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EX-99.1 - NACEL ENERGY CORP | v179202_ex99-1.htm |
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): March 25, 2010
Commission
File Number: 0-53150
NACEL
ENERGY CORPORATION
(Exact
name of registrant as specified in its charter)
Wyoming
|
20-4315791
|
|
(State
or other jurisdiction of
incorporation
or organization)
|
(I.R.S.
Employer
Identification
Number)
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9375
E Shea Blvd., Suite 100
Phoenix,
Arizona
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85260
|
|
(Address
of principal executive offices)
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(Zip
Code)
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(602) 235-0355
(Registrant
telephone including area code)
Check the
appropriate item below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:
¨
|
Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
|
¨
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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))
|
Item
1.01 – Entry into a Material Definitive Agreement.
On March
25, 2010, NACEL Energy Corporation (the Company or NACEL), executed and
delivered, pursuant to a private placement with a single institutional investor,
its $300,000 Convertible Promissory Note (the “Convertible Note”) in
exchange for the investor’s execution and delivery of a $300,000 Secured &
Collateralized Promissory Note (the “Secured Note”) to the Company. This is the
first of a series of transactions between the Company and the investor which may
occur over the next several years which, if fully funded, could provide the
Company with funding aggregating up to $4.3 million. However, there are no
assurances that any further transaction will occur, or if further transactions
do occur, the number of potential transactions which may occur is uncertain and
dependent on numerous factors including, without limitation, the Company’s
progress in developing its existing wind energy projects, its financial
condition and resources, strength and volatility of stock prices for the
Company’s common stock and other factors over which the Company has no
control.
The
original principal amount of the Convertible Note is $300,000, and the
Convertible Note provides for a 12% one-time interest charge. The Convertible
Note has a maturity date of three (3) years from March 24, 2010 at which time
all principal and accrued interest shall be due and payable in full. Prepayment
is not permitted unless approved by the holder in writing. However, the
Convertible Note is payable on demand by the holder in an amount not to exceed
the cash amount paid under the Secured Note.
The
Convertible Note is convertible by the holder at its election at any time
provided that the designated amount to be converted into shares of NACEL’s
common stock has been discharged by payment of an equal or greater amount on the
Secured Note. The subject conversion amount is converted into shares of NACEL’s
common stock based on a conversion price of seventy percent (70%) of the lowest
trade price in the 30 trading days prior to the conversion. However, the Company
has the right to enforce a conversion floor of $0.65 per share. Thus, if the
conversion price is less than $0.65 per share, the holder would incur a
conversion loss which is satisfied by either (a) cash payment by the Company in
an amount sufficient to pay the conversion loss (($0.65 per share less the
conversion price) times the number of shares being converted), or (b) the
Company may convert the conversion amount into shares at $0.65 per share and
adding the conversation loss to the unpaid balance of the Convertible Note.
Shares from any such conversion are to be delivered to holder within two (2)
business days of conversion notice delivery by electronic transfer. If shares
are not delivered by the third business day, a penalty of $2,000 per day is
assessed until shares delivery is made, with the penalty being added to the
principal balance of the Convertible Note. If the subject shares are not timely
delivered for any reason, the holder may rescind the particular conversion and
have conversion amount restored to the unpaid balance of the Convertible
Note.
In
accordance with the terms of the Convertible Note, the investor may not convert
any amount of the Convertible Note if after giving effect to such conversion the
investor would beneficially own greater than 4.9% of the outstanding shares of
NACE’s common stock.
The
Secured Note is a full recourse obligation of the investor to repay the original
principal amount of $300,000 and the 13.6% one-time interest charge as provided
for therein. The Secured Note has a maturity date of three (3) years from March
24, 2010 at which time all principal and accrued interest shall be due and
payable in full. Prepayment is permitted at any time in the form of cash, other
payment as mutually agreed upon, surrender of the Convertible Note, or surrender
of the collateral or security which secures repayment of amounts due under the
Secured Note. The Secured Note provides that the investor will plan to make,
without obligation, monthly payments of $50,000 beginning at the date of
execution of the Secured Note subject to conversions being honored as set forth
under the Convertible Note and Rule 144 being available to remove restrictive
legend from shares obtained in conversions such that the shares are free
trading. On March 24, 2010, the investor did make a $50,000 prepayment against
the subject indebtedness.
The
investor granted the Company a security interest in specified collateral having
a $300,000 worth to secure payment and performance of its obligations under the
Secured Note. The investor warranted that, among other things, it was
the sole owner of the collateral free and clear form any liens, security
interests or encumbrances and will defend the collateral against all claims and
demands of all parties claiming an interest therein, that the collateral had not
been pledged, assigned or hypothecated for any other purpose, and that, while
amounts remain outstanding on the Secured Note, it will not transfer, assign,
sell, pledge, spend or otherwise transfer an amount of the collateral equal to
or greater than the outstanding balance due on the Secured Note. The Company
intends to file a financing statement with the proper state authorities to
perfect its security interest in the collateral, and the investor will provide
reasonable assistance. The investor is allowed to use and possess the collateral
provided that no default has occurred on the Secured Note. In addition, the
investor may transfer or exchange the collateral into another investment asset
with equal or greater value and, upon Company’s request, will promptly provide
update on investment asset placement of the subject collateral. The security
interest in the collateral automatically terminates at the time the Secured Note
is paid in full.
The
securities sold in the private placement and the shares issuable upon the
conversion of the Convertible Note have not been registered under the Securities
Act of 1933, as amended, and may not be offered or sold in the United States
without being registered with the Securities and Exchange Commission (“SEC”) or
through an applicable exemption from registration requirements. The Convertible
Note and the shares of NACEL’s common stock issuable upon conversion of the
Convertible Note were offered and sold in reliance upon exemptions from
registration pursuant to Rule 506 of Regulation D and Section 18(b)(4)(D) of the
Securities Act and/or Section 4(6) of the Securities Act.
A copy of
the press release is attached hereto as an exhibit.
Item
2.03 – Creation of a Direct Financial Obligation or an Obligation under an
Off-Balance Sheet Arrangement of a Registrant.
The
disclosure provided in Item 1.01 of this report is hereby incorporated by
reference into this Item 2.03.
Item
3.02 – Unregistered Sales of Equity Securities.
The
disclosure provided in Item 1.01 of this report is hereby incorporated by
reference into this Item 3.02.
Item 9.01
– Exhibits
(d) Exhibits.
Exhibit No.
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Description
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99.1
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Press
Release
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SIGNATURE
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned, hereunto
duly authorized.
NACEL
ENERGY CORPORATION
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Date:
March 30, 2010
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By: /s/ Paul Turner
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Paul
Turner, Chief Executive Officer
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