NOTE PURCHASE AGREEMENT
This Note Purchase Agreement (the "Agreement”) is made as of March 6, 2015 by andbetween Start Scientific, Inc. a Delaware corporation with principal offices at 2003 My Anns HillSan Antonio, TX 78258 (the "Company") and Iconic Holdings, LLC, a Delaware LLC withprincipal offices at 7200 Wisconsin Ave, Suite 206, Bethesda, MD 20814 (the "Purchaser"). Asused herein, the term “Parties” shall be used to refer to the Company and Purchaser jointly.
WHEREAS:
A. | The Parties jointly warrant and represent that they have a pre-existingrelationship prior to the date of this Agreement. |
B. | Purchaser warrants and represents that it is sophisticated and experiencedin acquiring the debt instruments issued by small early-stage companiesthat have not achieve profitability, positive cash flow or both. |
C. | Purchaser warrants and represents that it is an “accredited investor,” asthat term is defined in Rule 501 of the Securities Act of 1933, as amended(the “1933 Act”). |
D. | Purchaser warrants and represents that prior to entering into thisAgreement that it has received and completed its review of the Company’scorporate and financial statements as included in the filings and disclosures as listed for the Company with the Securities and Exchange Commission which has allowed Purchaser to make an informed investment decision with respect to purchase of that certain ConvertiblePromissory Note in the stated original principal amount of $220,000 (the“Note”) attached in Exhibit A and dated March 6, 2015. |
E. | The Purchaser acknowledges and agrees that it is acquiring the Note forinvestment purposes only and not with a view to a distribution. |
F. | The Purchaser acknowledges and agrees that: (i) the Note is a “restrictedsecurity,” as that term is defined in the 1933 Act and (ii) no registrationrights have been granted to Purchaser to register the Note. |
NOW THEREFORE THE PARTIES AGREE AS FOLLOWS:
Section 1. SALE AND ISSUANCE OF THE NOTE. In consideration of the Company’sreceipt of the initial sum of $55,000 at Closing (as defined in Section 2.1), the Company shall sellto the Purchaser, and the Purchaser shall purchase from the Company (the “Issuance”) the Noteupon the terms set forth in this Agreement. In addition, a copy of that certain Action of the Board of Directors, dated March 6, 2015 (the “Action of the Board of Directors”) is attached hereto asExhibit A.
Section 2. THE CLOSING.
2.1. PLACE OF CLOSING AND PROCEDURE AT CLOSING. The closing of theissuance of the Note to the Purchaser (the "Closing") shall take place simultaneously with and uponthe satisfaction of the following conditions:
(1)the Company’s execution and delivery to the Purchaser of the following: (a) an executed copy of this Agreement; (b) an executed copy of the Note; (c) a signed copy of theIrrevocable Instructions to the Transfer Agent; and (d) the signed Action of the Board of Directors.
(2) the Purchaser’s execution of a wire transfer to the Company no later than 2 businessdays following the Closing as follows: the sum of $50,000 in cash shall be remitted and deliveredto the Company and $5,000 in cash shall be retained by the Purchaser through an original issuediscount for due diligence and legal bills related to this transaction.
(3) the Purchaser reserves the right to pay additional consideration at any time and inany amount it desires, up to the total face value of the Note, at its sole discretion.
Section 3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company hereby represents and warrants to the Purchaser as follows:
3.1. ORGANIZATION. The Company is duly organized, validly existing and in goodstanding under the laws of the State of Delaware and is qualified to conduct its business as aforeign corporation in each jurisdiction where the failure to be so qualified would have a materialadverse effect on the Company.
3.2.AUTHORIZATION OF AGREEMENT, ETC. The execution, delivery andperformance by the Company of this Agreement, the Note, and each other document or instrumentcontemplated hereby or thereby (collectively, the "Financing Documents") have been dulyauthorized by all requisite corporate action by the Company and delivered by the Company. Eachof the Financing Documents, when executed and delivered by the Company, constitutes a valid and binding obligation of the Company, enforceable against the Company in accordance with its terms,subject to applicable bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium or other similar laws affecting creditors' rights and remedies generally, and subject as to enforceabilityto general principles of equity (regardless of whether enforcement is sought in a proceeding at lawor in equity).
Section 4. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER.
The Purchaser hereby represents and warrants to the Company as follows:
4.1. AUTHORIZATION OF THE DOCUMENTS. Purchaser has all requisite powerand authority (corporate or otherwise) to execute, deliver and perform the Financing Documents towhich it is a party and the transactions contemplated thereby, and the execution, delivery andperformance by such Purchaser of the Financing Documents to which it is a party have been duly authorized by all requisite action by such Purchaser and each such Financing Document, when
executed and delivered by the Purchaser, constitutes a valid and binding obligation of such Purchaser, enforceable against such Purchaser in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium or other similar laws affecting creditors' rights and remedies generally, and subject, as to enforceability, to general principles of equity (regardless of whether enforcement is sought in a proceeding at law or inequity).
4.1. INVESTMENT REPRESENTATIONS. The Purchaser warrants and represents that:
(a) | the Purchaser is an accredited investor (as that term is defined in Rule 501(a)(1) of Regulation D of the 1933 Act; |
(b) | the Purchaser is sophisticated and experienced in acquiring the securities of small public companies; |
(c) | the Purchaser has reviewed the Company’s Annual and Quarterly Reports togetherwith the audited financial statements contained therein; |
(d) | the Purchaser has had sufficient opportunity to review and evaluate the risks anduncertainties associated with the purchase of the Company’s securities; |
(e) | the Purchaser is acquiring the Note from the Company for investment purposes onlyand not with a view to a distribution. |
4.3. RESTRICTED SECURITY. Purchaser understands and acknowledges that the Notehas not been, and when issued will not be, registered with the Securities and ExchangeCommission. Purchaser warrants and represents that it has fully reviewed the restricted securitieslegend and the terms thereof with its financial, legal, investment, and business advisors and that ithas not relied upon the Company or any other person for any advice in connection with thepurchase of the Note, this Agreement, or both of them.
4.4.LEGAL COUNSEL. Purchaser has consulted with its own independent legal, tax, investment, and other advisors of its own choosing prior to entering into this Agreement.
4.5.ABSENCE OF REGISTRATION RIGHTS. Purchaser understands and agrees thatit is not acquiring and has not been granted any registration rights with respect to the Note. TheNote is a restricted security and the Purchaser understands that there is no trading market for theNote and no such market will likely ever develop.
Section 5. BROKERS AND FINDERS.
The Company shall not be obligated, unless previously detailed in Section 2.1(2), to pay any commission, brokerage fee or finder's fee based on any alleged agreement or understandingbetween the Purchaser and a third person in respect of the transactions contemplated hereby. ThePurchaser hereby agrees to indemnify the Company against any claim by any third person for any commission, brokerage or finder's fee or other payment with respect to this Agreement or the
transactions contemplated hereby based on any alleged agreement or understanding between thePurchaser and such third person, whether express or implied from the actions of the Purchaser.
Section 6. SUCCESSORS AND ASSIGNS.
This Agreement shall bind and inure to the benefit of the Company, the Purchaser and theirrespective successors and assigns.
Section 7. ENTIRE AGREEMENT.
This Agreement and the other writings and agreements referred to in this Agreement or deliveredpursuant to this Agreement contain the entire understanding of the parties with respect to thesubject matter hereof and supersede all prior agreements and understandings among the parties withrespect thereto.
Section 8. NOTICES.
All notices, demands and requests of any kind to be delivered to any party in connection with thisAgreement shall be personally served, sent via facsimile or e-mail, or sent in writing via an internationally recognized overnight courier or by registered or certified mail, return receiptrequested and postage prepaid to the address of each party listed on the first page of this Agreementor to such other address as the party to whom notice is to be given may have furnished to the otherparties to this Agreement in writing in accordance with the provisions of this Section 8. Any suchnotice or communication shall be deemed to have been received (i) in the case of personal delivery,on the date of such delivery, (ii) in the case of facsimile or e-mail, immediately (iii) in the case of an internationally-recognized overnight courier, on the next business day after the date when sentand (iv) in the case of mailing, on the third business day following that on which the piece of mailcontaining such communication is posted.
Section 9. AMENDMENTS.
This Agreement may not be modified or amended, or any of the provisions of this Agreementwaived, except by written agreement of the Company and the Purchaser.
Section 10. ATTORNEYS’ FEES.
In the event of a dispute between the parties concerning the enforcement or interpretation of thisAgreement, the prevailing party in such dispute, whether by legal proceedings or otherwise, shall be reimbursed immediately for the reasonably incurred attorneys' fees and other costs and expensesby the other parties to the dispute.
Section 11. GOVERNING LAW AND ARBITRATION.
(A) | All questions concerning the construction, interpretation and validity of this Agreementshall be governed by and construed and enforced in accordance with the domestic laws of the State of California without giving effect to any choice or conflict of law provision or rule (whether in theState of California or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of California. In furtherance of the foregoing, the internal law of |
the State of California will control the interpretation and construction of this Agreement, even ifunder such jurisdiction's choice of law or conflict of law analysis, the substantive law of some otherjurisdiction would ordinarily or necessarily apply.
Section 12. CAPTIONS AND EXHIBIT A.
The captions by which the sections and subsections of this Agreement are identified are forconvenience only, and shall have no effect whatsoever upon its interpretation. Exhibit A is attachedhereto and each of the attachments listed in Exhibit A are each with Exhibit A incorporated byreference herein.
Section 13. SEVERANCE.
If any provision of this Agreement is held to be illegal or invalid by a court of competentjurisdiction, such provision shall be deemed to be severed and deleted; and neither such provision,nor its severance and deletion, shall affect the validity of the remaining provisions.
Section 14. COUNTERPARTS.
This Agreement may be executed in any number of counterparts, and each such counterpart of thisAgreement shall be deemed to be an original instrument, but all such counterparts together shall constitute but one agreement. Facsimile counterpart signatures to this Agreement shall beacceptable and binding.
[The remainder of this page has been left intentionally blank.]
IN WITNESS WHEREOF, each of the undersigned has duly executed this NotePurchase Agreement as of the date first written above.
FOR THE COMPANY:
Start Scientific, Inc.
By: /s/ Norris R. Harris
Name:Norris R. Harris
Its: Chief Executive Officer
FOR THE PURCHASER: Iconic Holdings, LLC
By:/s/ Michael Sobeck
Name: Michael Sobeck
Its: Managing Member
[SIGNATURE PAGE TO NOTE PURCHASE AGREEMENT]
[The remainder of this page has been left intentionally blank.]
EXHIBIT A
(Copy of Convertible Promissory Note, Board Resolution, and Irrevocable Instructions toStock Transfer Agent, are each attached hereto.)
1. Copy of Convertible Promissory Note
2. Copy of the Board Resolution of the Borrower
3. Copy of Irrevocable Instructions to Stock Transfer Agent
[The remainder of this page has been left intentionally blank.]