Subscription Agreement.
In conjunction with the Operating Agreement, the Registrant entered into a Subscription and Customer Agreement (“Subscription Agreement”) with Third Coast Energy & Development, LLC, (“Third Coast”) as consideration for the Registrant’s participation in the Operating Agreement, in the amount of $303,986. The Registrant purchased eight (8) Units at the rate of $37,996 per Unit in the Program described above. The Units have not been registered with any federal or state agency, and in accordance with applicable securities laws, may not be freely transferred except in accordance with such laws. This brief description of the Subscription Agreement is not intended to be complete and is qualified in its entirety by reference to the full text of the Subscription Agreement as attached in Exhibit 10.3 to this report.
Financing.
On March 4, 2010, the Registrant entered into a senior secured convertible promissory note with Eurasian Capital Partners Limited (“Eurasian”) in exchange for $300,000 (“Note”). The Note is due on November 18, 2012, or upon default, whichever is earlier, and bears interest at the annual rate of 8%. The Note has an optional conversion feature by which Eurasian can convert the principal and accrued interest into shares of the Registrant’s common stock at a conversion price of $0.50 per share. This brief description of the Note is not intended to be complete and is qualified in its entirety by reference to the full text of the Note as attached in Exhibit 10.4 to this report. In connection with the Note, Eurasian also received warrants to purchase three hundred thousand (300,000) shares of the Registrant’s common stock at a purchase price of $1.00 per share (“Warrants”). The Warrants expire five years from the date of the investment. This brief description of the Warrants is not intended to be complete and is qualified in its entirety by reference to the full text of the Warrants as attached in Exhibit 10.5 to this report.
The Note and Warrants were issued in a transaction which the Registrant believes satisfies the requirements of that exemption from the registration and prospectus delivery requirements of the Securities Act of 1933, which exemption is specified by the provisions of Regulation S promulgated pursuant to that act by the Securities and Exchange Commission.
Item 2.01. Completion of Acquisition or Disposition of Assets.
The disclosure in Item 1.01 is incorporated herein by reference.
Item 2.03 Creation of a Direct Financial Obligation.
See Item 1.01 for a description of the Subscription Agreement and the Note.
Item 3.02 Unregistered Sales of Equity Securities.
See Item 1.01 for a description of the Note and the Warrants.
Item 7.01 Regulation FD Disclosure.
On March 9, 2010, the Registrant issued a press release to report the issuance of the Note and Warrants, as discussed above.
A copy of the release is attached as Exhibit 99.1. This information shall not be deemed “filed” for purposes of Section 18 of the Securities and Exchange Act 1934, as amended, and is not incorporated by reference into any filing of the company, whether made before or after the date of this report, regardless of any general incorporation language in the filing.
Item 9.01 Exhibits.
The following exhibits are filed with this report on Form 8-K.