SECURITIES PURCHASEAGREEMENT
ThisSECURITIESPURCHASE AGREEMENT(the “Agreement”),dated asof January8,2014,byand betweenCO-SIGNER,INC.,aNevadacorporation,withheadquarterslocated at8275S.EasternAvenue–Suite200-661,LasVegas, NV89123(the “Company”),andASHER ENTERPRISES,INC., aDelawarecorporation,withitsaddressat 1Linden Place, Suite207,GreatNeck,NY11021(the “Buyer”).
WHEREAS:
A. TheCompanyandtheBuyerareexecutinganddeliveringthisAgreementinrelianceupontheexemptionfromsecurities registrationaffordedbytherulesandregulationsas promulgatedbytheUnitedStatesSecurities andExchange Commission(the “SEC”) under theSecuritiesActof1933, asamended(the “1933Act”);
B. Buyerdesirestopurchase andtheCompanydesirestoissueandsell,uponthetermsandconditions setforthinthisAgreement an8%convertiblenoteoftheCompany,intheform attachedheretoasExhibit A,intheaggregateprincipal amountof$32,500.00(togetherwith any note(s)issuedinreplacementthereoforasadividendthereonorotherwisewithrespect theretoinaccordance withthetermsthereof,the“Note”), convertibleintosharesofcommonstock,$0.001parvalueper share, of the Company(the“Common Stock”), upon thetermsandsubject to the limitationsand conditionssetforth insuch Note.
C. TheBuyer wishestopurchase,uponthetermsandconditions statedinthis Agreement,such principalamountofNoteasissetforth immediatelybelowitsnameonthesignature pageshereto;and
NOW THEREFORE,the CompanyandtheBuyerseverally(andnotjointly)herebyagreeas follows:
1. Purchase and SaleofNote.
a. Purchaseof Note.OntheClosingDate (asdefinedbelow),theCompanyshallissueandselltotheBuyerandtheBuyeragreestopurchasefromtheCompanysuch principalamountofNoteasissetforthimmediately belowtheBuyer’sname onthesignature pageshereto.
b. FormofPayment. OntheClosingDate(as definedbelow),(i)theBuyershallpaythepurchasepricefortheNotetobeissued andsoldtoitattheClosing(asdefinedbelow)(the “PurchasePrice”) bywiretransfer ofimmediatelyavailablefunds to theCompany,inaccordancewiththeCompany’swrittenwiring instructions,againstdelivery oftheNotein theprincipal amountequal to thePurchasePriceas isset forth immediately below theBuyer’snameon thesignaturepageshereto,and(ii)the Companyshalldeliver such dulyexecutedNoteon behalf ofthe Company, to theBuyer,against delivery ofsuchPurchase Price.
c. ClosingDate. Subjecttothesatisfaction(orwrittenwaiver)oftheconditions theretosetforthinSection6andSection7below,thedateandtimeoftheissuance andsaleoftheNotepursuanttothisAgreement(the “ClosingDate”)shallbe12:00noon,EasternStandard TimeonoraboutJanuary10,2014,orsuchothermutuallyagreedupontime.Theclosingof thetransactionscontemplatedbythisAgreement(the “Closing”)shall occur on theClosingDateatsuch locationas may beagreed to by the parties.
2. Buyer’sRepresentations andWarranties.TheBuyerrepresentsand warrants to theCompanythat:
a. InvestmentPurpose. Asof thedatehereof,theBuyerispurchasingtheNoteandthesharesofCommonStockissuableuponconversionoforotherwisepursuanttotheNote(including,without limitation,suchadditionalsharesofCommonStock,ifany,asareissuable(i)onaccountofinterestontheNote, (ii) asaresultoftheevents describedinSections1.3and1.4(g)oftheNoteor(iii)inpaymentoftheStandard LiquidatedDamagesAmount (asdefinedinSection2(f)below)pursuanttothisAgreement,suchsharesofCommonStockbeingcollectivelyreferredtoherein as the“ConversionShares”and, collectivelywith theNote,the“Securities”) for itsown accountand notwith apresentviewtowards the publicsale ordistributionthereof, exceptpursuanttosales registered orexempted fromregistration under the 1933Act;provided,however, that by making therepresentations herein, theBuyer does notagree to hold any of theSecurities for any minimum orotherspecifictermandreservestheright to dispose of theSecurities at any time inaccordancewith or pursuant to aregistrationstatement or an exemptionunderthe1933Act.
b. AccreditedInvestorStatus.TheBuyerisan“accreditedinvestor”asthattermisdefined inRule 501(a)of Regulation D (an“Accredited Investor”).
c. Reliance onExemptions. TheBuyerunderstandsthat theSecuritiesarebeingofferedandsoldtoitinrelianceuponspecificexemptionsfromtheregistrationrequirementsofUnitedStatesfederal andstatesecuritieslaws andthattheCompanyisrelyinguponthetruthandaccuracyof,andtheBuyer’scompliancewith,therepresentations,warranties,agreements,acknowledgments andunderstandings of theBuyersetforthhereininordertodeterminetheavailability ofsuchexemptionsandtheeligibilityof theBuyertoacquire the Securities.
d. Information.The Buyeranditsadvisors,if any,have been,andforsolongastheNoteremain outstandingwillcontinuetobe,furnished withallmaterialsrelatingtothebusiness, financesandoperationsoftheCompanyand materialsrelatingtotheoffer andsaleoftheSecurities whichhavebeen requestedbytheBuyeroritsadvisors.The Buyerand itsadvisors,ifany,have been,andforsolongas theNote remainoutstandingwillcontinue tobe,affordedthe opportunitytoask questionsof theCompany. Notwithstandingtheforegoing,the CompanyhasnotdisclosedtotheBuyeranymaterialnonpublicinformationand willnotdisclosesuch informationunlesssuchinformationisdisclosed to the publicprior to or promptlyfollowingsuch disclosure to theBuyer. Neithersuchinquiriesnor anyother duediligenceinvestigation conductedbyBuyeror any ofits advisors or representativesshallmodify, amend oraffectBuyer’sright torely ontheCompany’s representationsandwarranties containedinSection 3below. TheBuyerunderstandsthat itsinvestment in theSecurities involves asignificant degree ofrisk.TheBuyeris notawareofanyfactsthatmay constitutea breach of any ofthe Company'srepresentationsand warrantiesmade herein.
e. GovernmentalReview. TheBuyerunderstandsthat noUnitedStatesfederalorstateagencyoranyothergovernmentorgovernmentalagencyhaspasseduponor madeanyrecommendationor endorsementofthe Securities.
f. TransferorRe-sale. TheBuyerunderstandsthat (i)thesaleorre-saleoftheSecuritieshasnotbeen andisnotbeingregistered underthe1933Actoranyapplicablestate securitieslaws,andthe Securitiesmaynot be transferredunless(a)the Securitiesare soldpursuanttoaneffectiveregistration statementunder the 1933 Act,(b)theBuyershall havedelivered to theCompany,at thecost of theBuyer, an opinion of counselthatshall be inform,substanceandscope customaryfor opinions ofcounselincomparabletransactions to theeffectthat theSecuritiesto be sold ortransferred may be sold ortransferredpursuant toan exemptionfromsuchregistration,whichopinionshall beacceptedbytheCompany,(c)theSecurities are soldortransferredtoan“affiliate” (asdefined in Rule144promulgatedunder the 1933Act (or asuccessorrule)(“Rule 144”)) of theBuyerwhoagrees tosell orotherwise transfertheSecuritiesonly inaccordance with thisSection2(f)and whoisan AccreditedInvestor,(d)theSecuritiesare soldpursuantto Rule 144, or(e)theSecuritiesare sold pursuanttoRegulationSunder the 1933Act(ora successorrule)(“RegulationS”),and theBuyershall havedelivered to theCompany,at thecost of theBuyer, an opinion of counselthatshall be inform,substanceandscope customaryfor opinions ofcounselincorporatetransactions,whichopinionshall beacceptedbytheCompany;(ii)anysale ofsuch Securitiesmade inreliance on Rule144maybemade onlyinaccordancewiththetermsofsaidRuleandfurther,ifsaidRuleis notapplicable,anyre-saleofsuchSecurities undercircumstancesinwhichtheseller(orthepersonthroughwhomthesale is made)maybedeemed tobean underwriter (asthat term isdefinedinthe1933Act)mayrequirecompliance withsomeotherexemptionunderthe1933Act ortherulesand regulationsoftheSECthereunder;and(iii)neither theCompanynoranyotherpersonisunderanyobligationtoregistersuch Securitiesunderthe1933Actorany statesecuritieslawsor to complywiththe termsand conditions of any exemptionthereunder (ineachcase). Notwithstanding theforegoingoranything elsecontained herein to thecontrary,theSecuritiesmaybe pledgedascollateral in connectionwith abonafidemargin account orotherlendingarrangement.
g. Legends.The Buyer understandsthat theNoteand, untilsuchtimeastheConversionShares have beenregisteredunderthe1933ActmaybesoldpursuanttoRule144orRegulationSwithoutanyrestrictionastothenumberofsecuritiesasofaparticulardatethatcanthenbeimmediately sold,theConversionSharesmay bear arestrictivelegendin substantiallythe followingform(andastop-transfer order maybeplaced againsttransfer of thecertificatesforsuchSecurities):
“NEITHERTHEISSUANCE ANDSALEOFTHESECURITIES REPRESENTEDBY THISCERTIFICATE NORTHESECURITIES INTO WHICHTHESESECURITIESAREEXERCISABLE HAVEBEENREGISTEREDUNDERTHESECURITIESACTOF1933,ASAMENDED,ORAPPLICABLESTATE SECURITIESLAWS.THESECURITIESMAYNOTBEOFFEREDFORSALE,SOLD,TRANSFERREDORASSIGNED(I)IN THEABSENCEOF(A)AN EFFECTIVEREGISTRATIONSTATEMENTFOR THESECURITIESUNDER THESECURITIESACTOF 1933,ASAMENDED, OR(B)AN OPINIONOFCOUNSEL(WHICHCOUNSEL SHALLBESELECTEDBYTHEHOLDER),INAGENERALLYACCEPTABLEFORM, THATREGISTRATION ISNOTREQUIREDUNDERSAIDACTOR(II)UNLESSSOLDPURSUANTTORULE144 ORRULE 144AUNDERSAIDACT.NOTWITHSTANDINGTHEFOREGOING,THESECURITIESMAYBEPLEDGEDINCONNECTION WITH ABONAFIDEMARGINACCOUNTOROTHERLOAN ORFINANCINGARRANGEMENTSECUREDBYTHE SECURITIES.”
The legendset forthabove shallberemovedandtheCompanyshallissueacertificate withoutsuchlegendtotheholderofanySecurityuponwhichitisstamped,if,unless otherwiserequiredbyapplicable statesecuritieslaws,(a)suchSecurity isregisteredforsale underaneffectiveregistration statementfiled under the 1933Act orotherwise maybe soldpursuantto Rule 144orRegulationSwithoutanyrestrictionastothe numberof securitiesasofaparticulardatethatcan thenbeimmediatelysold,or(b)suchholderprovidestheCompanywithanopinion ofcounsel, inform,substanceandscopecustomary for opinions ofcounsel incomparable transactions,totheeffectthatapublicsaleortransferofsuchSecurity maybemade withoutregistrationunderthe1933Act, whichopinionshallbeaccepted by theCompany sothatthesale ortransferiseffected.TheBuyer agrees to sellallSecurities,including thoserepresentedbyacertificate(s)fromwhich thelegendhasbeenremoved,incompliancewithapplicableprospectus deliveryrequirements,ifany.Inthe eventthat the Companydoesnotaccept the opinionofcounsel provided by theBuyerwith respecttothetransfer ofSecuritiespursuanttoanexemptionfromregistration,such as Rule 144 orRegulation S,attheDeadline, itwillbeconsideredanEventof Default pursuant toSection 3.2 ofthe Note.
h. Authorization;Enforcement. ThisAgreementhasbeendulyandvalidlyauthorized.ThisAgreement hasbeendulyexecutedand deliveredonbehalfoftheBuyer, andthisAgreement constitutesavalid andbindingagreementoftheBuyer enforceableinaccordance with itsterms.
i. Residency.TheBuyerisaresidentofthejurisdictionsetforthimmediately belowtheBuyer’snameon the signature pageshereto.
3. Representationsand WarrantiesoftheCompany. The Companyrepresentsand warrantsto the Buyer that:
a. Organizationand Qualification. TheCompanyandeachofitsSubsidiaries(as definedbelow),ifany,isacorporationdulyorganized,validlyexistingandingoodstandingunderthelawsofthejurisdictioninwhichitisincorporated, withfullpowerand authority(corporateand other)toown, lease,useandoperateitspropertiesandtocarryonitsbusinessasand where nowowned,leased,used, operatedandconducted.Schedule 3(a)setsforth a list ofallof theSubsidiaries of the Companyandthe jurisdiction inwhicheach isincorporated.TheCompanyandeachofitsSubsidiariesisdulyqualifiedasaforeign corporation to do businessand is in good standing in everyjurisdictioninwhich itsownership or use ofproperty orthenatureofthebusinessconductedby itmakes suchqualificationnecessaryexceptwhere thefailuretobe soqualifiedor ingoodstandingwouldnothaveaMaterialAdverseEffect.“MaterialAdverse Effect”meansanymaterialadverseeffectonthebusiness,operations, assets, financialcondition orprospectsof the Company or itsSubsidiaries, ifany, takenas awhole,oron the transactionscontemplated hereby orby theagreements orinstruments to beenteredinto inconnectionherewith.“Subsidiaries”meansanycorporation orotherorganization,whetherincorporatedorunincorporated,inwhichtheCompanyowns,directlyorindirectly,anyequity orother ownershipinterest.
b. Authorization;Enforcement. (i)TheCompanyhas allrequisitecorporatepowerandauthoritytoenterintoandperformthisAgreement,theNoteandtoconsummatethetransactionscontemplated herebyandtherebyandtoissuetheSecurities,in accordancewith the termshereofand thereof,(ii) theexecution anddelivery of thisAgreement, theNoteby the Company and theconsummationby it of thetransactionscontemplatedherebyand thereby(includingwithoutlimitation, theissuanceof the Note and theissuanceandreservationforissuanceof theConversionSharesissuableuponconversion orexercisethereof) havebeendulyauthorizedbytheCompany’sBoard ofDirectorsandnofurtherconsentorauthorization of theCompany, itsBoard ofDirectors,or itsshareholders isrequired,(iii) thisAgreementhasbeen dulyexecutedand deliveredby the Companybyitsauthorizedrepresentative,andsuchauthorizedrepresentative is the trueandofficial representativewith authority tosign thisAgreementandtheother documentsexecuted inconnectionherewithandbindtheCompanyaccordingly,and (iv)thisAgreementconstitutes,anduponexecutionand deliverybythe Companyof theNote,each of suchinstruments willconstitute, alegal,valid andbindingobligationoftheCompanyenforceableagainsttheCompanyinaccordancewithitsterms.
c. Capitalization.Asofthe datehereof,theauthorizedcapital stockoftheCompanyconsistsof:(i)440,000,000sharesofCommonStock,$0.001parvalue pershare,ofwhich136,111,1202sharesareissued andoutstanding;and(ii)10,000,000sharesofPreferredStock,$0.001parvalueper share,ofwhich1,173,041shares areissuedandoutstanding;nosharesarereservedforissuancepursuanttotheCompany’sstockoptionplans, nosharesare reservedfor issuance pursuant tosecurities(otherthan theNoteandapriorconvertible promissory note infavorof theBuyerdatedNovember25, 2103 in theamount of $42,500.00for which 6,500,000shares ofCommonStock arepresentlyreserved) exercisablefor, orconvertibleinto orexchangeableforsharesof CommonStockand 17,000,000shares arereservedforissuance uponconversion of the Note.Allofsuchoutstandingsharesofcapitalstock are, or uponissuancewillbe,duly authorized, validlyissued, fully paidandnon-assessable.Nosharesofcapitalstockof the Companyaresubject to preemptiverights or anyothersimilar rights of theshareholders of the Company oranyliens orencumbrancesimposed through theactions orfailure toact of theCompany.Asof theeffective date of thisAgreement, thereare nooutstanding options,warrants, scrip,rights tosubscribe for, puts,calls,rights offirstrefusal,agreements, understandings,claims orothercommitments or rights ofanycharacter whatsoeverrelating to,orsecuritiesorrightsconvertible into or exchangeableforanysharesofcapitalstockof the Company oranyof itsSubsidiaries,orarrangementsbywhichthe Company orany of itsSubsidiariesis ormay become bound to issueadditional sharesofcapitalstockof theCompanyorany ofitsSubsidiaries, (ii) therearenoagreementsor arrangementsunder which the Company orany ofitsSubsidiariesisobligatedtoregisterthe saleofany ofitsortheir securities under the 1933Actand(iii)there are noanti-dilutionorpriceadjustmentprovisions contained inanysecurityissuedby the Company(or inany agreementprovidingrights to security holders)thatwill betriggeredby the issuanceof theNote or theConversionShares.TheCompany hasfurnished to theBuyertrueandcorrectcopiesof theCompany’sCertificateofIncorporationas ineffecton thedatehereof(“CertificateofIncorporation”), theCompany’s By-laws,asineffectonthedatehereof(the “By-laws”),andthetermsofallsecuritiesconvertibleinto orexercisablefor CommonStock of the Companyandthematerialrights of theholders thereof inrespect thereto.The Company shallprovide theBuyerwithawritten update of thisrepresentation signed bytheCompany’sChiefExecutive onbehalf of the Companyasof the ClosingDate.
d. IssuanceofShares. TheConversionSharesaredulyauthorizedandreserved forissuanceand,uponconversionoftheNoteinaccordancewithitsrespectiveterms, willbevalidlyissued,fullypaid andnon-assessable,andfree fromalltaxes,liens,claims andencumbranceswithrespectto the issuethereofandshallnot besubject topreemptiverights orothersimilar rightsofshareholdersof the Companyandwillnotimposepersonalliability upon the holder thereof.
e. AcknowledgmentofDilution.TheCompanyunderstandsand acknowledgesthepotentiallydilutiveeffecttotheCommonStockupontheissuanceoftheConversion SharesuponconversionoftheNote. TheCompanyfurtheracknowledgesthatitsobligation to issueConversionShares uponconversion oftheNoteinaccordance with thisAgreement,theNoteisabsoluteandunconditionalregardless ofthe dilutiveeffectthatsuch issuancemay haveon theownershipinterestsofother shareholders ofthe Company.
f. NoConflicts. Theexecution, deliveryand performanceof thisAgreement,the NotebytheCompanyandtheconsummationbytheCompanyofthetransactionscontemplatedherebyandthereby(including,withoutlimitation,theissuanceandreservationfor issuance of the ConversionShares)willnot(i)conflict withorresultinaviolationofanyprovisionof theCertificateofIncorporationorBy-laws,or(ii) violate orconflictwith,orresult inabreachofany provisionof,orconstitute a default(oraneventwhichwithnoticeor lapse of time or bothcouldbecome adefault)under,orgive toothersanyrightsoftermination,amendment,accelerationorcancellationof,anyagreement,indenture, patent,patentlicense orinstrumenttowhichtheCompany oranyofitsSubsidiariesisaparty, or(iii)resultinaviolation ofanylaw, rule,regulation,order, judgmentor decree (includingfederal andstatesecuritieslawsandregulationsand regulationsofanyself-regulatoryorganizationstowhichthe Companyor its securitiesare subject)applicable to the Companyoranyof itsSubsidiariesorbywhichanyproperty orasset of the Companyor anyof itsSubsidiaries is bound oraffected (exceptfor suchconflicts,defaults, terminations,amendments,accelerations, cancellationsandviolationsaswould not, individuallyor in theaggregate, have aMaterial AdverseEffect).NeithertheCompanynoranyofitsSubsidiariesis inviolationofitsCertificateofIncorporation,By-laws or otherorganizationaldocuments andneither the Companynor anyof itsSubsidiaries isindefault(andnoeventhasoccurredwhich withnoticeorlapseoftime orbothcouldputthe Company orany of itsSubsidiariesindefault)under,and neither the Company norany of itsSubsidiaries hastakenanyaction orfailed to take anyaction thatwouldgivetoothersanyrights oftermination,amendment, acceleration orcancellationof,anyagreement,indentureorinstrumenttowhichthe Companyoranyof itsSubsidiariesisa partyorbywhichanyproperty orassets of the Company oranyof itsSubsidiaries is bound or affected,except for possibledefaultsaswouldnot, individually or in theaggregate, have aMaterial Adverse Effect.Thebusinesses of the Companyand itsSubsidiaries,ifany, are not beingconducted, andshall not beconductedsolongastheBuyer ownsany oftheSecurities,inviolationofanylaw,ordinanceorregulation of anygovernmentalentity.Exceptasspecifically contemplatedby thisAgreementandas requiredunderthe1933Actandanyapplicable statesecuritieslaws,theCompany isnotrequiredtoobtainanyconsent,authorizationororderof,ormakeanyfilingorregistration with, anycourt,governmentalagency,regulatoryagency,selfregulatory organizationorstockmarketor anythird party inorderforit toexecute,deliver orperformany of itsobligationsunder thisAgreement,the Note inaccordancewiththe termshereof orthereofor toissueandsellthe Note inaccordancewith thetermshereofandto issue theConversionShares uponconversion of theNote.Allconsents, authorizations,orders,filingsand registrations which the Company isrequiredtoobtainpursuanttotheprecedingsentence have beenobtained oreffectedon orpriortothedatehereof. The Companyisnotinviolationof the listingrequirementsof theOver-the-CounterBulletin Board(the“OTCBB”)and does not reasonablyanticipatethatthe CommonStockwill bedelistedbytheOTCBBin theforeseeablefuture. The Companyand itsSubsidiariesare unaware ofanyfacts orcircumstanceswhich mightgiverisetoanyof theforegoing.
g. SECDocuments; FinancialStatements. TheCompany hastimelyfiled allreports,schedules,forms, statementsandotherdocuments requiredtobefiledbyitwiththeSECpursuanttothereportingrequirementsoftheSecuritiesExchangeActof1934,as amended(the “1934Act”)(all of the foregoingfiledprior to thedatehereofand allexhibitsincludedthereinandfinancialstatements andschedulesthereto and documents(otherthan exhibits tosuchdocuments)incorporatedbyreferencetherein, beinghereinafter referred tohereinas the“SEC Documents”).Uponwrittenrequest the Company willdeliver to the Buyertrueand completecopiesoftheSECDocuments,except forsuchexhibitsand incorporateddocuments.Asoftheirrespectivedates,theSECDocuments complied inallmaterialrespects with therequirements of the 1934Act and the rulesandregulations of theSECpromulgatedthereunder applicableto theSECDocuments,and none of theSECDocuments, at the time theywerefiled with theSEC,containedanyuntruestatement of amaterialfact oromitted tostate amaterial factrequiredtobestatedthereinornecessary inordertomake thestatements therein,inlight of thecircumstances underwhich theywere made, notmisleading.Noneof thestatementsmade inanysuchSECDocumentsis, orhas been,required to beamended orupdated underapplicable law(exceptforsuchstatements ashavebeenamendedorupdatedinsubsequent filingsprior the datehereof). Asoftheirrespective dates,thefinancialstatementsof the Company included intheSECDocumentscompliedastoform inallmaterialrespectswith applicableaccountingrequirementsandthepublished rulesandregulationsof theSEC withrespectthereto. Suchfinancialstatementshavebeenpreparedinaccordancewith UnitedStates generallyacceptedaccountingprinciples, consistentlyapplied, duringtheperiodsinvolvedandfairlypresentinallmaterial respectstheconsolidatedfinancialpositionof the Companyanditsconsolidated Subsidiariesas of thedatesthereofand theconsolidated results oftheiroperationsand cashflowsfortheperiodsthenended (subject, in thecaseofunauditedstatements, tonormalyear-end auditadjustments).Exceptas setforth in thefinancialstatementsof the CompanyincludedintheSECDocuments,theCompanyhasnoliabilities,contingentorotherwise,otherthan(i)liabilities incurredintheordinarycourse ofbusinesssubsequenttoAugust 31,2013,and obligationsunder contractsandcommitments incurredintheordinary course ofbusinessand notrequiredundergenerally acceptedaccountingprinciplestobereflectedinsuchfinancialstatements,which, individuallyor in theaggregate,are notmaterial to thefinancial condition oroperatingresults of theCompany. The Companyissubjectto the reportingrequirements ofthe 1934Act.
h. AbsenceofCertain Changes. SinceAugust31,2013,therehasbeennomaterialadversechangeandnomaterialadverse developmentintheassets,liabilities, business, properties,operations,financialcondition, resultsofoperations, prospectsor1934ActreportingstatusoftheCompany or any ofitsSubsidiaries.
i. AbsenceofLitigation. Thereisnoaction,suit,claim,proceeding,inquiry orinvestigationbeforeorbyany court,publicboard,governmentagency, self-regulatoryorganizationorbodypendingor,totheknowledgeoftheCompanyorany ofitsSubsidiaries,threatenedagainst or affecting the Company orany of itsSubsidiaries,ortheirofficers ordirectorsintheircapacity as such,that could have aMaterialAdverseEffect. Schedule 3(i)contains acompletelistand summarydescriptionofanypendingor, to theknowledgeof theCompany,threatened proceedingagainst oraffecting the Companyor anyof itsSubsidiaries,without regard towhether itwouldhaveaMaterialAdverseEffect.The Companyand itsSubsidiariesare unaware ofanyfactsorcircumstanceswhichmight giverise toanyoftheforegoing.
j. Patents,Copyrights,etc.TheCompanyandeachofitsSubsidiaries ownsorpossessestherequisitelicensesorrightstouseall patents,patentapplications,patent rights,inventions,know-how,trade secrets,trademarks,trademarkapplications, servicemarks,servicenames,tradenames andcopyrights(“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 Subsidiarywithrespectto anyIntellectualPropertynecessaryto enable it toconduct itsbusinessas now operated(and, as presentlycontemplated to beoperatedin thefuture); to thebest of theCompany’sknowledge, theCompany’sor itsSubsidiaries’currentandintendedproducts, servicesandprocessesdonotinfringeonanyIntellectualProperty orotherrightsheld byany person;and the Companyisunaware ofanyfactsorcircumstanceswhich mightgiverise to any of the foregoing.The Companyandeachof itsSubsidiarieshavetakenreasonable securitymeasures toprotectthe secrecy, confidentialityand valueof theirIntellectual Property.
k. NoMateriallyAdverse Contracts,Etc. NeithertheCompanynoranyofitsSubsidiariesissubjecttoanycharter,corporateorotherlegal restriction,oranyjudgment, decree,order,ruleorregulationwhichinthejudgment of theCompany’s officershas or isexpectedinthefuture tohaveaMaterialAdverseEffect. Neither the Company norany ofitsSubsidiariesisa party toanycontractoragreement whichinthe judgment of theCompany’sofficershas oris expected tohaveaMaterialAdverse Effect.
l. TaxStatus. The CompanyandeachofitsSubsidiarieshasmadeorfiledall federal,stateandforeignincomeand allothertaxreturns, reportsanddeclarationsrequiredbyanyjurisdiction towhich it issubject(unlessandonlyto theextentthattheCompanyand eachofitsSubsidiarieshas setasideonitsbooksprovisions reasonablyadequateforthepaymentofallunpaidand unreportedtaxes)andhaspaid alltaxesand othergovernmentalassessments andchargesthat arematerial in amount,shown ordetermined to be due onsuchreturns, reportsanddeclarations,exceptthose beingcontested ingood faithandhasset aside on its booksprovisionsreasonably adequatefor thepayment ofalltaxesforperiodssubsequentto the periods towhichsuchreturns, reports ordeclarationsapply. Thereare nounpaid taxes inanymaterial amountclaimed to be duebythe taxing authorityofanyjurisdiction,and theofficers of the Company know ofnobasisforanysuch claim.TheCompanyhas notexecuted awaiver withrespect to thestatute oflimitationsrelatingtotheassessmentorcollectionofanyforeign,federal, state orlocal tax.None of theCompany’staxreturnsis presentlybeingauditedbyany taxingauthority.
m. CertainTransactions. Exceptforarm’slength transactionspursuanttowhichtheCompanyoranyofitsSubsidiariesmakespaymentsintheordinarycourseofbusinessupontermsnolessfavorablethantheCompanyoranyofitsSubsidiariescouldobtain fromthirdpartiesand otherthan the grant ofstock optionsdisclosed onSchedule3(c),none oftheofficers,directors,oremployeesofthe Company ispresentlya party toanytransactionwith the CompanyoranyofitsSubsidiaries(other thanforservicesas employees,officersanddirectors),includinganycontract, agreement orotherarrangementprovidingfor thefurnishingofservices to orby,providingforrental ofreal orpersonalproperty to orfrom, orotherwiserequiringpaymentsto orfrom anyofficer, directororsuch employeeor, to theknowledgeof theCompany,anycorporation, partnership,trustor other entity inwhichanyofficer, director,oranysuchemployee has a substantialinterestor isanofficer,director,trustee or partner.
n. Disclosure.AllinformationrelatingtoorconcerningtheCompanyoranyofitsSubsidiariesset forthinthisAgreementand providedtothe BuyerpursuanttoSection2(d)hereofandotherwiseinconnectionwiththetransactionscontemplatedherebyistrue andcorrect inallmaterial respectsand the Companyhas notomitted tostate anymaterial fact necessary inordertomakethestatementsmadehereinortherein, inlightof thecircumstancesunderwhichtheyweremade, notmisleading. Noevent orcircumstancehas occurred or existswithrespect to the Companyor any of itsSubsidiaries or its ortheirbusiness,properties,prospects, operationsorfinancial conditions,which,under applicablelaw,ruleorregulation,requirespublicdisclosureor announcementby the Company butwhichhasnot been so publiclyannouncedordisclosed(assuming for thispurpose that theCompany’sreportsfiled underthe 1934Actarebeing incorporatedintoan effectiveregistrationstatement filedby the Company underthe1933Act).
o. AcknowledgmentRegardingBuyer’ PurchaseofSecurities. TheCompanyacknowledges andagreesthattheBuyerisacting solelyinthecapacityofarm’slength purchaserswithrespecttothisAgreementandthetransactionscontemplated hereby.TheCompanyfurtheracknowledges that theBuyer is notactingas afinancialadvisoror fiduciaryof the Company(orinanysimilar capacity)with respect to thisAgreementand thetransactions contemplated hereby and anystatement madebytheBuyer orany of itsrespective representatives or agents inconnectionwiththisAgreementand thetransactions contemplated herebyis notadviceor arecommendationandismerelyincidentalto theBuyer’purchase of theSecurities.The Companyfurtherrepresents to theBuyerthat theCompany’sdecision toenterintothisAgreementhasbeenbasedsolely ontheindependent evaluationofthe Companyanditsrepresentatives.
p. NoIntegratedOffering. NeithertheCompany,nor anyofitsaffiliates,noranypersonactingonitsortheirbehalf,hasdirectlyorindirectlymadeanyoffersor sales inanysecurityor solicitedanyofferstobuyanysecurityunder circumstancesthatwouldrequireregistration underthe1933ActoftheissuanceoftheSecuritiesto theBuyer.Theissuanceof theSecurities to theBuyerwill not beintegrated with anyother issuance of theCompany’ssecurities(past,currentorfuture)forpurposesofanyshareholderapproval provisionsapplicableto theCompanyoritssecurities.
q. NoBrokers.TheCompanyhastakennoactionwhichwould giverisetoanyclaimbyanyperson forbrokeragecommissions,transactionfeesorsimilarpayments relatingto thisAgreement or the transactionscontemplatedhereby.
r. Permits;Compliance.TheCompanyand each ofitsSubsidiaries isinpossessionofallfranchises,grants,authorizations,licenses,permits,easements,variances,exemptions,consents,certificates, approvalsandordersnecessarytoown,leaseand operateitsproperties andtocarry onitsbusinessasit isnowbeingconducted(collectively,the “CompanyPermits”),andthere is noaction pendingor, to theknowledgeof theCompany,threatened regardingsuspensionorcancellationof any of the CompanyPermits.Neitherthe Companynor any ofitsSubsidiaries is inconflictwith,orindefaultorviolationof,any ofthe CompanyPermits,except for anysuchconflicts, defaults orviolationswhich,individually or intheaggregate, wouldnotreasonablybeexpectedtohaveaMaterialAdverse Effect.SinceAugust31, 2013,neither the Company nor any of itsSubsidiaries hasreceived anynotificationwithrespect to possibleconflicts, defaults orviolationsofapplicable laws,exceptfor notices relating to possible conflicts, defaults or violations,whichconflicts, defaults orviolationswould not have a MaterialAdverseEffect.
(i) Thereare,totheCompany’sknowledge, withrespecttotheCompanyoranyofitsSubsidiariesoranypredecessoroftheCompany,nopastorpresentviolationsofEnvironmentalLaws(asdefinedbelow),releasesofanymaterialintotheenvironment, actions,activities,circumstances, conditions,events,incidents, orcontractualobligationswhichmaygive 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) Otherthanthosethat areorwerestored,usedordisposedofincompliancewithapplicable law,noHazardous Materialsarecontainedonoraboutanyrealpropertycurrentlyowned,leasedorusedbytheCompanyor anyofitsSubsidiaries,andnoHazardous Materialswerereleasedonorabout anyrealproperty previously owned,leasedorusedbytheCompany oranyofitsSubsidiariesduring theperiodtheproperty wasowned, leased or usedby theCompany oranyofitsSubsidiaries,exceptin thenormal courseofthe Company’s oranyofitsSubsidiaries’ business.
(iii) Thereare noundergroundstorage tanksonorunderanyrealpropertyowned,leasedorusedbytheCompanyoranyofitsSubsidiaries thatarenotincompliance withapplicable law.
t. TitletoProperty.TheCompanyanditsSubsidiarieshavegoodandmarketabletitleinfeesimpletoall realpropertyand goodandmarketabletitletoallpersonal property owned bythemwhich ismaterial to thebusinessof the Companyand itsSubsidiaries,ineach casefreeand clear ofall liens,encumbrancesanddefectsexcept suchas aredescribed in Schedule 3(t) orsuchaswould nothave aMaterial AdverseEffect. Anyreal propertyandfacilities heldunderlease by the Companyand itsSubsidiaries are held bythemundervalid,subsisting andenforceableleases withsuchexceptionsas would nothave aMaterialAdverseEffect.
u. Insurance.The CompanyandeachofitsSubsidiariesareinsuredbyinsurersofrecognizedfinancialresponsibilityagainst suchlossesandrisksandinsuchamounts asmanagementoftheCompanybelievestobeprudentandcustomaryinthe businesses inwhich the Companyand itsSubsidiariesare engaged.Neither the Company noranysuch Subsidiaryhasany reason tobelievethat itwillnot beable torenew itsexisting insurancecoverageas andwhensuch coverageexpires ortoobtain similar coveragefromsimilarinsurersasmaybe necessarytocontinue itsbusinessatacostthatwouldnot have aMaterialAdverseEffect. Uponwrittenrequest the Companywillprovideto theBuyertrueandcorrect copies ofallpoliciesrelatingtodirectors’andofficers’liabilitycoverage,errors andomissionscoverage,and commercialgeneral liabilitycoverage.
v. InternalAccountingControls.TheCompanyandeachofitsSubsidiariesmaintainasystemofinternalaccountingcontrolssufficient,inthejudgmentoftheCompany’s boardofdirectors,toprovidereasonableassurance that(i)transactionsare executedinaccordance withmanagement’sgeneralorspecificauthorizations, (ii)transactionsarerecordedasnecessary topermitpreparationoffinancialstatementsinconformitywithgenerallyacceptedaccountingprinciplesand tomaintainassetaccountability,(iii)access toassets ispermittedonly inaccordancewithmanagement’sgeneral orspecificauthorizationand(iv) therecordedaccountability forassets iscompared with theexistingassets atreasonableintervals andappropriateactionis takenwithrespect toanydifferences.
w. ForeignCorrupt Practices. NeithertheCompany,noranyofitsSubsidiaries,noranydirector,officer, agent,employeeorotherpersonactingonbehalfoftheCompanyor anySubsidiaryhas, in the course of hisactionsfor, or on behalfof,theCompany,usedanycorporatefundsforanyunlawfulcontribution,gift,entertainmentorotherunlawfulexpenses relating to politicalactivity; made anydirectorindirectunlawfulpaymenttoanyforeign ordomestic governmentofficial oremployeefromcorporate funds;violatedor is inviolationof anyprovisionof theU.S.ForeignCorruptPracticesActof 1977,asamended,ormadeanybribe,rebate,payoff, influencepayment,kickbackorotherunlawfulpaymenttoanyforeignor domesticgovernment official oremployee.
x. Solvency. TheCompany (aftergivingeffecttothetransactions contemplatedbythisAgreement)issolvent(i.e.,itsassetshaveafairmarketvalueinexcessoftheamountrequired topayits probableliabilities on its existingdebtsas theybecomeabsoluteandmatured) and currently the Company has noinformationthat wouldlead it toreasonablyconclude thatthe Companywouldnot,aftergiving effecttothetransaction contemplatedbythisAgreement, have the ability to, nor does itintendtotakeanyactionthat wouldimpairits ability to, payitsdebtsfrom time to timeincurred inconnection therewithassuchdebts mature.The Company did notreceiveaqualified opinionfrom itsauditorswithrespectto its mostrecentfiscal yearendand,after givingeffecttothetransactions contemplatedby thisAgreement,doesnotanticipate or know ofany basis uponwhich itsauditorsmightissue aqualified opinion inrespectofitscurrent fiscalyear.
y. NoInvestmentCompany. TheCompanyisnot,andupontheissuance andsaleoftheSecurities ascontemplatedby thisAgreement willnotbean“investment company”requiredtoberegisteredundertheInvestmentCompanyActof1940(an “InvestmentCompany”).TheCompany is notcontrolledbyanInvestmentCompany.
z. BreachofRepresentations andWarrantiesbytheCompany.IftheCompanybreachesanyoftherepresentationsorwarrantiessetforthinthisSection3,andinaddition toany otherremedies available to theBuyer pursuant to thisAgreement,itwill beconsideredan Event of defaultunderSection 3.4 ofthe Note.
a. BestEfforts.Theparties shallusetheirbesteffortstosatisfytimelyeach oftheconditionsdescribed inSection6and 7 ofthisAgreement.
b. FormD; BlueSkyLaws. TheCompanyagreestofileaFormDwithrespecttotheSecurities asrequiredunderRegulationDandtoprovideacopythereoftotheBuyerpromptlyaftersuchfiling.TheCompanyshall,onorbeforethe ClosingDate,take suchaction as theCompany shall reasonably determineis necessary to qualifytheSecurities forsale to theBuyerattheapplicableclosing pursuant tothisAgreement underapplicable securities or“bluesky”laws of thestates of theUnitedStates(or toobtain anexemptionfromsuch qualification),andshall provideevidence ofanysuch actionsotaken totheBuyer on or prior to theClosingDate.
c. UseofProceeds.TheCompanyshallusetheproceeds forgeneralworkingcapital purposes.
d. RightofFirst Refusal. Unlessitshall have firstdeliveredtotheBuyer, atleastseventytwo(72) hourspriortotheclosingofsuch FutureOffering(asdefined herein),writtennoticedescribingtheproposedFuture Offering,includingthetermsandconditionsthereof andproposeddefinitivedocumentationto be entered into inconnection therewith,and providing theBuyeran optionduring the seventytwo (72) hourperiod following deliveryofsuch notice topurchase the securitiesbeingofferedin theFutureOffering on thesametermsas contemplatedbysuchFutureOffering(thelimitationsreferredto in thissentenceand theprecedingsentence are collectivelyreferred toasthe“Right ofFirstRefusal”)(andsubject to theexceptionsdescribedbelow), the Companywillnotconductanyequityfinancing(includingdebt withan equitycomponent)(“Future Offerings”) during theperiodbeginningon theClosingDate andendingtwelve(12)monthsfollowingtheClosingDate.Intheeventthetermsand conditions of aproposedFutureOffering areamended inanyrespectafter delivery of thenoticetotheBuyerconcerningtheproposedFutureOffering,theCompanyshalldeliveranewnoticeto theBuyerdescribingtheamendedtermsand conditions of theproposedFutureOfferingandtheBuyerthereaftershall haveanoptionduring the seventytwo(72) hourperiodfollowingdelivery of suchnewnotice to purchase itsprorata share of thesecuritiesbeingoffered on thesame termsascontemplated by suchproposed FutureOffering,asamended.Theforegoingsentenceshallapply tosuccessiveamendments to theterms andconditionsof anyproposedFutureOffering. TheRight ofFirstRefusal shall not apply toany transaction involving(i) issuances ofsecurities in afirmcommitmentunderwritten publicoffering (excludingacontinuous offeringpursuant toRule 415underthe 1933Act) or(ii)issuancesofsecuritiesasconsiderationfor amerger, consolidation orpurchase of assets, or inconnectionwith anystrategic partnership or jointventure (the primarypurposeofwhich is not toraise equitycapital), or inconnectionwiththedisposition oracquisition of abusiness,product orlicenseby the Company.TheRightofFirstRefusalalso shall not apply to the issuance ofsecuritiesuponexercise orconversionof theCompany’soptions,warrantsorother convertible securitiesoutstandingasof thedate hereof or tothegrant ofadditionaloptionsorwarrants,or theissuance ofadditional securities,underanyCompanystock optionorrestricted stockplanapproved by the shareholders ofthe Company.
e. Expenses.AttheClosing,theCompanyshall reimburseBuyerforexpenses incurredbytheminconnection withthenegotiation,preparation, execution,deliveryandperformanceofthisAgreement andtheother agreementstobeexecutedinconnectionherewith(“Documents”), including,withoutlimitation,reasonableattorneys’and consultants’feesandexpenses, transfer agentfees,feesfor stockquotationservices,fees relating to anyamendmentsormodificationsof theDocuments or anyconsentsorwaiversofprovisionsintheDocuments,fees for thepreparation ofopinions ofcounsel,escrowfees, andcosts ofrestructuring the transactionscontemplatedby theDocuments.Whenpossible, the Company mustpaythesefeesdirectly,otherwisethe Company mustmakeimmediate paymentforreimbursementto theBuyer forallfees andexpenses immediately uponwritten noticeby theBuyer or the submission ofaninvoice by theBuyer. TheCompany’sobligationwithrespect to thistransactionis toreimburse Buyer’expenses shall be$2,500.
f. FinancialInformation. Uponwritten requestthe CompanyagreestosendormakeavailablethefollowingreportstotheBuyeruntiltheBuyer transfers,assigns,orsellsallof theSecurities: (i) withinten(10)daysafterthefilingwiththeSEC,a copy of itsAnnual ReportonForm 10-K itsQuarterlyReportsonForm10-QandanyCurrentReportsonForm 8-K;(ii) withinone(1)dayafterrelease, copiesofall pressreleasesissuedby theCompanyor anyof itsSubsidiaries; and(iii)contemporaneouslywiththemakingavailable orgivingto theshareholders of theCompany,copies of any notices orotherinformationthe Companymakesavailableorgives tosuchshareholders.
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h. Listing.The CompanyshallpromptlysecurethelistingoftheConversion Shares uponeach nationalsecurities exchangeor automated quotationsystem, ifany,uponwhichsharesofCommonStockarethen listed(subjecttoofficialnoticeofissuance)and,solongastheBuyerownsany oftheSecurities,shallmaintain,solongasany othersharesof CommonStockshallbesolisted,suchlistingofallConversionShares from time to timeissuable uponconversionof theNote. The Companywill obtainand, so longas theBuyer ownsanyof theSecurities,maintain the listingand tradingofits CommonStock on theOTCBB or anyequivalent replacementexchange, theNasdaqNationalMarket (“Nasdaq”), theNasdaqSmallCap Market(“NasdaqSmallCap”),theNewYork StockExchange(“NYSE”),ortheAmericanStockExchange (“AMEX”)andwill complyinallrespects with theCompany’sreporting, filingandotherobligations under thebylaws orrulesoftheFinancial IndustryRegulatory Authority(“FINRA”)andsuchexchanges,as applicable. The Companyshall promptly providetotheBuyercopiesofany noticesitreceivesfromtheOTCBBandany otherexchanges orquotation systems onwhich the CommonStock isthenlistedregardingthecontinuedeligibilityoftheCommonStockfor listing onsuchexchangesandquotationsystems.
i. CorporateExistence.SolongastheBuyerbeneficiallyownsanyNote,theCompanyshallmaintainitscorporateexistence andshallnotsellallorsubstantiallyallof theCompany’s assets,exceptin theevent of amerger or consolidation orsale ofall or substantiallyalloftheCompany’s assets,wherethesurvivingorsuccessorentity insuchtransaction (i)assumes theCompany’sobligationshereunderandunder theagreementsand instruments entered into inconnectionherewithand(ii) is a publiclytradedcorporation whose CommonStockislisted for trading on theOTCBB,Nasdaq,NasdaqSmallCap, NYSE orAMEX.
j. NoIntegration. TheCompanyshallnotmakeanyoffersorsalesofanysecurity(otherthantheSecurities)undercircumstancesthatwouldrequire registrationoftheSecuritiesbeing offeredorsoldhereunderunderthe1933ActorcausetheofferingoftheSecurities to beintegratedwithanyotheroffering ofsecurities bytheCompanyfor thepurpose ofanystockholder approvalprovisionapplicabletotheCompany orits securities.
k. Breachof Covenants.IftheCompanybreachesanyofthecovenantssetforthinthisSection4,andinadditiontoanyotherremediesavailabletotheBuyer pursuanttothisAgreement,itwillbeconsideredaneventofdefaultunderSection3.4oftheNote.
l. Failure to Complywith the 1934Act.SolongastheBuyerbeneficiallyownstheNote,theCompanyshallcomplywiththereportingrequirementsofthe1934Act;andthe Companyshallcontinuetobesubjecttothereportingrequirementsof the 1934Act.
m. TradingActivities. NeithertheBuyernoritsaffiliateshasan openshort position in the commonstock oftheCompanyand theBuyer agreethat itshall not,andthatitwillcauseitsaffiliatesnotto,engageinanyshortsalesoforhedgingtransactionswithrespectto the commonstock ofthe Company.
5. TransferAgentInstructions. TheCompanyshallissueirrevocableinstructionstoitstransferagenttoissuecertificates,registeredinthenameoftheBuyeroritsnominee, fortheConversion Sharesinsuch amountsasspecifiedfrom timetotimebytheBuyerto the Company uponconversionof theNote inaccordancewiththetermsthereof(the “IrrevocableTransferAgent Instructions”). IntheeventthattheBorrowerproposestoreplace itstransferagent,theBorrowershallprovide,prior to theeffective dateofsuchreplacement, a fullyexecutedIrrevocableTransferAgent Instructions in aformasinitiallydelivered pursuant to thePurchase Agreement(including but notlimitedto theprovision to irrevocablyreserve shares of CommonStock in theReserved Amount) signedby thesuccessortransfer agent toBorrowerand theBorrower.Priortoregistration of the ConversionShares under the 1933Act or thedate onwhich theConversionSharesmay be sold pursuant to Rule 144withoutanyrestrictionas to thenumberofSecuritiesas of aparticulardatethatcan then be immediatelysold,all suchcertificatesshallbeartherestrictivelegend specified inSection2(g) ofthisAgreement.The Companywarrants that:(i) noinstructionother than theIrrevocableTransferAgentInstructionsreferredtointhisSection 5,andstoptransferinstructionstogiveeffecttoSection2(f)hereof (in thecase of the ConversionShares, prior toregistration of the ConversionShares under the 1933Act or the date onwhichtheConversionShares maybesoldpursuant to Rule 144without anyrestrictionas to the number ofSecuritiesas of aparticular datethat canthen be immediatelysold),will begivenby the Company to itstransferagentandthattheSecurities shallotherwise be freelytransferable on the booksand records of the Companyasand to the extentprovided in thisAgreementand theNote;(ii)itwill notdirect itstransferagent not totransferordelay, impair,and/orhinderitstransfer agentintransferring (orissuing)(electronically or incertificatedform)anycertificateforConversion Shares to beissued to theBuyer uponconversion of orotherwise pursuant to theNoteasand whenrequiredby theNote and thisAgreement;and (iii) itwill notfail toremove (ordirects itstransferagent not to remove or impairs,delays, and/orhindersitstransferagentfrom removing)anyrestrictivelegend(ortowithdrawany stoptransferinstructionsinrespectthereof) on anycertificate forany ConversionSharesissuedto theBuyer uponconversion of orotherwisepursuant to theNote asandwhenrequiredby theNoteand thisAgreement.Nothing in thisSectionshallaffect in anyway theBuyer’s obligationsandagreementset forth inSection2(g) hereof to complywithallapplicable prospectus deliveryrequirements, ifany,uponre-sale of theSecurities. If theBuyer provides theCompany,atthecost of theBuyer,with (i)an opinion of counsel inform, substanceandscope customary for opinions incomparabletransactions, to theeffect that a publicsale ortransfer ofsuchSecurities maybemadewithout registration under the 1933Actandsuchsaleortransferiseffected or(ii) theBuyerprovidesreasonableassurances that theSecuritiescanbesoldpursuant to Rule144,the Companyshallpermitthetransfer,and,in the caseof the ConversionShares,promptlyinstruct itstransferagentto issue one ormore certificates,freefrom restrictivelegend, insuchnameand in such denominationsasspecified by theBuyer.The Companyacknowledgesthat abreach byit ofitsobligationshereunderwillcauseirreparableharm to theBuyer, byvitiating theintent andpurposeof thetransactions contemplatedhereby.Accordingly, the Companyacknowledgesthat the remedyatlaw for abreachof itsobligationsunder thisSection 5 maybeinadequateandagrees,in theevent of abreachorthreatenedbreach by the Company of theprovisions of thisSection,thattheBuyershallbeentitled, inaddition toall otheravailableremedies, toaninjunctionrestraininganybreachandrequiringimmediate transfer,without the necessity ofshowing economiclossandwithoutany bond orothersecuritybeingrequired.
6. ConditionstotheCompany’sObligationtoSell. TheobligationoftheCompanyhereundertoissueand selltheNotetotheBuyerattheClosingissubjecttothesatisfaction, atorbeforetheClosing Dateofeach ofthefollowingconditionsthereto,providedthat theseconditions arefor theCompany’s solebenefitandmay bewaived by the Companyat any timein its sole discretion
a. TheBuyer shallhave executedthisAgreementanddeliveredthe sameto the Company.
b. TheBuyershallhavedeliveredthePurchasePriceinaccordancewithSection1(b) above.
c. Therepresentations andwarrantiesoftheBuyershallbetrueandcorrectinallmaterialrespectsasofthedatewhenmadeand asoftheClosingDateasthough madeatthattime(exceptforrepresentations andwarrantiesthatspeakasof aspecificdate), and theBuyershallhave performed, satisfiedandcompliedinallmaterialrespects with thecovenants,agreementsandconditionsrequiredbythisAgreementtobeperformed, satisfiedorcompliedwithby theBuyerat orpriorto theClosingDate.
d. Nolitigation, statute,rule, regulation,executive order,decree, rulingorinjunction shallhavebeenenacted,entered,promulgatedorendorsed byorinanycourt
orgovernmentalauthorityofcompetent jurisdictionoranyself-regulatoryorganization havingauthorityoverthematterscontemplatedherebywhichprohibitstheconsummationofanyofthetransactionscontemplatedbythisAgreement.
7. ConditionstoTheBuyer’s ObligationtoPurchase. TheobligationoftheBuyerhereundertopurchasetheNoteattheClosing issubjecttothesatisfaction, atorbeforetheClosingDateofeachofthefollowingconditions, providedthattheseconditions arefortheBuyer’s sole benefitandmaybewaivedby the Buyeratanytimein its sole discretion:
a. TheCompanyshallhaveexecutedthisAgreementanddelivered
b. TheCompanyshall havedeliveredtotheBuyerthedulyexecuted Note (insuch denominationsas the Buyer shallrequest)inaccordancewithSection1(b) above.
c. TheIrrevocable TransferAgent Instructions, informand substancesatisfactoryto a majority-in-interestoftheBuyer, shallhavebeendeliveredtoandacknowledgedinwritingbythe Company’s TransferAgent.
d. Therepresentations andwarrantiesoftheCompanyshallbetrueandcorrectinallmaterialrespectsasofthedatewhen madeandasoftheClosingDate asthoughmadeatsuchtime(except forrepresentationsand warrantiesthatspeakasof aspecificdate) and the Company shallhaveperformed, satisfiedandcompliedinall materialrespectswith thecovenants, agreementsandconditionsrequiredby thisAgreement to beperformed, satisfied orcompliedwithby the Companyat orpriorto theClosingDate.TheBuyer shallhavereceivedacertificate orcertificates,executedby thechief executiveofficer of theCompany,datedasof theClosingDate,totheforegoing effectandastosuchother mattersasmaybereasonablyrequestedby theBuyerincluding, but notlimited tocertificateswith respect to theCompany’sCertificateofIncorporation,By-laws andBoardofDirectors’resolutionsrelating to thetransactions contemplatedhereby.
e. Nolitigation, statute,rule, regulation,executive order,decree, rulingorinjunction shallhavebeenenacted,entered,promulgatedorendorsed byorinanycourtorgovernmentalauthorityofcompetent jurisdictionoranyself-regulatoryorganization having authority over thematterscontemplatedhereby whichprohibits theconsummationof anyof thetransactionscontemplatedby thisAgreement.
f. Noevent shallhave occurredwhich couldreasonably beexpectedtohaveaMaterialAdverse EffectontheCompanyincludingbutnotlimitedtoachangeinthe1934Actreporting statusoftheCompanyorthefailureoftheCompanytobetimelyinits1934Act reportingobligations.
g. TheConversion Sharesshallhavebeenauthorizedfor quotationontheOTCBBandtradingintheCommonStockontheOTCBB shallnothavebeensuspendedbythe SEC orthe OTCBB.
h. TheBuyershallhave receivedanofficer’scertificate describedinSection 3(c)above,datedasoftheClosingDate.
| 8. | GoverningLaw;Miscellaneous. |
a. GoverningLaw.ThisAgreementshallbegovernedbyand construedinaccordance withthelawsoftheStateofNew Yorkwithoutregardtoprinciplesofconflictsoflaws. Any actionbroughtby eitherpartyagainst theotherconcerning thetransactionscontemplatedbythisAgreementshallbebroughtonly in thestate courtsof NewYork or in thefederalcourtslocated in the stateand county of Nassau.Thepartiesto thisAgreement hereby irrevocablywaiveany objectiontojurisdictionand venue ofanyactioninstituted hereunderandshallnotassertanydefensebasedonlack of jurisdiction orvenueorbased uponforum nonconveniens.The CompanyandBuyerwaivetrialbyjury.The prevailing partyshallbeentitled torecoverfromtheother party itsreasonableattorney'sfeesand costs.In theevent thatanyprovisionofthisAgreementoranyother agreement deliveredinconnection herewith isinvalid orunenforceableunder anyapplicablestatute orrule oflaw,then suchprovision shallbe deemedinoperative totheextentthatitmayconflict therewithandshallbedeemedmodified toconform withsuchstatuteorruleoflaw.Anysuchprovisionwhichmayproveinvalidorunenforceableunder any lawshallnotaffectthevalidityorenforceabilityof anyotherprovisionofanyagreement.Each party herebyirrevocablywaivespersonalserviceofprocessandconsentstoprocessbeingservedinany suit,actionorproceeding inconnectionwith thisAgreement oranyotherTransaction Documentbymailingacopythereofviaregistered orcertifiedmailor overnightdelivery(withevidence ofdelivery) tosuch partyattheaddressineffectfornoticesto it under thisAgreementand agreesthatsuchserviceshallconstitute goodandsufficientserviceofprocessand noticethereof.Nothingcontained hereinshall be deemed to limit in anywayany right toserve process inanyother manner permittedbylaw.
b. Counterparts.This Agreementmaybeexecutedinoneormorecounterparts, eachofwhichshallbedeemedan originalbutallofwhichshallconstituteoneandthesameagreementand shallbecomeeffectivewhen counterpartshavebeensignedbyeachpartyanddelivered to theother party.
c. Headings.TheheadingsofthisAgreement areforconvenienceofreferenceonlyandshallnotformpartof,oraffectthe interpretationof, thisAgreement.
d. Severability.IntheeventthatanyprovisionofthisAgreementisinvalidorunenforceableunderanyapplicablestatuteorruleoflaw,thensuchprovisionshallbedeemedinoperativetotheextentthatitmayconflicttherewithandshallbedeemedmodifiedtoconformwithsuch statute orrule oflaw.Anyprovisionhereof which may proveinvalid orunenforceable underanylawshallnotaffectthevalidity orenforceabilityofany otherprovisionhereof.
e. EntireAgreement; Amendments. This Agreementandtheinstrumentsreferenced hereincontaintheentireunderstandingoftheparties withrespecttothematterscovered hereinandthereinand,except asspecificallysetforthhereinortherein,neithertheCompanynortheBuyermakes anyrepresentation,warranty, covenant orundertakingwithrespecttosuchmatters.Noprovisionof thisAgreementmay bewaivedoramendedotherthan byan instrument in writingsigned by themajority ininterest ofthe Buyer.
f. Notices.All notices,demands,requests,consents,approvals, andother communicationsrequiredorpermittedhereundershallbeinwritingand, unlessotherwise specifiedherein,shallbe(i)personallyserved,(ii)depositedinthemail,registeredorcertified,returnreceiptrequested,postage prepaid,(iii) deliveredbyreputableaircourierservice with chargesprepaid,or(iv) transmittedbyhanddelivery, telegram, or facsimile,addressedassetforthbelowortosuchotheraddressas suchparty shallhave specifiedmostrecentlybywrittennotice.Anynotice or othercommunication required orpermitted to begiven hereundershallbedeemed effective (a) uponhand deliveryor delivery byfacsimile,withaccurate confirmationgeneratedbythe transmittingfacsimilemachine, at theaddress ornumberdesignatedbelow(ifdelivered on a businessday duringnormal businesshourswhere such noticeis to bereceived),orthefirstbusinessdayfollowingsuch delivery(if delivered otherthanonabusinessdayduringnormalbusinesshours wheresuch notice is to bereceived)or(b) on thesecondbusinessdayfollowing thedateofmailingbyexpress courierservice, fully prepaid,addressedtosuchaddress,or uponactualreceiptofsuchmailing, whichevershallfirst occur.Theaddresses forsuchcommunicationsshall be:
Ifto the Company, to:
CO-S IGNER,INC.
8275 S.Eastern Avenue– Suite 200-661LasVegas,NV89123
Attn: KURTISA.KRAMARENKO, ChiefExecutive Officer
facsimile: [enter faxnumber]
With acopybyfaxonlyto(which copyshall not constitute notice):
Kyleen CaneCane•Clark LLP
3273E.WarmSpringsRd.LasVegas,NV89120
Ifto the Buyer:
ASHER ENTERPRISES,INC.
1Linden Pl., Suite207GreatNeck, NY. 11021Attn:CurtKramer, President
facsimile: 516-498-9894
With acopybyfaxonlyto(which copyshall not constitute notice):
Naidich Wurman Birnbaum &MadayLLP
80CuttermillRoad,Suite410
Great Neck, NY11021
Attn: Bernard S.Feldman,Esq.
facsimile: 516-466-3555
Eachpartyshallprovide noticeto the otherpartyofanychangeinaddress.
g. Successorsand Assigns. ThisAgreement shallbe bindinguponand inuretothebenefitoftheparties andtheir successorsandassigns. NeithertheCompany northeBuyershall assignthisAgreementoranyrightsorobligationshereunderwithoutthepriorwritten consentof the other.Notwithstandingtheforegoing,subject to Section2(f), theBuyermayassignitsrightshereunder toanyperson thatpurchasesSecurities in aprivatetransactionfromtheBuyeror to anyof its“affiliates,”as thatterm isdefinedunder the 1934 Act,without the consentofthe Company.
h. ThirdPartyBeneficiaries. ThisAgreementisintendedforthebenefitoftheparties heretoandtheirrespective permittedsuccessorsandassigns, andisnotforthe benefitof, normay anyprovisionhereofbe enforcedby,anyotherperson.
i. Survival.The representationsand warrantiesof theCompanyandtheagreementsandcovenants setforthinthisAgreement shallsurvivetheclosinghereundernotwithstandinganyduediligenceinvestigationconducted byor onbehalf oftheBuyer. The Companyagrees to indemnifyand holdharmlesstheBuyerandall theirofficers,directors,employees and agents for loss ordamage arisingasaresult of orrelatedtoany breach orallegedbreach bythe Company ofanyof itsrepresentations, warrantiesand covenantssetforth in thisAgreementor any ofitscovenants andobligationsunderthisAgreement, includingadvancementof expensesas they are incurred.
j. Publicity.TheCompany, andtheBuyershallhavetherighttoreviewareasonableperiodoftimebeforeissuanceofanypressreleases,SEC,OTCBBorFINRA filings,oranyotherpublicstatementswith respecttothetransactionscontemplated hereby;provided,however,thatthe Company shall beentitled,withoutthepriorapproval of theBuyer,tomakeanypressrelease orSEC,OTCBB (orotherapplicable tradingmarket) orFINRAfilings withrespect tosuchtransactionsas isrequiredbyapplicable lawandregulations(althoughtheBuyershallbeconsultedbythe Companyinconnectionwithanysuchpressrelease prior to itsreleaseandshallbeprovidedwith a copythereof and begivenan opportunity tocommentthereon).
k. FurtherAssurances.Eachpartyshalldoandperform,orcausetobedoneandperformed, allsuchfurtheractsandthings, andshallexecuteand deliverallsuchother agreements,certificates,instrumentsand documents,astheotherpartymay reasonablyrequest in order to carryout theintentandaccomplish thepurposes of thisAgreement and theconsummation ofthe transactionscontemplatedhereby.
l. NoStrict Construction. Thelanguage usedin thisAgreement willbedeemedtobethelanguage chosen bythepartiestoexpresstheir mutualintent, andnorulesofstrictconstruction willbe appliedagainstanyparty.
m. Remedies.The Company acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the Buyer by vitiating the intent and purpose of the transaction contemplated hereby. Accordingly, the Company acknowledges that the remedy at law for a breach of its obligations under this Agreement will be inadequate and agrees, in the event of a breach or threatened breach by the Company of the provision s of this Agreement , that the Buyer shall be entitled, in addition to all other available remedie s at law or in equity, and in addition to the penalties assessable herein, to an injunction or injunctions restraining, preventing or curing any breach of this Agreement and to enforce specifically the terms and provisions hereof, without the necessity of showing economic loss and without any bond or other security being required.
IN WITNESS WHEREOF , the undersigned Buyer and the Company have caused this Agreement to be duly executed as of the date first above written.
| CO-SIGNER, INC. |
| |
| By:/s/ Kurtis A. Kramarenko |
| Kurtis A. Kramarenko |
| Chief Executive Officer |
| |
| ASHER ENTERPRISES, INC. |
| |
| By:/s/ Curt Kramer |
| Name: Curt Kramer Title: President |
| 1 Linden Pl., Suite 207 Great Neck, NY. 11021 |
AGGREGATE SUBSCRIPTION AMOUNT: Aggregate Principal Amount of Note: | $32,500.00 |
| Aggregate Purchase Price: | $32,500.00 |
3865(3) 1-8-14 kurt@co-Signer.comgarv@co-signer.corn | |
