Exhibit 4.1
FNDS3000 CORP.
AND
ATLAS MERCHANT SERVICES,
LLC
NOTE PURCHASE
AGREEMENT
This NOTE PURCHASE AGREEMENT
dated as of October 29, 2008 (this “ Agreement
”), is entered into by and between FNDS3000 CORP , a
Delaware corporation (the “ Parent ”), with its
principal executive office at 818 A1A North, Suite #201, Ponte
Vedra Beach, FL 32082 (the “ Principal Office
”), ATLAS MERCHANT SERVICES, LLC , a Nevada limited
liability company (the “ Subsidiary ” and,
together with the Parent, the “ Issuers ”) with
its principal executive office at the Principal Office, and
SHERINGTON HOLDINGS, LLC , a Georgia limited liability
company (“ Purchaser ”).
RECITALS
A. On the terms and subject to the
conditions set forth herein, Purchaser is willing to purchase from
the Issuers, and the Issuers are willing to sell to Purchaser, a
joint and several convertible secured promissory note (in the form
of Exhibit A hereto) in the original principal amount of
Three Hundred and Twenty Thousand Dollars ($320,000) (the
“Note” ).
B. Capitalized terms not otherwise
defined herein shall have the meaning set forth in the form of Note
(as defined below) attached hereto as Exhibit A
.
AGREEMENT
NOW THEREFORE, in consideration of
the foregoing, and the representations, warranties, and conditions
set forth below, the parties hereto, intending to be legally bound,
hereby agree as follows:
1. The Note .
(a) Issuance of the Note . At
the Closing (as defined below) the Issuers, jointly and severally,
agree to issue and sell to Purchaser, and, subject to all of the
terms and conditions hereof, Purchaser agrees to purchase, the
Note.
(b) Delivery . The sale and
purchase of the Note shall take place at a closing (the “
Closing ”) to be held at such place and time as the
Issuers and Purchaser may determine (the “ Closing
Date ”). At the Closing, the Issuers will deliver the
Note to the Purchaser, against receipt by the Issuers of the
purchase price of Three Hundred Twenty Thousand Dollars ($320,000)
(the “ Purchase Price ”). The Note will be
registered in Purchaser’s name in the Issuers’
records.
(c) Use of Proceeds . The
proceeds of the sale and issuance of the Note will be used
(i) to repay existing indebtedness in a principal amount of
$70,000, (ii) for working capital and (iii) for general
corporate purposes.
(d) Payments . The Issuers
will make all cash payments due under the Note in immediately
available funds by 2:00 P.M. (prevailing Eastern Time) on the
date such payment is due in such manner as Purchaser may direct in
writing from time to time.
(e) Interest; Effect of
Conversion. The Issuers shall pay to Purchaser any interest
accrued on the amount converted by such Purchaser. Upon conversion
of the Note in full and the payment of any amounts specified in
this Section 1(e) , the Issuers shall be forever
released from all their obligations and liabilities under the
Note.
2. Representations and
Warranties of the Issuers . The Issuers, jointly and severally, represent
and warrant to Purchaser that:
(a) Due Incorporation,
Qualification, etc . The Parent is a corporation duly
organized, validly existing and in good standing under the laws of
the State of Delaware. The Subsidiary is a limited liability
company duly organized, validly existing and in good standing under
the laws of the State of Nevada. Each Issuer (i) has the power
and authority to own, lease and operate its properties and carry on
its business as now conducted; and (ii) is duly qualified,
licensed to do business and in good standing as a foreign
corporation or limited liability company, as applicable, in each
jurisdiction in which the failure to be so qualified or licensed
could reasonably be expected to have a material adverse effect on
the business, financial condition or results of operations of
either of the Issuers (a “ Material Adverse Effect
”).
(b) Authority . The
execution, delivery and performance by each Issuer of each
Transaction Document (as defined in Section 5(e)
hereof) to be executed by such Issuer, and the consummation of the
transactions contemplated thereby (i) are within the power of
each Issuer and (ii) have been duly authorized by all
necessary corporate or company action on the part of such
Issuer.
(c) Enforceability . Each
Transaction Document executed, or to be executed, by such Issuer(s)
has been, or will be, duly executed and delivered by such Issuer(s)
and constitutes, or will constitute, a legal, valid and binding
obligation of such Issuer(s), enforceable against such Issuer(s) in
accordance with its terms, except as limited by bankruptcy,
insolvency or other laws of general application relating to or
affecting the enforcement of creditors’ rights generally and
general principles of equity.
(d) Non-Contravention . The
execution and delivery by Issuer of the Transaction Documents
executed by each Issuer and the performance and consummation of the
transactions contemplated thereby do not and will not:
(i) violate such Issuer’s certificate of incorporation,
bylaws, articles of formation or operating agreement, as applicable
(collectively, the “ Organizational Documents ”)
or any material judgment, order, writ, decree, statute, rule or
regulation applicable to such Issuer; (ii) violate any
provision of, or result in the breach or the
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acceleration of, or entitle any other Person to
accelerate (whether after the giving of notice or lapse of time or
both), any material mortgage, indenture, agreement, instrument or
contract to which such Issuer is a party or by which it is bound;
or (iii) result in the creation or imposition of any lien upon
any property, asset or revenue of such Issuer or the suspension,
revocation, impairment, forfeiture, or nonrenewal of any material
permit, license, authorization or approval applicable to such
Issuer, its business or operations, or any of its assets or
properties.
(e) Approvals . No consent,
approval, order or authorization of, or registration, declaration
or filing with, any governmental authority or other Person
(including, without limitation, the stockholders of any Person) is
required in connection with the execution and delivery of the
Transaction Documents executed by either Issuer and the performance
and consummation of the transactions contemplated
thereby.
(f) No Violation or Default .
Neither Issuer is in material violation of or in material default
with respect to: (i) its Organizational Documents (in each
case as currently in effect) or any material judgment, order, writ,
decree, statute, rule or regulation applicable to such Issuer;
(ii) any material mortgage, indenture, agreement, instrument
or contract to which such Issuer is a party or by which it is
bound; or (iii) any federal, state, local or foreign law,
ordinance or regulation or other requirement of any governmental or
regulatory body, court or arbitrator applicable to the business of
such Issuer (nor is there any waiver in effect which, if not in
effect, would result in such a violation or default).
(g) Capitalization . The
authorized capital stock of the Parent consists solely of
70,000,000 shares of Common Stock, par value $0.001 per share, of
which (a) 28,500,000 shares are issued and outstanding,
(b) no shares are held in treasury, (c) 11,500,000 shares
are reserved for issuance upon the exercise of options and warrants
outstanding (the “ Option and Warrant Shares ”),
and (d) 1,280,000 shares are reserved for issuance upon the
exercise of certain convertible notes outstanding (the “
Conversion Shares ”). All of the issued and
outstanding shares of Common Stock have been duly authorized and
are validly issued, fully paid and nonassessable. Except as set
forth in the Parent’s certification of incorporation or this
Agreement (including the Note), and except for options and warrants
relating to the Option and Warrant Shares and for the convertible
notes relating to the Conversion Shares, there are no options,
warrants, conversion privileges, preemptive rights or other rights
presently outstanding to purchase or otherwise acquire any
authorized but unissued shares of capital stock or other securities
of the Parent, or any other written agreements of the Parent to
issue any such securities or rights.
(h) Absence of Undisclosed
Liabilities and Obligations . Neither Issuer has any liability
or obligation, either accrued, absolute, direct, or to such
Issuer’s knowledge, contingent or indirect, or otherwise,
whether as principal, agent, partner, co-venturer, guarantor or in
any capacity whatsoever other than (i) obligations and
liabilities that are not individually or in the aggregate material
and (ii) obligations under contracts made in the ordinary
course of business.
(i) Accuracy of Information
Furnished . The Issuers understand and confirm that the
Purchaser will rely on the representations and warranties and
covenants herein effecting transactions in securities of the
Issuers. None of the Transaction Documents and none of the
other
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certificates, statements or information
furnished to the Purchaser by or on behalf of the Issuers, or
either of them, in connection with the Transaction Documents or the
transactions contemplated thereby contains or will contain any
untrue statement of a material fact or omits or will omit to state
a material fact necessary to make the statements therein, in the
light of the circumstances under which they were made, not
misleading.
(j) Litigation . There is no
pending or, to the best knowledge of the Issuers, threatened
action, suit, proceeding or investigation before any court,
governmental agency or body, or arbitrator having jurisdiction over
the Issuers, or any of their affiliates that would affect the
execution by the Issuers or the performance by the Issuers of their
obligations under the Transaction Documents. There is no pending,
or to the best of knowledge of the Issuers, basis for a threatened
action, suit, proceeding or investigation before any court,
governmental agency or body, or arbitrator having jurisdiction over
the Issuers, or any of their affiliates which litigation if
adversely determined would have or be reasonably likely to have a
Material Adverse Effect.
(k) Financial Statements .
The Issuers have delivered to the Purchaser, or their
representatives, true and complete copies of their financial
statements complied as to form and substance with applicable
accounting requirements and the published rules and regulations
of
(l) Stop Transfer . The Note
and the securities into which the Note is convertible
(collectively, the “ Securities ”), when issued,
will be restricted securities. The Issuers will not issuer any stop
transfer order or other order impending the sale, resale or
delivery of any of the Securities, except as may be required by any
applicable federal or state securities laws and unless
contemporaneous notice of such instruction is given to
Purchaser.
(m) No Integrated Offering .
Neither Issuer, nor any of its affiliates, nor any person acting on
their behalf, has directly or indirectly made any offers or sales
of any security or solicited any offers to buy any security under
circumstances that would cause the offer of the Securities pursuant
to this Agreement to be integrated with prior offerings by either
of the Issuers for purposes of the 1933 Act or any applicable
stockholder approval provisions. Neither Issuer will take any
action or steps that would cause the offer or issuance of the
Securities to be integrated with other offerings. The Issuers will
not conduct any offering other than the transactions contemplated
hereby that will be integrated with the offer or issuance of the
Securities.
(n) No General Solicitation;
Private Placement . Neither Issuer, or to its knowledge, any
person acting on their behalf, has engaged in any form of general
solicitation or general advertising (within the meaning of
Regulation D under the 1933 Act) in connection with the offer or
sale of the Securities. Assuming the accuracy of the
Purchaser’s representations and warranties set forth in
Section 3(b), no registration under the 1933 Act is required
for the offer and sale of the Securities by the Issuers to the
Purchaser under the Transaction Documents.
(o) Acknowledgement Regarding
Purchaser’s Purchase of the Securities . The Issuers
acknowledge and agree that the Purchaser is acting solely to the
capacity of an arm’s length purchaser with respect to this
Agreement, the Transaction Documents and the transactions
contemplated hereby and thereby. The Issuers further acknowledge
that the Purchaser is not acting
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as a financial advisor or fiduciary of the
Issuers (or in any similar capacity) with respect to the Agreement,
the Transaction Documents and the transactions contemplated hereby
and thereby and any advice given by the Purchaser or any of their
respective representative or agents in connection with this
Agreement, the Transaction Documents and the transactions
contemplated hereby and thereby is merely incidental to
Purchaser’s purchase of the Securities. The Issuers further
represent to the Purchaser that the Issuer’s decision to
enter into this Agreement has been based solely on the independent
evaluation by the Issuers and their representatives.
(p) Investment Company .
Neither Issuer is an “investment company” within the
meaning of the Investment Company Act of 1940, as
amended.
(q) Solvency . Based on the
financial condition of the Issuers as of the Closing Date (and
assuming that the Closing shall have occurred), (i) each of
the Issuer’s saleable value of its assets exceeds the amount
that will be required to be paid on or in respect of the
Issuer’s existing debts and other liabilities (including
known contingent liabilities) as they mature, (ii) neither of
the Issuer’s assets constitute unreasonably small capital to
carry on its business for the current fiscal year as now conducted
and as proposed to be conducted including its capital needs taking
into account the particular capital requirements of the business
conducted by each of the Issuers, and projected capital
requirements and capital availability thereof, and (iii) the
current cash flow of each of the Issuers, together with the
proceeds the Issuers would receive, were they to liquidate all of
their assets, after taking into account all anticipated uses of the
cash, would be sufficient to pay all amounts on or in respect of
its debt when such amounts are required to be paid. Neither Issuer
will incur debts beyond its ability to pay such debts as they
mature (taking into account the timing and amounts of cash to be
payable on or in respect of its debt).
(r) Regulatory Permits . The
Issuers possess all material certificates, authorizations and
permits issued by the appropriate federal, state or foreign
regulatory authorities necessary to conduct their respective
businesses, and neither Issuer has received any notice of
proceedings relating to the revocation or modification of any such
certificate, authorization or permit.
(s) Tax Status . The Issuers
have made and filed through the date hereof (and has valid
extensions for applicable period thereafter) all federal and state
income and all other tax returns, reports, and declarations
required by any jurisdiction to which it is subject and (unless and
only to the extent that the Issuers has set aside on its books
provisions reasonably adequate for the payment of all unpaid and
unreported taxes) has paid all taxes and other governmental
assessments and charges that are material in amount, shown or
determined to be due on such returns, reports and declarations,
except those being contested in good faith and has set aside on its
books provision reasonably adequate for the payment of all taxes
for periods subsequent to the periods to which such returns,
reports or declarations apply, in each case, except where the
failure to make such filing or payment or set aside such amount
would not, individually or in the aggregate, have or be reasonably
likely to have a Material Adverse Effect. There are no unpaid taxes
claimed to be due by the taxing authority of any jurisdiction, and
the officers of the Issuers know of no basis for any such
claim.
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3. Representations and
Warranties of Purchaser . The Purchaser represents and warrants to the
Issuers upon the acquisition of the Note as follows:
(a) Binding Obligation . The
Purchaser has full legal capacity, power and authority to execute
and deliver this Agreement and to perform the Purchaser’s
obligations hereunder. Each of this Agreement and the Note issued
to the Purchaser is a valid and binding obligation of the
Purchaser, enforceable in accordance with its terms, except as
limited by bankruptcy, insolvency or other laws of general
application relating to or affecting the enforcement of
creditors’ rights generally and general principles of
equity.
(b) Securities Law Compliance
. The Purchaser has been advised that the Securities have not been
registered under the Securities Act, or any state securities laws
and, therefore, cannot be resold unless they are registered under
the Securities Act and applicable state securities laws or unless
an exemption from such registration requirements is available. The
Purchaser is aware that neither Issuer is under any obligation to
effect any such registration with respect to the Securities or to
file for or comply with any exemption from registration. The
Purchaser is purchasing the Securities for the Purchaser’s
own account for investment, not as a nominee or agent, and not with
a view to, or for resale in connection with, the distribution
thereof. The Purchaser has such knowledge and experience in
financial and business matters that the Purchaser is capable of
evaluating the merits and risks of such investment, is able to
incur a complete loss of such investment and is able to bear the
economic risk of such investment for an indefinite period of time.
The Purchaser is an “accredited investor” as such term
is defined in Rule 501 of Regulation D under the
Securities Act.
(c) Access to Information .
The Purchaser acknowledges that each Issuer has given the Purchaser
access to the corporate records and accounts of such Issuer and to
all information in its possession relating to the Issuers, has made
its officers and representatives available for interview by the
Purchaser, and has furnished the Purchaser with all documents and
other information required for the Purchaser to make an informed
decision with respect to the purchase of the Securities.
4. Covenants of the
Issuers . The
Issuers, jointly and severally, hereby covenant that from and after
the date of this Agreement and so long as any of the obligations
under the Note are outstanding:
(a) Corporate Existence;
Compliance with Law . Each Issuer will maintain its corporate
or company existence, as applicable, and use all commercially
reasonable efforts to comply with all laws, government regulations,
rules and ordinances and judicial orders, judgments and decrees
applicable to such Issuer and its business and properties other
than any such non-compliance that could not reasonably be expected
to result in a Material Adverse Effect or adversely effect the
ability of such Issuer to perform its obligations hereunder and
under the Transaction Documents to which it is a party.
(b) Taxes and Liens . Each
Issuer will (i) punctually pay and discharge or cause to be
paid and discharged before the same shall become delinquent
(A) all taxes, assessments and
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governmental charges lawfully imposed upon such
Issuer, or any of its property, or upon the income and profits
thereof; provided that such Issuer may delay payment of any amount
disputed in good faith and for which adequate reserves, in
accordance with generally acceptable accounting principals, have
been accrued, and (B) all lawful claims for labor, materials
and supplies which, if unpaid, might result in a lien upon the
property of such Issuer, (ii) withhold or cause to be withheld
all monies required to be withheld by such Issuer from employees
for income taxes, social security and unemployment insurance taxes
and (iii) complete and file, on a timely basis, all tax
returns and reports required to be filed by it.
(c) Maintain Property . Each
Issuer will cause all material properties used or useful in the
conduct of its business to be maintained and kept in good
condition, repair and working order and supplied with all necessary
equipment and will cause to be made all necessary repairs as in the
judgment of such Issuer may be necessary so that business carried
on in connection therewith may be properly and advantageously
conducted.
(d) Financial Statements and
Reports .
(i) Each Issuer will keep adequate
and accurate books of account and will prepare the financial
statements referred to herein, in accordance with generally
accepted accounting principles, consistently applied.
(ii) The Issuers will furnish to the
Purchaser, as soon as practicable (and in any event within ten
(10) days after available), an audited balance sheet of the
Issuers as of the end of the year and the related statement of
operations, cash flows, retained earnings or deficit and changes in
the financial position of the Issuers as of the end of the year, on
a consolidated basis, and accompanied by an audit report and
opinion in respect of such financial statements of the independent
certified public accountants acceptable to the
Purchaser.
(iii) The Issuers shall furnish to
the Purchaser any information delivered to other stockholders or
creditors of either Issuer substantially contemporaneously with the
delivery thereof to such stockholder or creditor.
(e) Insurance . The Issuers
will insure and keep insured, with reputable insurance companies,
so much of their properties, to such an extent and against such
risks, as reasonably prudent persons engaged in similar businesses
would customarily insure properties of a similar character or as
otherwise approved by the Parent’s Board of
Directors.
(f) Access to Books and
Records . The Issuers hereby covenant that from and after the
date of this Agreement and so long as any of the indebtedness
evidenced by the Note is outstanding that the Purchaser and the
Purchaser’s agents shall have (i) access upon reasonable
notice to the Issuers, during usual business hours, and as often as
may reasonably be desired, to the accounts, books and records of
the Issuers and shall permit the Purchaser to examine and make
copies therefrom, and from any other items, such information
relating to the Issuers as the Purchaser shall reasonably specify
and (ii) shall permit, upon reasonable notice to the Issuers,
the Purchaser to visit and inspect any of the properties of the
Issuers.
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(g) Right of First Refusal .
Purchaser shall be given not less than ten (10) days prior
written notice of any proposed sale (a “ New Offering
”) by either of the Issuers of Common Stock or other
securities or debt obligations, except in connection with
(i) full or partial consideration in connection with a
strategic merger, consolidation or purchase of substantially all of
the securities or assets of a corporation or other entity,
(ii) either Issuer’s issuance of securities in
connection with strategic license agreements and other partnering
arrangements so long as such issuances are not for the purpose of
raising capital, (iii) either Issuer’s issuance of
Common Stock or the issuance. If Purchaser exercises its right
pursuant to this Section 4(g), it shall have the right during
the ten (10) business days following receipt of the notice to
commit to purchase such offered Common Stock, debt or other
securities in the New Offering in accordance with the terms and
conditions set forth in the notice of sale in the same proportion
to each other as its purchase of the Note. In the event such terms
and conditions are modified during the notice period, Purchaser
shall be given prompt notice of such modification and shall have
the right during the ten (10) days following the notice of
modification to exercise such right.
5. Conditions to Closing by
The Purchaser . The
Purchaser’s obligations at the Closing are subject to the
fulfillment, on or prior to the Closing Date, of all of the
following conditions, any of which may be waived in whole or in
part by the Purchaser:
(a) Representations and
Warranties . The representations and warranties made by the
Issuers in Section 2 hereof shall have been true and
correct on the Closing Date.
(b) Governmental Approvals and
Filings . Except for any notices required or permitted to be
filed after the Closing Date with certain federal and state
securities commissions, the Issuers shall have obtained all
governmental approvals required in connection with the lawful sale
and issuance of the Note.
(c) Legal Requirements . At
the Closing, the sale and issuance by the Issuers, and the purchase
by the Purchaser, of the Note shall be legally permitted by all
laws and regulations to which the Purchaser or either of the
Issuers are subject.
(d) Proceedings and Documents
. All corporate and other proceedings in connection with the
transactions contemplated at the Closing and all documents and
instruments incident to such transactions shall be reasonably
satisfactory in form and substance to the Purchaser.
(e) Transaction Documents .
The Purchaser shall have received executed copies of this
Agreement, the Note, the Security Agreement and the Pledge
Agreement. This Agreement, the Note, the Security Agreement and the
Pledge Agreement, together with each other agreement, document and
instrument executed from time to time in connection herewith or
therewith, are referred to collectively in this Agreement as the
“ Transaction Documents .”
6. Conditions to Obligations
of the Issuers. The
Issuers’ obligation to issue and sell the Note at the Closing
is subject to the fulfillment, on or prior to the Closing Date, of
the following conditions, any of which may be waived in whole or in
part by the Issuers:
(a) Representations and
Warranties . The representations and warranties made by the
Purchaser in Section 3 hereof shall be true and correct
when made, and shall be true and correct on the Closing
Date.
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(b) Governmental Approvals and
Filings . Except for any notices required or permitted to be
filed after the Closing Date with certain federal and state
securities commissions, the Issuers shall have obtained all
governmental approvals required in connection with the lawful sale
and issuance of the Note.
(c) Legal Requirements . At
the Closing, the sale and issuance by the Issuers, and the purchase
by the Purchaser, of the Note shall be legally permitted by all
laws and regulations to which the Purchaser or either Issuer are
subject.
(d) Purchase Price . The
Purchaser shall have delivered to Issuer the Purchase Price in
respect of the Note being purchased.
7. Piggyback Registration
Rights .
(a) Notice of Rights . If
Parent determines to register the sale of any equity securities in
connection with an initial public offering of its Common Stock
pursuant to a registration under the Securities Act (an “
Initial Public Offering ”), Issuers shall notify
Purchaser in writing at least thirty (30) days prior to the
filing of any registration statement under the Securities Act for
purposes of a public offering of securities of Parent (whether in
connection with a public offering of securities by Parent, a public
offering of securities by shareholders of Parent, or both, but
excluding a registration relating solely to employee benefit plans,
or a registration relating to a corporate reorganization or other
transaction, or a registration on any registration form that does
not permit secondary sales). If Purchaser desires to include in any
such registration statement, all or any part of the Securities
held, it shall, within ten (10) days after receipt of the
above-described notice from the Issuers, so notify either of the
Issuers in writing and the Issuers shall use its commercially
reasonable efforts, subject to the provisions of this Section, to
include in such registration statement or prospectus all of the
Securities specified in such notice or notices. Such notice shall
state the intended method of disposition of the Securities by
Purchaser as set forth herein. If Purchaser decides not to include
all of its Securities in any registration statement thereafter
filed by the Issuer, Purchaser shall nevertheless continue to have
the right to include any of its Securities in any subsequent
registration statement or registration statements, as may be filed
by the Issuer with respect to offerings of its securities, all upon
the terms and conditions set forth herein.
(b) Underwriting . If the
registration statement under which Issuers gives notice under this
Section 7(b) is for an underwritten offering, the Issuers
shall so advise Purchaser as part of the notice given pursuant to
Section 7(a). In such event, the right of Purchaser to be
included in a registration or prospectus qualification pursuant to
this Section 7(b) shall be conditioned upon Purchaser’s
participation in such underwriting and the inclusion of
Purchaser’s Securities in the underwriting to the
ext
