert back to the defined Exercise Price.

	  
	  
	  
	  

	  
	 2.2
	  
	 Subdivision or Combination of Common Stock. In case the Company shall at any time subdivide or reclassify its outstanding shares of Common Stock into a greater number of shares, the Exercise Price in effect immediately prior to such subdivision shall be proportionately reduced, and conversely, in case the outstanding shares of Common Stock of the Company shall be combined or reclassified into a smaller number of shares, the Exercise Price in effect immediately prior to such combination shall be proportionately increased.

	  
	  
	  
	  

	  
	 2.3
	  
	 Dividends in Common Stock, Other Stock, Property, Reclassification. If at any time or from time to time the holders of Common Stock (or any shares of stock or other securities at the time receivable upon the exercise of this Warrant) shall have received or become entitled to receive, without payment therefore:

	  
	 2.3.1
	  
	 Stock, Common Stock or any shares of capital stock or other securities which are at any time directly or indirectly convertible into or exchangeable for Common Stock, or any rights or options to subscribe for, purchase or otherwise acquire any of the foregoing by way of dividend or other distribution,

	  
	  
	  
	  

	  
	 2.3.2
	  
	 Any cash paid or payable otherwise than as a cash dividend, or

	  
	  
	  
	  

	  
	 2.3.3
	  
	 Stock, Common Stock or additional capital stock or other securities or property (including cash) by way of spinoff, split-up, reclassification, combination of shares or similar corporate rearrangement, (other than shares of Common Stock issued as a stock split or adjustments in respect of which shall be covered by the terms of Section 2.1 above), then and in each such case, the Holder hereof shall, upon the exercise of this Warrant, be entitled to receive, in addition to the number of shares of Common Stock or other capital stock receivable thereupon, and without payment of any additional consideration therefor, the amount of stock and other securities and property (including cash in the cases referred to in clause (2.3.2) above and this clause (2.3.3)) which such Holder would hold on the date of such exercise had he been the holder of record of such Common Stock as of the date on which holders of Common Stock received or became entitled to receive such shares or all other additional stock and other securities and property.

	  
	 2.4
	  
	 Reorganization, Reclassification, Consolidation, Merger or Sale.

	  
	 2.4.1
	  
	 If any recapitalization, reclassification or reorganization of the capital stock of the Company, or any consolidation or merger of the Company with another corporation, or the sale of all or substantially all of its assets or other transaction shall be effected in such a way that holders of Common Stock shall be entitled to receive stock, securities, or other assets or property (an “Organic Change”), then, as a condition of such Organic Change, lawful and adequate provisions shall be made by the Company whereby the Holder hereof shall thereafter have the right, upon exercise of this Warrant, to purchase and receive (in lieu of the shares of the Common Stock of the Company immediately theretofore purchasable and receivable upon the exercise of the rights represented by this Warrant) such shares of stock, securities or other assets or property as may be issued or payable with respect to or in exchange for a number of outstanding shares of such Common Stock equal to the number of shares of such stock immediately theretofore purchasable and receivable upon the exercise of the rights represented by this Warrant. In the event of any Organic Change, appropriate provision shall be made by the Company with respect to the rights and interests of the Holder of this Warrant to the end that the provisions hereof (including, without limitation, provisions for adjustments of the Exercise Price and of the number of shares purchasable and receivable upon the exercise of this Warrant) shall thereafter be applicable, in relation to any shares of stock, securities or assets thereafter deliverable upon the exercise hereof. The Company will not effect any such consolidation, merger or sale unless, prior to the consummation thereof, the successor corporation (if other than the Company) resulting from such consolidation or the corporation purchasing such assets shall assume by written instrument executed and mailed or delivered to the Holder hereof at the last address of such Holder appearing on the books of the Company, the obligation to deliver to such Holder, upon Holder’s exercise of this Warrant and payment of the purchase price in accordance with the terms hereof, such shares of stock, securities or assets as, in accordance with the foregoing provisions, such Holder may be entitled to purchase.

 

 

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	 2.4.2
	  
	 No adjustment of the Exercise Price, however, shall be made in an amount less than $.01 per Share, but any such lesser adjustment shall be carried forward and shall be made at the time and together with the next subsequent adjustment which together with any adjustments so carried forward shall amount to $.01 per Share or more.

 

 2.5 Certain Events. If any change in the outstanding Common Stock of the Company or any other event occurs as to which the other provisions of this Section 2 are not strictly applicable or if strictly applicable would not fairly protect the purchase rights of the Holder of the Warrant in accordance with such provisions, then the Board of Directors of the Company shall make an adjustment in the number and class of shares available under the Warrant, the Exercise Price or the application of such provisions, so as to protect such purchase rights as aforesaid. The adjustment shall be such as will give the Holder of the Warrant upon exercise for the same aggregate Exercise Price the total number, and kind of shares as he would have owned had the Warrant been exercised prior to the event and had he continued to hold such shares until after the event requiring adjustment. 
 

 	  
	 2.6
	  
	 Notices of Change.

	  
	 2.6.1
	  
	 Upon any determination or adjustment in the number or class of shares subject to this Warrant and of the Exercise Price, the Company shall give written notice thereof to the Holder, setting forth in reasonable detail and certifying the calculation of such determination or adjustment.

	  
	  
	  
	  

	  
	 2.6.2
	  
	 The Company shall give written notice to the Holder at least 20 days prior to the date on which the Company closes its books or takes a record for determining rights to receive any dividends or distributions.

	  
	  
	  
	  

	  
	 2.6.3
	  
	 The Company shall also give written notice to the Holder at least 20 days prior to the date on which an Organic Change shall take place.

 

 3.  ISSUE TAX. The issuance of certificates for shares of Common Stock upon the exercise of the Warrant shall be made without charge to the Holder of the Warrant for any issue tax (other than any applicable income taxes) in respect thereof; provided, however, that the Company shall not be required to pay any tax which may be payable in respect of any transfer involved in the issuance and delivery of any certificate in a name other than that of the then Holder of the Warrant being exercised. 
 

 4. CLOSING OF BOOKS.  The Company will at no time close its transfer books against the transfer of any warrant or of any shares of stock issued or issuable upon the exercise of any warrant in any manner which interferes with the timely exercise of this Warrant. 
 

 5. NO VOTING OR DIVIDEND RIGHTS; LIMITATION OF LIABILITY. Nothing contained in this Warrant shall be construed as conferring upon the Holder hereof the right to vote as a shareholder of the Company. No dividends or interest shall be payable or accrued in respect of this Warrant, the interest represented hereby, or the shares purchasable hereunder until, and only to the extent that, this Warrant shall have been exercised, subject to the Holder’s rights under Section 2 of this Warrant. The Holder of this Warrant shall receive all notices as if a shareholder of the Company. No provisions hereof, in the absence of affirmative action by the Holder to purchase shares of Common Stock, and no mere enumeration herein of the rights or privileges of the Holder hereof, shall give rise to any liability of such Holder for the Exercise Price or as a shareholder of the Company, whether such liability is asserted by the Company or by its creditors. 
 

 6. RIGHTS AND OBLIGATIONS SURVIVE EXERCISE OF WARRANT. The rights and obligations of the Company, of the Holder of this Warrant and of the holder of Warrant Shares issued upon exercise of this Warrant, shall survive the exercise of this Warrant. 
 

 7. FURTHER REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY. 
 

 

 

 

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	 7.1
	  
	 Articles and Bylaws. The Company has made available to the Holder true, complete and correct copies of the Company’s Charter and Bylaws, as amended, through the date hereof.

	  
	  
	  
	  

	  
	 7.2
	  
	 Due Authority. The execution and delivery by the Company of this Warrant and the performance of all obligations of the Company hereunder, including the issuance to Holder of the right to acquire the shares of Common Stock, have been duly authorized by all necessary corporate action on the part of the Company, and the Warrant is not inconsistent with the Company Charter or Bylaws and constitutes a legal, valid and binding agreement of the Company, enforceable in accordance with its terms.

	  
	  
	  
	  

	  
	 7.3
	  
	 Consents and Approvals. No consent or approval of, giving of notice to, registration with, or taking of any other action in respect of any state, federal or other governmental authority or agency is required with respect to the execution, delivery and performance by the Company of its obligations under this Warrant, except for  any filing required by applicable federal and state securities laws, which filing will be effective by the time required thereby.

	  

	  
	 7.4
	 Issued Securities. All issued and outstanding shares of capital stock of the Company have been duly authorized and validly issued and are fully paid and nonassessable. All outstanding shares of capital stock were issued in full compliance with all federal and state securities laws.

	  
	  
	  
	  

	  
	 7.5
	  
	 Exempt Transaction. Subject to the accuracy of the Holder’s representations in Section 8 hereof, the issuance of this Warrant will constitute a transaction exempt from (i) the registration requirements of Section 5 of the 1933 Act , in reliance upon the issuance not deemed to be a sale under Section (2)(a)(3) of the 1933 Act, and (ii) the qualification requirements of the applicable state securities laws.

	  
	  
	  
	  

	  
	 7.6
	  
	 Compliance with Rule 144. At the written request of the Holder, who proposes to sell Common Stock issuable upon the exercise of the Warrant in compliance with Rule 144 promulgated by the SEC, the Company shall furnish to the Holder, within five (5) days after receipt of such request, a written statement confirming the Company’s compliance with the filing requirements of the SEC as set forth in such Rule, as such Rule may be amended from time to time.

	  
	  
	  
	  

	  
	 7.7
	  
	 Registration. The Company hereby grants to the Holder in respect of the Warrant Shares, and any securities of the Company into which the Warrant Shares are convertible, “piggy-back” registration rights. For a seven-year period commencing with the final closing of the Offering, if the Company shall file a registration statement other than on Form S-4, S-8, or their successor forms, it shall provide the Holder with at least ten (10) days prior notice of its filing such registration statement and the opportunity for the Holder to register its Shares, subject to any limitations issued by an underwriter in an underwritten public offering.
  

	 8.
	  
	 REPRESENTATIONS AND COVENANTS OF THE HOLDER.

 

 	 	 	 	
	  
	 8.1
	  
	 This Warrant has been entered into by the Company in reliance upon the following representations and covenants of the Holder:

 

 	 	 	 	
	  
	 8.1.1
	  
	 Disposition of Holders Rights. In no event will the Holder make a disposition of the Warrant or the Common Stock issuable upon exercise of the Warrant unless and until (i) it shall have notified the Company of the proposed disposition, and (ii) if requested by the Company, it shall have furnished the Company with an opinion of counsel (which counsel may either be inside or outside counsel to the Holder) satisfactory to the Company and its counsel to the effect that (A) appropriate action necessary for compliance with the 1933 Act has been taken, or (B) an exemption from the registration requirements of the 1933 Act is available. Notwithstanding the foregoing, the restrictions imposed upon the transferability of any of its rights to acquire Common Stock issuable on the exercise of such rights do not apply to transfers from the beneficial owner of any of the aforementioned securities to its nominee or from such nominee to its beneficial owner, and shall terminate as to any particular share of stock when (1) such security shall have been effectively registered under the 1933 Act and sold by the Holder thereof in accordance with such registration or (2) such security shall have been sold without registration in compliance with Rule 144 under the 1933 Act. Whenever the restrictions imposed hereunder shall terminate, as hereinabove provided, the Holder or holder of a share of stock then outstanding as to which such restrictions have terminated shall be entitled to receive from the Company, without expense to such Holder, one or more new certificates for the Warrant or for such shares of stock not bearing any restrictive legend.

 

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	 8.1.2
	  
	 Risk of No Registration. The Holder understands that if the Company does not file reports pursuant to Section 15(d) and/or Section 12(g), of the Securities Exchange Act of 1934 (“1934 Act”), or if a registration statement covering the securities under the 1933 Act is not in effect when it desires to sell (i) the Warrant, or (ii) the Common Stock issuable upon exercise of the Warrant, it may be required to hold such securities for an indefinite period unless this Warrant is exercised for non-cash consideration as set forth in Section 1.3 above. The Holder also understands that any sale of the Warrant or the Common Stock issuable upon exercise of the Warrant which might be made by it in reliance upon Rule 144 under the 1933 Act may be made only in accordance with the terms and conditions of that Rule.

 

 9. MODIFICATION AND WAIVER. This Warrant and any provision hereof may be changed, waived, discharged or terminated only by an instrument in writing signed by (a) the party against which enforcement of the same is sought or (b) the Company and the holders of at least a majority of the number of shares into which the Warrants are exercisable (without regard to any limitation contained herein on such exercise), it being understood that upon the satisfaction of the conditions described in (a) and (b) above, each Warrant (including any Warrant held by the Holder who did not execute the agreement specified in (b) above) shall be deemed to incorporate any amendment, modification, change or waiver effected thereby as of the effective date thereof. Notwithstanding the foregoing, no modification to this Section 9 will be effective against any Holder without their consent. 
 

 10. TRANSFER OF THIS WARRANT. The Holder may sell, transfer, assign, pledge or otherwise dispose of this Warrant, in whole or in part, as long as such sale or other disposition is made pursuant to an effective registration statement or an exemption from the registration requirements of the 1933 Act. Upon such transfer or other disposition (other than a pledge), the Holder shall deliver this Warrant to the Company together with a written notice to the Company, substantially in the form of the Transfer Notice attached hereto as Exhibit B (the “Transfer Notice”), indicating the person or persons to whom this Warrant shall be transferred and, if less than all of this Warrant is transferred, the number of Warrant Shares to be covered by the part of this Warrant to be transferred to each such person. Within three (3) Business Days of receiving a Transfer Notice and the original of this Warrant, the Company shall deliver to the each transferee designated by the Holder another Warrant(s) of like tenor and terms for the appropriate number of Warrant Shares and, if less than all this Warrant is transferred, shall deliver to the Holder another Warrant for the remaining number of Warrant Shares. 
 

 11. NOTICES. Any notice required or permitted hereunder shall be given in writing (unless otherwise specified herein) and shall be deemed effectively given upon (i) personal delivery, against written receipt thereof, (ii) delivery via facsimile or e-mail as set forth below (iii) two business days after deposit with Federal Express or another nationally recognized overnight courier service, or (iv) five business days after being forwarded, postage paid, via certified or registered mail, return receipt requested, addressed to each of the other parties thereunto entitled at the following addresses, or at such other addresses as a party may designate by ten days advance written notice. 
 

 12. BINDING EFFECT ON SUCCESSORS; BENEFIT. As provided in Section 2.4 above, this Warrant shall be binding upon any corporation succeeding the Company by merger, consolidation or acquisition of all or substantially all of the Company’s assets. All of the obligations of the Company relating to the Common Stock issuable upon the exercise of this Warrant shall survive the exercise and termination of this Warrant. All of the covenants and agreements of the Company shall inure to the benefit of the successors and assigns of the Holder hereof. This Warrant shall be for the sole and exclusive benefit of the Holder and nothing in this Warrant shall be construed to confer upon any person other than the Holder any legal or equitable right, remedy or claim hereunder. 
 

 13. DESCRIPTIVE HEADINGS AND GOVERNING LAW. The description headings of the several sections and paragraphs of this Warrant are inserted for convenience only and do not constitute a part of this Warrant. This Warrant shall be construed and enforced in accordance with, and the rights of the parties shall be governed by the laws of the State of Nevada.
 

 14. LOST WARRANTS. The Company represents and warrants to the Holder hereof that upon receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction, or mutilation of this Warrant and, in the case of any such loss, theft or destruction, upon receipt of an indemnity reasonably satisfactory to the Company, or in the case of any such mutilation upon surrender and cancellation of such Warrant, the Company, at its expense, will make and deliver a new Warrant, of like tenor, in lieu of the lost, stolen, destroyed or mutilated Warrant. 
 

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 15. FRACTIONAL SHARES.  No fractional shares shall be issued upon exercise of this Warrant. The Company shall, in lieu of issuing any fractional share, pay the Holder entitled to such fraction a sum in cash equal to such fraction multiplied by the then effective Exercise Price. 
 

 16. REDEMPTION. This Warrant may be redeemed at the option of the Company, at a redemption price (the “Redemption Price”) of $.001 per Warrant at any time upon twenty (20) days’ prior written notice. On and after the date fixed for redemption, the Holder shall have no rights with respect to this Warrant except to receive the $.001 per Warrant upon surrender of this Certificate. The Company covenants and agrees that it will honor all Exercise Notices tendered through the Business Day immediately preceding the Redemption Date. The redemption payment shall be made in cash on the date fixed for redemption in the Company’s notice of redemption, as described below (the “Redemption Date”). The redemption payment is due in full on the Redemption Date. Notwithstanding anything to the contrary contained in this Warrant, the Company shall have the option, without further compensation to the Holder other than the payment of the Redemption Price per Warrant, to cause any or all of the Warrants (each, a “non-Exercised Warrant”) which were not properly exercised on or before the Redemption Date to be assigned to one or more third parties (each, a “ Standby Purchaser”), effectively immediately upon the Redemption Date, for the consideration equal to $.001 per Non-Exercised Warrant payable to the Company, and (c) each Standby Purchaser shall have the right to exercise the Non-Exercised Warrants so assigned to such Standby Purchaser through the tenth business day following the Redemption Date. 
 

      The notice of redemption shall specify: (i) the Redemption Price; (ii) the date not more than twenty (20) days from mailing which is fixed for redemption (the “Redemption Date”); (iii) the place where Warrant Certificates shall be delivered and the redemption price paid; and (iv) that the right to exercise the Warrants shall terminate at 5:00 p.m. (Pacific Coast time) on the Business Day immediately preceding the Redemption Date. An affidavit of the Secretary or an Assistant Secretary of the Company that notice of redemption has been mailed shall, in the absence of fraud, be conclusive evidence of the facts stated therein. 
 

      From and after the Redemption Date, the Company shall, at the place specified in the notice of redemption, upon presentation and surrender to the Company by or on behalf of the Holder thereof of this Warrant, deliver or cause to be delivered to or upon the written order of such holder a sum of cash equal to the Redemption Price of each such Warrant. From and after the Redemption Date and upon the deposit or setting aside by the Company of a sum sufficient to redeem all the Warrants called for redemption, such Warrants shall expire and become void and all rights hereunder and shall cease, except the right, if any, to receive payment of the Redemption Price. 
 

      IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed by its officers, thereunto duly authorized this 
 

      Dated: ________________
  
 	 	 	 	
	  
	 Blue Earth, Inc.
a Nevada corporation

	  

	  
	 By:  
	  
	  

	  
	  
	 Name: Johnny R. Thomas 
	  

	  
	  
	 Title:  CEO
	  

	  
	  
	 Address:
2298 Horizon Ridge Parkway, Suite 205 Henderson, NV 89052
	  

	  

 

 

 

 

 

 

 8
 

 
 SCHEDULE A 
 SUBSCRIPTION FORM 
 

 

 

 Date:  _________, 2013                      
 

 

 

 Blue Earth, Inc. - Attn: CEO 
 

 Ladies and Gentlemen: 
     
 The undersigned hereby elects to exercise the Warrant issued to it by Blue Earth, Inc. (“Company”) and dated July 3, 2013, (“Warrant”) and to purchase thereunder _______ shares of the Common Stock of the Company (“ Shares”) at a purchase price of  $3.00 per Share or an aggregate purchase price of ____________ Dollars ($___) (“Exercise Price”).
 

 Pursuant to the terms of the Warrant, the undersigned has delivered the Exercise Price herewith in full in cash or by certified check or wire transfer. 
 

 

 Very truly yours, 
 

 

 _____________________
 Signature
 

 

 

 _____________________
 Print Name
   
 

 

 

 

 

 

 

 

 

 

  
 

 9
 

 
 SCHEDULE B
 TRANSFER NOTICE 
 To Be Executed by the Holder
in Order to Assign Warrants 
 FOR VALUE RECEIVED,
 ______________________________   hereby sells, assigns and transfers unto 
 PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER 
 	 	 	 	 	
	  
	  
	  
	  
	  

	   
	  
	   
  
	  
	   

	  
	  
	  
	  
	  

	   
	  
	   
  
	  
	   

	  
	  
	  
	  
	  

	   
	  
	   
  
	  
	   

	   
	  
	 [please print or type name and address]
	  
	  

 

  ____________________________  of the Warrants represented by this Warrant Certificate, and hereby irrevocably constitutes and appoints ___________________________ Attorney to transfer this Warrant Certificate on the books of the Company, with full power of substitution in the premises. 
 

 	 	 	 	 	 	 	 	 	 	 	
	 Dated: 
	  
	 _______________
  
	  
	  
	  
	  
	 x  
	 _______________________
  
 Signature Guaranteed 
	  
	  

 

 THE SIGNATURE TO THE ASSIGNMENT OR THE SUBSCRIPTION FORM MUST CORRESPOND TO THE NAME AS WRITTEN UPON THE FACE OF THIS WARRANT CERTIFICATE IN EVERY PARTICULAR, WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATSOEVER, AND MUST BE GUARANTEED BY A COMMERCIAL BANK OR TRUST COMPANY OR A MEMBER FIRM OF THE NEW YORK STOCK EXCHANGE, NYSE AMEX, PACIFIC STOCK EXCHANGE OR MIDWEST STOCK EXCHANGE. 
   
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 10neau_ex101.htm

EXHIBIT 10.1

 

SECURITIES PURCHASE AGREEMENT

 

This SECURITIES PURCHASE AGREEMENT (the “Agreement”) is dated as of December 31 2013 by and among Northeast Automotive Holdings, Inc., a corporation organized under the laws of Nevada (the “Company”), and each purchaser identified on the signature pages hereto (individually, a “Purchaser” and collectively, the “Purchasers”).

 

W I T N E S S E T H:

WHEREAS, the Company is conducting a private offering (the “Offering”) consisting of a minimum of $2,000,000 of Units, as defined below and a maximum of $4,500,000 of Units, with each Unit consisting of five (5) shares (the “Shares”) of the Company’s common stock, $0.001 par value per share (the “Common Stock”) and one (1) five-year warrants to purchase shares of the Company’s Common Stock at an exercise price of $0.32 per share (the “Warrants”), pursuant to Section 4(2) of the Securities Act of 1933, as amended (the “Securities Act”) and Rule 506 promulgated under Regulation D (“Regulation D”) thereunder in accordance with the rules and regulations of the United States Securities and Exchange Commission (the “Commission”);

 

WHEREAS, the Offering is described in a Private Placement Memorandum dated August 16, 2013 (the “Memorandum”) and

 

WHEREAS, each Purchaser desires to purchase that number of Units set forth on such Purchaser’s signature page attached hereto on the terms and conditions hereinafter set forth; and

 

NOW, THEREFORE, in consideration of the premises and the mutual representations and covenants hereinafter set forth, the parties hereto do hereby agree as follows:

 

I. PURCHASE AND SALE OF UNITS

 

Section 1.1 Purchase and Sale of Units; Form of Payment. Upon the terms and conditions set forth herein, at the Closing the Company shall issue and sell to each Purchaser, and each Purchaser severally, but not jointly, shall irrevocably purchase from the Company such number of Units as is set forth on such Purchaser’s signature page hereto in exchange for payment by such Purchaser of the amount (the “Purchase Price”) as is set forth on such Purchaser’s signature page hereto. Pending the sale of the Minimum Offering Amount of Units, all funds paid hereunder shall be deposited in an escrow account (“Escrow Account”) with Cross River Bank (the “Escrow Agent”). Each Purchaser shall deliver its respective Purchase Price for the Units to be issued and sold to such Purchaser at the Closing by wire transfer of immediately available funds to the Escrow Account in accordance with the following wiring instructions, such funds to be wired at the time such Purchaser executes this Agreement:

 

Account Name:

Acct #:

ABA/Routing #:

SWIFT Code:

Address:

  

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Section 1.2 Offering Period; Closing. The Units will be offered for sale until the earlier of (a) the date upon which subscriptions for all of the Units offered in the Offering have been accepted by the Company; (b) the date upon which the Company and the Placement Agent elect to terminate the Offering; or (c) September 30, 2013, subject to the right of the Company to extend the Offering for a period of up to 60 days (the “Termination Date”). Each Purchaser acknowledges and understands that the Offering is being made on an “all-or-none” basis for the Minimum Offering Amount and a “best efforts” basis for the Maximum Offering Amount. Each Purchaser acknowledges and understands that the Closing hereunder shall be conducted only upon the receipt and acceptance by the Company of subscriptions for all of the Units offered in the Offering. The closing of the purchase and sale of the Units (the “Closing”) to be acquired by the Purchasers from the Company under this Agreement shall take place at the offices of Cyruli Shanks Hart & Zizmor, LLP counsel to the Company, at 1:00 p.m., New York time on such date as the Placement Agent and the Company may agree upon; provided, that all of the conditions set forth in Article III hereof and applicable to the Closing shall have been fulfilled or waived in accordance herewith (the “Closing Date”).

 

Section 1.3 Deliveries at Closing. Subject to the terms and conditions of this Agreement, at the Closing (a) the Company shall issue that number of Units set forth on such Purchaser’s signature page hereto in the name of each such Purchaser; and (b) such Purchaser’s Purchase Price for the Units being purchased by such Purchaser will be delivered on behalf of each such Purchaser from the Escrow Account to the Company. Each Purchaser acknowledges and agrees that certificates evidencing the Common Stock and the Warrants will not be issued and delivered at the Closing and further acknowledges and agrees that the Company shall issue certificates evidencing the Common Stock and the Warrants within ten (10) days of the Closing.

 

Section 1.4 Kogeto Acquisition Transaction. The parties hereto acknowledge that the Closing will be subject to, among other things, the consummation of the acquisition by the Company of Kogeto, Inc., a Delaware corporation, pursuant to an Agreement and Plan of Merger.

 

ARTICLE II

REPRESENTATIONS AND WARRANTIES

 

Section 2.1 Representations and Warranties of the Company. The Company hereby makes the following representations and warranties to each Purchaser as of the Closing Date:

 

(a) Organization, Good Standing and Power. The Company is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Nevada and has the requisite corporate power to own, lease and operate its properties and assets and to conduct its business as it is now being conducted. The Company does not have any operating subsidiaries except as set forth in the Offering Documents. The Company and each such subsidiary is duly qualified as a foreign corporation to do business and is in good standing in every jurisdiction in which the nature of the business conducted or property owned by it makes such qualification necessary except for any jurisdiction(s) (alone or in the aggregate) in which the failure to be so qualified could not reasonably be expected to have a Material Adverse Effect (as defined in Section 2.1(c) hereof) on the Company’s financial condition.

 

  

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(b) Authorization; Enforcement. The Company has the requisite corporate power and authority to enter into and perform this Agreement, the Merger Agreement and the Escrow Agreement by and among the Company, Koegto, Placement Agent and the Escrow Agent (the “Escrow Agreement”) (collectively, the “Transaction Documents”) and to issue and sell the Units in accordance with the terms hereof. The execution, delivery and performance of the Transaction Documents by the Company and the consummation by it of the transactions contemplated hereby and thereby have been duly and validly authorized by all necessary corporate action, and no further consent or authorization of the Company or its Board of Directors or stockholders is required. This Agreement has been duly executed and delivered by the Company. The other Transaction Documents will have been duly executed and delivered by the Company at the Closing. Each of the Transaction Documents constitutes, or shall constitute when executed and delivered, a valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, fraudulent transfer, fraudulent conveyance, moratorium, liquidation, conservatorship, receivership or similar laws relating to, or affecting generally the enforcement of, creditor’s rights and remedies or by other equitable principles of general application.

 

(c) Capitalization. The authorized capital stock of the Company and the shares thereof issued and outstanding immediately prior to the Closing will be as set forth in the Memorandum. Except as set forth in the Company’s reports filed with the Commission or as contemplated by the Transaction Documents, the Agreement and Plan of Merger or the Memorandum, there are no contracts, commitments, understandings, or arrangements by which the Company is or may become bound to issue additional shares of the capital stock of the Company or options, securities or rights convertible into shares of capital stock of the Company. The Company has furnished or made available to the Purchasers true and correct copies of the Company’s Certificate of Incorporation as in effect on the date hereof (the “Certificate”), and the Company’s Bylaws as in effect on the date hereof (the “Bylaws”). For purposes of this Agreement, “Material Adverse Effect” means any material adverse effect on the business, operations, properties, or financial condition of the Company and its subsidiaries, taken as a whole and/or any condition, circumstance, or situation that would prohibit or otherwise materially interfere with the ability of the Company to perform any of its obligations under this Agreement in any material respect.

 

(d) Issuance of Securities. The Units have been duly and validly authorized and, when issued and paid for pursuant to this Agreement, will be validly issued, fully paid and nonassessable, and shall be free and clear of all encumbrances and restrictions (other than those created by the Purchasers), except for restrictions on transfer set forth in the Transaction Documents or imposed by applicable securities laws. The Common Stock which are part of the Units will be validly issued, fully paid and non-assessable free and clear of all encumbrances and restrictions, except for restrictions imposed by applicable securities laws and except for those created by the Purchasers.

 

  

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(e) No Conflicts. The execution, delivery and performance of the Transaction Documents by the Company and the consummation by the Company of the transactions contemplated herein and therein do not and will not (i) violate any provision of the Company’s Certificate or Bylaws, (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, mortgage, deed of trust, indenture, note, bond, license, lease agreement, instrument or obligation to which the Company is a party or by which it or its properties or assets are bound, (iii) create or impose a lien, mortgage, security interest, charge or encumbrance of any nature on any property of the Company under any agreement or any commitment to which the Company is a party or by which the Company is bound or by which any of its respective properties or assets are bound, or (iv) result in a violation of any federal, state, local or foreign statute, rule, regulation, order, judgment or decree (including Federal and state securities laws and regulations) applicable to the Company or any of its subsidiaries or by which any property or asset of the Company or any of its subsidiaries are bound or affected, except, in all cases other than violations pursuant to clauses (i) and (iv) above, for such conflicts, defaults, terminations, amendments, accelerations, cancellations and violations as could not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect.

 

Section 2.2 Representations and Warranties of the Purchasers. Each Purchaser hereby makes the following representations and warranties to the Company as of the date hereof and Closing Date, with respect solely to itself and not with respect to any other Purchaser:

 

(a) Organization and Good Standing of the Purchasers. If the Purchaser is an entity, such Purchaser is a corporation, partnership or limited liability company duly incorporated or organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization.

 

(b) Authorization and Power. Each Purchaser which is an entity has the requisite power and authority to enter into and perform this Agreement and each of the other Transaction Documents to which such Purchaser is a party and to purchase the Units being sold to it hereunder. The execution, delivery and performance of this Agreement and each of the other Transaction Documents to which such Purchaser is a party by such Purchaser and the consummation by it of the transactions contemplated hereby and thereby have been duly authorized by all necessary corporate or partnership action, and no further consent or authorization of such Purchaser or its Board of Directors, stockholders, or partners, as the case may be, is required. This Agreement and each of the other Transaction Documents to which such Purchaser is a party has been duly authorized, executed and delivered by such Purchaser and constitutes, or shall constitute when executed and delivered, a valid and binding obligation of such Purchaser enforceable against such Purchaser in accordance with the terms thereof. If the purchaser is an individual, such individual is over 18 and has the legal capacity to enter into this Agreement.

 

  

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(c) No Conflicts. The execution, delivery and performance of this Agreement and each of the other Transaction Documents to which such Purchaser is a party and the consummation by such Purchaser of the transactions contemplated hereby and thereby or relating hereto do not and will not (i) result in a violation of such Purchaser’s charter documents, bylaws, operating agreement, partnership agreement or other organizational documents (if such Purchaser is not a natural person) 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 or obligation to which such Purchaser is a party or by which its properties or assets are bound, or result in a violation of any law, rule, or regulation, or any order, judgment or decree of any court or governmental agency applicable to such Purchaser or its properties (except for such conflicts, defaults and violations as would not, individually or in the aggregate, have a material adverse effect on such Purchaser). Such Purchaser is not required to obtain any consent, authorization or order of, or make any filing or registration with, any court or governmental agency in order for it to execute, deliver or perform any of its obligations under this Agreement or any other Transaction Document to which such Purchaser is a party or to purchase the Units in accordance with the terms hereof.

 

(d) Acquisition for Investment. Such Purchaser is acquiring the Units proposed to be acquired by such Purchaser hereunder solely for its own account for the purpose of investment and not with a view to or for the resale or distribution of any part thereof. Such Purchaser does not have a present intention to sell such Units, nor a present arrangement (whether or not legally binding) or intention to effect any distribution of such Units to or through any person or entity; provided, however, that by making the representations herein and subject to Section 2.2(h) below, such Purchaser does not agree to hold such Units for any minimum or other specific term and reserves the right to dispose of such Units at any time in accordance with federal and state securities laws applicable to such disposition.

 

(e) Accredited Investor; Suitability. Such Purchaser is an “accredited investor” as defined in Regulation D. Such Purchaser is not required to be registered as a broker-dealer under Section 15 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and such Purchaser is not a broker-dealer, nor an affiliate of a broker-dealer. Such Purchaser has sufficient knowledge and experience in finance, securities, investments and other business matters to be able evaluate the risks and merits of its investment in the Company and to protect such Purchaser’s interests in connection with the transactions contemplated by this Agreement and such Purchaser has consulted, to the extent that it has deemed necessary, with its tax, legal, accounting and financial advisors concerning its investment in the Units and can afford to bear such risks for an indefinite period of time, including, without limitation, the risk of losing its entire investment in the Shares.

 

(f) Opportunities for Additional Information. Such Purchaser acknowledges that it has been given full access to such records of the Company, Kogeto and to the respective officers of the Company and Kogeto and received such information as it has deemed necessary or appropriate to conduct its due diligence investigation. Such Purchaser acknowledges that such Purchaser has had the opportunity to ask questions of and receive answers from, or obtain additional information from, the executive officers of the Company and Kogeto concerning the financial and other affairs of the Company and Kogeto, as the case may be, and that all such questions have been answered to Purchaser’s full satisfaction. Except as expressly set forth in this Agreement, no oral or written representations or warranties have been made to Purchaser by the Company or Kogeto or by any respective agent, employee, or affiliate of the Company or Kogeto,. In making the decision to invest in the Company and its business, such Purchaser hereby acknowledges that such Purchaser has relied solely upon the Memorandum and that the Memorandum supersedes any other information provided to such Purchaser.

 

  

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(g) Risk Factors. Such Purchaser is aware that an investment in the Units involves substantial risks. Purchaser has reviewed and understands the risk factors contained in the Memorandum. The purchases of the Units offered hereby must be regarded as the placing of funds at high risk in a new venture with all of the unforeseen costs, expenses, problems and difficulties to which such ventures are subject. There can be no assurance that the Company will be able to successfully implement its business plan or develop into a successful or profitable business.

 

(h) No General Solicitation. Such Purchaser acknowledges that Units were not offered to such Purchaser by means of any form of general or public solicitation or general advertising, or publicly disseminated advertisements or sales literature, including (i) any advertisement, article, notice or other communication published in any newspaper, magazine, or similar media, or broadcast over television or radio, or (ii) any seminar or meeting to which such Purchaser was invited by any of the foregoing means of communications.

 

(i) Restricted Securities. Such Purchaser understands that the Shares and Warrants are “restricted securities” under the Securities Act and that the Shares must be held indefinitely unless such Shares are registered under the Securities Act or an exemption from registration is available. Such Purchaser acknowledges that such Purchaser is familiar with Rule 144 of the rules and regulations of the Commission, as amended, promulgated pursuant to the Securities Act (“Rule 144”), and that such person has been advised that Rule 144 permits resales only under certain circumstances. Such Purchaser understands that to the extent that Rule 144 is not available, such Purchaser will be unable to sell any Shares without either registration under the Securities Act or the existence of another exemption from such registration requirement. Such Purchaser will not transfer any or all of such Purchaser’s Shares or Warrants absent an effective registration statement under the Securities Act and applicable state securities law covering the disposition of such Purchaser’s Shares or Warrants without first providing the Company with an opinion of counsel (which counsel and opinion are reasonably satisfactory to the Company) to the effect that such transfer will be exempt from the registration and the prospectus delivery requirements of the Securities Act and the registration or qualification requirements of any applicable state securities laws. Such Purchaser understands and agrees that the Shares have not been registered under the Securities Act or the securities laws of any state of the United States.

 

(j) Independent Investment. No Purchaser has agreed to act with any other Purchaser for the purpose of acquiring, holding, voting or disposing of the Shares and Warrants compromising the Units purchased hereunder for purposes of Section 13(d) under the Exchange Act, and each Purchaser is acting independently with respect to its investment in the Units.

 

  

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(k) Trading Activities and Confidentiality. Other than the transactions contemplated hereunder, such Purchaser has not directly or indirectly, nor has any person acting on behalf of or pursuant to any understanding with such Purchaser, executed any acquisition or disposition, including short sales or puts, in the securities of the Company during the period commencing from the time that such Purchaser first received any material, whether in writing or otherwise, from the Company or any other person setting forth the material terms of the transactions contemplated hereunder. Such Purchaser covenants that until such time as the transactions contemplated by this Agreement are publicly disclosed by the Company, such Purchaser will maintain the confidentiality of all disclosures made to it in connection with this transaction (including the existence and terms of this transaction). Each Purchaser agrees that it shall not, directly or indirectly, engage in any short sales with respect to the Common Stock for a period of one (1) year following the Closing.

 

(l) No Governmental Review. Such Purchaser understands that no United States federal or state agency or any other governmental agency has passed on or made recommendations or endorsement of the Units or the suitability of the investment in the Units nor have such authorities passed upon or endorsed the merits of the offering of the Units.

 

(m) Participation by Affiliates. Such Purchaser acknowledges and agrees that the officers, directors, affiliates and other insiders of the Company and of Northeast Auto are permitted to purchase Units in the Offering and that any such purchases shall be counted toward the amount of the Offering.

 

(n) Brokers. Other than to the Placement Agent, each Purchaser has no knowledge of any brokerage or finder’s fees or commissions that are or will be payable by the Company or any Subsidiary to any broker, financial advisor or consultant, finder, placement agent, investment banker, bank or other person or entity with respect to the transactions contemplated by this Agreement.

 

(o) Escrow Agent. Each Purchaser agrees that all funds for subscriptions for the Units will be held by the Escrow Agent pursuant to the Escrow Agreement in a non-interest bearing account and that the Escrow Agent shall be authorized to release such funds to the Company upon satisfaction of the conditions to Closing. Each Purchaser hereby authorizes and directs the Company and the Placement Agent to direct the Escrow Agent to return any funds for unaccepted subscriptions to the same account from which the funds were drawn, without interest. Each Purchaser agrees to be bound by the terms of the Escrow Agreement as if it is a signatory thereto.

 

(p) Correctness of Representation; Reliance. Such Purchaser understands that the Units are being offered and sold in reliance on a transactional exemption from the registration requirement of federal and state securities laws and the Company is relying upon the truth and accuracy of the representations, warranties, agreements, acknowledgments and understandings of such Purchaser set forth herein and the Investor Questionnaire accompanying this Agreement in the form attached hereto as Exhibit B (the “Investor Questionnaire”) in order to determine the applicability of such exemptions and the suitability of such Purchaser to acquire the Units. Such Purchaser further represents and warrants that this Agreement and the Investor Questionnaire do not contain any untrue statement or a material fact or omit any material fact concerning such Purchaser. Such Purchaser agrees, acknowledges and understands that the Company and its counsel are entitled to rely on the representations, warranties and covenants made by such Purchaser herein.

 

  

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(q) Residency. Such Purchaser represents and warrants that Purchaser is a bona fide resident of, and is domiciled in, the state so designated on the signature page hereto.

 

ARTICLE III

CONDITIONS

 

Section 3.1 Conditions Precedent to the Obligation of the Company to Sell the Units. The obligation hereunder of the Company to issue and sell the Units to the Purchasers is subject to the satisfaction or waiver, at or before the Closing, of each of the conditions set forth below. These conditions are for the Company’s sole benefit and may be waived by the Company at any time in its sole discretion.

 

(a) Accuracy of Each Purchaser’s Representations and Warranties. The representations and warranties made by each Purchaser in this Agreement and each of the other Transaction Documents to which such Purchaser is a party qualified as to materiality shall be true and correct at all times prior to and on the Closing Date, except to the extent any such representation or warranty expressly speaks as of an earlier date, in which case such representation or warranty shall be true and correct as of such earlier date, and, the representations and warranties made by each Purchaser in this Agreement and each of the other Transaction Documents to which such Purchaser is a party not qualified as to materiality shall be true and correct in all material respects at all times prior to and on the Closing Date, except to the extent any such representation or warranty expressly speaks as of an earlier date, in which case such representation or warranty shall be true and correct in all material respects as of such earlier date.

 

(b) Performance by the Purchasers. Each Purchaser shall have performed, satisfied and complied in all respects with all covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied with by such Purchaser at or prior to the Closing.

 

(c) No Injunction. No statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or endorsed by any court or governmental authority of competent jurisdiction which prohibits the consummation of any of the transactions contemplated by this Agreement.

 

(d) Delivery of Purchase Price. The Purchase Price for all of the Units shall have been delivered to the Escrow Agent pursuant to the Escrow Agreement and the aggregate amount of such Purchase Price shall be equal to or greater than the amount of the Offering.

 

(e) Delivery of Transaction Documents. Each Purchaser shall have duly executed and delivered to the Company each of the Transaction Documents to which it is a party.

 

(f) Closing of Koegto Transaction. Prior to or contemporaneous with the Closing, the Agreement and Plan of Merger shall have been consummated.

 

Section 3.2 Conditions Precedent to the Obligation of the Purchasers to Purchase the Units. The obligation hereunder of each Purchaser to acquire and pay for the Units is subject to the satisfaction or waiver, at or before the Closing, of each of the conditions set forth below. These conditions are for each Purchaser’s sole benefit and may be waived by such Purchaser at any time in its sole discretion.

 

  

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(a) Accuracy of the Company’s Representations and Warranties. The representations and warranties made by the Company in this Agreement and each of the other Transaction Documents to which the Company is a party qualified as to materiality shall be true and correct at all times prior to and on the Closing Date, except to the extent any such representation or warranty expressly speaks as of an earlier date, in which case such representation or warranty shall be true and correct as of such earlier date, and, the representations and warranties made by the Company in this Agreement and each of the other Transaction Documents to which the Company is a party not qualified as to materiality shall be true and correct in all material respects at all times prior to and on the Closing Date, except to the extent any such representation or warranty expressly speaks as of an earlier date, in which case such representation or warranty shall be true and correct in all material respects as of such earlier date.

 

(b) Performance by the Company. The Company shall have performed, satisfied and complied in all respects with all covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied with by the Company at or prior to the Closing.

 

(c) No Injunction. No statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or endorsed by any court or governmental authority of competent jurisdiction which prohibits the consummation of any of the transactions contemplated by this Agreement.

 

(d) No Proceedings or Litigation. No action, suit or proceeding before any arbitrator or any governmental authority shall have been commenced, and no investigation by any governmental authority shall have been threatened, against the Company or any subsidiary, or any of the officers, directors or affiliates of the Company or any subsidiary seeking to restrain, prevent or change the transactions contemplated by this Agreement, or seeking damages in connection with such transactions.

 

(e) Material Adverse Effect. No Material Adverse Effect shall have occurred at or before the Closing Date.

 

(f) Delivery of Transaction Documents. The Company shall have duly executed and delivered to each Purchaser each of the Transaction Documents to which it is a party.

 

(g) Closing of Koegto Transaction. Prior to or contemporaneous with the Closing, the Agreement and Plan of Merger shall have been consummated.

 

  

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ARTICLE IV

STOCK CERTIFICATE LEGEND

 

Section 4.1 Each certificate representing the Common Stock and the Warrants, and, if appropriate, securities issued upon conversion thereof, shall be stamped or otherwise imprinted with a legend substantially in the following form (in addition to any legend required by applicable state securities or “blue sky” laws):

 

THESE SECURITIES REPRESENTED BY THIS CERTIFICATE (THE “SECURITIES”) HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”) OR ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS REGISTERED UNDER THE SECURITIES ACT AND UNDER APPLICABLE STATE SECURITIES LAWS OR THE COMPANY SHALL HAVE RECEIVED AN OPINION OF COUNSEL THAT REGISTRATION OF SUCH SECURITIES UNDER THE SECURITIES ACT AND UNDER THE PROVISIONS OF APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED.

ARTICLE V

MISCELLANEOUS

 

Section 5.1 Fees and Expenses. Except as otherwise set forth in this Agreement and the other Transaction Documents, each party shall pay the fees and expenses of its advisors, counsel, accountants and other experts, if any, and all other expenses, incurred by such party incident to the negotiation, preparation, execution, delivery and performance of this Agreement.

 

Section 5.2 Entire Agreement; Amendment. This Agreement and the other Transaction Documents contains the entire understanding and agreement of the parties with respect to the matters covered hereby and, except as specifically set forth herein or in the Transaction Documents, neither the Company nor any of the Purchasers makes any representations, warranty, covenant or undertaking with respect to such matters and they supersede all prior understandings and agreements with respect to said subject matter, all of which are merged herein. No provision of this Agreement nor any of the Transaction Documents may be waived or amended other than by a written instrument signed by the Company and at a majority of the Units and no provision hereof may be waived other than by an a written instrument signed by the party against whom enforcement of any such amendment or waiver is sought. No such amendment shall be effective to the extent that it applies to less than all of the holders of the Units, as the case may be, then outstanding. No consideration shall be offered or paid to any person to amend or consent to a waiver or modification of any provision of any of the Transaction Documents unless the same consideration is also offered to all of the parties to the Transaction Documents or holders of the Units, as the case may be.

 

  

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Section 5.3 Notices. Any notice, demand, request, waiver or other communication required or permitted to be given hereunder shall be in writing and shall be effective (a) upon hand delivery by telex (with correct answer back received), telecopy or facsimile at the address or number designated below (if delivered on a business day during normal business hours where such notice is to be received), or the first business day following such delivery (if delivered other than on a business day during normal business hours where such notice is to be received) or (b) on the second business day following the date of mailing by express courier service, fully prepaid, addressed to such address, or upon actual receipt of such mailing, whichever shall first occur. The addresses for such communications shall be:

 

If to the Company:

 

With a required copy to:

 

If to any Purchaser:

 

At the address of such Purchaser set forth on such Purchaser’s signature page to this Agreement, with copies to Purchaser’s counsel as set forth on such Purchaser’s signature page to this Agreement or as specified in writing by such Purchaser.

Any party hereto may from time to time change its address for notices by giving at least ten (10) days written notice of such changed address to the other party hereto.

 

Section 5.4 Waivers. No waiver by either party of any default with respect to any provision, condition or requirement of this Agreement shall be deemed to be a continuing waiver in the future or a waiver of any other provisions, condition or requirement hereof, nor shall any delay or omission of any party to exercise any right hereunder in any manner impair the exercise of any such right accruing to it thereafter.

 

Section 5.5 Headings. The article, section and subsection headings in this Agreement are for convenience only and shall not constitute a part of this Agreement for any other purpose and shall not be deemed to limit or affect any of the provisions hereof.

 

Section 5.6 Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their successors and assigns. The Company may not assign this Agreement or any rights or obligations hereunder without the prior written consent of each Purchaser (other than by merger). Following the Closing, any Purchaser may assign any or all of its rights under this Agreement to any person to whom such Purchaser assigns or transfers any Shares or Warrants comprising the Units, provided that such transferee agrees in writing to be bound, with respect to the transferred Shares or Warrants, by the provisions of the Transaction Documents that apply to the Purchasers.

 

Section 5.7 No Third Party Beneficiaries. This Agreement is intended for the benefit of the parties hereto and their respective permitted successors and assigns and is not for the benefit of, nor may any provision hereof be enforced by, any other person.

 

  

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Section 5.8 Governing Law. This Agreement and the other Transaction Documents shall be governed by the laws of the state of New York, without giving effect to principles of conflicts of laws. Each of the Company and the Purchasers (a) hereby irrevocably submits to the jurisdiction of the United States District Court sitting in the Southern District of New York and the courts of the State of New York located in New York county for the purposes of any suit, action or proceeding arising out of or relating to this Agreement or any of the other Transaction Documents or the transactions contemplated hereby or thereby and (b) hereby waives, and agrees not to assert in any such suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of such court, that the suit, action or proceeding is brought in an inconvenient forum or that the venue of the suit, action or proceeding is improper. Each of the Company and the Purchasers consents to process being served in any such suit, action or proceeding by mailing a copy thereof to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing in this Section 65.8 shall affect or limit any right to serve process in any other manner permitted by law. Each party hereto agrees that a final judgment in any action or proceeding so brought shall be conclusive and may be enforced by suit on the judgment or in any other manner provided by law or at equity.

 

Section 5.9 Survival. The representations and warranties of the Company and the Purchasers shall survive the execution and delivery hereof and the Closings hereunder for a period of one year following the Closing Date.

 

Section 5.10 Counterparts. This Agreement may be executed in any number of counterparts, each of which when so executed shall be deemed to be an original and, all of which taken together shall constitute one and the same Agreement and shall become effective when counterparts have been signed by each party and delivered to the other parties hereto, it being understood that all parties need not sign the same counterpart. In the event that any signature is delivered by facsimile transmission or by e-mail delivery of a “.pdf” format data file, such signature shall create a valid and binding obligation of such party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile or “.pdf” signature page were an original thereof.

 

Section 5.11 Severability. The provisions of this Agreement and the Transaction Documents are severable and, in the event that any court of competent jurisdiction shall determine that any one or more of the provisions or part of the provisions contained in this Agreement or the Transaction Documents shall, for any reason, be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision or part of a provision of this Agreement or the Transaction Documents and such provision shall be reformed and construed as if such invalid or illegal or unenforceable provision, or part of such provision, had never been contained herein, so that such provisions would be valid, legal and enforceable to the maximum extent possible.

 

Section 5.12 Further Assurances. From and after the date of this Agreement, upon the request of any Purchaser or the Company, each of the Company and the Purchasers shall execute and deliver such instrument, documents and 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 and the other Transaction Documents.

 

  

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Section 5.13 Independent Nature of Purchasers’ Obligations and Rights. The obligations of each Purchaser under this Agreement and the other Transaction Documents to which it is a party are several and not joint with the obligations of any other Purchaser, and no Purchaser shall be responsible in any way for the performance of the obligations of any other Purchaser under this Agreement or any other Transaction Document. Nothing contained herein, and no action taken by any Purchaser pursuant hereto, shall be deemed to constitute the Purchasers as, and the Company acknowledges that the Purchasers do not so constitute, a partnership, an association, a joint venture or any other kind of group or entity, or create a presumption that the Purchasers are in any way acting in concert or as a group or entity with respect to such obligations or the transactions contemplated by this Agreement or any matters, and the Company acknowledges that the Purchasers are not acting in concert or as a group, and the Company shall not assert any such claim, with respect to such obligations or the transactions contemplated by this Agreement. The Company and each Purchaser confirms that each Purchaser has independently participated with the Company in the negotiation of the transaction contemplated hereby with the advice of its own counsel and advisors. Each Purchaser shall be entitled to independently protect and enforce its rights, including, without limitation, the rights arising out of this Agreement, and it shall not be necessary for any other Purchaser to be joined as an additional party in any proceeding for such purpose. It is expressly understood and agreed that each provision contained in this Agreement is between the Company and a Purchaser, solely, and not between the Company and the Purchasers collectively and not between and among the Purchasers.

 

Section 5.14 Construction. The parties hereto have participated jointly in the negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the parties hereto and no presumption or burden of proof shall arise favoring or disfavoring any party hereto by virtue of the authorship of any of the provisions of this Agreement. Any reference to any federal, state, local, or foreign statute or law shall be deemed also to refer to all rules and regulations promulgated thereunder, unless the context requires otherwise. Unless otherwise expressly provided, the word “including” shall mean including without limitation. The parties hereto intend that each representation, warranty, and covenant contained herein shall have independent significance. If any party hereto has breached any representation, warranty, or covenant contained herein in any respect, the fact that there exists another representation, warranty, or covenant relating to the same subject matter (regardless of the relative levels of specificity) which such party has not breached shall not detract from or mitigate the fact that such party is in breach of such representation, warranty, or covenant. All words used in this Agreement will be construed to be of such gender or number as the circumstances require.

 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officer as of the date first above written.

 

	 	NORTHEAST AUTOMOTIVE HOLDINGS, INC.	 
	 	 	 	 
	
   

	
By: 

	    	 
	 	Name:	 	 
	 	Title:	 	 
	 	 	 	 

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK

SIGNATURE PAGE FOR PURCHASER FOLLOWS]

 

  

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[PURCHASER SIGNATURE PAGE TO SECURITIES PURCHASE AGREEMENT]

IN WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement to be duly executed by their respective authorized signatories as of the date first indicated above.

Name of Purchaser: _________________________________________________________________

Signature of Authorized Signatory of Purchaser: __________________________________________

Name of Authorized Signatory: ________________________________________________________

Title of Authorized Signatory: _________________________________________________________

Email Address of Authorized Signatory: __________________________________________________

Facsimile Number of Authorized Signatory: _______________________________________________

State of Residency / Domicile: _________________________________________________________

Address for Notice of Purchaser:

 

__________________________________________________

__________________________________________________

__________________________________________________

 

Attention: __________________________________________

Telephone No.: ______________________________________

Facsimile No.: ________________________________________

Address for Delivery of Units for Purchaser (if not same as address for notice):

 

__________________________________________________

__________________________________________________

__________________________________________________

Attention: __________________________________________

 

Number of Units: ____________ x $50,000.00 = $____________ (the “Purchase Price”)

 

EIN Number or SSN

 

 

 

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