UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

 

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported):   December 18, 2012

 

FLUX TECHNOLOGIES, CORP.

 (Exact name of registrant as specified in its charter)

 

Nevada 333-180624 39-2078861
(State or Other Jurisdiction of (Commission File Number) (I.R.S. Employer Identification Number)
Incorporation)    

 

324 South Beverly Drive, Suite 118

Beverly Hills, CA 90212

(Address of principal executive offices, including zip code)

 

(213) 321-6065

(Registrant’s telephone number, including area code)

 

21 Komorowo Street, Ste. 2

Wolsztyn

Poland 64200

(Former address if changed since last report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)

 

 
 

 

Cautionary Note Regarding Forward-Looking Statements

 

Our disclosure and analysis in this Current Report on Form 8-K contains some forward-looking statements.. Statements that are predictive in nature, that depend upon or refer to future events or conditions or that include words such as "expects," "anticipates," "intends," "plans," "believes," "estimates" and similar expressions are forward-looking statements. Although we believe that these statements are based upon reasonable assumptions, they are subject to several risks and uncertainties.

 

Investors are cautioned that our forward-looking statements are not guarantees of future performance and the actual results or developments may differ materially from the expectations expressed in the forward-looking statements.

 

As for the forward-looking statements that relate to future financial results and other projections, actual results will be different due to the inherent uncertainty of estimates, forecasts and projections and may be better or worse than projected. Given these uncertainties, you should not place any reliance on these forward-looking statements. These forward-looking statements also represent our estimates and assumptions only as of the date that they were made. We expressly disclaim a duty to provide updates to these forward-looking statements, and the estimates and assumptions associated with them, after the date of this filing to reflect events or changes in circumstances or changes in expectations or the occurrence of anticipated events.

 

You are advised to consult any additional disclosures we make in our reports on Form 10-K, Form 10-Q, Form 8-K, or their successors. Other factors besides those discussed in this Current Report could also adversely affect us.

 

Item 1.01. Entry into a Material Definitive Agreement.

 

Reverse Acquisition

 

On December 18, 2012, the Company, Iryna Antaniuk, the then sole director and sole officer of the Company (“Antaniuk”), and Brazil Mining, Inc., a Delaware corporation (“Brazil Mining”) entered into, and on December 19, 2012 they consummated, an Agreement, a copy of which is filed herewith as Exhibit 10.1 (the “Acquisition Agreement”). Pursuant to the Acquisition Agreement, (a) the Company issued to Brazil Mining an aggregate of 1,073,511 shares of the Company’s Common Stock, par value $.001 per share, (b) 3,000,000 shares of Common Stock held by Antaniuk were cancelled and retired, (c) Brazil Mining paid to the Company $25,000, (d) the Company used the $25,000 payment from Brazil Mining to pay and satisfy all of the Company’s liabilities, (e) the Company’s sole officer and director prior to the signing of the Agreement resigned and Marc Fogassa was elected as a director of the Company and (f) the Company issued to Marc Fogassa one share of the Company’s Series A Convertible Preferred Stock (“Series A Stock”). The Certificate of Designations of the Series A Stock, among other things, provides that, for so long as Series A Stock is issued and outstanding, the holders of Series A Stock shall vote together as a single class with the holders of the Common Stock, and the holders of any other class or series of shares entitled to vote with the Common Stock, with the holders of Series A Preferred Stock being entitled to 51% of the total votes on all such matters regardless of the actual number of shares of Series A Preferred Stock then outstanding, and the holders of Common Stock and any other shares entitled to vote being entitled to their proportional share of the remaining 49% of the total votes based on their respective voting power. In the Acquisition Agreement, Antaniuk and the Company made certain representations to Brazil Mining (including as to the corporate organization and charter documents of the Company, the capitalization of the Company, Antaniuk’s title to the shares of Common Stock being cancelled and the authorization and enforceability of the Acquisition Agreement) and Brazil Mining made certain representations to Antaniuk (including as to the authorization and enforceability of the Acquisition Agreement).

 

 
 

 

The foregoing description of the terms of the Acquisition Agreement is qualified in its entirety by reference to the provisions of the Acquisition Agreement which is filed as Exhibit 10.1 to this Current Report and is incorporated by reference herein. 

 

Acquisition of Mineral Property Interests

 

In connection with the Acquisition Agreement, the Company entered into and consummated a Contribution Agreement with Brazil Mining pursuant to which Brazil Mining contributed to the Company by way of an Assignment of Mineral Rights, certain mineral exploration rights on an approximately 10,000 hectare property located in the municipality of Borba, State of Amazonas, Brazil. Brazil Mining also entered into an Option Agreement with the Company pursuant to which Brazil Mining granted to the Company an option to purchase for $800,000 a 20% share of the monthly diamond production that Brazil Mining actually receives in respect of Brazil Mining’s anticipated acquisition of a 55% equity interest in a Brazilian entity. If the option is exercised, Brazil Mining has the right to redeem it for a consideration and upon the occurrence of certain events specified in the Option Agreement. Copies of the Assignment of Mineral Rights, Option Agreement and Contribution Agreement are being filed herewith as Exhibits 10.2, 10.3 and 10.4, respectively.

 

Private Placement of Common Stock

 

On December 18, 2012, the Company entered into, and on December 19, 2012 consummated, Subscription Agreements with 37 investors pursuant to which the Company issued and sold to the investors for $33.333 per share an aggregate of 60,002 shares of the Company’s Common Stock for an aggregate purchase price of $2,000,006.66. Such Common Stock was issued in accordance with an exemption from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”) under Section 4(2) of the Securities Act by virtue of compliance with the provisions of Regulation D under the Securities Act.

 

The Subscription Agreement contains representations and warranties by the Company and the investors which are customary for transactions of this type such as, with respect to the Company: organization, good standing and qualification to do business; capitalization; subsidiaries, authorization and enforceability of the transaction and transaction documents; valid issuance of stock, consents being obtained or not required to consummate the transaction; litigation; compliance with securities laws; and no brokers used, and with respect to the investors: authorization and investment intent.

 

 
 

 

As contemplated by the Subscription Agreements, on December 18, 2012 the Company amended its Articles of Incorporation to authorize 10,000,000 shares of a class of “blank check” preferred stock and filed a Certificate of Designations, Preferences and Rights of Series A Convertible Preferred Stock. One share of Series A Convertible Preferred Stock (“Series A Stock”) was designated. The Certificate of Designations of the Series A Stock, among other things, provides that, for so long as Series A Stock is issued and outstanding, the holders of Series A Stock shall vote together as a single class with the holders of the Common Stock, and the holders of any other class or series of shares entitled to vote with the Common Stock, with the holders of Series A Preferred Stock being entitled to 51% of the total votes on all such matters regardless of the actual number of shares of Series A Preferred Stock then outstanding, and the holders of Common Stock and any other shares entitled to vote being entitled to their proportional share of the remaining 49% of the total votes based on their respective voting power. On December 18, 2012 the Company issued and sold for $1.00 to Marc Fogassa, who was elected on such date as a director and as the Chief Executive Officer of the Company, the one share of Series A Stock.

 

The foregoing description of the terms of the Subscription Agreements is qualified in its entirety by reference to the provisions of the form of Subscription Agreement which is filed as Exhibit 2.1 of this Current Report and is incorporated by reference herein. 

 

Item 2.01 Completion of Acquisition or Disposition of Assets .

 

The disclosure in the subsection of Item 1.01 entitled “Acquisition of Mineral Property Interests” is incorporated herein by reference. Brazil Mining, Inc. owns 51% of the outstanding common stock of the Company and Marc Fogassa is a director and the Chief Executive Officer of both the Company and Brazil Mining.

 

Item 3.02 Unregistered Sales of Equity Securities.

 

On December 18, 2012, the Company entered into, and on December 19, 2012 consummated, Subscription Agreements with 37 investors pursuant to which the Company issued and sold to the investors for $33.333 per share an aggregate of 60,002 shares of the Company’s Common Stock for an aggregate purchase price of $2,000,006.66. Such Common Stock was issued in accordance with an exemption from the registration requirements of the Securities Act under Section 4(2) of the Securities Act by virtue of compliance with the provisions of Regulation D under the Securities Act.

 

On December 18, 2012 the Company issued and sold to Marc Fogassa one share of Series A Convertible Preferred Stock (“Series A Stock”). Such Common Stock was issued in accordance with an exemption from the registration requirements of the Securities Act under Section 4(2) of the Securities Act.

 

Item 5.01 Changes in Control of Registrant.

 

Reference is made to the disclosures set forth under Items 1.01 and 3.02 of this Current Report, which disclosures are incorporated herein by reference.

 

 
 

 

As a result of the closing of the Acquisition Agreement, the Subscription Agreements and the issuance of Series A Stock to Marc Fogassa on such date, as of December 18, 2012 Marc Fogassa may be deemed to have acquired control of the Company as of such date by virtue of his right to cast 51% of the total votes on all matters on which stockholders of the Company may vote, including, but not limited to, the election of directors of the Company.

 

Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers.

 

On December 18, 2012 Iryna Antaniuk resigned as a director and from all officer positions she held with the Company. On such date, Marc Fogassa was elected as a director as of the Company by the written consent of the holder of a majority of the outstanding shares of Common Stock. In addition, on December 18, 2012 Marc Fogassa was elected as the Chief Executive Officer, Chairman, President, Chief Financial Officer, Treasurer and Secretary of the Company.

 

Marc Fogassa has been the Chairman and Chief Executive Officer of Brazil Mining, Inc., a privately held Delaware corporation which owns 51% of the Company’s Common Stock, since March 2012. Dr. Fogassa has 14 years of investment experience in private and public equity. He was a venture capitalist initially at Atlas Venture and later at Axiom Ventures, and involved in originating, structuring, and monitoring multiple transactions. He has been on the board of directors of six private companies. Among various transactions, Dr. Fogassa co-led an early stage round and at that time joined the board of directors of Achillion Pharmaceuticals, a company that later underwent a public offering and is now listed on Nasdaq. Dr. Fogassa has invested in multiple Brazilian public companies while at Hedgefort, a registered investment adviser. He is frequently invited as speaker on Brazilian issues. Previously, Dr. Fogassa was at Goldman Sachs & Co. and Deloitte Consulting. Dr. Fogassa is a registered representative of Hunter Wise Financial Group, LLC, a broker-dealer and the private placement agent for the private placement of the Company’s Common Stock reported in this Current Report. Dr. Fogassa has Series 63, 65, and 79 FINRA certifications. Dr. Fogassa double-majored from the Massachusetts Institute of Technology and graduated with two Bachelor of Science degrees in 1990, and also graduated from the Harvard Medical School with a Doctor of Medicine degree in 1995, and from the Harvard Business School with a Master in Business Administration degree in 1999. Dr. Fogassa was born in Brazil and is fluent in Portuguese and English.

 

Item 5.03 Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.

 

On December 18, 2012 the Company amended its Articles of Incorporation to authorize 10,000,000 shares of a class of “blank check” preferred stock and filed a Certificate of Designations, Preferences and Rights of Series A Convertible Preferred Stock. One share of Series A Convertible Preferred Stock (“Series A Stock”) was designated. The Certificate of Designations of the Series A Stock, among other things, provides that for so long as Series A Stock is issued and outstanding, the holders of Series A Stock shall vote together as a single class with the holders of the Common Stock, and the holders of any other class or series of shares entitled to vote with the Common Stock, with the holders of Series A Preferred Stock being entitled to 51% of the total votes on all such matters regardless of the actual number of shares of Series A Preferred Stock then outstanding, and the holders of Common Stock and any other shares entitled to vote being entitled to their proportional share of the remaining 49% of the total votes based on their respective voting power. On December 18, 2012 the Company issued and sold for $1.00 to Marc Fogassa, who was elected on such date as a director and as the Chief Executive Officer of the Company, the one share of Series A Stock.

 

 
 

 

On December 20, 2012, the sole director approved a change in the fiscal year of the Company from a year ending on the last day of February to a year ending on December 31. The determination was made without submission to a vote of securities holders and without amendment of the Company’s Articles of Incorporation or Bylaws.   The Company will file a Report on Form 10-K covering the transition period from March 1, 2012 to December 31, 2012.

 

Item 9.01 Financial Statements and Exhibits

 

(d)     Exhibits

 

EXHIBIT INDEX

 

Exhibit
Number
  Description
     
2.1   Form of Subscription Agreement dated as of December 18, 2012 among the Company and certain investors. The name, address and number of shares purchased by each investor are attached to the Subscription Agreement as Appendix A.
     
3.1   Certificate of Amendment to the Articles of Incorporation of the Company filed with the Secretary of State of the State of Nevada on December 18, 2012.
     
3.2   Certificate of Designations, Preferences and Rights of Series A Convertible Preferred Stock filed with the Secretary of State of the State of Nevada on December 18, 2012.
     
10.1   Acquisition Agreement dated as of December 18, 2012 between the Company, Antaniuk and Brazil Mining.
     
10.2   Assignment of Mineral Rights from Brazil Mining, Inc. to the Company, dated December 18, 2012.
     
10.3   Option Agreement between the Company and Brazil Mining, Inc., dated December 18, 2012.
     
10.4   Contribution Agreement dated December 18, 2012 between the Company and Brazil Mining, Inc.

 

 
 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

  FLUX TECHNOLOGIES, CORP.
     
Dated: December 24, 2012 By:   /s/ Marc Fogassa
    Name: Marc Fogassa
    Title: Chief Executive Officer
     

 

 
 

 

 

SUBSCRIPTION AGREEMENT

 

THIS SUBSCRIPTION AGREEMENT (this “ Agreement ”), is dated as of December 18, 2012, by and between Flux Technologies, Corp., a Nevada corporation (“ Flux ” or the “ Company ”), and the subscribers identified on the signature pages hereto (each a “ Subscriber ” and collectively, the “ Subscribers ”).

 

RECITALS:

 

WHEREAS , the Company and the Subscribers are executing and delivering this Agreement in reliance upon an exemption from securities registration afforded by the provisions of Section 4(2), Section 4(6), Regulation D (“ Regulation D ”) and/or Regulation S (“ Regulation S ”) as promulgated by the United States Securities and Exchange Commission (the “ Commission ”) under the Securities Act of 1933, as amended (the “ 1933 Act ”).

 

WHEREAS, Hunter Wise Securities, LLC (“ Hunter Wise ” or the “ Placement Agent ”), is acting as placement agent on a “best efforts” basis, in a private offering (the “ Offering ”) in which the Subscribers agree to purchase and the Company agrees to offer and sell a minimum of 500,000 shares of the Company’s Common Stock, par value $.001 per share (the “ Common Stock ” or “ Shares) at a price of $33.333 per Share (the “ Issue Price ”) for aggregate gross proceeds of $500,000 in gross aggregate proceeds and a maximum of 105,000 shares of the Company’s Common Stock for aggregate gross proceeds of $3,500,000. The Shares are also sometimes hereinafter referred to as the “ Purchased Securities ”.

 

WHEREAS, the Company desires to enter into this Agreement to issue and sell the Purchased Securities and the Subscriber desires to purchase that number of Purchased Securities set forth on the signature page hereto on the terms and conditions set forth herein.

 

WHEREAS , the aggregate proceeds of the Offering shall be held in escrow pursuant to the terms of a Escrow Deposit Agreement to be executed by the parties substantially in the form attached hereto as Exhibit A (the “ Escrow Agreement ”).

 

AGREEMENT:

 

NOW, THEREFORE , in consideration of the mutual covenants and other agreements contained in this Agreement, the Company and the Subscriber hereby agree as follows:

 

1.              Purchase and Sale of Shares . Subject to the satisfaction or waiver of the terms and conditions of this Agreement, on the Closing Date (as defined below), each Subscriber shall purchase and the Company shall sell to each Subscriber the Purchased Securities for the portion of the Issue Price designated on the signature pages hereto.

 

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2.              Closing . The issuance and sale of the Purchased Securities shall occur on the closing date (the “ Closing Date ”), which shall be the date that Subscriber funds representing the net amount due to the Company from the Issue Price of the Offering is transmitted by wire transfer or otherwise to or for the benefit of the Company. The consummation of the transactions contemplated herein (the “ Closing ”) shall take place at the offices of Ofsink, PLLC, 900 Third Avenue, 5 th Floor, New York, New York 10022 on such date and time as the Subscribers and the Company may agree upon; provided , that all of the conditions set forth in Section 11 hereof and applicable to the Closing shall have been fulfilled or waived in accordance herewith. The Subscriber and the Company acknowledge and agree that the Company may consummate the sale of additional Purchased Securities to the Subscriber, on the terms set forth in this Agreement and the other Transaction Documents as defined herein, at more than one closing, each of which shall be held no later than June 30, 2013 (each referred to herein as a “ Closing ”).

 

3.              Subscriber Representations, Warranties and Covenants . The Subscriber hereby represents and warrants to and agrees with the Company that:

 

(a)           Organization and Standing of the Subscriber . If such Subscriber is an entity, such Subscriber is a corporation, partnership or other entity 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 . Such Subscriber has the requisite power and authority to enter into and perform this Agreement and the other Transaction Documents (as defined in Section 4(c)) and to purchase the Purchased Securities being sold to it hereunder. The execution, delivery and performance of this Agreement and the other Transaction Documents by such Subscriber 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 Subscriber or its Board of Directors, stockholders, partners, members, as the case may be, is required. This Agreement and the other Transaction Documents have been duly authorized, executed and delivered by such Subscriber and constitute, or shall constitute when executed and delivered, a valid and binding obligation of such Subscriber enforceable against such Subscriber in accordance with the terms thereof.

 

(c)           No Conflicts . The execution, delivery and performance of this Agreement and the other Transaction Documents and the consummation by such Subscriber of the transactions contemplated hereby and thereby or relating hereto do not and will not (i) result in a violation of such Subscriber’s charter documents or bylaws or other organizational documents 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 Subscriber 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 Subscriber 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 Subscriber). Such Subscriber 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 and the other Transaction Documents or to purchase the Purchased Securities in accordance with the terms hereof, provided that for purposes of the representation made in this sentence, such Subscriber is assuming and relying upon the accuracy of the relevant representations and agreements of the Company herein.

 

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(d)           Acquisition for Investment . The Subscriber is acquiring the Purchased Securities solely for its own account for the purpose of investment and not with a view towards, or for resale in connection with, a distribution. The Subscriber does not have a present intention to sell the Purchased Securities, nor a present arrangement (whether or not legally binding) or intention to effect any distribution of the Purchased Securities to or through any person or entity; provided , however , that by making the representations herein and subject to Section 3.2(h) below, the Subscriber does not agree to hold the Purchased Securities for any minimum or other specific term and reserves the right to dispose of the Purchased Securities at any time in accordance with Federal and state securities laws applicable to such disposition. The Subscriber acknowledges that it is able to bear the financial risks associated with an investment in the Purchased Securities and that it has been given full access to such records of the Company and the subsidiaries and to the officers of the Company and the subsidiaries and received such information as it has deemed necessary or appropriate to conduct its due diligence investigation and has sufficient knowledge and experience in investing in companies similar to the Company in terms of the Company’s stage of development so as to be able to evaluate the risks and merits of its investment in the Company. The Subscriber further acknowledges that the Subscriber understands the risks of investing in companies which operate primarily in Brazil and that the purchase of the Purchased Securities involves substantial risks.

 

(e)           Information on Company . S uch Subscriber has received from the Company such information concerning the Company’s operations, financial condition and other matters as such Subscriber has requested and considered all factors such Subscriber deems material in deciding on the advisability of investing in the Purchased Securities.

 

(f)           Opportunities for Additional Information . The Subscriber acknowledges that the Subscriber has had the opportunity to ask questions of and receive answers from, or obtain additional information from, the executive officers of the Company concerning the financial and other affairs of the Company.

 

(g)           Information on Subscriber . If the Subscriber is a U.S. Person (as that term is defined in Section 3(o) of this Agreement), then such Subscriber represents that the Subscriber is, and will be on the Closing Date, an “ accredited investor ”, as such term is defined in Regulation D promulgated by the Commission under the 1933 Act, is experienced in investments and business matters, has made investments of a speculative nature and has purchased securities of United States publicly-owned companies in private placements in the past and, with its representatives, has such knowledge and experience in financial, tax and other business matters as to enable such Subscriber to utilize the information made available by the Company to evaluate the merits and risks of and to make an informed investment decision with respect to the proposed purchase, which represents a speculative investment. S uch Subscriber has the authority and is duly and legally qualified to purchase and own the Purchased Securities. S uch Subscriber is able to bear the risk of such investment for an indefinite period and to afford a complete loss thereof. The information set forth on the signature page hereto regarding such Subscriber is accurate.

 

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(h)           Compliance with 1933 Act . If a U.S. Person, such Subscriber understands and agrees that the Purchased Securities have not been registered under the 1933 Act or any applicable state securities laws, by reason of their issuance in a transaction that does not require registration under the 1933 Act (based in part on the accuracy of the representations and warranties of the Subscriber contained herein), and that such Purchased Securities must be held indefinitely unless a subsequent disposition is registered under the 1933 Act or any applicable state securities laws or is exempt from such registration. The Subscriber acknowledges that the Subscriber is familiar with Rule 144 of the rules and regulations of the Commission, as amended, promulgated pursuant to the 1933 Act (“ Rule 144 ”), and that such person has been advised that Rule 144 permits resales only under certain circumstances. The Subscriber understands that to the extent that Rule 144 is not available, the Subscriber will be unable to sell any Purchased Securities without either registration under the 1933 Act or the existence of another exemption from such registration requirement. In any event, and subject to compliance with applicable securities laws, the Subscriber may enter into lawful hedging transactions in the course of hedging the position they assume and the Subscriber may also enter into lawful short positions or other derivative transactions relating to the Purchased Securities, and deliver the Purchased Securities, to close out their short or other positions or otherwise settle other transactions, or loan or pledge the Purchased Securities, to third parties who in turn may dispose of these Purchased Securities.

 

(i)           Purchased Securities Legend . The Purchased Securities shall bear the following or similar legend:

 

THE ISSUANCE AND SALE OF THE PURCHASED SECURITIES REPRESENTED BY THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, NOR APPLICABLE STATE SECURITIES LAWS. THE PURCHASED SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE PURCHASED SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER), IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT, OR OTHERWISE. NOTWITHSTANDING THE FOREGOING, THE PURCHASED SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE PURCHASED SECURITIES.

 

(j)           Communication of Offer . The offer to sell the Purchased Securities was directly communicated to such Subscriber by the Company. At no time was such Subscriber presented with or solicited by any leaflet, newspaper or magazine article, radio or television advertisement, or any other form of general advertising or solicited or invited to attend a promotional meeting otherwise than in connection and concurrently with such communicated offer.

 

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(k)           Restricted Securities . Such Subscriber understands that the Purchased Securities have not been registered under the 1933 Act and such Subscriber will not sell, offer to sell, assign, pledge, hypothecate or otherwise transfer any of the Purchased Securities unless pursuant to an effective registration statement under the 1933 Act, or unless an exemption from registration is available. Notwithstanding anything to the contrary contained in this Agreement, such Subscriber may transfer (without restriction and without the need for an opinion of counsel) the Purchased Securities to its Affiliates (as defined below) provided that each such Affiliate is an “accredited investor” under Regulation D and such Affiliate agrees to be bound by the terms and conditions of this Agreement. For the purposes of this Agreement, an “ Affiliate ” of any person or entity means any other person or entity directly or indirectly controlling, controlled by or under direct or indirect common control with such person or entity. Affiliate includes each Subsidiary of the Company. For purposes of this definition, “ control ” means the power to direct the management and policies of such person or firm, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise.

 

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

 

(m)           Correctness of Representations . Such Subscriber represents that the foregoing representations and warranties are true and correct as of the date hereof and, unless such Subscriber otherwise notifies the Company prior to the Closing Date, shall be true and correct as of the Closing Date. The Subscriber understands that the Purchased Securities 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 the Subscriber set forth herein in order to determine the applicability of such exemptions and the suitability of the Subscriber to acquire the Purchased Securities.

 

(n)           Short Sales and Confidentiality. Other than the transaction contemplated hereunder, the Subscriber has not directly or indirectly, nor has any person acting on behalf of or pursuant to any understanding with the Subscriber, executed any disposition, including short sales (but not including the location and/or reservation of borrowable shares of Common Stock), in the securities of the Company during the period commencing from the time that the Subscriber first received a term sheet from the Company or any other person setting forth the material terms of the transactions contemplated hereunder until the date that the transactions contemplated by this Agreement are first publicly announced. The Subscriber covenants that until such time as the transactions contemplated by this Agreement are publicly disclosed by the Company, the Subscriber will maintain the confidentiality of all disclosures made to it in connection with this transaction (including the existence and terms of this transaction).

 

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(o)           Additional Representations, Warranties and Covenants of Non-U.S. Persons .

 

(i)          The Subscriber understands that the investment offered hereunder has not been registered under the 1933 Act.

 

(ii)          At the time the Subscriber was offered the Purchased Securities, it was not, and at the date hereof, such Subscriber is not a “U.S. Person” which is defined below:

 

(A)          Any natural person resident in the United States;

 

(B)          Any partnership or corporation organized or incorporated under the laws of the United States;

 

(C)          Any estate of which any executor or administrator is a U.S. person;

 

(D)          Any trust of which any trustee is a U.S. person;

 

(E)          Any agency or branch of a foreign entity located in the United States;

 

(F)          Any non-discretionary account or similar account (other than an estate or trust) held by a dealer or other fiduciary for the benefit or account of a U.S. person;

 

(G)          Any discretionary account or similar account (other than an estate or trust) held by a dealer or other fiduciary organized, incorporated, or (if an individual) resident of the United States; and

 

(H)          Any partnership or corporation if (i) organized or incorporated under the laws of any foreign jurisdiction and (ii) formed by a U.S. person principally for the purpose of investing in securities not registered under the 1933 Act, unless it is organized or incorporated, and owned, by accredited investors (as defined in Rule 501(a) of Regulation D promulgated under the 1933 Act) who are not natural persons, estates or trusts.

 

United States ” or “ U.S. ” means the United States of America, its territories and possessions, any State of the United States, and the District of Columbia.

 

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(iii)       The Subscriber understands that no action has been or will be taken in any jurisdiction by the Company that would permit a public offering of the Purchased Securities in any country or jurisdiction where action for that purpose is required.

 

(iv)       The Subscriber (i) as of the execution date of this Agreement is not located within the United States, and (ii) is not purchasing the Purchased Securities for the account or benefit of any U.S. Person, except in accordance with one or more available exemptions from the registration requirements of the 1933 Act or in a transaction not subject thereto.

 

(v)        The Subscriber will not resell the Purchased Securities except in accordance with the provisions of Regulation S (Rule 901 through 905 and Preliminary Notes thereto), pursuant to a registration statement under the 1933 Act, or pursuant to an available exemption from registration; and agrees not to engage in hedging transactions with regard to such securities unless in compliance with the 1933 Act.

 

(vi)        The Subscriber will not engage in hedging transactions with regard to shares of the Company prior to the expiration of the distribution compliance period specified in Category 2 or 3 (paragraph (b)(2) or (b)(3)) in Rule 903 of Regulation S, as applicable, unless in compliance with the 1933 Act; and as applicable, shall include statements to the effect that the securities have not been registered under the 1933 Act and may not be offered or sold in the United States or to U.S. persons (other than distributors) unless the securities are registered under the 1933 Act, or an exemption from the registration requirements of the 1933 Act is available.

 

(vii)       No form of “directed selling efforts” (as defined in Rule 902 of Regulation S under the 1933 Act), general solicitation or general advertising in violation of the 1933 Act has been or will be used nor will any offers by means of any directed selling efforts in the United States be made by the Subscriber or any of their representatives in connection with the offer and sale of the Purchased Securities.

 

(p)     Affiliations of Marc Fogassa. Such Subscriber understands and acknowledges that the Chief Executive Officer and Chairman of each of the Company and Brazil Mining, Inc., Marc Fogassa, is a registered representative of the Placement Agent.

 

4.              Company Representations and Warranties . The Company represents and warrants to and agrees with each Subscriber that:

 

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(a)           Due Incorporation . The Company is a corporation or other entity duly incorporated or organized, validly existing and in good standing under the laws of the state of Nevada and has the requisite corporate power to own its properties and to carry on its business as presently conducted. The Company is duly qualified as a foreign corporation to do business and is in good standing in each jurisdiction where the nature of the business conducted or property owned by it makes such qualification necessary, other than those jurisdictions in which the failure to so qualify would not have a Material Adverse Effect. For purposes of this Agreement, a “ Material Adverse Effect means any material adverse effect on the business, operations, properties, or financial condition of the Company and its Subsidiaries individually, or in the aggregate 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. For purposes of this Agreement, “ Subsidiary ” means, with respect to any entity at any date, any corporation, limited or general partnership, limited liability company, trust, estate, association, joint venture or other business entity of which more than 30% of (i) the outstanding capital stock having (in the absence of contingencies) ordinary voting power to elect a majority of the board of directors or other managing body of such entity, (ii) in the case of a partnership or limited liability company, the interest in the capital or profits of such partnership or limited liability company or (iii) in the case of a trust, estate, association, joint venture or other entity, the beneficial interest in such trust, estate, association or other entity business is, at the time of determination, owned or controlled directly or indirectly through one or more intermediaries, by such entity. As of the Closing Date, all of the Company’s Subsidiaries and the Company’s ownership interest therein are set forth on Schedule 4(a) .

 

(b)           Outstanding Stock . All issued and outstanding shares of capital stock and equity interests in the Company have been duly authorized and validly issued and are fully paid and non-assessable.

 

(c)           Authority; Enforceability . This Agreement, the Purchased Securities, the Escrow Agreement and any other agreements delivered together with this Agreement or in connection herewith (collectively, the “ Transaction Documents ”) have been duly authorized, executed and delivered by the Company and are valid and binding agreements of the Company enforceable in accordance with their terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors’ rights generally and to general principles of equity. The Company has full corporate power and authority necessary to enter into and deliver the Transaction Documents and to perform its obligations thereunder.

 

(d)           Capitalization and Additional Issuances . The authorized and outstanding capital stock of the Company and Subsidiaries on a fully diluted basis as of the date of this Agreement and the Closing Date (not including the Purchased Securities) are set forth on Schedule 4(d) . Except as set forth on Schedule 4(d) , there are no options, warrants, or rights to subscribe to, securities, rights, understandings or obligations convertible into or exchangeable for or giving any right to subscribe for any shares of capital stock or other equity interest of the Company or any of the Subsidiaries. The only officer, director, employee and consultant stock option or stock incentive plan or similar plan currently in effect or contemplated by the Company is described on Schedule 4(d) . There are no outstanding agreements or preemptive or similar rights affecting the Company’s common stock .

 

(e)           Consents . No consent, approval, authorization or order of any court, governmental agency or body or arbitrator having jurisdiction over the Company, or any of its Affiliates, or the Company’s stockholders is required for the execution by the Company of the Transaction Documents and compliance and performance by the Company of its obligations under the Transaction Documents, including, without limitation, the issuance and sale of the Purchased Securities. The Transaction Documents and the Company’s performance of its obligations thereunder have been unanimously approved by the Company’s Board of Directors. No consent, approval, order or authorization of, or registration, qualification, designation, declaration or filing with, any governmental authority in the world, including without limitation, the United States, or elsewhere is required by the Company or any Affiliate of the Company in connection with the consummation of the transactions contemplated by this Agreement, except as would not otherwise have a Material Adverse Effect or the consummation of any of the other agreements, covenants or commitments of the Company or any Subsidiary contemplated by the other Transaction Documents. Any such qualifications and filings will, in the case of qualifications, be effective on the Closing and will, in the case of filings, be made within the time prescribed by law.

 

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(f)           No Violation or Conflict . Assuming the representations and warranties of the Subscriber in Section 3 are true and correct, neither the issuance nor sale of the Purchased Securities nor the performance of the Company’s obligations under this Agreement and all other Transaction Documents entered into by the Company relating thereto will:

 

(i)          violate, conflict with, result in a breach of, or constitute a default (or an event which with the giving of notice or the lapse of time or both would be reasonably likely to constitute a default) under (A) the articles or certificate of incorporation, charter or bylaws of the Company, (B) to the Company’s knowledge, any decree, judgment, order, law, treaty, rule, regulation or determination applicable to the Company of any court, governmental agency or body, or arbitrator having jurisdiction over the Company or over the properties or assets of the Company or any of its Affiliates, (C) the terms of any bond, debenture, note or any other evidence of indebtedness, or any agreement, stock option or other similar plan, indenture, lease, mortgage, deed of trust or other instrument to which the Company or any of its Affiliates is a party, by which the Company or any of its Affiliates is bound, or to which any of the properties of the Company or any of its Affiliates is subject, or (D) the terms of any “lock-up” or similar provision of any underwriting or similar agreement to which the Company, or any of its Affiliates is a party except the violation, conflict, breach, or default of which would not have a Material Adverse Effect; or

 

(ii)         result in the creation or imposition of any lien, charge or encumbrance upon the Purchased Securities or any of the assets of the Company or any of its Affiliates, except in favor of Subscriber as described herein; or

 

(iii)        result in the activation of any anti-dilution rights or a reset or repricing of any debt, equity or security instrument of any creditor or equity holder of the Company, or the holder of the right to receive any debt, equity or security instrument of the Company nor result in the acceleration of the due date of any obligation of the Company; or

 

(iv)        result in the triggering of any piggy-back or other registration rights of any person or entity holding securities of the Company or having the right to receive securities of the Company.

 

(g)           The Purchased Securities . The Purchased Securities upon issuance:

 

(i)          are, or will be, free and clear of any security interests, liens, claims or other encumbrances, subject only to restrictions upon transfer under the 1933 Act and any applicable state securities laws;

 

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(ii)         have been, or will be, duly and validly authorized and on the date of issuance of the Purchased Securities, the Purchased Securities will be duly and validly issued, fully paid and nonassessable;

 

(iii)        will not have been issued or sold in violation of any preemptive or other similar rights of the holders of any securities of the Company or rights to acquire securities of the Company; and

 

(iv)        will not subject the holders thereof to personal liability by reason of being such holders.

 

(h)           Litigation . There is no pending or, to the best knowledge of the Company, threatened action, suit, proceeding or investigation before any court, governmental agency or body, or arbitrator having jurisdiction over the Company, or any of its Affiliates that would affect the execution by the Company or the complete and timely performance by the Company of its obligations under the Transaction Documents. There is no pending or, to the best knowledge of the Company, basis for or threatened action, suit, proceeding or investigation before any court, governmental agency or body, or arbitrator having jurisdiction over the Company, or any of its Affiliates which litigation if adversely determined would have a Material Adverse Effect.

 

(i)           No Market Manipulation . The Company and its Affiliates have not taken, and will not take, directly or indirectly, any action designed to, or that might reasonably be expected to, cause or result in stabilization or manipulation of the price of the Common Stock to facilitate the sale or resale of the Purchased Securities or affect the price at which the Purchased Securities may be issued or resold.

 

(j)           Defaults . The Company is not in material violation of its articles of incorporation or bylaws. The Company is (i) not in default under or in violation of any other material agreement or instrument to which it is a party or by which it or any of its properties are bound or affected, which default or violation would have a Material Adverse Effect, (ii) not in default with respect to any order of any court, arbitrator or governmental body or subject to or party to any order of any court or governmental authority arising out of any action, suit or proceeding under any statute or other law respecting antitrust, monopoly, restraint of trade, unfair competition or similar matters which default would have a Material Adverse Effect, or (iii) not in violation of any statute, rule or regulation of any governmental authority which violation would have a Material Adverse Effect.

 

(k)           No Integrated Offering. Neither the Company, nor any of its Affiliates, nor any person acting on its or their behalf, has directly or indirectly made any offers or sales of any security of the Company nor solicited any offers to buy any security of the Company under circumstances that would cause the offer of the Purchased Securities pursuant to this Agreement to be integrated with prior offerings by the Company for purposes of the 1933 Act or any applicable stockholder approval provisions. No prior offering will impair the exemptions relied upon in this Offering or the Company’s ability to timely comply with its obligations hereunder. Neither the Company nor any of its Affiliates will take any action or steps that would cause the offer or issuance of the Purchased Securities to be integrated with other offerings which would impair the exemptions relied upon in this Offering or the Company’s ability to timely comply with its obligations hereunder. The Company will not conduct any offering other than the transactions contemplated hereby that may be integrated with the offer or issuance of the Purchased Securities that would impair the exemptions relied upon in this Offering or the Company’s ability to timely comply with its obligations hereunder.

 

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(l)           No General Solicitation . Neither the Company, nor any of its Affiliates, nor to its knowledge, any person acting on its or their behalf, has engaged in any form of general solicitation or general advertising (within the meaning of Regulation D/Regulation S under the 1933 Act) in connection with the offer or sale of the Purchased Securities.

 

(m)           Dilution . The Company’s executive officers and directors understand the nature of the Purchased Securities being sold hereby and recognize that the issuance of the Purchased Securities will have a potential dilutive effect on the equity holdings of other holders of the Company’s equity or rights to receive equity of the Company. The board of directors of the Company has concluded, in its good faith business judgment that the issuance of the Purchased Securities is in the best interests of the Company. The Company specifically acknowledges that its obligation to issue the Purchased Securities is binding upon the Company and enforceable regardless of the dilution such issuance may have on the ownership interests of other shareholders of the Company or parties entitled to receive equity of the Company.

 

(n)           No Disagreements with Accountants and Lawyers. There are no disagreements of any kind presently existing, or reasonably anticipated by the Company to arise between the Company and the accountants and lawyers previously and presently employed by the Company, including, but not limited to, disputes or conflicts over payment owed to such accountants and lawyers, nor have there been any such disagreements during the two years prior to the Closing Date, in each case, that could cause a Material Adverse Effect.

 

(o)           Foreign Corrupt Practices. Neither the Company, nor to the knowledge of the Company, any agent or other person acting on behalf of the Company, has (i) directly or indirectly, used any funds for unlawful contributions, gifts, entertainment or other unlawful expenses related to foreign or domestic political activity, (ii) made any unlawful payment to foreign or domestic government officials or employees or to any foreign or domestic political parties or campaigns from corporate funds, (iii) failed to disclose fully any contribution made by the Company (or made by any person acting on its behalf of which the Company is aware) which is in violation of law, or (iv) violated in any material respect any provision of the Foreign Corrupt Practices Act of 1977, as amended.

 

(p)           Employees . Neither the Company nor any Subsidiary has any collective bargaining arrangements or agreements covering any of its employees. Neither the Company nor any Subsidiary has any employment contract, agreement regarding proprietary information, non-competition agreement, non-solicitation agreement, confidentiality agreement, or any other similar contract or restrictive covenant, relating to the right of any officer, employee or consultant to be employed or engaged by the Company or such Subsidiary which would be required to be disclosed with the Commission if the Company were a reporting company under the Securities Exchange Act of 1934, as amended (the “ 1934 Act ”). To the knowledge of the Company, no officer, consultant or key employee of the Company or any Subsidiary whose termination, either individually or in the aggregate, would have a Material Adverse Effect, has terminated or, to the knowledge of the Company, has any present intention of terminating his or her employment or engagement with the Company or any Subsidiary.

 

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(q)           Public Utility Holding Company Act; Investment Company Act and U.S. Real Property Holding Corporation Status . The Company is not a “holding company” or a “public utility company” as such terms are defined in the Public Utility Holding Company Act of 1935, as amended. The Company is not, and as a result of and immediately upon the Closing will not be, an “investment company” or a company “controlled” by an “investment company,” within the meaning of the Investment Company Act of 1940, as amended. The Company is not and has never been a U.S. real property holding corporation within the meaning of Section 897 of the Internal Revenue Code of 1986, as amended.

 

(r)            ERISA . No liability to the Pension Benefit Guaranty Corporation has been incurred with respect to any Plan (as defined below) by the Company or any of its Subsidiaries which is or would be materially adverse to the Company and its subsidiaries. The execution and delivery of this Agreement and the other Transaction Documents and the issuance and sale of the Purchased Securities will not involve any transaction which is subject to the prohibitions of Section 406 of ERISA or in connection with which a tax could be imposed pursuant to Section 4975 of the Internal Revenue Code of 1986, as amended, provided, that, if any of the Subscribers, or any person or entity that owns a beneficial interest in any of the Subscribers, is an “employee pension benefit plan” (within the meaning of Section 3(2) of ERISA) with respect to which the Company is a “party in interest” (within the meaning of Section 3(14) of ERISA), the requirements of Sections 407(d)(5) and 408(e) of ERISA, if applicable, are met. As used in this Section 2.1(bb), the term “ Plan ” shall mean an “employee pension benefit plan” (as defined in Section 3 of ERISA) which is or has been established or maintained, or to which contributions are or have been made, by the Company or any Subsidiary or by any trade or business, whether or not incorporated, which, together with the Company or any Subsidiary, is under common control, as described in Section 414(b) or (c) of the Code.

 

(s)           Independent Nature of Subscribers . The Company acknowledges that the obligations of each Subscriber under the Transaction Documents are several and not joint with the obligations of any other Subscriber, and no Subscriber shall be responsible in any way for the performance of the obligations of any other Subscriber under the Transaction Documents. The Company acknowledges that the decision of each Subscriber to purchase securities pursuant to this Agreement has been made by such Subscriber independently of any other Subscriber and independently of any information, materials, statements or opinions as to the business, affairs, operations, assets, properties, liabilities, results of operations, condition (financial or otherwise) or prospects of the Company or of its Subsidiaries which may have been made or given by any other Subscriber or by any agent or employee of any other Subscriber, and no Subscriber or any of its agents or employees shall have any liability to any Subscriber (or any other person) relating to or arising from any such information, materials, statements or opinions. The Company acknowledges that nothing contained herein, or in any Transaction Documents, and no action taken by any Subscriber pursuant hereto or thereto, shall be deemed to constitute the Subscribers as a partnership, an association, a joint venture or any other kind of entity, or create a presumption that the Subscribers are in any way acting in concert or as a group with respect to such obligations or the transactions contemplated by the Transaction Documents. The Company acknowledges that each Subscriber shall be entitled to independently protect and enforce its rights, including without limitation, the rights arising out of this Agreement or out of the other Transaction Documents, and it shall not be necessary for any other Subscriber to be joined as an additional party in any proceeding for such purpose.

 

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(t)           OFAC . Neither the Company nor any of its Subsidiaries nor, to the knowledge of the Company, any director, officer, agent, employee, Affiliate or person acting on behalf of any of the Company or any of its Subsidiaries, is currently subject to any U.S. sanctions administered by the Office of Foreign Assets Control of the U.S. Treasury Department (“ OFAC ”); and the Company will not directly or indirectly use the proceeds of the sale of the Purchased Securities, or lend, contribute or otherwise make available such proceeds to any subsidiary of the Company, joint venture partner or other person or entity, towards any sales or operations in Cuba, Iran, Syria, Sudan, Myanmar or any other country sanctioned by OFAC or for the purpose of financing the activities of any person currently subject to any U.S. sanctions administered by OFAC.

 

(u)           Money Laundering Laws . The operations of each of the Company and its Subsidiaries are and have been conducted at all times in compliance with the money laundering requirements of all applicable governmental authorities and any related or similar rules, regulations or guidelines, issued, administered or enforced by any governmental authority (collectively, the “ Money Laundering Laws ”) and no action, suit or proceeding by or before any court or governmental authority or any arbitrator involving any of the Company or any of its Subsidiaries with respect to the Money Laundering Laws is pending or, to the best knowledge of the Company, threatened.

 

(v)          Correctness of Representations . The Company represents that the foregoing representations and warranties are true and correct as of the date hereof in all material respects, and, unless the Company otherwise notifies the Subscribers prior to the Closing Date, shall be true and correct in all material respects as of the Closing Date; provided, that, if such representation or warranty is made as of a different date, in which case such representation or warranty shall be true as of such date.

 

(w)           Survival . The foregoing representations and warranties shall survive for a period of two years after the Closing Date.

 

(x)           No Brokers . Neither the Company nor any Subsidiary has taken any action which would give rise to any claim by any person for brokerage commissions, finder’s fees or similar payments relating to this Agreement or the transactions contemplated hereby, except for dealings with the Placement Agent, whose commissions and fees will be paid by the Company as set forth on Schedule 4(x) .

 

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5.              Regulation D/Regulation S Offering/Legal Opinion . The offer and issuance of the Purchased Securities to the Subscribers is being made pursuant to the exemption from the registration provisions of the 1933 Act afforded by Section 4(2) or Section 4(6) of the 1933 Act or Rule 506 of Regulation D and/or Regulation S promulgated thereunder. On the Closing Date, the Company will provide an opinion reasonably acceptable to the Subscribers from the Company’s legal counsel opining on the availability of an exemption from registration under the 1933 Act as it relates to the offer and issuance of the Purchased Securities. A form of the Closing Legal Opinion is annexed hereto as Exhibit B . The Company will provide, at the Company’s expense, such other legal opinions, if any, as are reasonably necessary in each Subscriber’s opinion for the issuance and resale of the Purchased Securities pursuant to an effective registration statement. The Company shall approve, or have its designated counsel approve, Rule 144 legal opinion requests from Subscriber’s counsel for removal of restrictive legends to the Purchased Securities, within three (3) Business Days (as such term is defined in Section 11(h)) after such request being provided to the Company’s transfer agent.

 

6.              Covenants of the Company . The Company covenants and agrees with the Subscribers as follows:

 

(a)           Stop Orders . Subject to the prior notice requirement described in Section 6(n), the Company will advise the Subscribers, within twenty-four hours after it receives notice of issuance by the Commission, any state securities commission or any other regulatory authority of any stop order or of any order preventing or suspending any offering of any securities of the Company, or of the suspension of the qualification of the common stock of the Company for offering or sale in any jurisdiction, or the initiation of any proceeding for any such purpose. The Company will not issue any stop transfer order or other order impeding the sale, resale or delivery of any of the Purchased Securities, except as may be required by any applicable federal or state securities laws and unless contemporaneous notice of such instruction is given to the Subscribers.

 

(b)           Market Regulations . If required, the Company shall notify the Commission, the Principal Market and applicable state authorities, in accordance with their requirements, of the transactions contemplated by this Agreement, and shall take all other necessary action and proceedings as may be required and permitted by applicable law, rule and regulation, for the legal and valid issuance of the Purchased Securities to the Subscribers and promptly provide copies thereof to the Subscribers.

 

(c)           Filing Requirements . From the date of this Agreement and until the last to occur of (i) two (2) years after the final Closing Date, or (ii) the Purchased Securities can be resold or transferred by the Subscribers pursuant to Rule 144(b)(1)(i) (the date of such latest occurrence being the “ End Date ”), the Company will comply with all requirements related to any registration statement filed pursuant to this Agreement. The Company will use its best efforts not to take any action or file any document (whether or not permitted by the 1933 Act or the 1934 Act or the rules thereunder) to terminate or suspend such registration or to terminate or suspend its reporting and filing obligations under said acts until the End Date. Until all of the Purchased Securities are sold by the Subscriber, the Company will comply in all respects with the Company’s reporting, filing and other obligations under the bylaws or rules of the Principal Market, if any. The Company agrees to timely file a Form D with respect to the Purchased Securities, if required under Regulation D and to provide a copy thereof to each Subscriber promptly after such filing.

 

(d)           Use of Proceeds . The proceeds of the Offering will be employed by the Company for expenses of the Offering, for the purposes set forth on Schedule 6(d) and general working capital. Except as described on Schedule 6(d) , the Issue Price may not and will not be used for accrued and unpaid officer and director salaries, payment of financing related debt, redemption of outstanding notes or equity instruments of the Company nor non-trade obligations outstanding on the Closing Date.

 

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(e)           Taxes . The Company will promptly pay and discharge, or cause to be paid and discharged, when due and payable, all lawful taxes, assessments and governmental charges or levies imposed upon the income, profits, property or business of the Company; 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.

 

(f)           Insurance . As reasonably necessary as determined by the Company, the Company will keep its assets which are of an insurable character insured by financially sound and reputable insurers against loss or damage by fire, explosion and other risks customarily insured against by companies in the Company’s line of business and location, in amounts and to the extent and in the manner customary for companies in similar businesses similarly situated and located and to the extent available on commercially reasonable terms.

 

(g)           Books and Records. The Company will 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.

 

(h)           Governmental Authorities. The Company shall duly observe and conform in all material respects to all valid requirements of governmental authorities relating to the conduct of its business or to its properties or assets.

 

(h)           Intellectual Property . The Company shall maintain in full force and effect its corporate existence, rights and franchises and all licenses and other rights to use intellectual property owned or possessed by it and reasonably deemed to be necessary to the conduct of its business, unless it is sold for value. Schedule 6(h) hereto identifies all of the intellectual property owned by the Company and Subsidiaries.

 

(i)           Properties. The Company will keep its properties in good repair, working order and condition, reasonable wear and tear excepted, and from time to time make all necessary and proper repairs, renewals, replacements, additions and improvements thereto; and the Company will at all times comply with each provision of all leases and claims to which it is a party or under which it occupies or has rights to property if the breach of such provision could reasonably be expected to have a Material Adverse Effect. The Company will not abandon any of its assets, except for those assets which have negligible or marginal value or for which it is prudent to do so under the circumstances.

 

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(j)           Confidentiality/Public Announcement. The Company agrees that except in connection with the registration statement or statements regarding the Subscriber’s Purchased Securities or in correspondence with the Commission regarding same, it will not disclose publicly or privately the identity of the Subscriber unless expressly agreed to in writing by the Subscriber or only to the extent required by law and then only upon not less than three days prior notice to Subscriber. Subject to the foregoing, the Company undertakes to issue a press release describing the Offering. Prior to the Closing Date, such press release will be provided to the Placement Agent for its review and approval. Upon  delivery by the Company to the Subscribers after the Closing Date of any notice or information, in writing, electronically or otherwise, and while the Purchased Securities are held by Subscribers and the Company is subject to the reporting obligations under the 1934 Act, unless the  Company has in good faith determined that the matters relating to such notice do not constitute material, nonpublic information relating to the Company or Subsidiaries, the Company  shall within four Business Days after any such delivery publicly disclose such  material,  nonpublic  information on a Report on Form 8-K, provided, however , that the Company will have no obligation to file any Report on Form 8-K with respect to (i) any information contained in the registration statement relating to the registration of the Registrable Securities, submitted for investors’ review pursuant to Section 8 herein, and (ii) the information as to currently contemplated and/or negotiated financing transactions.  In the event that the Company believes that a notice or communication to Subscribers contains material, nonpublic information relating to the Company or Subsidiaries, the Company shall so indicate to Subscribers prior to delivery of such notice or information. Subscribers will be granted sufficient time to notify the Company that such Subscriber elects not to receive such information. In such case, the Company will not deliver such information to Subscribers. In the absence of any such indication, Subscribers shall be allowed to presume that all matters relating to such notice and information do not constitute material, nonpublic information relating to the Company or Subsidiaries.

 

(k)           Non-Public Information . The Company covenants and agrees that except for the schedules and exhibits to this Agreement and the Transaction Documents, and except for the information as to currently contemplated and/or negotiated financing transactions, neither it nor any other person acting on its behalf will at any time provide any Subscriber or its agents or counsel with any information that the Company believes constitutes material non-public information, unless prior thereto such Subscriber shall have agreed in writing to accept such information. The Company understands and confirms that each Subscriber shall be relying on the foregoing representations in effecting transactions in securities of the Company.

 

(l)           Further Registration Statements. Except for a registration statement filed exclusively on behalf of the Subscribers, the Company will not, without the consent of the Majority Holders (as such term is hereinafter defined), file with the Commission or with state regulatory authorities any registration statements or amend any already filed registration statement to increase the amount of common stock registered therein, or reduce the price of which such company securities are registered therein, (except for Forms S-8), until the End Date.

 

(m)           Further Undertakings. Promptly after the Closing the Company shall use its best efforts to do or consummate each of the following:

 

(i) A forward stock split or stock dividend resulting in 33.33 shares for each share then outstanding.

 

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(ii) An increase in the authorized number of shares of common stock of the Company (either as part of a stock split or otherwise) to not more than 150 million shares of common stock.

 

(iii) An amendment to the Articles of Incorporation of the Company to change the name of the Company to Brazil Minerals, Inc.

 

(iv) Obtain advance approval from the Financial Industry Regulatory Association of the transactions set forth in clauses (i) and (iii).

 

(v) Cause the Company’s common stock to be eligible for the Deposit/Withdrawal At Custodian (“DWAC”) transaction system including satisfying all conditions imposed by the Company’s transfer agent and the Depository Trust Company (“DTC”) in order to make DWAC available for the Company’s common stock, under DTC’s Fast Automated Transfer Program.

 

(vi) Change the fiscal year of the Company to the calendar year (year ending December 31).

 

(vii) Provided that the applicable provisions of SEC Rule 144 are satisfied with respect to the Subscriber’s Common Stock, upon request of any Subscriber and at the sole cost of the Company, promptly and in no event more than 5 days after receipt of such request, provide to the transfer agent for the Common Stock an opinion of legal counsel that any legend restricting the transfer of such shares of Common Stock (and any related stop transfer instruction) without registration under the 1933 Act be removed from certificates for the shares of such Common Stock or that the Common Stock be transferred without registration.

 

(viii) Not later than the first Closing Date, the Company shall (A) amend its Articles of Incorporation to authorize a class of “blank check” preferred stock (b) file with the Nevada Secretary of State a Certificate of Designation of Series A Convertible Preferred Stock (the “Series A Stock”) substantially in the form of Exhibit E attached hereto and (c) issue and sell one share of Series A Stock to Marc Fogassa for a purchase price of $1.00, which share shall entitle Marc Fogassa to cast 51% of the votes on all matters. Marc Fogassa is a third party beneficiary of this covenant and condition to closing.

 

7.              Indemnification.

 

(a)          The Company agrees to indemnify, hold harmless, reimburse and defend the Subscribers, the Subscribers’ officers, directors, agents, Affiliates, members, managers, control persons, and principal shareholders, against any claim, cost, expense, liability, obligation, loss or damage (including reasonable legal fees) of any nature, incurred by or imposed upon the Subscribers or any such person which results, arises out of or is based upon (i) any material misrepresentation by the Company or breach of any representation or warranty by the Company in this Agreement or in any Exhibits or Schedules attached hereto in any Transaction Documents, or (ii) after any applicable notice and/or cure periods, any breach or default in performance by the Company of any material covenant or undertaking to be performed by the Company hereunder, or any other material agreement entered into by the Company and Subscribers relating hereto.

 

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(b)          The Subscribers agree to indemnify, hold harmless, reimburse and defend the Company, the Company’s officers, directors, agents, Affiliates, members, managers, control persons, and principal shareholders, against any claim, cost, expense, liability, obligation, loss or damage (including reasonable legal fees) of any nature, incurred by or imposed upon them or any such person which results, arises out of or is based upon any material misrepresentation by the Subscribers in this Agreement or in any Exhibits or Schedules attached hereto or in any Transaction Documents. Notwithstanding the forgoing, in no event shall the liability of the Subscriber or permitted successor hereunder, or under any Transaction Documents or other agreement delivered in connection herewith, exceed the Purchase Price paid by such Subscriber. Except for breaches of the Subscriber’s representations in this Agreement and for the indemnification set forth in this Section 7(b), the Company shall take no action against any Subscriber in the Offering with respect to this Agreement or any Transaction Document.

 

8.              Closing Conditions .

 

(a)          The obligation hereunder of the Subscriber to acquire and pay for the Purchased Securities 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 Subscriber’s sole benefit and may be waived by the Subscriber at any time in its sole discretion.

 

(i)          The representations and warranties of the Company contained in this Agreement shall have been true and correct on the date of this Agreement and shall be true and correct on the Closing Date as if given on and as of the Closing Date (except for representations given as of a specific date, which representations shall be true and correct as of such date), and on or before the Closing Date the Company shall have performed all covenants and agreements of the Company contained herein or in any of the other Transaction Documents required to be performed by the Company on or before the Closing Date;

 

(ii)         The Transaction Documents have been duly executed and delivered by the Company to the Escrow Agent;

 

(iii)        On the Closing Date, the Subscriber shall have received (A) an opinion of the Ofsink, PLLC, counsel for the Company, dated the Closing Date, addressed to the Subscribers, in the form attached as Exhibit B, and (B) a copy of a lockup agreement between the Company and Brazil Mining, Inc., Marc Fogassa and each other person who shall be a director or executive officer of either Brazil Mining, Inc., the Company and any person controlled by or under common control of the foregoing entities in the form attached as Exhibit C.

 

(b)          The obligation hereunder of the Company to issue and sell the Purchased Securities to the Subscriber 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.

 

(i)          The representations and warranties of the Subscriber in this Agreement and each of the other Transaction Documents to which the Subscriber is a party shall be true and correct in all material respects as of the date when made and as of the Closing Date as though made at that time, except for representations and warranties that are expressly made as of a particular date, which shall be true and correct in all material respects as of such date;

 

18
 

 

(ii)         The Issue Price for the Purchased Securities has been delivered to the escrow account maintained by Signature Bank (the “ Escrow Agent ”); and

 

(iii)         The Transaction Documents to which the Subscriber is a party have been duly executed and delivered by the Subscriber to the Escrow Agent.

 

9.              Miscellaneous .

 

(a)           Notices . All notices, demands, requests, consents, approvals, and other communications required or permitted hereunder shall be in writing and, unless otherwise specified herein, shall be (i) personally served, (ii) deposited in the mail, registered or certified, return receipt requested, postage prepaid, (iii) delivered by reputable air courier service with charges prepaid, or (iv) transmitted by hand delivery, telegram, or facsimile, addressed as set forth below or to such other address as such party shall have specified most recently by written notice. Any notice or other communication required or permitted to be given hereunder shall be deemed effective (a) upon hand delivery or delivery by facsimile, with accurate confirmation generated by the transmitting facsimile machine, 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, to:

 

Flux Technologies, Corp

Attn: Marc Fogassa, Chief Executive Officer

324 South Beverly Drive, Suite 118

Beverly Hills, California 90212 U.S.A.

 

With a copy by fax only to (which copy shall not constitute notice):

 

Darren L. Ofsink

OFSINK, PLLC

900 Third Avenue, 5 th Floor

New York, New York 10022 U.S.A.

Facsimile:  (212) 688-7273

 

If to the Subscribers:

 

19
 

 

To each of the addresses and facsimile numbers listed on the signature pages of this Agreement

 

(b)           Entire Agreement; Amendment . This Agreement and the other Transaction Documents contain 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 Subscribers 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 the holders of at least fifty percent (50%) of the total number of Shares purchased at all Closings and then outstanding (the “ Majority Holders ”), and no provision hereof may be waived other than by a written instrument signed by the Majority Holders. No such amendment shall be effective to the extent that it applies to less than all of the holders of the Shares 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 Purchased Shares, as the case may be.

 

(c)           Counterparts/Execution . This Agreement may be executed in any number of counterparts and by the different signatories hereto on separate counterparts, each of which, when so executed, shall be deemed an original, but all such counterparts shall constitute but one and the same instrument. This Agreement may be executed by facsimile transmission, PDF, electronic signature or other similar electronic means with the same force and effect as if such signature page were an original thereof.

 

(d)           Law Governing this Agreement . This Agreement shall be governed by and construed in accordance with the laws of the State of California without regard to principles of conflicts of laws. Any action brought by either party against the other concerning the transactions contemplated by this Agreement shall be brought only in the state courts of California or in the federal courts located in the state of California and county of Los Angeles. The parties to this Agreement hereby irrevocably waive any objection to jurisdiction and venue of any action instituted hereunder and shall not assert any defense based on lack of jurisdiction or venue or based upon forum non conveniens . The parties executing this Agreement and other agreements referred to herein or delivered in connection herewith on behalf of the Company agree to submit to the in personam jurisdiction of such courts and hereby irrevocably waive trial by jury. The prevailing party shall be entitled to recover from the other party its reasonable attorney’s fees and costs. In the event that any provision of this Agreement or any other agreement delivered in connection herewith is invalid or unenforceable under any applicable statute or rule of law, then such provision shall be deemed inoperative to the extent that it may conflict therewith and shall be deemed modified to conform with such statute or rule of law. Any such provision which may prove invalid or unenforceable under any law shall not affect the validity or enforceability of any other provision of any agreement. Each party hereby irrevocably waives personal service of process and consents to process being served in any suit, action or proceeding in connection with this Agreement or any other Transaction Documents by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) 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 contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by law.

 

20
 

 

(e)           Specific Enforcement, Consent to Jurisdiction . The Company and Subscribers acknowledge and agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that the parties shall be entitled to seek an injunction or injunctions to prevent or cure breaches of the provisions of this Agreement and to enforce specifically the terms and provisions hereof, this being in addition to any other remedy to which any of them may be entitled by law or equity. Subject to Section 9(d) hereof, the Company and the Subscribers hereby irrevocably waive, and agree not to assert in any such suit, action or proceeding, any claim that it is not personally subject to the jurisdiction in New York 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. Nothing in this Section shall affect or limit any right to serve process in any other manner permitted by law.

 

(f)           Damages . In the event the Subscriber is entitled to receive any liquidated damages pursuant to the Transaction Documents, the Subscriber may elect to receive the greater of actual damages or such liquidated damages.

 

(g)           Maximum Payments . Nothing contained herein or in any document referred to herein or delivered in connection herewith shall be deemed to establish or require the payment of a rate of interest or other charges in excess of the maximum permitted by applicable law. In the event that the rate of interest or dividends required to be paid or other charges hereunder exceed the maximum permitted by such law, any payments in excess of such maximum shall be credited against amounts owed by the Company to the Subscriber and thus refunded to the Company.

 

(h)           Calendar Days and Business Days . All references to “days” in the Transaction Documents shall mean calendar days unless otherwise stated. The term “Business Day” shall mean days that the New York Stock Exchange is open for trading for three or more hours. Time periods shall be determined as if the relevant action, calculation or time period were occurring in New York City. Any deadline that falls on a non-Business Day in any of the Transaction Documents shall be automatically extended to the next Business Day and interest, if any, shall be calculated and payable through such extended period.

 

(i)           Captions: Certain Definitions . The captions of the various sections and paragraphs of this Agreement have been inserted only for the purposes of convenience; such captions are not a part of this Agreement and shall not be deemed in any manner to modify, explain, enlarge or restrict any of the provisions of this Agreement. As used in this Agreement the term “ person ” shall mean and include an individual, a partnership, a joint venture, a corporation, a limited liability company, a trust, an unincorporated organization and a government or any department or agency thereof.

 

21
 

 

(j)           Severability . In the event that any term or provision of this Agreement shall be finally determined to be superseded, invalid, illegal or otherwise unenforceable pursuant to applicable law by an authority having jurisdiction and venue, that determination shall not impair or otherwise affect the validity, legality or enforceability: (i) by or before that authority of the remaining terms and provisions of this Agreement, which shall be enforced as if the unenforceable term or provision were deleted, or (ii) by or before any other authority of any of the terms and provisions of this Agreement.

   

[ Signature Pages Follow ]

 

22
 

 

SIGNATURE PAGE TO SUBSCRIPTION AGREEMENT

 

Please acknowledge your acceptance of the foregoing Subscription Agreement with Flux Technologies, Corp.. by signing and returning a copy to the Company whereupon it shall become a binding agreement.

 

NUMBER OF SHARES  _______________  x $33.333 =  ____________  (the “ Issue Price ”)

 

___________________________________  
Signature   Signature (if purchasing jointly)
     
___________________________________  
Name Typed or Printed   Name Typed or Printed
     
___________________________________  
Entity Name   Entity Name
     
___________________________________  
Address   Address
     
___________________________________  
City, State and Zip Code/Country   City, State and Zip Code/Country
     
___________________________________  
Telephone - Business   Telephone - Business
     
___________________________________  
Telephone – Residence   Telephone – Residence
     
___________________________________  
Facsimile – Business   Facsimile - Business
     
___________________________________  
Facsimile – Residence   Facsimile – Residence
     
___________________________________  
Tax ID # or Social Security #   Tax ID # or Social Security #

 

Name in which securities should be issued:    

 

Dated: ____________________, 2012

 

23
 

 

This Subscription Agreement is agreed to and accepted as of December 18, 2012.

 

  FLUX TECHNOLOGIES, CORP.
   
  By: /s/ Marc Fogassa
    Name:  Marc Fogassa
    Title: Chief Executive Officer

 

24
 

 

FLUX TECHNOLOGIES

 

Investor Name   Address   Shares
A.I. International Corporate Holdings Ltd.   AMS
Road Town Tortola
DUI
  3,000
Adrienne Solomon   42 River Hollow Ln
Houston, TX 77027
  750
Apollos Company 401 (K) Plan   31131 Ceanothus Dr.
Laguna Beach, CA 92651
  750
B Kevin and Renee T. Smith   19969 Cresent Court
Montgomery, TX 77356
  750
Brompton Group NA, LLC   109 N Post Oak Lane, Suite 430
Houston, TX 77024
  930
Burt Bowen   8304 Winningham
Houston, TX 77055
  750
Carl R. Webb and Patricia A. Webb   4803 South Owasso Ave.
Tulsa, OK 74105
  750
City Choice Group, LLC   109 N. Post Oak Lane, Suite 430
Houston, TX 77024
  750
Cyril Canezin   1506 Hazel St.
Houston, TX 77019
  750
Don and Peggy Wiesner   25214 London Town Dr.
Spring, TX 77389
  750
Ed Soderstrom   356 70th Rd.
Ponca City, OK 74604
  750
Eric Orzeck   2632B Wroton Rd.
West University PL, TX 77005
  750
Flashy P, LLC   4411 Champions Court
League City, TX 77573
  750
Harvey Trammell   9528 Briar Forest
Houston, TX 77063
  750
Jeff Lamont   6930 Oporto Drive
Los Angeles, CA 90068
  3,000
John D. Nottingham Jr.   7118 N Holiday Dr.
Galveston, TX 77550
  750
John G. Tripp   1205 Easy Street
Claremore, OK 74017
  750
Jon L. Poole and Mary Jo Poole   6830 FM 822
Edna, TX 77957
  750
Larry E. Porter   310 Roger Road
Kenai, AK 99611
  750
Leonard White  
6114 Creekview
Sugarland, TX 77479
  1,500
Matthew Weinman   3011 Acorn Wood Way
Houston, TX 77059
  750
MSSB c/f David S. Nagelberg IRA   939 Coast Blvd., Unit 21 DE
La Jolla, CA 92037
  18,002
Nicholas Maglio   7509 La Jolla Blvd
La Jolla, CA 92037
  750
Nine Dragon Investments   1049 Coast Blvd.
La Jolla, CA 92037
  5,250
Patricia A. Shaw Family Trust   510 Longwoods LN
Houston, TX 77024
  1,500
Pete Gerukos   5705 Shady River
Houston, TX 77057
  750
Peter Isaac   5715 Glasgow
Beaumont, TX 77706
  750
Robert Klinek and Susan Pack   P.O. Box 157
Rancho SantaFe, CA
  750
Roy and Patricia Wedge   201 Saddle Creek
Tyler, TX 75703
  750
Sheri Leigh Gross   447 Hunterwood Dr.
Houston, TX 77024
  1,500
Svenco Inc. Retirement Plan DBPP FBO Tamberli Weitkunat   13406 Spyglen
Cypress, TX 77429
  1,500
Thriving Future Limited   15/F Tower 1, China Central Place,
81 Jianguo Rd., Chaoyang District,
Beijing 100025 China
  3,000
Tom Martin   697 Sand Isles Circle
Ponte Vedra Beach, FL 32082
  750
William W. Bartlett Jr.   506 Ramblewood
Houston, TX 77079
  3,000
Winship Associates Inc. PSP   419 Hollow Drive
Houston, TX 77024
  570
         
    Total:   60,002

   

25

 

 

 

 

 
 

 

 

 
 

 

 

CERTIFICATE OF AMENDMENT TO

ARTICLES OF INCORPORATION

OF

FLUX TECHNOLOGIES, CORP.

(Continued)

 

“The total number of shares of Common Stock that the corporation shall have authority to issue is seventy-five million (75,000,000) shares, par value $.001 per share. The total number of shares of Preferred Stock that the corporation shall have authority to issue is ten million (10,000,000) shares, par value $.001 per share. The Preferred Stock may be issued in one or more series, each series to be appropriately designated by a distinguishing letter or title, prior to the issuance of any shares thereof. The voting powers, designations, preferences, limitations, restrictions, and relative, participating, optional and other rights, and the qualifications, limitations, or restrictions thereof, of the Preferred Stock shall hereinafter be prescribed by resolution of the board of directors pursuant hereto.

 

 

 

 

 

 
 

 

 

 
 

 

(Continuation Pages)

 

CERTIFICATE OF DESIGNATIONS. PREFERENCES AND RIGHTS OF

SERIES A CONVERTIBLE PREFERRED STOCK

OF

FLUX TECHNOLOGIES, CORP.

 

Flux Technologies, Corp. (the “ Corporation ”), a corporation organized and existing under the laws of the State of Nevada, does hereby certify, that, pursuant to authority conferred upon the Board of Directors by the Corporation’s Articles of Incorporation and pursuant to Section 78.1955 of the Nevada Revised Statutes, the Board of Directors duly adopted resolutions:

 

RESOLVED, that the designations, powers, preferences and rights of the Series A Convertible Preferred Stock be, and they hereby are, as set forth below:

 

1. Designation; Ranking . A series of preferred stock is hereby designated as Series A Convertible Preferred Stock (the “Series A Preferred Stock”).

 

2. Number . The number of shares constituting Series A Preferred Stock is fixed at one (1) share, par value $.001 per share, and such amount may not be increased or decreased, except with the written consent of the holders of 100% of the issued and outstanding Series A Preferred Stock.

 

3. Dividends . The holders of the Series A Preferred Stock shall not be entitled to dividends, except that in the event that a dividend is declared on the Corporation’s Common Stock, par value $.001 per share (“Common Stock”), the holders of the Series A Preferred Stock shall receive the dividends that would be payable if all then outstanding shares were converted into Common Stock immediately prior to the declaration of the dividend.

 

4. Liquidation . In the event of the liquidation, dissolution or winding up of the Corporation, the holders of Series A Preferred Stock shall not be entitled to a liquidation preference over the holders of the Common Stock, but the holders of the Series A Preferred shall share pro rata with the holders of Common Stock, as if all then outstanding shares of Series A Preferred Stock were converted into Common Stock, in any assets of the Corporation available therefor after the payment of all sums to which the holders of other classes of outstanding Preferred Stock, if any, having a preference over the Series A Preferred Stock, are entitled.

 

 
 

 

5. Voting . Except as otherwise provided herein or by law and in addition to any right to vote as a separate class as provided by law,  the holders of the Series A Preferred Stock shall have full voting rights and powers equal to the voting rights and powers of holders of Common Stock and shall be entitled to notice of any stockholders meeting in accordance with the By-laws of the Corporation, and shall be entitled to vote, with respect to any question upon which holders of Common Stock have the right to vote, including, without limitation, the right to vote for the election of directors, voting together with the holders of Common Stock as one class.  For so long as Series A Preferred Stock is issued and outstanding, the holders of Series A Preferred Stock shall vote together as a single class with the holders of the Corporation’s Common Stock, and the holders of any other class or series of shares entitled to vote with the Common Stock, with the holders of Series A Preferred Stock being entitled to 51% of the total votes on all such matters regardless of the actual number of shares of Series A Preferred Stock then outstanding, and the holders of Common Stock and any other shares entitled to vote being entitled to their proportional share of the remaining 49% of the total votes based on their respective voting power. The vote of 100% of the outstanding Series A Preferred Stock shall determine the vote of the Series A Preferred Stock as a class. If the holders of Series A Preferred Stock cannot unanimously agree on how to vote on a particular matter or matters, then the holders shall submit such matter or matters for a determination by a majority of the directors of the Board of Directors of the Corporation (including, for such purpose directors who are holders of Series A Preferred Stock) and the holders shall be deemed to have voted all of their shares of Series A Preferred Stock in accordance with the determination of the Board of Directors.

 

6. Action By Written Consent . Whenever holders of Series A Preferred Stock are required or permitted to take any action by vote, such action may be taken without a meeting on written consent, setting forth the action so taken and signed by the holders of the outstanding Series A Preferred Stock of the Corporation having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted.

 

7. Conversion .

 

(a) Optional Conversion . All or any portion of the outstanding shares of Series A Preferred Stock may upon at least ten (10) days prior written notice to the Corporation be converted into Common Stock at the then effective Conversion Ratio, as defined below. At any time, each share of Series A Preferred Stock shall be convertible into one (1) share of Common Stock (the “Conversion Ratio”).

 

(b) Delivery of Certificates Upon Conversion . The Corporation shall deliver to the holder promptly following the Conversion Date (which date shall be ten (10) days after the Conversion Notice is delivered to the Corporation together with the certificate or certificates representing the number of shares of Series A Preferred Stock being converted and a duly executed assignment or stock power) a certificate or certificates for the number of shares of Common Stock being acquired upon the conversion of shares of Series A Preferred Stock.

 

 
 

 

(c) Reservation of Shares Issuable Upon Conversion . The Corporation covenants that it will at all times reserve and keep available out of its authorized and unissued shares of Common Stock solely for the purpose of issuance on conversion of the Series A Preferred Stock, not less than such number of shares of Common Stock as shall be issuable upon the conversion of all outstanding shares of Series Preferred Stock.

 

(d) Transfer Taxes . The issuance of certificates for shares of the Common Stock on conversion of the Series A Preferred Stock shall be made without charge to the holders thereof for any documentary stamp or similar taxes that may be payable in respect of the issue or delivery of such certificate, provided that the Corporation shall not be required to pay any tax that may be payable in respect of any transfer involved in the issuance and delivery of any such certificate upon conversion in a name other than that of the holder of such shares of Series A Preferred Stock so converted and the Corporation shall not be required to issue or deliver such certificates unless or until the person or persons requesting the issuance thereof shall have paid to the Corporation the amount of such tax or shall have established to the satisfaction of the Corporation that such tax has been paid.

 

8. Limitations Upon Disposition . The Series A Preferred Stock issuable pursuant to this Certificate and the shares of Common Stock issuable on conversion of the Series A Preferred Stock (collectively the “ Securities ”), if not registered by the Corporation under the Securities Act of 1933, as amended, may not be sold or offered for sale in the absence of an effective registration statement as to the Securities under the Securities Act, or an opinion of counsel satisfactory to the Corporation that such registration statement is not required. The above restrictions in this Section 9 shall be contained in a legend to be placed on each of the Series A Preferred Stock certificates at the time of issuance of the shares and a stop transfer order may be placed on such shares by the Corporation. In addition, the following language shall appear on the back of each of the Series A Preferred Stock certificates:

 

ANY TRANSFEREE OF THIS CERTIFICATE SHOULD CAREFULLY REVIEW THE TERMS OF THE COMPANY’S CERTIFICATE OF DESIGNATIONS, PREFERENCES AND RIGHTS OF THE PREFERRED SHARES REPRESENTED BY THIS CERTIFICATE

 

9. Additional Rights . So long as any shares of Series A Preferred Stock remain outstanding, the Corporation shall not, without first obtaining the approval by vote or written consent of all the outstanding shares of Series A Preferred Stock, (i) alter or change the powers, preferences, privileges, or rights of the Series A Preferred Stock, or (ii) amend the provisions of this Section 9 or any other provision of this Certificate of Designation.

 

 
 

 

10. Replacement . Upon receipt by the Corporation of evidence reasonably satisfactory to it of the ownership of and the loss, theft, destruction or mutilation of any certificate evidencing one or more shares of Series A Preferred Stock, and in the case of loss, theft or destruction, of any indemnification undertaking by the holder to the Corporation in customary form and, in the case of mutilation, upon surrender and cancellation of such certificate, the Corporation at its expense will execute and deliver in lieu of such certificate, a new certificate of like kind, representing the number of shares of Series A Preferred Stock which shall have been represented by such lost, stolen, destroyed, or mutilated certificate.

 

11. Notice . Whenever notice is required to be given pursuant to this Certificate of Designation, unless otherwise provided herein, such notice shall be given at the address then set forth in the Corporation’s records.

 

 

 

 

ACQUISITION AGREEMENT

 

This Acquisition Agreement (this “Agreement”) is made and entered into as of December 18, 2012 by and among Flux Technologies, Corp., a Nevada corporation, with its principal office at 21 Komorowo Street, Suite 2, Wolsztyn, Poland 64200 (the “Company”), Iryna Antaniuk, with an address at 21 Komorowo Street, Suite 2, Wolsztyn, Poland 64200 (“Antaniuk”) and Brazil Mining, Inc., a Delaware corporation (“BMI” and collectively with the Company and Antaniuk, the “Parties”).

 

WITNESSETH

 

WHEREAS, Antaniuk is the record and beneficial owner of a majority of the outstanding shares of Common Stock, par value $.001 per share, of the Company (“Common Stock”); and

 

WHEREAS, BMI desires to acquire 51% of the outstanding shares of the Company’s Common Stock giving effect to (a) the issuance of shares of Common Stock to BMI in exchange for certain interests in mineral rights owned or controlled by BMI, (b) the issuance of shares of Common Stock to certain investors in a private placement to be consummated simultaneously with the closing of this Agreement (the “Private Placement”), and (c) the cancellation of all 3,000,000 shares of Common Stock held by Antaniuk pursuant to this Agreement.

 

NOW, THEREFORE, in the parties hereto agree as follows:

 

1. Agreement to Cancel Common Stock . Antaniuk agrees to the cancellation of all 3,000,000 shares of Common Stock held by Antaniuk in exchange for the payment by BMI to the Company of $25,000.

 

2. Closing . (a) The closing of the transactions pursuant to this Agreement (the “Closing”) shall be held on December 10, 2012 ((the “Closing Date”), or such other date as the Parties may agree, at the offices of Ofsink, PLLC, 900 Third Avenue, 5 th Floor, New York, New York 10022.

 

(b) Subject to the terms and conditions hereof, and in reliance upon the written representations and warranties of BMI, at the Closing Antaniuk will deliver to the Company (i) for cancellation, a certificate or certificates for 3,000,000 shares of Common Stock, together with a signed (with signature medallion guaranteed) stock power transferring such shares to the Company and signed instructions to the Company’s transfer agent to cancel such shares, (ii) a written consent of sole director of the Company electing Marc Fogassa as the sole director of the Company simultaneously with the effectiveness of the resignation of Antaniuk as sole director, (iii) a resignation of Antaniuk as a director and from all positions as an officer of, the Company, (iv) evidence of the termination or full satisfaction of all contracts and contractual obligations of the Company as of the Closing Date (including the termination of all Company bank and checking accounts), other than the Company’s engagement agreement with Silberstein Ungar, PLLC, (v) a certified copy of a Certificate of Amendment to the Articles of Incorporation of the Company to authorize 10,000,000 shares of blank check preferred stock, (vi) a certified copy of a Certificate of Designations, Preferences and Rights to evidence the designation of one share of Series A Convertible Preferred Stock and a certificate representing one share of Series A Preferred Stock registered in the name of Marc Fogassa.

 

 
 

 

(c) Subject to the terms and conditions hereof, and in reliance upon the written representations and warranties of Antaniuk and the Company, at the Closing BMI shall pay to the Company in immediately available funds, $25,000 and the Company shall simultaneously use such proceeds to pay all of its outstanding liabilities as of the Closing Date.

 

3. Representations and Warranties of Antaniuk and the Company . Antaniuk and the Company hereby severally represent and warrant to BMI that the statements in the following paragraphs of this Section 3 are all true and complete as of the date hereof:

 

3.1 Authority; Due Authorization . This Agreement has been duly and validly executed and delivered by the Company and Antaniuk, and upon the execution and delivery by BMI of this Agreement and the performance by BMI of its obligations herein, will constitute, a legal, valid and binding obligation of each of the Company and Antaniuk. The Company is a corporation duly incorporated, validly existing and in good standing under the laws of Nevada. The execution and delivery by the Company and Antaniuk of this Agreement does not, and the performance by the Company and Antaniuk of their obligations under this Agreement and the consummation of the transactions contemplated hereby will not, conflict with or result in a violation or breach of any of the terms, conditions or provisions of any other agreement to which either the Company or Antaniuk is a party.

 

3.2 Title to Securities. Antaniuk is the sole record and beneficial owner of the 3,000,000 shares of Common Stock being cancelled pursuant to this Agreement and has sole dispositive authority with respect to such Common Stock. There are no liens or encumbrances on the shares being cancelled

 

3.3 Valid Issuance . The Common Stock being cancelled hereunder is, and shall be at the Closing, duly and validly issued, fully paid, and non-assessable and in each instance have been issued in accordance with the registration requirements of applicable securities laws or valid exemptions therefrom.

 

3.4 Capitalization of the Company . Immediately prior to the Closing, the authorized capital stock of the Company shall consist of a total of 75,000,000 (seventy-five million) shares of Common Stock, par value $.001 per share and 10,000,000 (ten million) shares of Preferred Stock, par vale $.001 per share, of which one share has been designated as Series A Convertible Preferred Stock. Immediately prior to the Closing there will be 1 share of Series A Convertible Preferred Stock outstanding and issued to Marc Fogassa, no other shares of Preferred Stock issued or outstanding and 3,880,000 shares of Common Stock outstanding. There are no commitments to issue, and there are no outstanding warrants, options, convertible securities or debt, preferred stock, or any other securities other than as set forth in the Company’s filings with the Securities and Exchange Commission through December 7, 2012 (the “Filings”).

 

 
 

 

3.5 Litigation . There is no action, suit, proceeding or investigation pending or currently threatened against the Company that may affect the validity of this Agreement or the right of the Seller to enter into this Agreement or to consummate the transactions contemplated hereby.

 

3.6 Securities Laws . The Company has complied in all respects with applicable federal and state securities laws, rules and regulations, including the Sarbanes Oxley Act of 2002, as such laws, rules and regulations apply to the Company and its securities; and (b) all shares of capital stock of the Company have been issued in accordance with applicable federal and state securities laws, rules and regulations. There are no stop orders in effect with respect to any of the Company’s securities.

 

3.7 Tax Returns, Payments and Elections . The Company has timely filed all tax returns, statements, reports, declarations and other forms and documents and has, to date, paid all taxes due.

 

3.8 34 Act Reports. None of the Company’s Flings, contains any untrue statement of a material fact or omits to state a material fact necessary to make the statements therein not misleading, in light of the circumstances in which they were made.

 

3.9 No Liabilities. Upon the use by the Company at the Closing of all or a portion of the $25,000 BMI is paying to the Company pursuant pursuant to Section 2(c) hereof, to pay its liabilities, the Company shall have no liabilities of any kind, whether direct or contingent.

 

4. Representations and Warranties of BMI . BMI hereby represents and warrants to Antaniuk that the statements in the following paragraphs of this Section 4 are all true and complete as of the date hereof:

 

4.1 Authority; Due Authorization . This Agreement has been duly and validly executed and delivered by BMI, and upon the execution and delivery by the Company and Antaniuk of this Agreement and the performance by Company and Antaniuk of their respective obligations herein, will constitute, a legal, valid and binding obligation of BMI. BMI is a corporation duly incorporated, validly existing and in good standing under the laws of Delaware. The execution and delivery by BMI of this Agreement does not, and the performance by BMI of its obligations under this Agreement and the consummation of the transactions contemplated hereby will not, conflict with or result in a violation or breach of any of the terms, conditions or provisions of any other agreement to which BMI is a party.

  

 
 

 

5. CONDITIONS TO BMI’S OBLIGATIONS AT THE CLOSINGS.

  

5.1 Conditions to Closing . Subject to the terms hereof, the obligation of BMI to consummate this Agreement at the Closing is subject to the fulfillment, prior to the Closing to the satisfaction of BMI, of the following conditions, the waiver of which shall not be effective against BMI without its written consent thereto:

 

5.1.1 Representations and Warranties True and Correct . The representations and warranties made by the Company and Antaniuk in Section 3 hereof shall be true and correct and complete as of the date hereof, and shall be true and correct and complete as of the date of the Closing with the same force and effect as if they had been made on and as of such date.

 

5.1.2 Access to Books and Records . The Company shall have provided BMI with reasonable access to the Company’s books and records for the purpose of performing due diligence on the Company.

 

5.1.3 Amendment of the Company’s Charter and Designation and Issuance of Series A Convertible Preferred Stock. The Company shall have (a) amended its Articles of Incorporation to authorize 10,000,000 shares of blank check Preferred Stock, (b) filed a Certificate of Designations of Preferences and Rights of Series A Convertible Preferred Stock in order to designate one share of a series of preferred stock which shall, among other things, be entitled to 51% of the voting power on all matters on which shareholders of the Company shall be entitled to vote, and (c) issued and sold to Marc Fogassa for $1.00 the one share of Series A Convertible Preferred Stock.

 

5.1.4 Consummation of Contribution Agreement . The Company and BMI shall have simultaneously entered into and consummated a Contribution Agreement pursuant to which the Company shall issue to BMI 51% of the outstanding shares of Common Stock (giving effect to the consummation of the Private Placement and the cancellation of 3,000,000 shares of Common Stock held by Antaniuk pursuant to this Agreement).

 

6. Indemnification .

 

6.1 Antaniuk’s’s Indemnification . Antaniuk agrees to indemnify, defend and hold BMI and the Company and its officers, directors, employees, agents, consultants and assigns harmless from and against any claims, losses or expenses (including reasonable attorney’s fees) resulting from or arising out of breach by Antaniuk of any of her representations, warranties, covenants or obligations under this Agreement.

 

6.2 BMI’s Indemnification . BMI agrees to indemnify, defend and hold Antaniuk and her assigns harmless from and against any claims, losses or expenses (including reasonable attorney’s fees) resulting from or arising out of breach by BMI of any of its representations, warranties, covenants or obligations under this Agreement.

 

 
 

 

7. Miscellaneous . Any dispute, disagreement, conflict of interpretation or claim arising out of or relating to this Agreement, or its enforcement, shall be governed by the laws of the State of New York. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same agreement. A telefaxed copy of this Agreement shall be deemed an original. Any action brought by either party against the other concerning the transactions contemplated by this Agreement shall be brought only in the state courts of New York or in the federal courts located in the state of New York and county of New York. The parties to this Agreement hereby irrevocably waive any objection to jurisdiction and venue of any action instituted hereunder and shall not assert any defense based on lack of jurisdiction or venue or based upon forum non conveniens . The headings and captions used in this Agreement are used for convenience only and are not to be considered in construing or interpreting this Agreement. Any term of this Agreement may be amended and the observance of any term of this Agreement may be waived (either generally or in a particular instance and either retroactively or prospectively), only with the written consent of the Parties. This Agreement constitutes the entire agreement and understanding of the Parties with respect to the subject matter hereof and supersedes any and all prior negotiations, correspondence, agreements, understandings duties or obligations between the parties with respect to the subject matter hereof. The terms and conditions of this Agreement shall inure to the benefit of and be binding upon the respective successors and assigns of the Parties.

 

In Witness Whereof , the parties hereto have executed this Agreement as of the date first written above.

 

FLUX TECHNOLOGIES, Corp.  
     
By:   /s/ Iryna Antaniuk  
  Name: Iryna Antaniuk,  
  Title: Chief Executive Officer  

 

  /s/ Iryna Antaniuk  
Iryna Antaniuk  

 

BRAZIL MINING, INC.  
     
By:   /s/ Marc Fogassa  
  Name: Marc Fogassa  
  Title: Chief Executive Officer  

 

 

 

 

ASSIGNMENT

 

This ASSIGNMENT, dated as of December 18, 2012 (“ Assignment ”), by BRAZIL MINING, INC., a Delaware corporation (“ Assignor ”), with an office at 324 South Beverly Drive, Suite 118, Beverly Hills, California 90212 in favor of FLUX TECHNOLOGIES, CORP., a Nevada corporation (“ Assignee ”), with an office at 324 South Beverly Drive, Suite 118, Beverly Hills, California 90212.

 

WITNESSETH

 

WHEREAS , Assignor is the owner of the mineral rights described in Exhibit A attached hereto (the “Mineral Rights”); and

 

WHEREAS , Assignor has agreed to sell to Assignee and Assignee has agreed to purchase from Assignor the Mineral Rights.

 

NOW , THEREFORE , for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Assignor does hereby assign, transfer, set over, and deliver to Assignee (ii) all of Assignor's right, title, and interest in and to the Mineral Rights and (ii) all rights corresponding thereto throughout the world.

 

Assignor further agrees, without further consideration, to cause to be performed such lawful acts and to be executed such further assignments and other lawful documents as Assignee may reasonably request to effectuate fully this Assignment and to permit Assignee to be duly recorded as the registered owner of the Mineral Rights and of the rights hereby conveyed.

 

Assignee represents and warrants to Assignor as follows:

 

(1)             Assignee is a corporation duly organized, validly existing and in good standing under the laws of the state of Nevada.

 

(2)            Assignee has full corporate power and authority to execute and deliver this Assignment and to consummate the transactions contemplated hereby. This Assignment has been duly and validly executed and delivered by Assignee and, assuming due and valid authorization, execution and delivery hereof by Assignor, is a valid and binding obligation of Assignee, enforceable against Assignee in accordance with its terms. Neither the execution and delivery of this Assignment nor the consummation by Assignee of any of the transactions contemplated hereby will conflict with, or require any consent under, any contract to which Assignee is a party or any judgment, order or decree of any court or other governmental entity to which Assignee or its any of its assets is subject or bound.

 

 
 

 

(3)            Assignee has full corporate power and authority to carry on its business as it is now being conducted and to own the properties and assets it now owns, including the Mineral Rights. Assignee is duly qualified or licensed to do business as a foreign corporation in good standing in every jurisdiction in which such qualification is required. Assignee has heretofore delivered to Assignor complete and correct copies of Assignee’s Articles of Organization as presently in effect.

 

Assignor hereby makes the following representations and warranties to the Assignee: (i) Assignor has the full, absolute and entire power and legal right to execute, deliver and perform this Assignment and (ii) the Mineral Rights are owned of record and beneficially by Assignor, to its best knowledge free and clear of any contract, commitment, demand, lien, charge, security interest or encumbrance whatsoever. Assignor hereby agrees to defend, indemnify, defend and hold harmless Assignee from and against and in respect of: (i) any and all losses or Damages resulting from, relating or incident to, or arising out of, or otherwise in connection with any third party claim, suit, action or proceeding asserting (i) any misrepresentation or breach of representation, warranty or acknowledgment made or contained in this Agreement; and (ii) any and all actions, suits, proceedings, claims, demands, judgments, costs and expenses (including reasonable legal fees and expenses) incident to the foregoing, whether between the parties or between Assignee and any third party or otherwise. Assignee (the “ Indemnified Party ”) shall promptly notify Assignor (the “ Indemnifying Party ”) in writing of any claim for indemnification, provided, that failure to give such notice shall not relieve the Indemnifying Party of any liability hereunder (except to the extent the Indemnifying Party has suffered actual material prejudice by such failure). The Indemnifying Party shall tender sole defense and control of such claim to the Indemnified Party. The Indemnifying Party shall at its expense, if requested by the Indemnified Party, give reasonable assistance to the Indemnified Party in defense of any claim. As used herein, “ Damages ” means all losses, awards, causes of action, claims, obligations, demands, assessments, fines and penalties (civil or criminal), liabilities, expenses and costs (including litigation costs and reasonable attorneys’ fees), bodily or other personal injuries, damage to tangible Mineral Rights, and any other damages, of any kind or nature actually suffered by an entity.

 

 
 

 

IN WITNESS WHEREOF , the undersigned has caused this Assignment to be executed by the signature of its duly authorized officer as of the date above first written.

 

  ASSIGNOR:
     
  BRAZIL MINING, INC.
     
  By:   /s/ Marc Fogassa
  Marc Fogassa, Chief Executive Officer
     
  ASSIGNEE:
   
  FLUX TECHNOLOGIES, CORP.
     
  By:   /s/ Marc Fogassa
  Marc Fogassa, Chief Executive Officer

 

 
 

 

EXHIBIT A

 

DESCRIPTION OF MINERAL RIGHTS

 

Brazilian Department for Mineral Production (“DNPM”) Exploration Permit number 11638 published in the Federal Official Gazette of October 14 th , 2009, and pertaining to DNPM Process number 880.239/2009.

 

The primary mineral indicated in the DNPM Process number 880.239/2009 is gold. These mineral rights are for an area of size 9,999.11 hectares, in the municipality of Borba, state of Amazonas, in Brazil, in the shape of a square, with the following geographical coordinates:

 

latitude -06°30'00''657 to -06°35'26''186

longitude -59°27'52''267 to -59°33'17''738

 

The unique identifier for this area in the DNPM database is 9DDF897B-8D3A-4F88-AAC4-42D9FCE0939A.

 

 

 

 

OPTION AGREEMENT

 

This Option Agreement (“Agreement”), dated as of December 18, 2012 by and among Brazil Mining, Inc., a Delaware corporation (“BMI” or the “Optionor”), and Flux Technologies, Corp., a Nevada corporation (“Flux” or the “Optionee”).

 

As used in this Agreement, the parties hereto are each referred to individually as a “Party” and collectively as “Parties.”

 

WHEREAS,

 

1. BMI is a party to an agreement pursuant to which BMI has been granted an option to acquire a 55% share (the “Majority Stake”) of the equity of a Brazilian entity (“Target 1”) which will generate monthly diamond production from a certain mining property located in Brazil.

 

2. BMI represents that it can grant to Flux 20% of BMI’s share of the monthly diamond production of Target 1 (the “20% Interest”), payable in cash or in kind, upon the terms and conditions set forth herein.

 

3. Flux is herewith advancing to BMI $800,000 (the “Advance”) to be held by BMI until BMI exercises its option to acquire the Majority Stake in Target 1. The Advance shall be used for the acquisition cost as well as legal and regulatory filing costs and initial operating costs directly related to Target 1.

 

NOW, THEREFORE, the Parties to this Agreement hereby agree as follows:

 

1. Option to Purchase 20% Interest.

 

Section 1.1 Option to Purchase

 

BMI hereby grants to Flux an irrevocable and exclusive option (“ Purchase Option ”) to purchase the 20% Interest on the terms specified in this Agreement. During the term of the Purchase Option, BMI shall not grant or transfer to any person any equity interest in Target 1 or any interest in the 20% Interest. The Purchase Option shall become exercisable on the date BMI gives written notice to Flux that BMI has exercised its option to acquire the Majority Stake in Target 1), which notice shall include all documentation with respect to the exercise of the option. The term of the Purchase Option shall expire 90 days after the acquisition of the Majority Stake in Target 1 by BMI. Upon exercise of the Purchase Option, so long as Flux holds the 20% Interest, BMI shall on a monthly basis in perpetuity, pay over to Flux 20% of the monthly diamond production actually received by BMI from Target 1, and such payment shall be made in cash or in kind. If Flux does not exercise the Purchase Option within 90 days after the acquisition of the Majority Stake in Target 1 by BMI, then BMI shall promptly return to Flux the Advance.

 

 
 

 

Section 1.2 Purchase Price

 

The exercise price for the Purchase Option shall be $800,000 (the “ Purchase Price ”). The Purchase Price shall be paid by Flux giving written notice to BMI that the Advance shall be applied to the Purchase Price. A sufficient portion of the Purchase Price shall be used by BMI to exercise BMI’s option to acquire the Majority Stake in Target 1 and to perform BMI’s other obligations in connection with its acquisition of the Majority Stake and initial operations of Target 1. If at any time Flux determines not to exercise the Purchase Option, then by written notice to BMI, Flux may require BMI to return to Flux without interest, the Advance.

 

Section 1.3 Transaction Announcement

 

After the exercise of the Purchase Option by Flux and completion of the acquisition by BMI of the Majority Stake, and not later than January 25 th , 2013, Flux shall issue a press release in which it describes the diamond producing properties of Target 1 with details such as location, history, and other characteristics.

 

Section 1.4 Redemption of Flux’s 20% Interest

 

(a) At such time, if any, that Flux has received aggregate payments (in cash or in kind) of an amount equal to the sum of $800,000 plus simple interest thereon at the rate of 10% per annum from the date the Purchase Option is exercised, BMI shall have the right (but not the obligation), to be exercised upon written notice to Flux, to repurchase all or a portion of the 20% Interest, for a cash payment equal to the Redemption Value (as hereinafter defined) upon the occurrence of any of the following events (each a “Triggering Event”): (i) if any of BMI’s securities are listed or qualified for trading on a securities exchange in any jurisdiction, (ii) if BMI receives an offer from a bona fide purchaser to sell to such purchaser all or substantially all of BMI’s equity interest in Target 1 (including the 20% Interest), which offer contains a written appraisal of the value of the 20% Interest issued by Roscoe Postle Associates or Coffey Mining, both bona fide independent mining consultancies, and BMI accepts such offer, (iii) if BMI receives an offer from a bona fide purchaser to sell to such purchaser all or substantially all of the assets of BMI (including all or substantially all of its equity interest in Target 1) and BMI accepts such offer, (iv) BMI or the holders of a majority of the outstanding shares of common stock of BMI receive an offer from a bona fide purchaser to sell to such purchaser a majority of the outstanding shares of common stock of BMI and BMI or such holders accept such offer or (v) BMI makes a Qualified Offering (as hereinafter defined).

 

(b) For purposes of this Agreement, the term “Redemption Value” shall mean the then current value of the 20% Interest or portion thereof being redeemed as shall be determined as follows: (i) if the Triggering Event is a Qualified Offering, then the Redemption Value shall be determined by the sole underwriter or lead underwriter for such Qualified Offering or (ii) if the Triggering Event is any of the other events specified in clauses (i), (ii), (iii) or (iv) of Section 1.4, then the Redemption Value shall be determined by Roscoe Postle Associates or Coffey Mining,; provided, however , if neither of these firms agree to be retained as an appraiser, then the independent directors of the Parties shall jointly select another appraisal firm to make such determination. The cost of any appraisal hereunder shall be borne equally by the Parties.

 

 
 

 

(c) For purposes of this Agreement, the term “Qualified Offering” shall mean the issuance and sale of at least $5,000,000 of securities of either BMI or Flux in an underwritten public offering or in an underwritten secondary offering.

 

2. Representations and Warranties

 

As of the date hereof, each Party hereby represents and warrants to the other Party as follows:

 

(a) The Party has all requisite power and legal capacity to enter into and deliver this Agreement and to perform its obligations under this Agreement. This Agreement constitutes, a legal, valid and binding obligation of the Party enforceable against it in accordance with its terms;

 

(b) The execution, delivery of this Agreement and the performance by the Party, of its obligations hereunder do not: (i) cause any violation of applicable laws; (ii) result in any breach of any Agreement or instruments to which the Party is a party or has binding obligations thereunder, or cause the Party to breach any contract or instruments to which it is a party or has binding obligations thereunder; (iii) cause such Party to violate any relevant authorization or consent or approval held by it and/or any continuing valid condition; or (iv) cause any consent or approval to be suspended, removed, or modified, such as by adding additional conditions to the effectiveness of such consent or approval;

 

(c) No litigation, arbitration or administrative or bankruptcy procedure relating to any assets of the Party is underway or to be decided or, to the knowledge of the Party, threatened.

 

Prior to the expiration of the period during which the option hereunder may be exercised, neither Party shall take any action or intentionally refrain from taking any action would have the effect of causing any of the foregoing representations to not be true as of the date the 20% Interest is transferred to Flux upon the Flux’s exercise of the Purchase Option.

 

 
 

 

3. Undertakings

 

(a) Without the prior written consent by Flux, BMI shall not sell, transfer, mortgage, dispose, pledge, encumbrance, grant any option, rights, liens or other interests with respect to all or any portion of its Majority Stake in Target 1 or to approve any other security interest therein;

 

(b) Each Party shall immediately notify the other of the occurrence or the probable occurrence of the litigation, arbitration, administrative or bankruptcy procedure related to the Party or any of its assets;

 

(c) Each Party shall perform all of its respective obligations under this Agreement and not to take any action that would affect the validity or enforceability of this Agreement.

 

4. Applicable Law and Dispute Resolution

 

This Agreement is to be construed in accordance with and governed by the internal laws of the State of New York without giving effect to any choice of law rule that would cause the application of the laws of any jurisdiction other than the internal laws of the State of New York to the rights and duties of the parties.

 

5. Notices

 

Except as may be otherwise provided herein, all notices, requests, waivers and other communications made pursuant to this Agreement shall be in writing and shall be conclusively deemed to have been duly given (a) when hand delivered to the other party; (b) when a printed confirmation sheet verifying successful transmission of the facsimile is generated by the sender’s machine, when sent by facsimile to the number set forth below; (c) five (5) business days after deposit in the mail with first class or certified mail receipt requested postage prepaid and addressed to the other party at the address set forth below; or (d) two (2) business days after deposit with internationally recognized overnight delivery service, postage prepaid, addressed to the parties as set forth below with next business day delivery guaranteed, provided that the sending party receives a confirmation of delivery from the delivery service provider. A party may change or supplement the addresses given below, or designate additional addresses, for purposes of this Section 5 by giving the other party written notice of the new address in the manner set forth above.

 

To: Flux Technologies, Corp.
   
Attention: Mr. Marc Fogassa
Address: 324 South Beverly Drive, Suite 118
  Beverly Hills, California 90212

 

 
 

 

To: Brazil Mining, Inc.
   
Attention: Mr. Marc Fogassa
Address: 324 South Beverly Drive, Suite 118
  Beverly Hills, California 90212

 

6. Miscellaneous

 

Section 6.1 Amendments and Waivers

 

This Agreement can only be amended by a writing signed by each of the Parties hereto. The observance of any term of this Agreement may be waived (either generally or in a particular instance and either retroactively or prospectively), only with the written consent of the party making the waiver.

 

Section 6.2 Severability

 

If one or more provisions of this Agreement are held to be unenforceable under applicable law, such provision shall be excluded from this Agreement and the balance of the Agreement shall be interpreted as if such provision were so excluded and shall be enforceable in accordance with its terms.

 

Section 6.3 Further Assurances

 

The Parties shall from time to time and at all times hereafter make, do, execute, or cause or procure to be made, done and executed such further acts, deeds, conveyances, consents and assurances without further consideration, which may reasonably be required to effect the transactions contemplated by this Agreement.

 

Section 6.4 Entire Agreement

 

This Agreement constitutes the entire agreement among the parties with respect to the subject matter hereof and no party shall be liable or bound to any other party in any manner by any warranties, representations or covenants except as specifically set forth herein or therein.

 

 
 

 

IN WITNESS WHEREOF, the parties hereof have caused the Agreement to be executed by their duly authorized representatives as of the date first written above.

 

  COMPANY:
     
  BRAZIL MINING, INC.
     
  By:    /s/ Marc Fogassa
  Name:  Marc Fogassa
  Title: Chief Executive Officer
     
  FLUX TECHNOLOGIES, CORP.
     
  By:    /s/ Marc Fogassa
  Name: Marc Fogassa
  Title: Chief Executive Officer

 

 
 

 

 

CONTRIBUTION AGREEMENT

 

THIS AGREEMENT is made as of this 18 th day of December, 2012, by and among BRAZIL MINING, INC., a Delaware corporation (“BMI”), and FLUX TECHNOLOGIES, CORP., a Nevada corporation (“Flux” and collectively with BMI, the “Parties”).

 

WHEREAS, as of the date of this Agreement, BMI is (a) the beneficial owner of the mineral rights described on Exhibit A attached hereto (the “Mineral Rights”) and (b) a party to an option agreement pursuant to which Flux has been granted an option to acquire a 55% share of the monthly diamond production from a certain property located in Brazil (the “Diamond Rights”); and .

 

WHEREAS, the Parties believe that it is desirable and in their mutual best interests that, upon the terms and conditions set forth herein, BMI contribute to Flux by way of assignment all of the Mineral Rights and enter into an Option Agreement with Flux in the form of Exhibit B attached hereto (the “Option Agreement”), pursuant to which BMI shall grant to Flux an option to acquire 20% of the Diamond Rights (equivalent to an 11.0% share of the monthly diamond production) upon the terms and conditions set forth therein, in exchange for a number of shares of Common Stock, par value $.001 per share, of Flux (“Common Stock”) such that upon issuance of such shares BMI shall own 51% of the outstanding shares of Common Stock after giving effect to the consummation of a private placement of shares of Common Stock to certain investors (the “Private Placement”) and the cancellation of 3,000,000 shares of Common Stock held by Iryna Antaniuk pursuant to an Acquisition Agreement, dated the date hereof among Flux, BMI and Antaniuk (the “Acquisition Agreement”).

 

NOW, THEREFORE, in consideration of the foregoing and the following mutual covenants and agreements the “Parties” agree as follows:

 

ARTICLE I

 

THE TRANSACTION

 

1.1          The Contribution . On the Closing Date, and at the Closing Time, as defined herein, subject in all instances to each of the terms, conditions, provisions and limitations contained in this Agreement, BMI shall (a) contribute to Flux by way of an Assignment in the form of Exhibit C attached hereto, and enter into the Option Agreement with Flux in exchange for the number of shares of Common Stock equal to 51% of the outstanding shares of Common Stock giving effect to the consummation of the Private Placement and the cancellation of 3,000,000 shares of Common Stock held by Iryna Antaniuk pursuant to the Acquisition Agreement. The events set forth in this Section 1.1 shall be referred to herein as the “Contribution.”

 

 
 

 

1.2            Closing . The Closing hereunder shall take place at the offices of Ofsink, PLLC, 900 Third Avenue, 5 th Floor, New York, New York 10022 or at such other place as the Parties may agree upon, no later than December 19, 2012, on a date to be set by the Parties. The date and time on which the closing occurs shall be the Closing Date and Closing Time, respectively.

 

ARTICLE II

 

REPRESENTATIONS AND WARRANTIES OF FLUX

 

Flux represents and warrants to BMI, as follows:

 

2.1         Due Authorization . This Agreement has been duly and validly executed and delivered by Flux and constitutes a valid and binding Agreement of Flux enforceable in accordance with its terms, except as such enforceability may be limited by general principles of equity or applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating to or affecting creditors generally. Flux has all requisite entity power and authority to enter into and carry out this Agreement and to accept the Contribution.

 

2.2         Absence of Breach; No Consents . The execution, delivery, and performance of this Agreement, and the performance by Flux of its obligations hereunder, do not, nor will with the giving of notice or passage of time or both:

 

2.2.1          conflict with or result in a breach of any of the provisions of the Articles of Incorporation of Flux, as amended to date or the Nevada Revised Statutes;

 

2.2.2          contravene any law, ordinance, rule, or regulation of any State or Commonwealth or political subdivision of either or of the United States, or contravene any order, writ, judgment, injunction, decree, determination, or award of any court or other authority having jurisdiction, or cause the suspension or revocation of any authorization, consent, approval, or license, presently in effect, which affects or binds, Flux or any of its material properties;

 

2.2.3          conflict with, result in termination of, contravene, constitute a default under, give to others any rights of termination or cancellation of, or accelerate the performance required by or maturity of, result in the creation of any lien or loss of any rights, or result in a material breach of, or default under, any material indenture, loan, credit agreement, mortgage, deed of trust, note, bond, franchise, lease, contract or any other agreement or instrument binding upon Flux, or to which Flux is subject; or

 

2.4.4           require the authorization, consent, approval, or license of, or the submission of any notice, report or other filing with, any third party, including any governmental agency.         

 

ARTICLE III

 

REPRESENTATIONS AND WARRANTIES OF BMI

 

BMI represents and warrants to Flux, as follows:

 

 
 

 

3.1         Due Authorization . This Agreement has been duly and validly executed and delivered by BMI and constitutes a valid and binding Agreement enforceable in accordance with its terms, except as such enforceability may be limited by general principles of equity or applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating to or affecting creditors generally.

 

3.2         Absence of Breach; No Consents . The execution, delivery, and performance of this Agreement, and the performance by BMI of its obligations hereunder, does not nor will with the giving of notice or passage of time or both:

 

3.2.1         contravene any law, ordinance, rule, or regulation of any State or Commonwealth or political subdivision of either or of the United States, or contravene any order, writ, judgment, injunction, decree, determination, or award of any court or other authority having jurisdiction, or cause the suspension or revocation of any authorization, consent, approval, or license, presently in effect, which affects or binds, BMI;

 

3.2.2          conflict with, result in termination of, contravene, constitute a default under, give to others any rights of termination or cancellation of, or accelerate the performance required by or maturity of, result in the creation of any lien or loss of any rights, or result in a material breach of or default under any material indenture, loan, credit agreement, mortgage, deed of trust, note, bond, franchise, lease, contract or any other agreement or instrument binding upon BMI; or

 

3.2.3          require the authorization, consent, approval, or license of, or the submission of any notice, report or other filing with, any third party, including any governmental agency.

 

3.3         Investment Representations .

 

3.3.1           Acquisition for Own Account . The shares of Common Stock to be received by BMI hereunder (the “Flux Shares”), will be acquired for investment for BMI’s own account, not as a nominee or agent, and not with a view to the public resale or distribution thereof, and BMI has no present intention of selling, granting any participation in, or otherwise distributing the same.

 

3.3.2          Restricted Securities . BMI understands that the Flux Shares being issued to it are characterized as “restricted securities” under the Securities Act of 1933, as amended (the “1933 Act”), inasmuch as they is being acquired from Flux in a transaction not involving a public offering and that under the 1933 Act and applicable regulations thereunder such securities may be resold without registration under the 1933 Act only in certain limited circumstances. In this connection, BMI represents that BMI is familiar with Rule 144 promulgated under the 1933 Act, and understand the resale limitations imposed thereby and by the 1933 Act.

 

 
 

 

ARTICLE IV

 

CONDITIONS TO CLOSING

 

4.1         Conditions to Obligations of the Parties . The obligations of the Parties to effect the Contribution shall be subject to the fulfillment at or prior to the Closing of the following conditions, unless waived by the appropriate Party:

 

4.1.1          There shall not be in effect a preliminary or permanent injunction or other order by any federal or state court which prohibits the consummation of the Contribution;

 

4.1.2         Each of the Parties to this Agreement shall have performed in all material respects each of its agreements and obligations contained in this Agreement and required to be performed on or prior to the Closing and shall have complied with all material requirements, rules, and regulations of all regulatory authorities having jurisdiction relating to the Contribution;

 

4.1.3         The representations and warranties of each of the other Parties to this Agreement set forth in this Agreement shall be true in all material respects as of the date of this Agreement and as if made as of such time;

 

4.1.4         Flux shall have received, on and as of the Closing Date, such closing documents and instruments as Flux shall reasonably request, in each case reasonably satisfactory in form and substance to Flux and its counsel; and

 

4.1.5          BMI shall have received, free and clear of all liens, pledges or encumbrances, a certificate representing all of the Flux Shares to which it shall be entitled to receive.

 

ARTICLE V

 

GENERAL PROVISIONS


5.1            Interpretation . The headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.

 

5.2          Miscellaneous . This Agreement:

 

5.2.1         and the other agreements and instruments executed and delivered in connection herewith constitute the entire agreement and supersede all other prior agreements and understandings, both written and oral, between the Parties, with respect to the subject matter hereof, except as specifically provided otherwise or referred to herein, so that no such external or separate agreements relating to the subject matter of this Agreement shall have any effect or be binding, unless the same is referred to specifically in this Agreement or is executed by the Parties after the date hereof;

 

 
 

 

5.2.2        is not intended to confer upon any other person, other than to the Parties hereto and their respective heirs, successors and permitted assigns, any rights or remedies hereunder;

 

5.2.3        shall not be assigned by operation of law or otherwise;

 

5.2.4         shall be governed in all respects, including validity, interpretation and effect, by the internal laws of the State of New York, without regard to the principles of conflict of laws thereof, provided, t he corporate laws of the State of Nevada shall govern all issues concerning the relative rights of Flux and its shareholders; and

 

5.2.5          shall be binding upon and shall inure to the benefit of the Parties hereto and their respective successors, assigns, heirs and legal representatives;

 

5.3         Counterparts . This Agreement may be executed in two or more counterparts which together shall constitute a single agreement.

 

5.4         Severability . If any provision, including any phrase, sentence, clause, section or subsection of this Agreement is invalid, inoperative or unenforceable for any reason, such provision shall be valid and enforceable to the fullest extent permitted by law and such circumstances shall not have the effect of rendering such provision in question invalid, inoperative or unenforceable in any other case or circumstance, or of rendering any other provision herein contained invalid, inoperative or unenforceable to any extent whatsoever.

 

 
 

 

IN WITNESS WHEREOF, the undersigned parties have caused this Agreement to be signed on the date first written above by their respective officers thereunto duly authorized.

 

FLUX TECHNOLOGIES, CORP.

  

By:   /s/ Marc Fogassa  
  Name: Marc Fogassa  
  Title: Chief Executive Officer  
     
BRAZIL MINING, INC.  
     
By:   /s/ Marc Fogassa  
  Name: Marc Fogassa  
  Title: Chief Executive Officer