COMMON STOCK PURCHASE AGREEMENT

Exhibit 10.5

 

COMMON STOCK PURCHASE AGREEMENT

 

This Common Stock Purchase Agreement (this “ Agreement ”) is made and entered into as of the 27 ^th day of May, 2009 by, between and among America West Resources, Inc., a Nevada corporation (the “ Company ”), and each of Denly Utah Coal, LLC, a Texas limited liability company (“ Denly ”), John Thomas Bridge and Opportunity Fund, L.P., a Delaware limited partnership (“ JTBOF ”), Thomas Murch, an individual (“ Murch ”), James J. Moore, an individual (“ Moore ”) and John A. Meeks, an individual (“ Meeks ”) (Denly, JTBOF, Murch, Moore and Meeks, together with any subsequent holders of any of the Investors’ Common Stock, are sometimes referred to in this Agreement, collectively, as the “ Investors ”).

ARTICLE I.
RECITALS

1.01

Company .  The Company was initially incorporated on July 13, 1990 and as of the date of this Agreement has only one class of its capital stock issued and outstanding, that being its $.0001 par value common stock (the “ Common Stock ”).  The Company is engaged in the coal mining business in Utah.

1.02

Consideration .  Each of the Parties acknowledges that each has given and received good, valuable and present consideration to support each of the obligations of the Parties under this Agreement.

ARTICLE II.
TRANSACTION TO BE EFFECTED PURSUANT TO THIS AGREEMENT

2.01

Issuance and Sale of Common Stock for Cash .  Subject to the terms and conditions of this Agreement, at the Closing, the Company shall issue and sell to the Investors, and the Investors shall purchase from the Company, Forty One Million Eight Hundred Thousand (41,800,000) shares of Common Stock (the “ Investors’ Common Stock ”) for an aggregate purchase price of One Hundred Fifty Thousand Dollars ($150,000) and being a price of approximately $.0035885 per share.  The Investors shall purchase the Investors’ Common Stock from the Company in the following amounts among them:

Investors

Shares

Price

 

Denly

20,900,000 shares

$  75,000

JTBOF

14,630,000 shares

$  52,500

Murch

  2,508,000 shares

$    9,000

Moore

  2,090,000 shares

$    7,500

Meeks

  1,672,000 shares

$    6,000

41,800,000 shares

$150,000

 

2.02

Determination of Purchase Price for the Investors’ Common Stock .  The Company and the Investors acknowledge that the purchase price for the Investors’ Common stock under this Agreement is fair and reasonable and has been determined by negotiation, with each of the Parties considering, among other factors, the following:

 

(a)

the fact that the Company’s principal operating subsidiary recently emerged from bankruptcy, and continues to experience operating losses; and

(b)

the fact that the Company has experienced operating losses in 2006, 2007 and 2008 (including an operating loss of $6,579,895 in 2008); and

(c)

the fact that the Company has a substantial negative net worth; and

(d)

the fact that the Company's auditors have indicated in their report relating to the Company’s December 31, 2008 financial statements that there is “substantial doubt about the Company’s ability to continue as a going concern”; and

(e)

the fact that in 2008 a substantial number of unregistered shares of Common Stock were issued by the Company at a price of $.02 per share or less; and

(f)

the fact that the current global credit crisis has made the continued financing of the operations of the Company and its Subsidiaries very difficult; and

(g)

the fact that the mining equipment currently available to the Company is not adequate to produce coal in quantities necessary for the Company to be profitable; and

(h)

the fact that the market for the stock of the Company will not absorb a substantial volume of sales of the Company’s Common Stock at almost any price.

2.03

Registration Rights Agreement .  When issued, the Investors’ Common Stock shall have the benefit of that certain Registration Rights Agreement to be executed by the Company in the form attached as Exhibit A to this Agreement (the “ Registration Rights Agreement ”).

2.04

Cancellation of 1,800,000 Shares of Common Stock Previously Issued to JTBOF .  JTBOF and the Company agree that the 1,800,000 shares (the “ April Shares ”) of Common Stock issued to JTBOF in April of 2009 in connection with a loan made by JTBOF to the Company that will be repaid in full at the Closing will be cancelled, and JTBOF agrees to return the certificates evidencing all of the April Shares to the Company for cancellation prior to the expiration of ten (10) days after the Closing.

ARTICLE III.
CLOSINGS

3.01

Date and Place of Closing .  The closing (the “ Closing ”) hereunder with respect to the issuance and sale of the shares of Common Stock and the consummation of the related transactions contemplated hereby shall, subject to the satisfaction or waiver of the applicable conditions set forth in Article VII, take place at the offices of Graves, Dougherty, Hearon & Moody, P.C., 401 Congress Avenue, Suite 2200, Austin, Texas 78701 on the date (the “ Closing Date ”) the conditions to such Closing set forth in Article VII are fully satisfied.

3.02

Deliveries at Closing .  

(a)

At, or prior to, the Closing, the Company shall:

 

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(i)

deliver to the Investors a copy certified by the Secretary of State of the State of Nevada of the Articles of Incorporation of the Company and all amendments thereto;

(ii)

deliver to the Investors a Secretary’s Certificate executed by the Secretary of the Company certifying to the incumbency of the Chief Executive Officer of the Company, and certifying to and attaching (A) the Bylaws of the Company and all amendments thereto, (B) the resolutions of the Board of Directors of the Company authorizing and approving the execution, delivery and performance of this Agreement;

(iii)

deliver to the Investors the opinion of the Company’s counsel, in the form acceptable to the Investors;

(iv)

deliver to the Investors certificate evidencing the Investors’ Common Stock in customary form and containing only the restrictive legend described in Section 5.03 below; and

(v)

execute and deliver to the Investors the Registration Rights Agreement.

(b)

At the Closing, the Investors shall:

(i)

deliver to the Company the purchase price for the Investors’ Common Stock; and

(ii)

execute and deliver to the Company the Registration Rights Agreement.

ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY

4.01

Representations and Warranties of the Company .  The Company represents and warrants to the Investors as set forth in this Article IV.

4.02

Organization and Standing of the Company; Authority.  The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Nevada and has all requisite corporate power to carry on its business as now conducted and as proposed to be conducted, and the Company has the corporate power to enter into and perform this Agreement and to issue and sell the Investors’ Common Stock as herein provided.  The Company is duly qualified or licensed as a foreign corporation and in good standing in each jurisdiction in which the character or location of the property owned, leased or operated by it or the nature of the business conducted by it makes such qualification necessary.  The Company is not in default in the performance, observance or fulfillment of any provisions of its Articles of Incorporation or bylaws.

4.03

Capitalization of the Company .  Immediately prior to execution of this Agreement and the Closing:

 

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(a)

the authorized capital stock of the Company consists entirely of Three Hundred Million (300,000,000) shares of Common Stock, and Two Million Five Hundred Thousand (2,500,000) shares of $.0001 par value Preferred Stock (“ Preferred Stock ”);

(b)

166,650,957 shares of Common Stock are issued and outstanding, no (0) shares of Preferred Stock are issued or outstanding, and the Company has outstanding warrants, options and a right pursuant to an employment agreement to purchase and issue Common Stock in the aggregate amount of 35,357,183 shares;

(c)

the Company has no issued or outstanding capital stock or obligations to issue capital stock except as set forth in subsection (b) above.

4.04

Duly Issued .  Upon issuance and delivery to each of the Investors of the Investors’ Common Stock against payment of the purchase price therefore pursuant to this Agreement and the Escrow Agreement, such shares will be validly issued, fully paid and non-assessable shares of Common Stock, and will be free and clear of all liens, charges, restrictions, claims and encumbrances imposed by or through the Company.

4.05

Authorization .  The Company has the requisite corporate power and authority to enter into this Agreement and each of the Transaction Documents required to be entered into by the Company pursuant to the terms and conditions hereof and thereof, respectively, and to perform its obligations hereunder and thereunder.  This Agreement, the issuance, sale and delivery of the shares of Investors’ Common Stock have, and each of the Transaction Documents, when executed and delivered by the Company, will have been duly authorized, executed and delivered by and on behalf of the Company and will constitute the valid and binding agreements of the Company, enforceable in accordance with their respective terms, except as enforceability may be limited by bankruptcy, insolvency, reorganization or similar laws affecting creditors’ rights generally.

4.06

SEC Filings; Financial Statements .  The Company has provided to the Investors copies of or internet access to its Form 10K SB/A filed with the Commission on April 15, 2009 for the period ended December 31, 2008, the Form 10Q filed with the Commission on May 20, 2009 for the period ended March 31, 2009, and all Form 8-K’s filed with the SEC since January 1, 2009 (collectively, the “ SEC Filings ”).  The SEC Filings are accurate and complete in all material respects and contain all information required to be set forth in the same.  The financials statements included in the SEC Filings (collectively, the “ Financial Statements ”) present fairly, in accordance with GAAP, the financial position and the results of operation and cash flow of the Company as of the dates and for the periods indicated therein (with any of such Financial Statements that are unaudited subject to normal audit adjustments).  

4.07

No Conflict .  The execution, delivery and performance of this Agreement and the other Transaction Documents to which the Company is a party will not violate the Articles of Incorporation or Bylaws of the Company and will not violate any provision of law, or order of any court or governmental agency affecting the Company in any respect, and will not conflict with, result in a breach of the provisions of, constitute a default under any material agreement binding on the Company, or result in the imposition of any lien, charge, or encumbrance upon any assets of the Company that could have a Material Adverse Effect.  No approval or consent from any third party not already obtained is required in connection with the execution of or performance under this Agreement or the Transaction Documents.

 

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4.08

No Material Adverse Changes .  Since January 1, 2009, there have been no Material Adverse Changes other than as set forth in any of the SEC Filings.  

4.09

Governmental Authorization: Third Party Consents .  No approval, consent, compliance, exemption, authorization or other action by, or notice to, or filing with, any Governmental Authority or any other Person in respect of any Requirement of Law, and no lapse of a waiting period under a Requirement of Law, is necessary or required in connection with the execution, delivery or performance by the Company or enforcement against the Company of this Agreement or the Transaction Documents to which any such Person is a party or the transactions contemplated thereby.

4.10

Representations and Warranties in Other Agreements .  The representations and warranties made by the Company in the other Transaction Documents, and in any other certificates delivered pursuant hereto or thereto, are true and correct in all material respects (except where any such representation and warranty is stated as being true only as of a specific date, in which case such representation and warranty was true and correct in all material respects on such date).

4.11

Disclosure .  This Agreement, the SEC Filings, the Financial Statements and the documents and certificates furnished to the Investors by the Company on or prior to the Closing do not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements contained herein or therein, in the light of the circumstances under which they were made, not misleading.  There is no fact known to the Company which the Company has not disclosed to the Investors in writing, which has had or would reasonably be expected to have a Material Adverse Effect.

ARTICLE V.
REPRESENTATIONS AND WARRANTIES OF INVESTORS

5.01

Representations and Warranties of the Investors .  Each of the Investors severally (but not jointly) represents and warrants to the Company as set forth in this Article V.

5.02

Authorization; Authority .  This Agreement and each of the Transaction Documents has been duly authorized and executed by such Investor (to the extent such Investor is a party to the same) and constitutes a valid agreement binding upon the Investor, enforceable in accordance with its terms (except to the extent that such enforceability may be limited by bankruptcy or similar laws affecting creditors’ rights generally or by general equitable principles).  Such Investor has the full legal right, power and authority to enter into this Agreement and each of the Transaction Documents to which it is a party and to perform such Investor’s obligations hereunder and thereunder upon the terms and conditions herein and therein set forth.

 

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5.03

Securities Not Registered .  Such Investor is acquiring the shares of Common Stock being purchased by such Investor hereunder for such Investor’s own account and not with a view to or for sale in connection with the distribution thereof in violation of applicable securities laws.  Such Investor has been advised that the shares of the Common Stock to be issued and sold hereunder have not been registered under the Securities Act, or applicable state securities laws and that they must be held indefinitely unless the offer and sale thereof are subsequently registered under the Securities Act or any exemption from such registration is available.  Such Investor acknowledges and agrees that the certificates representing the shares of the Investors’ Common Stock will bear a restrictive legend in substantially the following form:

“THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS.  THE SHARES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE OFFERED FOR SALE, PLEDGED, HYPOTHECATED OR SOLD IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SHARES UNDER THE SECURITIES ACT OF 1933, A “NO ACTION” LETTER FROM THE SECURITIES AND EXCHANGE COMMISSION WITH RESPECT TO SUCH OFFER FOR SALE OR SALE, COMPLIANCE WITH RULE 144 UNDER THE SECURITIES ACT OF 1933, OR AN OPINION OF COUNSEL SATISFACTORY TO THE CORPORATION THAT SUCH REGISTRATION IS NOT REQUIRED.”

 

The Investor further acknowledges and agrees that the Company may issue appropriate “stop transfer” instructions to its transfer agent, if any, with respect to such securities and/or make appropriate notations to such effect in its own transfer records.  

 

5.04

Investment Experience, Etc .  The Investor represents that such Investor (i) has such knowledge and experience in financial and business matters that such Investor is capable of evaluating the merits and risks of the purchase of the Investors’ Common Stock, (ii) has a net worth significantly in excess of the amount of the purchase price for the Investors’ Common Stock and is able to bear the economic risk of a complete loss on the purchase of the Investors’ Common Stock, and (iii) is an “accredited investor” as that term is defined in Rule 501(a) of Regulation D under the Securities Act.

5.05

Finder’s Fees .  The Investors have not incurred any liability for commissions or other fees to any finder, broker or agent in connection with the transactions contemplated by this Agreement.

5.06

Receipt of Information .  Each Investor has received all the information it has requested from the Company and has received all the information that it considers necessary or appropriate for deciding whether to consummate the transactions described herein and to accept the Investors’ Common Stock, including but not limited to the SEC Filings and the Financial Statements.  Each Investor has had an opportunity to ask questions of and to receive answers from the Company and regarding the terms and conditions of the sale of the Investors’ Common Stocks.

 

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ARTICLE VI.
COVENANTS OF THE COMPANY

Subject to earlier expiration with respect to Section 6.10 as set forth herein, until the date Investors shall own less than ten percent (10.0%) of the Investors’ Common Stock, the Company and each Subsidiary of the Company shall:

6.01

Maintenance of Corporate Existence, etc .  Maintain in full force and effect its corporate existence, rights and franchises and all licenses and other rights in or to use patents, processes, licenses, trademarks, trade names or copyrights owned or possessed by it of any subsidiary and deemed by the Company to be necessary to the conduct of their business.

6.02

Prompt Payment of Taxes, etc .  Promptly pay and discharge, or cause to be paid and discharge, when due and payable, all lawful taxes, assessments and governmental charges or levies imposed upon the income, profits, property or business of the Company or any subsidiary; provided, however, that any such tax, assessment, charge or levy need not be paid if the validity thereof shall currently be contested in good faith by appropriate proceedings and if the Company shall have set aside on its books adequate reserves with respect thereto and provided, further, that the Company will pay all such taxes, assessments, charges or levies forthwith upon the commencement of proceedings to foreclose any lien which may have attached as security therefore. The Company will promptly pay or cause to be paid when due, or in conformance with customary trade terms or otherwise in accordance with policies related thereto adopted by the Company’s Board of Directors, all other indebtedness incident to operations of the Company.

6.03

Accounts and Records .  Keep true records and books of account in which full, true and correct entries will be made of all dealings or transactions in relation to its business and affairs in accordance with generally accepted accounting principles applied on a consistent basis.

6.04

Compliance with Requirements of Government Authorities .  Duly observe and conform to all valid requirements of governmental authorities relating to the conduct of their businesses or to their properties or assets.

6.05

Visits and Inspections .  Permit representatives of each Investor, from time to time, as often as may be reasonably requested, but only during normal business hours and upon reasonable prior notice, to visit and inspect its properties; inspect, audit and make extracts from its books, records and files, including, but not limited to, management letters prepared by independent accountants; and discuss with its principal officers and its independent accountants, its business, assets, liabilities, financial condition, results of operations and business prospects (and by this provision the Company authorizes such accountants to discuss the finances and affairs of the Company).

6.06

Conduct of Business .  Engage only in business consisting primarily of business conducted on the Closing Date and other businesses reasonably related thereto.

6.07

Use of Proceeds .  Use the proceeds of the sale of the Investors’ Common Stock only for the purposes provided for in the Escrow Agreement and the other Transaction Documents.

 

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6.08

Compliance with Agreements .  Perform and observe all of its material obligations to the Investors, set forth in this Agreement and the other Transaction Documents to which it is a party and the Articles of Incorporation, Bylaws or other organizational and governing documents of the Company.

6.09

Compliance with Transaction Documents .  Comply in all material respects with each term, condition and provision of the Articles of Incorporation, Bylaws and all other Transaction Documents to which the Company and any of the Investors is a party.

6.10

Issuance of Preferred Stock .  The Company shall not issue any Preferred Stock without the prior written consent of the holders of a majority of the shares of Investors’ Common Stock (provided that this Section 6.10 shall expire one (1) year from the date of this Agreement).

ARTICLE VII.
CONDITION TO INVESTORS’ OBLIGATION TO CLOSE

7.01

Conditions .  The obligation of Investors to close the purchase of the Investors’ Common Stock and to effect the Closing shall be expressly subject to, and conditioned upon, satisfaction of the following conditions:

(a)

all of the warranties and representations of the Company being true, correct, complete and accurate; and

(b)

full and timely performance by the Company of all of its obligations and covenants under this Agreement and each of the Transaction Documents.

7.02

Termination .  Investors may terminate this Agreement by written notice to the Company in the event of any one of the following:

(a)

the failure of any of the warranties or representations of the Company set forth in this Agreement or any of the Transaction Documents to be true, correct, complete and accurate; or

(b)

the failure of the Company to fully and timely perform any of its obligations under this Agreement or any of the other Transaction Documents; or

(c)

each of the conditions set forth at Section 7.01 above has not been fully satisfied or waived on or before May 31, 2009.

 

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ARTICLE VIII.
INDEMNIFICATION

8.01

Indemnification .  In addition to all other sums due hereunder or provided for in this Agreement, the Company agrees to indemnify and hold harmless each Investor and their Affiliates and their officers, directors, agents, employees, subsidiaries, partners and controlling Persons (each, an “ Indemnified Party ”) to the fullest extent permitted by law, from and against any and all out-of-pocket losses, claims, damages, expenses (including reasonable fees, disbursements and other charges of counsel) or other liabilities (collectively, “ Liabilities ”) resulting from or arising out of (a) any breach of any representation or warranty, covenant or agreement of the Company in this Agreement or any of the other Transaction Documents or (b) any investigation or proceeding against the Company or any Indemnified Party and arising out of or in connection with this Agreement or any of the Transaction Documents, whether or not the transactions contemplated by this Agreement are consummated, which investigation or proceeding requires the participation of, or is commenced or filed against, any Indemnified Party because of this Agreement, any other Transaction Document or such other documents and the transactions contemplated hereby or thereby, provided, that the Company shall not be liable under this Section 8.01 to an Indemnified Party for any liabilities resulting primarily from any actions that involved the gross negligence or willful misconduct of such Indemnified Party; and provided, further, that if and to the extent that such indemnification is unenforceable for any reason, the Company shall make the maximum contribution to the payment and satisfaction of such Liabilities for which it would otherwise be liable hereunder which shall be permissible under applicable laws.  In connection with the obligation of the Company to indemnify for Liabilities as set forth above, the Company further agrees, upon presentation of appropriate invoices containing reasonable detail, to reimburse each Indemnified Party for all such Liabilities (including reasonable fees, disbursements and other charges of counsel) as they are incurred by such Indemnified Party; provided, that if an Indemnified Party is reimbursed hereunder for any Liabilities, such reimbursement of Liabilities shall be refunded to the extent it is finally judicially determined that the Liabilities in question resulted primarily from the willful misconduct or gross negligence of such Indemnified Party.  The obligations of the Company under this paragraph will survive any transfer of the Investors’ Common Stock.  In the event that the foregoing indemnity is unavailable or insufficient to hold an Indemnified Party harmless, then the Company will contribute to amounts paid or payable by such Indemnified Party in respect of such Indemnified Party’s Liabilities in such proportions as appropriately reflect the relative benefits received by and fault of the Company and such Indemnified Party in connection with the matters as to which such Liabilities relate and other equitable considerations.

 

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8.02

Notification .  Each Indemnified Party under this Article VIII will, promptly after the receipt of notice of the commencement of any action, investigation, claim or other proceeding against such Indemnified Party in respect of which indemnity may be sought from the Company under this Article VIII, notify the Company in writing of the commencement thereof.  The omission of any Indemnified Party so to notify the Company of any such action shall not relieve the Company from any liability which it may have to such Indemnified Party under this Article VIII unless, and only to the extent that, such omission results in the Company’s forfeiture of substantive rights or defenses or the Company is otherwise irrevocably prejudiced in defending such proceeding.  In case any such action, claim or other proceeding shall be brought against any Indemnified Party and it shall notify the Company of the commencement thereof, the Company shall be entitled to assume the defense thereof at its own expense, with counsel satisfactory to the Company; provided, that any Indemnified Party may, at its own expense, retain separate counsel to participate in such defense.  Notwithstanding the foregoing, in any action, claim or proceeding in which both the Company, on the one hand, and an Indemnified Party, on the other hand, is, or is reasonably likely to become, a party, such Indemnified Party shall have the right to employ separate counsel at the Company’s expense and to control its own defense of such action, claim or proceeding if, (a) the Company has failed to assume the defense and employ counsel as provided herein, (b) the Company has agreed in writing to pay such fees and expenses of separate counsel or (c) in the reasonable opinion of counsel to such Indemnified Party, a conflict or likely conflict exists between the Company, on the one hand, and such Indemnified Party, on the other hand, that would make such separate representation advisable, provided, however, that the Company shall not in any event be required to pay the fees and expenses of more than one separate counsel (and if deemed necessary by such separate counsel, appropriate local counsel who shall report to such separate counsel).  The Company agrees that it will not, without the prior written consent of an Indemnified Party, settle, compromise or consent to the entry of any judgment in any pending or threatened claim, action or proceeding relating to the matters contemplated hereby (if such Indemnified Party is a party thereto or has been actually threatened to be made a party thereto) unless such settlement, compromise or consent includes an unconditional release of such Indemnified Party from all liability arising or that may arise out of such claim, action or proceeding.  The Company shall not be liable for any settlement of any claim, action or proceeding effected against an Indemnified Party without the prior written consent of the Company.  The rights accorded to Indemnified Parties hereunder shall be in addition to any rights that any Indemnified Party may have at common law, by separate agreement or otherwise.

 

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ARTICLE IX.
ANTIDILUTION PROVISIONS

9.01

Additional Shares .  In the event that at any time after the Closing Date and prior to the expiration of one hundred eighty (180) days following the repayment in full of all of the Notes, the Company issues shares of its Common Stock or any preferred stock, warrants, stock options or other agreements or securities convertible, exercisable or exchangeable into Common Stock (each, an “ Issuance ”), other than in connection with an “ Excluded Issuance ” (defined below) with respect to which the price per share (the “ Issuance Price ”) of Common Stock (as determined in accordance with Section 9.03 below and as adjusted for any stock splits, stock dividends, reverse splits or other similar transactions) is less than $.10, the Company shall, contemporaneously with each such Issuance, issue and deliver to each of the holders of the Investors’ Common Stock, at a price equal to $.0001 per share, that number of additional shares of its Common Stock, pro rata amongst such holders as set forth in the following formula:  

X=[(A-B)x(C/B)]

Where:

X = the number of additional shares of Common Stock issuable to the holders of the Investors’ Common Stock, to be divided among them on a pro rata basis based upon their respective ownership of Investors’ Common Stock

A = the number of shares of Common Stock that the Investors would have been able to purchase for $4,000,000 of consideration at the Issuance Price

B = the number of shares of the Investors’ Common Stock issued to the Investors under this Agreement at the Closing, plus any additional shares of Common Stock issued to the holders of Investors’ Common Stock in accordance with this Section 9.01

C = the number of shares of Common Stock issued (or deemed issued) in connection with the Issuance

9.02

Excluded Issuance .  For purposes of this Agreement, the term “ Excluded Issuance ” shall mean and include any of the following:

(a)

Issuance of shares of Common Stock after the Closing Date to contractors and other third parties in consideration for services paid to the Company or any of its Subsidiaries, with the aggregate amount of all such Issuances not to exceed 5,000,000 shares of Common Stock;

(b)

Issuance of shares of Common Stock after the Closing Date in connection with the exercise of any stock options, warrants or other agreements (including any issuance of common stock pursuant to any anti-dilution or adjustment provision in any such agreement) to the extent such option, warrant or other agreement is in effect as of the date of this Agreement;

 

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(c)

Issuance of shares of Common Stock to employees, officers or directors of the Company or any of its Subsidiaries or in connection with the exercise of any stock options issued after the Closing Date to employees, officers and directors of the Company or any of its Subsidiaries, with the aggregate amount of all such Issuances under this Subsection (c) not to exceed 5,000,000 shares of Common Stock;

(d)

Issuance of shares of Common Stock in connection with this Agreement; and

(e)

Issuance of shares of Common Stock issued upon or issuable by reason of a stock dividend or stock split; and

(f)

Any Issuance which each of Denly and JTBOF agree in writing is an Excluded Issuance.

9.03

Determination of Issuance Price Consideration for Stock .  In case any Issuance shall be issued for cash, the Issuance Price shall be equal to the purchase price of the Common Stock by the new purchasers.  In case such Issuance shall be for consideration other than cash, the determination of the Issuance Price shall be deemed to be the fair value of such consideration as determined in good faith by the Board of Directors of the Company based upon the opinion of a qualified and independent appraiser or investment banker.  In cas