SECURITIESPURCHASEAGREEMENT
ThisSECURITIESPURCHASEAGREEMENT(the “Agreement”),datedasofNovember25,2013,byand betweenCO-SIGNER,INC.,aNevadacorporation, withheadquarterslocatedat6250MountainVistaStreet-SuiteC-1,Henderson,NV89014(the“Company”),andASHERENTERPRISES, INC., aDelaware corporation,with itsaddressat 1LindenPlace,Suite207,GreatNeck,NY11021 (the “Buyer”).
WHEREAS:
A. TheCompanyandtheBuyerareexecutinganddeliveringthisAgreementinrelianceupontheexemptionfromsecuritiesregistrationaffordedbytherulesandregulationsaspromulgatedbytheUnitedStatesSecuritiesandExchange Commission(the“SEC”) under theSecuritiesAct of1933, asamended(the“1933Act”);
B. BuyerdesirestopurchaseandtheCompanydesirestoissueandsell,uponthetermsandconditionssetforthinthisAgreementan8%convertiblenoteoftheCompany,intheformattachedheretoasExhibitA,intheaggregateprincipalamountof$42,500.00(togetherwith any note(s)issuedinreplacementthereof orasadividendthereon orotherwisewithrespecttheretoinaccordancewiththetermsthereof,the“Note”),convertibleintosharesofcommonstock, $0.001parvaluepershare, of the Company(the“CommonStock”), upon thetermsandsubject to the limitationsandconditionssetforth insuchNote.
C. TheBuyerwishestopurchase,uponthetermsandconditionsstatedinthisAgreement,suchprincipalamountofNoteasissetforthimmediatelybelowitsnameonthesignature pageshereto; and
NOWTHEREFORE,theCompanyandtheBuyerseverally(andnotjointly)herebyagreeasfollows:
1. Purchase and SaleofNote.
a. PurchaseofNote.OntheClosingDate(asdefinedbelow),theCompanyshallissueandselltotheBuyerandtheBuyeragreestopurchasefromtheCompanysuchprincipalamountofNoteasissetforthimmediatelybelowtheBuyer’sname onthesignature pageshereto.
b. FormofPayment.OntheClosingDate(asdefinedbelow),(i)theBuyershallpaythepurchasepricefortheNotetobeissuedandsoldtoitattheClosing(asdefinedbelow)(the“PurchasePrice”) bywire transfer ofimmediatelyavailablefunds to theCompany,inaccordancewiththeCompany’swrittenwiringinstructions,againstdelivery oftheNotein theprincipalamountequal to thePurchasePriceas issetforth immediately below theBuyer’sname on thesignaturepageshereto, and(ii)the Companyshalldeliversuch dulyexecutedNoteon behalfofthe Company, to theBuyer,against delivery ofsuchPurchase Price.
c. ClosingDate.Subjecttothesatisfaction(orwrittenwaiver)oftheconditionstheretosetforthinSection6andSection7below,thedateandtimeoftheissuanceandsaleoftheNotepursuanttothisAgreement(the“ClosingDate”)shallbe12:00noon,EasternStandardTime on oraboutNovember 27, 2013, orsuch other mutuallyagreed upontime.Theclosingof thetransactionscontemplated by thisAgreement(the“Closing”) shalloccuron theClosing Date atsuchlocationas may be agreed to by the parties.
2. Buyer’sRepresentationsandWarranties. TheBuyerrepresentsandwarrants to theCompanythat:
a. InvestmentPurpose. Asofthedatehereof,theBuyerispurchasingtheNoteandthesharesofCommonStockissuableuponconversionoforotherwisepursuanttotheNote(including,withoutlimitation,suchadditionalsharesofCommonStock,ifany,asareissuable(i)onaccountofinterestontheNote,(ii) asaresultoftheeventsdescribedinSections1.3and1.4(g)oftheNoteor(iii)inpaymentoftheStandardLiquidatedDamagesAmount(asdefinedinSection2(f)below)pursuanttothisAgreement,suchsharesofCommonStockbeing collectivelyreferredtohereinas the“ConversionShares”and, collectivelywith theNote, the“Securities”) for itsownaccountand notwith apresent viewtowards the publicsale ordistributionthereof, exceptpursuanttosalesregistered orexempted fromregistrationunder the 1933Act;provided,however, that by making therepresentations herein, theBuyerdoes notagree to hold any of theSecuritiesfor any minimum orotherspecifictermandreserves theright to dispose of theSecuritiesat any time inaccordancewith or pursuant to aregistrationstatement or an exemptionunderthe1933Act.
b. AccreditedInvestorStatus.TheBuyerisan“accreditedinvestor”asthatterm isdefined inRule 501(a)of Regulation D (an“AccreditedInvestor”).
c. Reliance onExemptions. TheBuyerunderstandsthat theSecuritiesarebeingofferedandsoldtoitinrelianceuponspecificexemptionsfromtheregistrationrequirementsofUnitedStatesfederalandstatesecuritieslawsandthattheCompanyisrelyinguponthetruthandaccuracyof,andtheBuyer’scompliancewith,therepresentations,warranties,agreements,acknowledgmentsandunderstandings of theBuyersetforthherein inordertodeterminetheavailability ofsuchexemptionsandtheeligibilityof theBuyertoacquire the Securities.
d. Information.TheBuyeranditsadvisors,if any,havebeen,andforsolongastheNoteremainoutstandingwillcontinuetobe,furnishedwithallmaterialsrelatingtothebusiness,financesandoperationsoftheCompanyandmaterialsrelatingtotheofferandsaleoftheSecuritieswhichhavebeenrequestedbytheBuyeroritsadvisors.TheBuyerand itsadvisors,ifany,have been,andforsolongas theNoteremainoutstandingwillcontinue tobe,affordedthe opportunitytoaskquestionsof theCompany.Notwithstandingtheforegoing,the CompanyhasnotdisclosedtotheBuyeranymaterialnonpublicinformationandwillnotdisclosesuchinformationunlesssuchinformation isdisclosed to the publicprior to or promptlyfollowingsuch disclosure to theBuyer.Neithersuchinquiries nor anyother duediligenceinvestigationconductedbyBuyeror any ofits advisors or representativesshallmodify,amend oraffectBuyer’sright torely ontheCompany’srepresentationsandwarrantiescontainedinSection 3below.TheBuyerunderstands that itsinvestment in theSecuritiesinvolves asignificant degreeofrisk.TheBuyeris notawareofanyfactsthatmay constitutea breach of any ofthe Company'srepresentationsandwarrantiesmade herein.
e. GovernmentalReview. TheBuyerunderstandsthat noUnitedStatesfederalorstateagencyoranyothergovernmentorgovernmentalagencyhaspasseduponor madeanyrecommendation or endorsementofthe Securities.
f. TransferorRe-sale.TheBuyerunderstandsthat(i)thesaleorre-saleoftheSecuritieshasnotbeenandisnotbeingregisteredunderthe1933Actoranyapplicablestate securitieslaws,andthe Securitiesmaynot be transferredunless(a)the Securitiesare soldpursuanttoaneffectiveregistrationstatementunder the 1933 Act,(b)theBuyershall havedelivered to theCompany,at thecost of theBuyer,an opinion of counselthatshall be inform,substanceand scope customaryfor opinions ofcounsel incomparabletransactions to theeffectthat theSecurities to be sold ortransferred may be sold ortransferred pursuant toan exemptionfromsuchregistration,which opinionshall beacceptedby theCompany,(c)theSecurities are soldortransferred toan“affiliate”(asdefined in Rule144promulgatedunder the 1933Act(or asuccessorrule)(“Rule144”)) of theBuyerwhoagrees tosell orotherwisetransfertheSecuritiesonly inaccordancewith thisSection2(f)andwhoisanAccreditedInvestor,(d)theSecuritiesare soldpursuant to Rule 144, or(e)theSecuritiesare sold pursuanttoRegulation Sunder the 1933Act(or a successorrule)(“Regulation S”),and theBuyershallhavedelivered to theCompany,at thecost of theBuyer,an opinion of counselthatshall be inform,substanceand scope customaryfor opinions ofcounsel incorporatetransactions,which opinionshall beacceptedbytheCompany;(ii)anysale ofsuch Securitiesmade inreliance on Rule144maybemade onlyinaccordancewiththetermsofsaidRuleandfurther,ifsaidRuleis notapplicable,anyre-sale ofsuchSecurities undercircumstances inwhichtheseller(or thepersonthroughwhom thesale is made)maybedeemed tobeanunderwriter (asthat term isdefinedinthe1933Act) mayrequirecompliancewithsomeother exemptionunderthe1933Act ortherulesandregulationsoftheSECthereunder;and(iii)neither theCompanynoranyotherpersonisunderanyobligationtoregistersuchSecuritiesunderthe1933Act orany statesecuritieslawsor to complywith the termsand conditions of any exemptionthereunder(ineachcase).Notwithstanding theforegoingoranythingelsecontained herein to thecontrary, theSecuritiesmaybe pledgedascollateral in connectionwith abonafidemarginaccount orotherlendingarrangement.
g. Legends.TheBuyer understandsthat theNoteand, untilsuch timeastheConversionShareshavebeenregisteredunderthe1933ActmaybesoldpursuanttoRule144orRegulationSwithoutanyrestrictionastothenumberofsecuritiesasofaparticulardatethatcanthenbeimmediately sold,theConversionSharesmaybear arestrictivelegendin substantiallythe followingform(andastop-transfer order maybeplacedagainsttransfer of thecertificatesforsuchSecurities):
“NEITHERTHEISSUANCEANDSALEOFTHESECURITIES REPRESENTEDBY THISCERTIFICATE NORTHESECURITIES INTO WHICHTHESESECURITIESAREEXERCISABLEHAVEBEENREGISTEREDUNDERTHESECURITIESACTOF1933,ASAMENDED,ORAPPLICABLESTATESECURITIESLAWS.THESECURITIESMAYNOTBEOFFEREDFORSALE,SOLD,TRANSFERREDORASSIGNED(I)IN THEABSENCE OF(A)ANEFFECTIVEREGISTRATIONSTATEMENT FOR THESECURITIESUNDER THESECURITIESACTOF 1933,ASAMENDED, OR(B)AN OPINIONOFCOUNSEL(WHICHCOUNSELSHALLBESELECTEDBYTHEHOLDER), INAGENERALLYACCEPTABLEFORM,THATREGISTRATION ISNOTREQUIREDUNDERSAIDACTOR(II)UNLESSSOLDPURSUANTTORULE 144 ORRULE 144AUNDERSAIDACT.NOTWITHSTANDING THEFOREGOING,THESECURITIESMAYBEPLEDGEDINCONNECTIONWITH ABONAFIDEMARGINACCOUNTOR OTHERLOAN ORFINANCINGARRANGEMENTSECUREDBY THE SECURITIES.”
ThelegendsetforthaboveshallberemovedandtheCompanyshallissueacertificatewithoutsuchlegendtotheholderofanySecurityuponwhichitisstamped,if,unlessotherwiserequiredbyapplicablestatesecuritieslaws,(a)suchSecurity isregisteredfor sale underaneffectiveregistrationstatementfiled under the 1933Act orotherwise maybe soldpursuantto Rule 144orRegulationSwithoutanyrestrictionastothe numberof securitiesasof aparticulardatethatcanthenbeimmediately sold,or(b)suchholderprovidestheCompanywithanopinion ofcounsel, inform,substanceandscope customary for opinions ofcounsel incomparabletransactions,totheeffectthatapublicsaleortransferofsuchSecurity maybemadewithoutregistrationunderthe1933Act,whichopinionshallbeaccepted by theCompany sothatthesale ortransfer iseffected.TheBuyeragrees to sellallSecurities,including thoserepresentedby acertificate(s)fromwhich thelegendhasbeenremoved,incompliancewithapplicableprospectus deliveryrequirements,ifany.Inthe eventthat the Companydoesnotaccept the opinionofcounselprovided by theBuyerwithrespecttothetransfer ofSecuritiespursuanttoanexemptionfromregistration,such as Rule 144 orRegulation S,at theDeadline, itwill beconsideredanEvent of Default pursuant toSection 3.2 ofthe Note.
h. Authorization;Enforcement.ThisAgreementhasbeendulyandvalidlyauthorized.ThisAgreementhasbeendulyexecutedanddeliveredonbehalfoftheBuyer,andthisAgreementconstitutesavalidandbindingagreementoftheBuyerenforceableinaccordance with itsterms.
i. Residency.TheBuyerisaresidentofthejurisdictionsetforthimmediatelybelowtheBuyer’snameon the signature pageshereto.
3. RepresentationsandWarrantiesoftheCompany. TheCompanyrepresentsandwarrantsto the Buyer that:
a. OrganizationandQualification. TheCompanyandeachofitsSubsidiaries(asdefinedbelow),ifany,isacorporationdulyorganized,validlyexistingandingoodstandingunderthelawsofthejurisdictioninwhichitisincorporated,withfullpowerand authority(corporateandother)toown,lease,useandoperateitspropertiesandtocarryonitsbusinessasandwhere nowowned,leased,used,operatedandconducted.Schedule3(a)setsforth a list ofall of theSubsidiaries of the Companyand the jurisdiction inwhicheach isincorporated.The Companyandeachof itsSubsidiariesisdulyqualifiedasaforeigncorporation to do businessand is in good standing in everyjurisdiction inwhich itsownership or useofproperty orthenatureofthebusinessconductedby itmakessuchqualificationnecessaryexceptwhere thefailure tobe soqualifiedor ingoodstandingwouldnothave aMaterialAdverseEffect.“MaterialAdverseEffect”meansanymaterialadverseeffectonthebusiness,operations,assets, financialcondition orprospects of the Company or itsSubsidiaries, ifany,takenas awhole,oron the transactionscontemplated hereby orby theagreements orinstruments to beentered into inconnectionherewith.“Subsidiaries”meansanycorporation orotherorganization,whetherincorporatedorunincorporated,inwhichtheCompanyowns,directlyorindirectly,any equity orother ownershipinterest.
b. Authorization;Enforcement. (i)TheCompanyhasallrequisitecorporatepowerandauthoritytoenterintoandperformthisAgreement,theNoteandtoconsummatethetransactionscontemplatedherebyandtherebyandtoissuetheSecurities,inaccordancewith the termshereofand thereof,(ii) theexecutionanddelivery of thisAgreement, theNoteby the Company and theconsummationby it of thetransactionscontemplated herebyand thereby(including withoutlimitation, theissuance of the Note and theissuanceandreservationforissuance of theConversionSharesissuable uponconversion orexercisethereof)havebeendulyauthorizedbytheCompany’sBoard ofDirectorsand nofurtherconsentorauthorization of theCompany, itsBoard ofDirectors, or itsshareholders isrequired,(iii) thisAgreementhas been dulyexecutedanddeliveredby the Companybyitsauthorizedrepresentative,andsuchauthorizedrepresentative is the trueandofficialrepresentativewith authority tosign thisAgreementand theother documentsexecuted inconnectionherewithandbindtheCompanyaccordingly,and(iv)thisAgreementconstitutes,anduponexecutionand deliverybythe Companyof theNote,each of suchinstrumentswillconstitute, alegal,validandbindingobligationoftheCompanyenforceableagainsttheCompanyinaccordancewithitsterms.
c. Capitalization.Asofthedatehereof,theauthorizedcapitalstockoftheCompanyconsistsof:(i)440,000,000sharesofCommonStock,$0.001parvaluepershare,ofwhich136,111,1202sharesareissuedandoutstanding;and(ii)10,000,000sharesofPreferredStock,$0.001parvaluepershare,ofwhich1,173,041sharesareissuedandoutstanding;nosharesarereservedforissuancepursuanttotheCompany’sstockoptionplans, nosharesarereserved forissuancepursuant tosecurities(otherthan theNote)exercisablefor, orconvertible into orexchangeableforshares of CommonStockand6,500,000shares arereservedfor issuance upon conversion of theNote.All ofsuchoutstandingshares ofcapitalstockare, or uponissuancewillbe,dulyauthorized, validly issued, fullypaidandnon-assessable.Noshares ofcapitalstock oftheCompany aresubject topreemptiverights or any othersimilarrightsoftheshareholders of the Company oranyliensorencumbrancesimposedthrough the actions orfailure toact of theCompany.Asof theeffectivedate of thisAgreement,(i) there are nooutstandingoptions,warrants,scrip,rightstosubscribefor,puts,calls,rightsoffirstrefusal,agreements,understandings,claims orother commitments orrights of any character whatsoeverrelating to, orsecurities orrightsconvertible into orexchangeableforanyshares ofcapitalstock of the Companyoranyof itsSubsidiaries, orarrangementsbywhich the Company oranyof itsSubsidiaries is or may become bound to issueadditionalshares ofcapitalstock of the Company orany ofitsSubsidiaries,(ii) therearenoagreements or arrangements under which theCompany orany of itsSubsidiaries isobligated toregister thesale ofanyof its ortheirsecurities under the 1933Actand(iii)thereare noanti-dilution orpriceadjustmentprovisionscontained in any securityissued by the Company(or inanyagreementprovidingrights to security holders)thatwill betriggered bytheissuanceof theNoteor theConversion Shares.The Companyhasfurnished to theBuyer trueandcorrectcopiesof theCompany’sCertificate ofIncorporationas ineffect on the date hereof(“Certificate ofIncorporation”), theCompany’sBy-laws,as ineffect on thedatehereof(the“By-laws”),and theterms ofallsecuritiesconvertible into orexercisableforCommonStockoftheCompanyandthematerialrights oftheholdersthereofinrespectthereto.The Companyshallprovide theBuyerwith awrittenupdate of thisrepresentationsigned by the Company’sChief Executiveon behalfoftheCompanyas oftheClosingDate.
d. IssuanceofShares. TheConversionSharesaredulyauthorizedandreservedforissuanceand,uponconversionoftheNoteinaccordancewithitsrespectiveterms,willbevalidlyissued,fullypaidandnon-assessable,andfreefromalltaxes,liens,claimsandencumbranceswithrespect to the issuethereofandshall not besubject topreemptiverights orothersimilar rightsofshareholdersof the Companyandwillnotimposepersonalliability upon the holder thereof.
e. AcknowledgmentofDilution.TheCompanyunderstandsandacknowledgesthepotentiallydilutiveeffecttotheCommonStockupontheissuanceoftheConversionSharesuponconversionoftheNote.TheCompanyfurtheracknowledgesthatitsobligation to issueConversionShares uponconversion oftheNoteinaccordancewith thisAgreement,theNote isabsoluteandunconditionalregardless ofthe dilutiveeffectthatsuchissuancemay haveon theownership interests ofother shareholders ofthe Company.
f. �� NoConflicts. Theexecution,deliveryandperformanceofthisAgreement,the NotebytheCompanyand theconsummationbytheCompanyofthetransactionscontemplatedherebyandthereby(including,withoutlimitation,theissuanceandreservationforissuance of the ConversionShares)willnot(i)conflictwithorresultinaviolationofanyprovisionof theCertificate ofIncorporationorBy-laws,or(ii)violate orconflictwith,orresult inabreachofany provisionof,orconstitute a default(oraneventwhichwithnotice or lapse of time or bothcouldbecome adefault)under,orgive toothersanyrightsoftermination,amendment,acceleration orcancellationof,anyagreement,indenture, patent,patentlicense orinstrumenttowhichtheCompany orany ofitsSubsidiariesisaparty, or(iii)resultinaviolation ofanylaw, rule,regulation,order,judgmentor decree (includingfederalandstatesecuritieslawsandregulationsandregulationsofanyself-regulatoryorganizationstowhichthe Companyor its securitiesare subject)applicable to the Companyoranyof itsSubsidiaries orbywhichany property orasset of the Companyor anyof itsSubsidiaries is bound oraffected(exceptfor suchconflicts,defaults,terminations,amendments,accelerations,cancellationsandviolationsaswould not, individuallyor in theaggregate, have aMaterialAdverseEffect).NeithertheCompanynoranyofitsSubsidiariesis inviolationofitsCertificateofIncorporation, By-laws or otherorganizationaldocumentsandneither the Companynor anyof itsSubsidiaries isindefault(andnoeventhasoccurredwhichwithnoticeorlapseoftime orbothcouldputthe Company orany of itsSubsidiaries indefault)under,andneither the Company norany of itsSubsidiarieshastakenanyaction orfailed to take anyactionthatwouldgive toothersanyrights oftermination,amendment,acceleration orcancellationof,anyagreement,indenture orinstrumenttowhichthe Companyoranyof itsSubsidiariesisa partyorbywhichanyproperty orassets of the Company orany of itsSubsidiaries is bound or affected,exceptfor possibledefaultsaswould not, individually or in theaggregate, have aMaterialAdverse Effect.Thebusinesses of the Companyand itsSubsidiaries, ifany, are not beingconducted,andshall not beconductedsolongastheBuyer ownsany oftheSecurities,inviolationofanylaw,ordinanceorregulation of anygovernmentalentity.Exceptasspecificallycontemplatedby thisAgreementandasrequiredunderthe1933Actandanyapplicablestatesecuritieslaws,theCompany isnotrequiredtoobtainany consent,authorizationororderof,ormakeany filingorregistrationwith, anycourt,governmentalagency,regulatoryagency,selfregulatory organizationorstockmarket or anythird party inorderfor it toexecute,deliver orperform any of itsobligationsunder thisAgreement,the Note inaccordancewiththe termshereof orthereofor toissueandsellthe Note inaccordancewith thetermshereofand to issue theConversionShares uponconversion of theNote.Allconsents, authorizations,orders,filingsandregistrations which the Company isrequiredtoobtainpursuanttotheprecedingsentence have beenobtained oreffectedon orprior tothedatehereof.The Companyisnotinviolationof the listingrequirementsof theOver-the-CounterBulletinBoard(the“OTCBB”)and does not reasonablyanticipatethat the CommonStockwill bedelistedbytheOTCBB in theforeseeablefuture. The Companyand itsSubsidiariesare unaware ofanyfacts orcircumstanceswhichmightgiverise toanyof theforegoing.
g. SECDocuments;FinancialStatements.TheCompanyhastimelyfiledallreports,schedules,forms,statementsandotherdocumentsrequiredtobefiledby itwiththeSECpursuanttothereportingrequirementsoftheSecuritiesExchangeActof1934,asamended(the “1934Act”) (all of the foregoingfiledprior to thedatehereofandallexhibitsincludedthereinandfinancialstatementsandschedulestheretoand documents(otherthan exhibits tosuchdocuments)incorporated byreferencetherein, beinghereinafterreferred tohereinas the“SECDocuments”).Uponwrittenrequest the Company willdeliver to the BuyertrueandcompletecopiesoftheSECDocuments,exceptforsuchexhibitsandincorporateddocuments.As oftheirrespectivedates, theSECDocumentscomplied inallmaterialrespectswith therequirements of the 1934Actand the rulesandregulations of theSECpromulgatedthereunderapplicableto theSECDocuments,and none of theSECDocuments,at the time theywerefiledwith theSEC,containedanyuntruestatement of amaterial fact oromitted tostate amaterialfactrequiredtobestatedthereinornecessary inordertomake thestatementstherein,inlight of thecircumstancesunderwhich theyweremade, notmisleading.None of thestatementsmade inanysuchSECDocuments is, orhas been,required to beamended orupdated underapplicablelaw(exceptforsuchstatementsashavebeenamendedorupdatedinsubsequentfilingsprior the datehereof). Asoftheirrespectivedates,thefinancialstatementsof the Company included intheSECDocumentscompliedas toform inallmaterialrespectswithapplicableaccountingrequirementsandthepublishedrulesandregulationsof theSECwithrespectthereto.Suchfinancialstatementshave beenpreparedinaccordancewithUnitedStates generallyaccepted accountingprinciples, consistentlyapplied, duringtheperiodsinvolvedand fairlypresentinallmaterialrespectstheconsolidatedfinancialpositionof the CompanyanditsconsolidatedSubsidiariesas of thedatesthereofand theconsolidated results oftheiroperationsandcashflowsfortheperiodsthenended(subject, in thecaseofunauditedstatements, tonormalyear-endauditadjustments).Exceptassetforth in thefinancialstatements of the CompanyincludedintheSECDocuments,theCompanyhasnoliabilities,contingentorotherwise,otherthan(i)liabilitiesincurredintheordinary course ofbusinesssubsequent toAugust 31,2013,and (ii)obligationsundercontractsandcommitments incurredintheordinary course ofbusinessand notrequiredundergenerallyacceptedaccountingprinciplestobereflectedinsuchfinancialstatements,which,individuallyor in theaggregate,are notmaterial to thefinancialcondition oroperatingresults of theCompany. The Companyissubject to the reportingrequirements ofthe 1934Act.
h. AbsenceofCertainChanges.SinceAugust31,2013,therehasbeennomaterialadversechangeandnomaterialadversedevelopmentintheassets,liabilities,business,properties,operations,financialcondition,resultsofoperations,prospectsor1934Actreportingstatus oftheCompany or any ofitsSubsidiaries.
i. AbsenceofLitigation.Thereisnoaction,suit,claim,proceeding,inquiry orinvestigationbeforeorbyany court,publicboard,governmentagency,self-regulatoryorganizationorbodypendingor,totheknowledgeoftheCompanyorany ofitsSubsidiaries,threatened against or affecting the Company orany of itsSubsidiaries, ortheirofficers ordirectors intheircapacity as such,thatcould have aMaterialAdverseEffect. Schedule 3(i)contains acomplete listand summarydescription ofanypendingor, to theknowledge of theCompany,threatened proceedingagainst oraffecting the Companyoranyof itsSubsidiaries,withoutregard towhether itwouldhave aMaterialAdverseEffect. The Companyand itsSubsidiariesare unaware ofanyfacts orcircumstanceswhichmightgiverise toanyof theforegoing.
j. Patents,Copyrights,etc.TheCompanyandeachofitsSubsidiariesownsorpossessestherequisitelicensesorrightstouseallpatents,patentapplications,patentrights,inventions,know-how,tradesecrets,trademarks,trademarkapplications,servicemarks,servicenames,tradenamesandcopyrights(“IntellectualProperty”)necessaryto enable it toconduct itsbusinessas nowoperated(and,as presentlycontemplated to beoperatedinthefuture);thereisnoclaimoractionby any personpertaining to,orproceedingpending, or to theCompany’s knowledgethreatened,whichchallenges theright of the Company or of a Subsidiarywithrespect to anyIntellectualPropertynecessaryto enable it toconduct itsbusinessas now operated(and,as presentlycontemplated to beoperatedin thefuture); to thebest of theCompany’sknowledge, theCompany’s or itsSubsidiaries’currentandintendedproducts,servicesandprocessesdonotinfringeonanyIntellectualProperty orotherrightsheld byany person;and the Companyisunaware ofanyfacts orcircumstanceswhichmightgiverise to any of the foregoing.The Companyandeach of itsSubsidiarieshavetaken reasonable securitymeasures toprotect the secrecy, confidentialityand valueof theirIntellectualProperty.
k. NoMateriallyAdverseContracts,Etc.NeithertheCompanynoranyofitsSubsidiariesissubjecttoanycharter,corporateorotherlegalrestriction,oranyjudgment,decree,order,rule orregulationwhich inthejudgment of theCompany’sofficershas or isexpected inthefuture tohave aMaterialAdverseEffect.Neither the Company norany ofitsSubsidiariesisa party toanycontract oragreement whichinthe judgment of theCompany’sofficers has oris expected tohavea MaterialAdverse Effect.
l. TaxStatus.The CompanyandeachofitsSubsidiarieshasmadeorfiledallfederal,stateandforeignincomeandallothertaxreturns,reportsanddeclarationsrequiredbyanyjurisdiction towhich it issubject (unlessandonlyto theextentthat theCompanyandeachofitsSubsidiarieshassetasideonitsbooksprovisions reasonablyadequateforthepaymentofallunpaidandunreportedtaxes)andhaspaidalltaxesandothergovernmentalassessmentsandchargesthatarematerial in amount,shown ordetermined to be due onsuchreturns,reportsanddeclarations,except those beingcontested ingood faithandhassetaside on its booksprovisionsreasonablyadequatefor thepayment ofall taxesforperiodssubsequent to the periods towhichsuchreturns,reports ordeclarationsapply.Thereare nounpaid taxes inanymaterialamountclaimed to be duebythe taxing authorityofanyjurisdiction,and theofficers of the Company know ofnobasisforanysuch claim.The Companyhas notexecuted awaiverwithrespect to thestatute oflimitationsrelatingto theassessmentorcollection ofanyforeign,federal,state orlocal tax.None of theCompany’staxreturns is presentlybeingauditedbyany taxingauthority.
m. CertainTransactions. Exceptforarm’slengthtransactionspursuanttowhichtheCompanyoranyofitsSubsidiariesmakespaymentsintheordinarycourseofbusinessupontermsnolessfavorablethantheCompanyoranyofitsSubsidiariescouldobtainfromthirdpartiesandotherthan the grant ofstock optionsdisclosed onSchedule3(c), none oftheofficers,directors,oremployeesofthe Company ispresentlya partytoanytransactionwith the Companyoranyof itsSubsidiaries(other thanforservicesasemployees,officersanddirectors), includinganycontract,agreement orotherarrangementprovidingfor thefurnishing ofservices to orby,providing forrental ofreal orpersonal property to orfrom, orotherwiserequiringpayments to orfrom anyofficer,directororsuchemployeeor, to theknowledge of theCompany,anycorporation,partnership,trustor other entityinwhichanyofficer,director,oranysuchemployee has a substantialinterest or isanofficer,director, trustee or partner.
n. Disclosure.AllinformationrelatingtoorconcerningtheCompanyoranyofitsSubsidiariessetforthinthisAgreementandprovidedtotheBuyerpursuanttoSection2(d)hereofandotherwiseinconnectionwiththetransactionscontemplatedherebyistrueandcorrect inallmaterialrespectsand the Companyhas notomitted tostate anymaterialfact necessary inordertomake thestatementsmadeherein ortherein, inlightof thecircumstancesunderwhich theyweremade, notmisleading.Noevent orcircumstancehasoccurred or existswithrespect to the Companyor any of itsSubsidiaries or its ortheirbusiness,properties,prospects,operationsorfinancial conditions,which,underapplicablelaw,ruleorregulation,requires publicdisclosureor announcementby the Company butwhichhas not been so publiclyannouncedordisclosed(assuming for thispurposethat theCompany’sreportsfiledunderthe 1934Actarebeingincorporatedintoaneffectiveregistrationstatementfiledby the Company underthe1933Act).
o. AcknowledgmentRegardingBuyer’PurchaseofSecurities.TheCompanyacknowledgesandagreesthattheBuyerisacting solelyinthecapacityofarm’slengthpurchaserswithrespecttothisAgreementandthetransactionscontemplatedhereby.TheCompanyfurtheracknowledgesthat theBuyer is notactingas afinancialadvisor or fiduciaryof the Company(or inanysimilarcapacity)withrespect to thisAgreementand thetransactionscontemplated hereby and anystatement madeby theBuyer orany of itsrespectiverepresentatives or agents inconnectionwith thisAgreementand thetransactionscontemplated herebyis notadviceor arecommendationand ismerelyincidental to theBuyer’purchase of theSecurities.TheCompanyfurtherrepresents to theBuyerthat theCompany’s decision toenterintothisAgreementhasbeenbasedsolely ontheindependentevaluationofthe Companyanditsrepresentatives.
p. NoIntegratedOffering. NeithertheCompany,nor anyofitsaffiliates,noranypersonactingonitsortheirbehalf,hasdirectlyorindirectlymadeanyoffersor sales inanysecurityor solicitedanyoffers tobuyanysecurityunder circumstancesthatwouldrequireregistrationunder the 1933Actof theissuance of theSecurities to the Buyer.Theissuance of theSecurities to theBuyerwill not beintegratedwith anyotherissuance of theCompany’ssecurities(past,currentorfuture)forpurposes ofanyshareholderapprovalprovisionsapplicableto theCompanyoritssecurities.
q. NoBrokers.TheCompanyhastakennoactionwhichwouldgiverisetoanyclaimbyanypersonforbrokeragecommissions,transactionfeesorsimilarpaymentsrelatingto thisAgreement orthe transactionscontemplatedhereby.
r. Permits;Compliance. TheCompanyandeach ofitsSubsidiaries isinpossessionofallfranchises,grants,authorizations,licenses,permits,easements,variances,exemptions,consents,certificates,approvalsandordersnecessarytoown,leaseandoperateitspropertiesandtocarry onitsbusinessasit isnowbeingconducted(collectively,the “CompanyPermits”),and there is noaction pendingor, to theknowledgeof theCompany,threatenedregardingsuspensionorcancellationof any of the CompanyPermits.Neither the Companynor any ofitsSubsidiariesis inconflictwith,orindefault orviolationof,any ofthe CompanyPermits,exceptfor anysuchconflicts,defaults orviolationswhich,individually or intheaggregate,wouldnotreasonablybeexpectedtohaveaMaterialAdverseEffect.SinceAugust 31, 2013,neither the Company nor any of itsSubsidiarieshasreceived anynotificationwithrespect to possibleconflicts,defaults orviolationsofapplicablelaws,exceptfornotices relating to possible conflicts, defaults or violations,whichconflicts,defaults orviolationswould not have a MaterialAdverseEffect.
s. EnvironmentalMatters.
(i) Thereare,totheCompany’s knowledge,withrespecttotheCompanyoranyofitsSubsidiariesoranypredecessoroftheCompany,nopastorpresentviolationsofEnvironmentalLaws(asdefined below),releasesofanymaterialintotheenvironment,actions,activities, circumstances,conditions,events, incidents, orcontractualobligations whichmaygive risetoanycommonlaw environmental liability orany liability under theComprehensive EnvironmentalResponse,Compensation andLiabilityAct of 1980 orsimilarfederal,state, local orforeign lawsand neither the Company norany of itsSubsidiarieshasreceivedanynotice withrespecttoanyof theforegoing, nor isanyactionpendingor,to theCompany’s knowledge,threatened inconnection with anyof theforegoing.The term“EnvironmentalLaws” meansallfederal,state, local orforeignlawsrelatingto pollution orprotection of human health or theenvironment (including,withoutlimitation,ambientair,surface water,groundwater,landsurfaceorsubsurfacestrata),including, withoutlimitation, lawsrelatingtoemissions,discharges, releasesorthreatenedreleasesofchemicals, pollutantscontaminants,ortoxicorhazardous substancesorwastes(collectively, “HazardousMaterials”) into theenvironment, orotherwiserelatingto themanufacture,processing,distribution,use,treatment, storage,disposal,transportorhandlingofHazardous Materials,as wellasallauthorizations, codes,decrees, demands ordemandletters, injunctions,judgments,licenses, notices ornoticeletters,orders, permits,plans orregulationsissued,entered,promulgatedorapprovedthereunder.
(ii) Otherthanthosethatareorwerestored,usedordisposedofincompliancewithapplicablelaw,noHazardousMaterialsarecontainedonoraboutanyrealpropertycurrentlyowned,leasedorusedbytheCompanyoranyofitsSubsidiaries,andnoHazardousMaterialswerereleasedonorabout anyrealproperty previously owned,leasedorusedby theCompany oranyofitsSubsidiariesduring theperiodtheproperty wasowned,leased or usedby theCompany oranyofitsSubsidiaries,except in thenormal courseofthe Company’s orany ofitsSubsidiaries’ business.
(iii) Therearenoundergroundstoragetanksonorunderanyrealpropertyowned,leasedorusedbytheCompanyoranyofitsSubsidiariesthatarenotincompliance withapplicable law.
t. TitletoProperty.TheCompanyanditsSubsidiarieshavegoodandmarketabletitleinfeesimpletoallrealpropertyandgoodandmarketabletitletoallpersonal property owned bythemwhich ismaterial to thebusiness of the Companyand itsSubsidiaries, ineach casefreeandclear ofall liens,encumbrancesanddefectsexceptsuchas aredescribed in Schedule 3(t) orsuchaswould nothave aMaterialAdverseEffect. Anyreal propertyandfacilitiesheldunder lease by the Companyand itsSubsidiariesare held bythemundervalid, subsisting andenforceableleases withsuchexceptionsaswould nothave aMaterialAdverseEffect.
u. Insurance.TheCompanyandeachofitsSubsidiariesareinsuredbyinsurersofrecognizedfinancialresponsibilityagainstsuchlossesandrisksandinsuchamountsasmanagementoftheCompanybelievestobeprudentandcustomary inthe businesses inwhich the Companyand itsSubsidiariesareengaged.Neither the Company norany such Subsidiaryhasany reason tobelievethat itwill not beable torenew itsexistinginsurancecoverageasandwhen such coverageexpires ortoobtainsimilar coveragefromsimilarinsurersasmaybe necessarytocontinue itsbusinessat acostthatwould not have aMaterialAdverseEffect.Uponwrittenrequest the Companywillprovide to theBuyertrueandcorrectcopies ofallpoliciesrelating todirectors’andofficers’liabilitycoverage,errorsandomissionscoverage,andcommercialgeneral liabilitycoverage.
v. InternalAccounting Controls.TheCompanyandeachofitsSubsidiariesmaintainasystemofinternalaccountingcontrolssufficient,inthejudgmentoftheCompany’sboardofdirectors,toprovidereasonableassurancethat(i)transactionsareexecutedinaccordancewithmanagement’sgeneralorspecificauthorizations,(ii)transactionsarerecordedasnecessary topermitpreparationoffinancialstatementsinconformitywithgenerallyaccepted accountingprinciplesand tomaintainassetaccountability, (iii)access toassets ispermitted only inaccordancewithmanagement’sgeneral orspecificauthorizationand(iv) therecorded accountability forassets iscomparedwith theexistingassetsatreasonableintervalsandappropriateaction is takenwithrespect toanydifferences.
w. ForeignCorruptPractices.NeithertheCompany,noranyofitsSubsidiaries,noranydirector,officer,agent,employeeorotherpersonactingonbehalfoftheCompanyoranySubsidiaryhas, in the course of hisactionsfor, or on behalfof, theCompany,usedanycorporatefundsforanyunlawfulcontribution,gift,entertainmentorotherunlawfulexpensesrelating to politicalactivity; made anydirectorindirectunlawfulpayment toanyforeign ordomesticgovernmentofficial oremployeefromcorporate funds;violated or is inviolationof anyprovisionof theU.S.ForeignCorruptPracticesActof 1977,asamended,ormadeanybribe,rebate,payoff,influencepayment,kickbackorotherunlawfulpayment toanyforeign or domesticgovernmentofficial oremployee.
x. Solvency. TheCompany(aftergivingeffecttothetransactionscontemplatedbythisAgreement)issolvent(i.e.,itsassetshaveafairmarketvalueinexcessof theamountrequired topayits probableliabilities on its existingdebtsas theybecomeabsoluteandmatured)and currently the Company has noinformationthatwouldlead it toreasonablyconcludethatthe Companywouldnot,aftergivingeffecttothetransactioncontemplatedbythisAgreement, have the ability to, nor does itintend totakeanyactionthat wouldimpair its ability to, payitsdebtsfromtime to timeincurred inconnectiontherewithassuchdebtsmature.The Company did notreceive aqualified opinionfrom itsauditorswithrespect to its mostrecentfiscalyearendand,aftergivingeffecttothetransactionscontemplatedby thisAgreement,does notanticipate or know ofany basis uponwhich itsauditorsmight issue aqualified opinion inrespect ofitscurrent fiscalyear.
y. NoInvestmentCompany. TheCompanyisnot,andupontheissuanceandsaleoftheSecuritiesascontemplatedby thisAgreementwillnotbean“investmentcompany”requiredtoberegisteredundertheInvestmentCompanyActof1940(an“InvestmentCompany”).TheCompany is notcontrolledbyanInvestmentCompany.
z. BreachofRepresentationsandWarrantiesbytheCompany.IftheCompanybreachesanyoftherepresentationsorwarrantiessetforthinthisSection3,andinaddition toany otherremediesavailable to theBuyer pursuant to thisAgreement, itwill beconsideredanEvent of defaultunderSection 3.4 ofthe Note.
4. COVENANTS.
a. BestEfforts.Thepartiesshallusetheirbesteffortstosatisfytimelyeach oftheconditionsdescribed inSection6and 7 ofthisAgreement.
b. FormD;BlueSkyLaws.TheCompanyagreestofileaFormDwithrespecttotheSecuritiesasrequiredunderRegulationDandtoprovideacopythereoftotheBuyerpromptlyaftersuchfiling.TheCompanyshall,onorbefore the ClosingDate,take suchactionas theCompany shall reasonably determineis necessary to qualifytheSecurities forsale to theBuyerat theapplicableclosing pursuant tothisAgreement underapplicablesecurities or“bluesky” laws of thestates of theUnitedStates(or toobtainanexemptionfromsuchqualification),andshallprovideevidence ofanysuchactionsotaken totheBuyer on or prior to theClosingDate.
c. UseofProceeds.TheCompanyshallusetheproceedsforgeneralworkingcapital purposes.
d. RightofFirstRefusal.UnlessitshallhavefirstdeliveredtotheBuyer,atleastseventytwo(72)hourspriortotheclosingofsuchFutureOffering(asdefinedherein),writtennoticedescribingtheproposedFutureOffering,includingthetermsandconditionsthereofandproposeddefinitivedocumentation to be entered into inconnectiontherewith,andproviding theBuyeran optionduring the seventytwo (72) hourperiodfollowing deliveryofsuch notice topurchase the securitiesbeingoffered in theFutureOffering on thesametermsascontemplatedbysuchFuture Offering(thelimitationsreferred to in thissentenceand thepreceding sentence are collectivelyreferred toas the“Right ofFirstRefusal”) (andsubject to theexceptionsdescribedbelow), the Companywill notconductany equityfinancing(includingdebtwithan equitycomponent)(“FutureOfferings”) during theperiodbeginning on theClosingDateandendingtwelve(12)monthsfollowingtheClosingDate. Intheeventtheterms andconditions of aproposedFutureOffering areamended inanyrespectafter delivery of thenoticetotheBuyerconcerningtheproposedFutureOffering,theCompanyshalldeliveranewnotice to theBuyerdescribingtheamendedtermsandconditions of theproposedFutureOfferingandtheBuyerthereaftershallhaveanoptionduring the seventytwo(72) hourperiodfollowing delivery of suchnewnotice to purchase itsprorata share of thesecurities beingoffered on thesame termsascontemplated by suchproposedFutureOffering,asamended.Theforegoingsentenceshall apply tosuccessiveamendments to theterms andconditionsof anyproposedFutureOffering.TheRight ofFirstRefusalshall not apply toany transaction involving(i)issuances ofsecurities in afirmcommitmentunderwritten publicoffering(excludingacontinuousofferingpursuant toRule 415underthe 1933Act) or(ii)issuancesofsecuritiesas considerationfor amerger, consolidation orpurchase of assets, or inconnectionwith anystrategic partnership or jointventure (the primarypurposeofwhich is not toraise equitycapital), or inconnectionwith thedisposition oracquisition of abusiness,product orlicense by the Company.TheRight ofFirstRefusalalsoshall not apply to the issuance ofsecuritiesuponexercise orconversionof theCompany’soptions,warrantsorotherconvertible securitiesoutstandingasof thedatehereof or tothegrant ofadditionaloptionsorwarrants,or theissuance ofadditionalsecurities,underanyCompanystock optionorrestrictedstockplanapproved by the shareholders ofthe Company.
e. Expenses.AttheClosing,theCompanyshallreimburseBuyerforexpensesincurredbytheminconnectionwiththenegotiation,preparation,execution,deliveryandperformanceofthisAgreementandtheotheragreementstobeexecutedinconnection herewith(“Documents”),including,withoutlimitation,reasonableattorneys’andconsultants’feesandexpenses,transfer agentfees,feesfor stockquotationservices,feesrelating to anyamendmentsormodificationsof theDocuments or anyconsentsorwaiversofprovisionsintheDocuments,feesfor thepreparation ofopinions ofcounsel,escrowfees,andcosts ofrestructuring the transactionscontemplatedby theDocuments. Whenpossible, the Company mustpaythesefeesdirectly,otherwise the Company mustmakeimmediatepaymentforreimbursement to theBuyer forallfeesandexpenses immediately uponwrittennoticeby theBuyer or the submission ofaninvoice by theBuyer.TheCompany’sobligationwithrespect to thistransaction is toreimburse Buyer’expensesshall be$2,500.
f. FinancialInformation.UponwrittenrequesttheCompanyagreestosendormakeavailablethefollowingreportstotheBuyeruntiltheBuyertransfers,assigns,orsellsallof theSecurities:(i) withinten(10)daysafter thefilingwiththeSEC,a copy of itsAnnualReportonForm10-K itsQuarterlyReportsonForm10-QandanyCurrentReportsonForm8-K;(ii) withinone(1)dayafterrelease,copiesofallpressreleasesissuedby theCompanyor anyof itsSubsidiaries;and(iii)contemporaneouslywith themakingavailable orgiving to theshareholders of theCompany, copies of any notices orotherinformation the Companymakesavailableorgives tosuchshareholders.
g. [INTENTIONALLYDELETED]
h. Listing.TheCompanyshallpromptlysecurethelistingoftheConversionShares uponeach nationalsecuritiesexchangeor automated quotationsystem, if any,uponwhichsharesofCommonStockarethenlisted(subjecttoofficialnoticeofissuance)and,solongastheBuyerownsanyoftheSecurities,shallmaintain,solongasanyothersharesof CommonStockshall be solisted,such listing ofallConversionSharesfrom time to timeissuable uponconversion of theNote. The Companywillobtainand, so longas theBuyerownsanyof theSecurities, maintain the listingand tradingof its CommonStock on theOTCBB or anyequivalent replacementexchange, theNasdaqNationalMarket(“Nasdaq”), theNasdaqSmallCapMarket(“NasdaqSmallCap”),theNewYorkStockExchange(“NYSE”),ortheAmericanStockExchange(“AMEX”)andwill complyinallrespectswith theCompany’sreporting,filingandotherobligationsunder thebylaws orrulesof theFinancial IndustryRegulatory Authority(“FINRA”)andsuchexchanges,asapplicable.The Companyshall promptly providetotheBuyercopiesofany noticesitreceivesfromtheOTCBBandany otherexchanges orquotationsystems onwhich the CommonStock isthenlistedregardingthecontinuedeligibilityoftheCommonStockfor listing onsuchexchanges andquotationsystems.
i. CorporateExistence.SolongastheBuyerbeneficiallyownsanyNote,theCompanyshallmaintainitscorporateexistenceandshallnotsellallorsubstantiallyallof theCompany’s assets,except in theevent of amerger or consolidation orsale ofall or substantiallyalloftheCompany’sassets,wherethesurvivingorsuccessorentity insuchtransaction(i)assumes theCompany’sobligationshereunderand under theagreements andinstrumentsentered into inconnectionherewith and(ii) is a publiclytradedcorporationwhose CommonStockislistedfor trading on theOTCBB,Nasdaq,NasdaqSmallCap,NYSE orAMEX.
j. NoIntegration.TheCompanyshallnotmakeanyoffersorsalesofanysecurity(otherthantheSecurities)undercircumstancesthatwouldrequireregistrationoftheSecuritiesbeingofferedorsoldhereunderunderthe1933ActorcausetheofferingoftheSecurities to beintegratedwithanyotheroffering ofsecurities bytheCompanyfor thepurpose ofanystockholderapprovalprovisionapplicableto theCompany orits securities.
k. Breach of Covenants.IftheCompanybreachesanyofthecovenantssetforthinthisSection4,andinadditiontoanyotherremediesavailabletotheBuyerpursuanttothisAgreement,itwillbeconsideredaneventofdefaultunderSection3.4oftheNote.
l. Failure to Complywith the 1934Act.SolongastheBuyerbeneficiallyownstheNote,theCompanyshallcomplywiththereportingrequirementsofthe1934Act;andthe Companyshallcontinuetobesubjecttothereportingrequirementsof the 1934Act.
m. TradingActivities.NeithertheBuyernoritsaffiliateshasanopenshort position in the commonstock oftheCompanyand theBuyer agreethat itshall not,andthatitwillcauseitsaffiliatesnotto,engageinanyshortsalesoforhedgingtransactionswithrespectto the commonstock ofthe Company.
5. TransferAgentInstructions. TheCompanyshallissueirrevocableinstructionstoitstransferagenttoissuecertificates,registeredinthenameoftheBuyeroritsnominee,fortheConversionSharesinsuchamountsasspecifiedfromtimetotimebytheBuyertothe Company uponconversionof theNote inaccordancewiththetermsthereof(the“IrrevocableTransfer AgentInstructions”). IntheeventthattheBorrowerproposestoreplace itstransferagent, theBorrowershallprovide, prior to theeffective dateofsuchreplacement, a fullyexecutedIrrevocableTransferAgentInstructions in aformas initiallydelivered pursuant to thePurchaseAgreement(including but notlimited to theprovision to irrevocablyreserveshares of CommonStockintheReservedAmount) signedby thesuccessortransfer agenttoBorrowerandtheBorrower.Prior toregistrationof the ConversionSharesunder the 1933Actor thedate onwhichtheConversionSharesmay be soldpursuanttoRule 144withoutanyrestrictionasto thenumber ofSecuritiesas of aparticular datethatcanthen be immediatelysold,allsuchcertificatesshallbear therestrictivelegend specified inSection2(g) ofthisAgreement.The Companywarrantsthat:(i) noinstructionotherthan theIrrevocableTransferAgentInstructionsreferredtointhisSection 5,andstoptransferinstructionstogiveeffecttoSection2(f)hereof(in thecase of the ConversionShares,prior toregistration of the ConversionSharesunder the 1933Act or the date onwhich theConversionSharesmaybe soldpursuant to Rule 144without anyrestrictionas to the number ofSecuritiesas of aparticulardatethat canthen be immediatelysold),will begivenby the Company to itstransferagentandthat theSecuritiesshallotherwise be freelytransferable on the booksandrecords of the Companyasand to the extentprovided in thisAgreementand theNote;(ii) itwill notdirect itstransfer agent not totransferordelay,impair,and/orhinderitstransferagentintransferring(orissuing)(electronically orincertificatedform)anycertificateforConversionShares to beissued to theBuyer uponconversion of orotherwisepursuant to theNoteasandwhenrequiredby theNote and thisAgreement;and(iii) itwill notfail toremove(ordirects itstransferagent not to remove or impairs,delays,and/orhindersitstransferagentfromremoving)anyrestrictivelegend(or towithdrawany stoptransferinstructionsinrespectthereof) onanycertificateforany ConversionSharesissuedtotheBuyer uponconversion of orotherwisepursuant to theNoteasandwhenrequired by theNoteand thisAgreement.Nothing inthisSectionshallaffectinanyway theBuyer’sobligationsandagreementsetforth inSection 2(g) hereof to complywithallapplicableprospectus deliveryrequirements, ifany, uponre-sale of theSecurities. If theBuyer provides theCompany,at thecost of theBuyer,with(i)an opinion of counsel inform, substanceandscope customary for opinions incomparabletransactions, to theeffectthat a publicsale ortransfer ofsuchSecurities maybemadewithoutregistration under the 1933Actand suchsaleortransfer iseffected or(ii) theBuyer providesreasonableassurancesthat theSecuritiescanbesoldpursuant to Rule144,the Companyshall permit thetransfer,and, in the caseof the ConversionShares, promptlyinstruct itstransferagentto issue one ormorecertificates,freefrom restrictivelegend, insuchnameand in such denominationsasspecifiedby theBuyer. The Companyacknowledges thatabreach byit ofitsobligationshereunderwillcauseirreparableharm to theBuyer, byvitiating theintentandpurposeof thetransactionscontemplatedhereby.Accordingly, the Companyacknowledgesthat the remedyatlaw for abreachof itsobligationsunder thisSection 5 maybeinadequateandagrees, in theevent of abreachorthreatenedbreach by the Company of theprovisions of thisSection,that theBuyershall beentitled, inaddition toallotheravailableremedies, toaninjunctionrestraininganybreachandrequiringimmediatetransfer,without the necessity ofshowingeconomiclossandwithout any bond orothersecuritybeingrequired.
6. ConditionstotheCompany’sObligationtoSell.TheobligationoftheCompanyhereundertoissueandselltheNotetotheBuyerattheClosingissubjecttothesatisfaction,atorbeforetheClosing Dateofeach ofthefollowingconditionsthereto,providedthattheseconditions arefor theCompany’s solebenefitand may bewaived by the Companyat any timein its sole discretion sameto the Company.
a. TheBuyershallhaveexecutedthisAgreementanddeliveredthe
b. The BuyershallhavedeliveredthePurchasePriceinaccordancewithSection1(b) above.
c. The representationsand warrantiesoftheBuyershallbetrueand correctinall materialrespectsasofthedatewhenmadeandasoftheClosingDateas thoughmadeatthattime(exceptfor representationsandwarrantiesthatspeakasof aspecificdate),and theBuyer shallhaveperformed, satisfiedandcompliedinallmaterialrespects with thecovenants,agreementsandconditionsrequiredbythisAgreementtobeperformed, satisfiedorcompliedwithby theBuyerat orpriorto theClosingDate.
d. No litigation,statute, rule,regulation, executiveorder, decree,rulingorinjunction shallhavebeenenacted,entered,promulgatedorendorsed byorinanycourtorgovernmentalauthorityofcompetentjurisdictionoranyself-regulatoryorganization having authority over thematterscontemplatedhereby whichprohibits theconsummationof anyof thetransactionscontemplatedby thisAgreement.
7. ConditionstoTheBuyer’sObligationtoPurchase.TheobligationoftheBuyerhereundertopurchasetheNoteattheClosing issubjecttothesatisfaction,atorbeforetheClosingDateofeachofthefollowingconditions,providedthattheseconditionsarefortheBuyer’s sole benefitandmaybe waivedby the Buyeratanytimein its sole discretion:the sameto the Buyer.
a. TheCompanyshallhaveexecutedthisAgreementanddelivered
b. TheCompanyshall havedeliveredtotheBuyerthedulyexecuted Note (insuch denominationsas the Buyer shallrequest)inaccordancewithSection1(b) above.
c. The IrrevocableTransfer AgentInstructions,informandsubstancesatisfactoryto a majority-in-interest oftheBuyer, shallhavebeendeliveredtoandacknowledgedinwritingbythe Company’s TransferAgent.
d. The representationsand warrantiesoftheCompanyshallbetrueandcorrectinallmaterialrespectsasofthedatewhen madeandasoftheClosingDate asthoughmadeatsuchtime(except forrepresentationsand warrantiesthatspeakasof aspecificdate) and the Company shallhaveperformed, satisfiedand complied inallmaterialrespectswiththecovenants,agreementsand conditionsrequiredby thisAgreementto beperformed,satisfied orcompliedwithbythe Companyat orpriorto theClosingDate.The Buyershallhavereceived acertificate orcertificates, executedby thechiefexecutive officer of theCompany,datedas of theClosingDate,totheforegoingeffectand astosuch othermattersasmaybereasonablyrequested by theBuyerincluding, but notlimited tocertificates withrespect to theCompany’s Certificate ofIncorporation,By-laws andBoardofDirectors’resolutionsrelating to thetransactions contemplatedhereby.
e. Nolitigation,statute,rule,regulation,executiveorder,decree,rulingorinjunctionshallhavebeenenacted,entered,promulgatedorendorsed byorinanycourtorgovernmentalauthorityofcompetentjurisdictionoranyself-regulatoryorganizationhaving authority over thematterscontemplated hereby whichprohibits theconsummation of anyof thetransactionscontemplatedby thisAgreement.
f. No eventshall haveoccurred whichcouldreasonablybeexpectedtohaveaMaterialAdverse EffectontheCompanyincludingbutnotlimitedtoachangeinthe1934Actreporting statusoftheCompanyorthefailureoftheCompanytobetimelyinits1934Act reportingobligations.
g. The ConversionSharesshallhavebeenauthorizedfor quotationontheOTCBBandtradingintheCommonStockontheOTCBB shallnothavebeensuspendedbythe SEC orthe OTCBB.
h. The Buyershallhavereceived anofficer’scertificatedescribedinSection3(c)above,datedasoftheClosingDate.
8. GoverningLaw;Miscellaneous.
a. GoverningLaw.ThisAgreementshallbegovernedbyandconstruedinaccordancewiththelawsoftheStateofNewYorkwithoutregardtoprinciplesofconflictsoflaws. Any actionbroughtby eitherpartyagainst theotherconcerning thetransactionscontemplatedbythisAgreementshallbebroughtonly in thestatecourtsof NewYork or in thefederal courtslocated in the stateandcounty of Nassau.Theparties to thisAgreement hereby irrevocablywaiveany objectiontojurisdictionandvenue ofanyactioninstitutedhereunderandshallnotassertanydefensebased onlack of jurisdiction orvenueorbased uponforum nonconveniens. The CompanyandBuyer waivetrialbyjury.The prevailing partyshall beentitled torecoverfrom theother party itsreasonableattorney'sfeesandcosts.In theeventthatanyprovisionofthisAgreement oranyotheragreement deliveredinconnectionherewith isinvalid orunenforceable under anyapplicablestatute orrule oflaw,thensuchprovisionshallbe deemedinoperative totheextentthatitmayconflicttherewithandshallbedeemedmodified toconformwithsuchstatuteorruleoflaw.Anysuchprovisionwhichmayproveinvalidorunenforceableunder any lawshallnotaffectthevalidityorenforceabilityof anyotherprovision ofanyagreement. Each party herebyirrevocablywaivespersonalserviceofprocessandconsentstoprocessbeingserved inany suit,actionorproceeding inconnection with thisAgreement oranyotherTransactionDocumentbymailingacopythereof viaregistered orcertifiedmailor overnightdelivery(withevidence ofdelivery) tosuch partyattheaddressineffectfornotices to it under thisAgreementandagreesthatsuchserviceshallconstitutegoodandsufficientserviceofprocessandnoticethereof.Nothingcontained hereinshall be deemed to limit in anywayany right toserve process inanyother manner permittedbylaw.
b. Counterparts.ThisAgreementmaybeexecutedinoneormorecounterparts,eachofwhichshallbedeemedanoriginalbutallofwhichshallconstituteoneandthesameagreementandshallbecomeeffectivewhencounterpartshavebeensignedbyeach partyanddelivered to theother party.
c. Headings.TheheadingsofthisAgreementareforconvenienceofreferenceonlyandshallnotformpartof, oraffectthe interpretationof, thisAgreement.
d. Severability.IntheeventthatanyprovisionofthisAgreementisinvalidorunenforceableunderanyapplicablestatuteorruleoflaw,thensuchprovisionshallbedeemedinoperativetotheextentthatitmayconflicttherewithandshallbedeemedmodified toconformwithsuchstatute orrule oflaw.Anyprovisionhereofwhich may proveinvalid orunenforceable underanylawshallnotaffectthevalidity orenforceabilityofany otherprovisionhereof.
e. EntireAgreement;Amendments. ThisAgreementandtheinstrumentsreferencedhereincontaintheentireunderstandingofthepartieswithrespecttothematterscoveredhereinandthereinand,exceptasspecificallysetforthhereinortherein,neitherthe Company nor theBuyermakes any representation,warranty, covenant orundertakingwithrespecttosuchmatters.Noprovisionof thisAgreementmay bewaivedoramendedotherthan byaninstrument in writingsigned by themajority ininterest ofthe Buyer.
f. Notices.Allnotices,demands,requests,consents,approvals,andothercommunicationsrequiredorpermittedhereundershallbeinwritingand,unlessotherwisespecifiedherein,shallbe(i)personallyserved,(ii)depositedinthemail,registeredorcertified,returnreceiptrequested,postageprepaid,(iii)deliveredbyreputable aircourierservicewith chargesprepaid,or(iv)transmittedbyhanddelivery,telegram, or facsimile,addressedas setforthbelowortosuchotheraddressassuchparty shallhavespecifiedmostrecentlybywrittennotice.Anynotice or othercommunicationrequired orpermitted to begiven hereundershallbedeemedeffective (a) uponhand deliveryor delivery byfacsimile,withaccurateconfirmationgeneratedbythe transmittingfacsimilemachine,at theaddress ornumberdesignated below(ifdelivered on a businessday duringnormal businesshourswhere such noticeis to bereceived),or thefirstbusinessdayfollowingsuch delivery(ifdelivered otherthanonabusinessdayduringnormalbusinesshourswheresuch notice is to bereceived) or(b) on thesecondbusinessdayfollowing thedate ofmailingbyexpresscourierservice, fully prepaid,addressed tosuchaddress,or uponactualreceiptofsuchmailing,whichevershallfirstoccur.Theaddressesforsuchcommunicationsshallbe:
Ifto the Company, to:CO-SIGNER,INC.
6250MountainVista Street -Suite C-1Henderson, NV89014
Attn:DARRENM.MAGOT,Chief Executive Officer
facsimile:[enter faxnumber]
With acopybyfaxonlyto(which copyshall not constitute notice):
KyleenCaneCane•ClarkLLP
3273E. WarmSpringsRd.LasVegas,NV89120
Ifto the Buyer:
ASHERENTERPRISES,INC.
1Linden Pl., Suite207GreatNeck, NY. 11021
Attn:CurtKramer,President
facsimile:516-498-9894
With acopybyfaxonlyto(which copyshall not constitute notice):
NaidichWurman Birnbaum &MadayLLP
80CuttermillRoad,Suite410GreatNeck, NY11021
Attn:Bernard S.Feldman,Esq.
facsimile: 516-466-3555
Each partyshallprovide noticeto the otherpartyofanychangeinaddress.
g. SuccessorsandAssigns.ThisAgreementshallbebindinguponandinuretothebenefitofthepartiesandtheirsuccessorsandassigns.NeithertheCompany northeBuyershallassignthisAgreementoranyrightsorobligationshereunderwithoutthepriorwrittenconsentof the other.Notwithstanding theforegoing,subject to Section2(f), theBuyer mayassign itsrightshereunder toany person thatpurchasesSecurities in aprivatetransactionfrom theBuyeror to anyof its“affiliates,”as thatterm isdefined under the 1934 Act,without the consent ofthe Company.
h. ThirdPartyBeneficiaries. ThisAgreementisintendedforthebenefitofthepartiesheretoandtheirrespectivepermittedsuccessorsandassigns,andisnotforthe benefitof, normayanyprovisionhereofbe enforcedby,anyotherperson.
i. Survival.TherepresentationsandwarrantiesoftheCompanyandtheagreementsandcovenantssetforthinthisAgreementshallsurvivetheclosinghereundernotwithstandinganyduediligenceinvestigationconducted byor onbehalf oftheBuyer. The Companyagrees to indemnifyand holdharmless theBuyerandalltheirofficers,directors,employeesand agents for loss ordamage arisingas aresult of orrelatedto any breach orallegedbreach bythe Company ofanyof itsrepresentations, warrantiesandcovenantssetforth in thisAgreement or any ofitscovenantsandobligationsunderthisAgreement, includingadvancement of expensesas they are incurred.
j. Publicity.TheCompany,andtheBuyershallhavetherighttoreviewareasonableperiodoftimebeforeissuanceofanypressreleases,SEC,OTCBBorFINRAfilings,oranyotherpublicstatementswithrespecttothetransactionscontemplatedhereby;provided,however,that the Company shall beentitled,without thepriorapproval of theBuyer, tomakeanypressrelease orSEC,OTCBB(orotherapplicable tradingmarket) orFINRAfilingswithrespect tosuchtransactions as isrequiredbyapplicablelawandregulations(althoughtheBuyershallbeconsultedbythe Companyinconnectionwithanysuchpressreleaseprior to itsreleaseandshall beprovidedwith a copythereofand begivenan opportunity tocommentthereon).
k. FurtherAssurances.Eachpartyshalldoandperform,orcausetobedoneandperformed,allsuchfurtheractsandthings,andshallexecuteanddeliverallsuchotheragreements,certificates,instrumentsanddocuments,astheotherpartymay reasonablyrequest in order to carryout theintentand accomplish thepurposes of thisAgreementand theconsummation ofthe transactionscontemplatedhereby.
l. NoStrictConstruction.ThelanguageusedinthisAgreementwillbedeemedtobethelanguagechosen bythepartiestoexpresstheirmutualintent,andnorulesofstrictconstructionwill be appliedagainstanyparty.
m. Remedies.TheCompanyacknowledgesthatabreachbyitofitsobligationshereunderwillcause irreparableharmto the Buyerbyvitiatingthe intentandpurposeofthetransactioncontemplatedhereby.Accordingly, theCompanyacknowledgesthat the remedyatlawforabreachofitsobligationsunderthisAgreementwillbeinadequateandagrees, in theevent of a breach orthreatenedbreachby the Company of theprovisions of this
Agreement,thattheBuyershallbeentitled,inadditiontoallotheravailableremediesatlaworinequity,andinadditiontothepenaltiesassessableherein,toaninjunctionorinjunctionsrestraining,preventingorcuringanybreachofthisAgreementandtoenforcespecificallythetermsandprovisionshereof,without thenecessityofshowingeconomiclossandwithout any bond or othersecurity beingrequired.
INWITNESSWHEREOF,theundersignedBuyerandtheCompanyhavecausedthisAgreement to bedulyexecutedasofthe datefirstabove written.
| CO-SIGNER, INC. |
| |
| By: /s/ Darren M. Magot |
| DARRENM.MAGOT |
| Chief Executive Officer |
| |
| ASHER ENTERPRISES, INC. |
| |
| By: /s/ Curt Kramer |
| Name: CurtKramer |
| Title: President |
| 1Linden Pl., Suite207GreatNeck, NY. 11021 |
| AGGREGATE SUBSCRIPTION AMOUNT: | |
| Aggregate Principal Amount of Note: | $42,500.00 |
| Aggregate Purchase Price: | $42,500.00 |
3773(2)11-25-13 patrick.gaynes@gmail.com darrenmagot@earthlink.net | |
