SECURITIES PURCHASEAGREEMENT
ThisSECURITIESPURCHASE AGREEMENT(the “Agreement”),dated asofJune5,2014,byandbetweenCO-SIGNER,INC.,aNevadacorporation,with headquarterslocatedat8275SouthEasternAvenue-Suite200-661, LasVegas,NV89123(the“Company”), andKBMWORLDWIDE,INC.,aNewYorkcorporation, withitsaddress at80Cuttermill Road, Suite410,GreatNeck,NY11021(the “Buyer”).
WHEREAS:
A. TheCompanyandtheBuyerareexecutinganddeliveringthisAgreementinrelianceupontheexemptionfrom securitiesregistrationaffordedbytherulesand regulationsaspromulgatedbytheUnitedStatesSecurities andExchangeCommission (the“SEC”) under theSecurities Act of1933, asamended(the “1933Act”);
B. Buyerdesirestopurchase andtheCompanydesirestoissueandsell,uponthetermsandconditions setforthinthisAgreement an8%convertiblenoteoftheCompany,intheform attachedheretoasExhibit A,intheaggregateprincipal amountof$32,500.00(togetherwith any note(s)issuedinreplacementthereoforas adividendthereonorotherwise withrespecttheretoinaccordancewiththetermsthereof,the“Note”),convertibleintosharesofcommonstock, $0.001par valuepershare, of the Company (the“CommonStock”), upon thetermsandsubjectto thelimitationsandconditions setforth insuchNote.
C. TheBuyer wishestopurchase,uponthetermsand conditionsstatedinthisAgreement,such principalamountofNoteasissetforth immediatelybelowitsnameonthesignature pageshereto; and
NOW THEREFORE,the CompanyandtheBuyerseverally(andnotjointly)herebyagreeas follows:
1. Purchase and Sale ofNote.
a. PurchaseofNote.OntheClosingDate(asdefinedbelow),theCompanyshallissueandselltotheBuyer andtheBuyer agreestopurchasefromtheCompanysuchprincipalamountofNoteasissetforthimmediately below theBuyer’sname onthesignature pageshereto.
b. FormofPayment. OntheClosingDate(as definedbelow),(i)the Buyershallpaythepurchasepriceforthe NotetobeissuedandsoldtoitattheClosing(asdefined below)(the“PurchasePrice”)bywire transferofimmediately availablefunds totheCompany,inaccordancewiththeCompany’swrittenwiring instructions,againstdelivery oftheNote in theprincipal amountequal tothePurchase Priceas issetforthimmediately below theBuyer’snameon thesignaturepageshereto,and(ii)the Companyshalldeliver such dulyexecutedNoteon behalf ofthe Company, to theBuyer, against delivery ofsuchPurchase Price.
c. ClosingDate. Subjectto thesatisfaction(orwrittenwaiver)oftheconditionstheretoset forthinSection6andSection7below,the dateandtimeoftheissuance andsaleoftheNotepursuanttothisAgreement(the “Closing Date”)shallbe 12:00noon,EasternStandardTimeonorabout June 9,2014,orsuchother mutuallyagreedupontime.Theclosing of the transactionscontemplated by thisAgreement (the“Closing”)shalloccuron theClosingDate atsuchlocationas maybe agreedto bytheparties.
2. Buyer’sRepresentationsandWarranties.TheBuyerrepresentsand warrants to theCompanythat:
a. InvestmentPurpose. Asof thedatehereof,theBuyerispurchasingtheNoteandthesharesofCommonStockissuableuponconversionoforotherwisepursuanttotheNote(including,without limitation,suchadditionalsharesofCommonStock,ifany,asareissuable(i)onaccountofinterestontheNote, (ii) asaresult oftheeventsdescribedinSections 1.3and1.4(g)of theNote or(iii)inpaymentof theStandardLiquidatedDamages Amount(asdefinedinSection2(f)below)pursuanttothisAgreement,suchsharesofCommonStockbeingcollectivelyreferredtoherein asthe“Conversion Shares”and, collectivelywiththeNote, the“Securities”)for itsownaccountandnotwith apresent viewtowardsthe publicsale ordistributionthereof,exceptpursuanttosalesregisteredorexemptedfrom registrationunder the 1933Act;provided,however, that by making therepresentationsherein, theBuyerdoesnotagree to hold any of theSecurities for any minimum orotherspecifictermandreserves the right todispose of theSecurities at any time inaccordancewith orpursuant to aregistrationstatementor an exemptionunderthe1933Act.
b. AccreditedInvestorStatus.TheBuyerisan“accreditedinvestor”asthattermisdefined inRule 501(a)of Regulation D (an“Accredited Investor”).
c. Relianceon Exemptions.TheBuyer understandsthat theSecuritiesarebeingoffered andsoldtoitinrelianceuponspecificexemptionsfromtheregistrationrequirementsofUnitedStates federalandstatesecurities lawsandthattheCompanyisrelyinguponthetruth andaccuracyof,andtheBuyer’s compliancewith,therepresentations,warranties, agreements, acknowledgmentsandunderstandings of theBuyersetforth herein inordertodeterminetheavailabilityofsuchexemptionsandtheeligibilityof theBuyertoacquirethe Securities.
d. Information.The Buyeranditsadvisors,if any,have been,andforsolongastheNoteremain outstandingwillcontinuetobe,furnished withallmaterialsrelatingtothebusiness, financesandoperationsoftheCompanyand materialsrelatingtotheoffer andsale of theSecurities whichhavebeenrequestedbytheBuyeror itsadvisors.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.Neithersuch inquiries nor anyother duediligence investigationconductedbyBuyeror any ofits advisors or representativesshall modify,amend oraffect Buyer’sright torely ontheCompany’s representationsandwarranties containedinSection3below.The Buyerunderstands that itsinvestmentin theSecuritiesinvolves asignificant degreeofrisk.The Buyerisnotawareofanyfactsthatmay constitutea breach ofany ofthe Company'srepresentationsand warrantiesmade herein.
e. GovernmentalReview. TheBuyerunderstandsthat noUnitedStates federalorstateagencyoranyothergovernmentorgovernmentalagencyhaspasseduponor madeanyrecommendation orendorsement of theSecurities.
f. Transferor Re-sale.TheBuyerunderstandsthat(i)thesaleorre-saleoftheSecuritieshasnotbeen andisnotbeingregistered underthe1933Actoranyapplicablestate securitieslaws,andtheSecuritiesmay notbetransferredunless(a) theSecuritiesaresoldpursuanttoaneffective registrationstatementunder the 1933 Act,(b) theBuyershall havedelivered to theCompany,at thecostoftheBuyer,an opinion of counselthatshall be inform, substanceand scope customaryfor opinions ofcounsel incomparabletransactionsto theeffectthat theSecuritiesto be sold ortransferred may be sold ortransferredpursuant toan exemptionfromsuchregistration,whichopinionshall beacceptedbytheCompany,(c)theSecuritiesare soldortransferred toan“affiliate”(asdefined in Rule144promulgatedunder the 1933Act(or asuccessor rule)(“Rule144”)) of theBuyerwhoagreestosell orotherwisetransfer theSecuritiesonly inaccordance with thisSection2(f) andwho isan AccreditedInvestor,(d)the Securitiesare soldpursuant to Rule 144, or(e) theSecuritiesaresold pursuanttoRegulation Sunder 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 Rule144may bemade only inaccordancewiththetermsofsaidRuleandfurther,ifsaidRuleis notapplicable,anyre-sale ofsuchSecurities undercircumstancesinwhich theseller(or thepersonthroughwhomthesale is made)maybedeemed tobean underwriter (asthat term isdefinedinthe1933Act)mayrequirecompliance withsomeotherexemptionunderthe1933Act ortherulesand regulationsoftheSECthereunder;and(iii)neither theCompanynoranyotherpersonisunderanyobligationtoregistersuch Securitiesunderthe1933Actorany statesecurities lawsorto complywiththe termsandconditions of any exemptionthereunder (ineach case). Notwithstandingtheforegoing oranything elsecontained herein to thecontrary,theSecuritiesmaybe pledgedascollateralin connectionwith abonafidemarginaccount orother lendingarrangement.
g. Legends.The Buyer understandsthat theNoteand, untilsuch timeastheConversionShareshave beenregisteredunderthe1933ActmaybesoldpursuanttoRule144orRegulationSwithoutanyrestrictionastothenumberofsecuritiesasofaparticulardatethatcanthenbeimmediately sold,theConversionSharesmay bear arestrictivelegendin substantiallythe followingform(andastop-transfer order maybe placedagainsttransfer ofthecertificates for such Securities):
“NEITHERTHEISSUANCE ANDSALEOFTHESECURITIES REPRESENTEDBYTHISCERTIFICATENORTHESECURITIESINTOWHICH THESESECURITIESAREEXERCISABLE HAVEBEENREGISTEREDUNDERTHESECURITIESACTOF1933,ASAMENDED,ORAPPLICABLESTATE SECURITIESLAWS. THESECURITIESMAY NOT BEOFFERED FORSALE,SOLD,TRANSFERREDORASSIGNED(I) IN THEABSENCE OF(A)ANEFFECTIVE REGISTRATIONSTATEMENT FOR THESECURITIESUNDER THESECURITIESACTOF1933,ASAMENDED, OR(B)AN OPINIONOFCOUNSEL(WHICH COUNSELSHALLBESELECTEDBYTHEHOLDER),INAGENERALLYACCEPTABLEFORM, THATREGISTRATION ISNOTREQUIREDUNDERSAIDACTOR(II)UNLESSSOLDPURSUANTTORULE 144 ORRULE144AUNDERSAIDACT.NOTWITHSTANDING THEFOREGOING, THESECURITIESMAYBEPLEDGEDINCONNECTIONWITH ABONAFIDEMARGINACCOUNTOROTHERLOAN ORFINANCINGARRANGEMENTSECUREDBYTHE SECURITIES.”
The legendset forthabove shallberemovedandtheCompanyshallissueacertificate withoutsuchlegendtotheholderofanySecurityuponwhichitisstamped,if,unless otherwiserequiredbyapplicable statesecuritieslaws,(a)suchSecurity isregisteredforsale underaneffectiveregistration statementfiled under the 1933Act orotherwise maybe soldpursuantto Rule 144 orRegulationSwithoutanyrestriction astothenumberof securitiesasof aparticulardate thatcanthenbeimmediately sold,or(b)suchholder providestheCompanywith anopinion ofcounsel, inform, substanceandscope customary for opinions ofcounsel incomparabletransactions,totheeffectthatapublicsaleortransferofsuchSecurity maybemade withoutregistrationunderthe1933Act, whichopinionshallbeaccepted by theCompany sothatthesaleor transfer iseffected.TheBuyer agrees to sellallSecurities,including thoserepresentedbyacertificate(s)fromwhich thelegendhasbeenremoved,incompliancewithapplicableprospectusdeliveryrequirements,ifany.Inthe eventthat the Companydoesnotaccept the opinionofcounsel provided by theBuyerwith respecttothetransfer ofSecuritiespursuanttoanexemptionfromregistration,such as Rule 144 orRegulation S,at theDeadline, itwillbeconsideredanEvent of Default pursuant toSection 3.2 ofthe Note.
h. Authorization;Enforcement. ThisAgreementhasbeendulyandvalidlyauthorized.ThisAgreement hasbeendulyexecutedand deliveredonbehalfoftheBuyer, andthisAgreement constitutesavalid andbindingagreementoftheBuyerenforceableinaccordance with itsterms.
i. Residency.TheBuyerisaresidentofthejurisdictionset forth immediatelybelowtheBuyer’snameonthesignature pageshereto.
3. RepresentationsandWarrantiesoftheCompany. TheCompanyrepresentsand warrantstotheBuyer that:
a. Organizationand Qualification.TheCompanyand eachofitsSubsidiaries(asdefined below),ifany,isacorporationdulyorganized,validlyexistingandingoodstanding under thelawsof thejurisdictioninwhichitisincorporated,withfull power and authority(corporateandother)toown,lease,useand operateitsproperties andtocarryonitsbusiness asand where nowowned,leased,used, operatedandconducted.Schedule 3(a)setsforth a list ofallof theSubsidiaries of the Companyandthejurisdiction inwhicheach isincorporated. The CompanyandeachofitsSubsidiariesisdulyqualifiedasaforeign corporation to do businessand is in good standing in everyjurisdictioninwhich itsownership or use of property or the nature of thebusinessconductedby itmakes suchqualificationnecessaryexceptwherethefailuretobesoqualifiedor ingoodstanding wouldnothaveaMaterialAdverse Effect.“Material AdverseEffect”meansanymaterialadverseeffectonthebusiness, operations,assets, financialconditionorprospects of the Company or itsSubsidiaries,ifany,takenasawhole,oron the transactionscontemplated hereby orby theagreementsorinstruments to beentered into inconnectionherewith. “Subsidiaries”meansanycorporation orotherorganization,whetherincorporatedorunincorporated,inwhichtheCompanyowns,directlyorindirectly,anyequity orother ownershipinterest.
b. Authorization;Enforcement. (i)TheCompanyhas allrequisitecorporatepowerandauthoritytoenterintoandperformthisAgreement,theNoteandtoconsummatethe transactionscontemplatedherebyandtherebyand toissuethe Securities,inaccordance withthe termshereofandthereof,(ii)theexecution anddeliveryof thisAgreement, theNoteby the Company and theconsummationby it of thetransactions contemplated herebyandthereby(including withoutlimitation, theissuance of the Note and theissuanceandreservation forissuance of theConversionSharesissuable uponconversionorexercisethereof)havebeendulyauthorizedbytheCompany’s Board ofDirectorsandnofurtherconsentorauthorization of theCompany, itsBoard ofDirectors,or itsshareholders isrequired,(iii) thisAgreementhasbeen dulyexecutedand deliveredby the Companybyitsauthorized representative,and suchauthorizedrepresentativeisthe trueand officialrepresentativewithauthority tosign thisAgreementand theother documentsexecutedinconnectionherewithandbindtheCompanyaccordingly,and (iv)thisAgreementconstitutes,anduponexecutionand deliverybythe Companyof theNote,each of suchinstruments willconstitute, alegal,valid and bindingobligationoftheCompanyenforceable againsttheCompanyinaccordance withitsterms.
c. Capitalization.As ofthedatehereof, theauthorizedcapital stockoftheCompanyconsistsof:(i)440,000,000sharesofCommonStock,$0.001parvalue pershare,ofwhich150,484,189sharesareissuedandoutstanding;and(ii)8,500,000authorizedsharesofPreferredStock,$0.001parvaluepershare, ofwhichnosharesareissuedandoutstanding;and (iii) 1,500,000authorizedsharesofPreferredStock–SeriesA, $0.001par valueper share, ofwhich1,173,041shares areissuedand outstanding; nosharesarereservedforissuance pursuant to theCompany’s stock optionplans, noshares arereservedforissuancepursuanttosecurities(otherthantheNote andapriorconvertiblepromissory noteinfavoroftheBuyerdatedMarch20, 2014 in theamountof $42,500.00forwhich 10,500,000sharesofCommonStockarepresentlyreserved)exercisable for, orconvertible into orexchangeable forsharesofCommonStockand45,500,000sharesarereservedforissuance uponconversionoftheNote. All of such outstandingshares ofcapital stockare, or uponissuancewill be, dulyauthorized, validly issued, fullypaidandnon-assessable. Noshares ofcapitalstockof the Company aresubjecttopreemptiverightsoranyother similarrightsof theshareholdersofthe Companyoranyliens orencumbrancesimposed through theactions orfailure toact of theCompany. As of theeffective date of thisAgreement, (i)there arenooutstandingoptions,warrants,scrip,rightstosubscribefor, puts,calls, rights offirstrefusal,agreements, understandings,claims orothercommitments orrights ofanycharacterwhatsoeverrelatingto, orsecuritiesorrightsconvertibleintoorexchangeableforany shares ofcapitalstockofthe Company oranyofitsSubsidiaries, orarrangementsbywhich the Companyor any of itsSubsidiaries is or maybecome bound to issueadditionalshares ofcapitalstock of the Company orany ofitsSubsidiaries, (ii) therearenoagreements or arrangements underwhich theCompanyorany of itsSubsidiaries isobligatedtoregisterthesale ofanyofits ortheirsecuritiesunderthe 1933Actand (iii)thereare noanti-dilutionorpriceadjustment provisionscontained in any securityissuedby the Company(orinanyagreementproviding rights to security holders)thatwillbetriggeredbytheissuanceof theNoteor theConversion Shares.TheCompanyhasfurnishedto theBuyer trueandcorrect copiesof theCompany’sCertificate ofIncorporation as ineffectonthedate hereof(“Certificate ofIncorporation”),theCompany’sBy-laws,as ineffecton thedatehereof(the “By-laws”),andthetermsofall securitiesconvertible intoorexercisableforCommonStockoftheCompanyandthematerialrightsoftheholders thereofinrespect thereto.The Companyshall provide theBuyerwith awritten update of thisrepresentationsignedby the Company’sChief Executiveon behalfof theCompanyas oftheClosingDate.
d. Issuanceof Shares.TheConversionSharesaredulyauthorized andreservedforissuanceand,uponconversionoftheNoteinaccordancewithitsrespectiveterms, willbevalidlyissued,fullypaid andnon-assessable,andfreefrom alltaxes,liens, claims andencumbranceswithrespect to the issuethereofand shall not besubject topreemptiverights orothersimilar rightsofshareholdersof the Companyandwillnotimposepersonalliability upon the holder thereof.
e. AcknowledgmentofDilution.TheCompanyunderstandsand acknowledgesthepotentiallydilutiveeffecttotheCommonStockupontheissuanceoftheConversion SharesuponconversionoftheNote.TheCompanyfurtheracknowledgesthatitsobligationto issue ConversionShares uponconversionof theNote inaccordancewiththisAgreement,the Note isabsoluteandunconditionalregardless ofthe dilutiveeffectthatsuch issuancemay haveon theownershipinterests ofother shareholders ofthe Company.
f. NoConflicts. Theexecution, deliveryand performanceof thisAgreement,theNotebytheCompanyand theconsummationbytheCompanyofthetransactionscontemplatedherebyandthereby(including,withoutlimitation,theissuanceandreservationfor issuance of the ConversionShares)willnot(i)conflict withorresultinaviolationofanyprovisionof theCertificate ofIncorporationorBy-laws,or(ii)violate orconflictwith,orresult inabreachofanyprovisionof,orconstitute a default(or aneventwhich withnotice or lapse of time or bothcouldbecome adefault)under,orgive toothersanyrightsoftermination,amendment,acceleration orcancellationof,anyagreement,indenture, patent,patentlicenseor instrumenttowhichtheCompany oranyofitsSubsidiariesisaparty, or(iii)resultinaviolation ofanylaw, rule,regulation,order, judgmentor decree(includingfederalandstate securitieslawsand regulationsandregulationsofanyself-regulatoryorganizationstowhichthe Companyor itssecuritiesaresubject)applicableto the CompanyoranyofitsSubsidiaries orbywhichany property orasset of the Companyor anyof itsSubsidiariesis bound oraffected(exceptfor suchconflicts,defaults, terminations,amendments,accelerations, cancellationsandviolationsaswould not, individuallyor in theaggregate, have aMaterial AdverseEffect).Neitherthe CompanynoranyofitsSubsidiariesis inviolationofitsCertificateofIncorporation,By-laws or otherorganizationaldocuments andneither the Companynor any of itsSubsidiaries isindefault(andnoeventhasoccurredwhich withnotice orlapseof time or bothcouldputthe Company orany of itsSubsidiariesindefault)under,and neither the Company norany of itsSubsidiaries hastakenanyaction orfailed to take anyaction thatwouldgivetoothersanyrightsoftermination, amendment,acceleration orcancellation of,anyagreement,indentureorinstrumenttowhichthe Companyoranyof itsSubsidiariesisa partyorbywhichanypropertyorassets of the Company oranyof itsSubsidiaries is bound or affected,exceptfor possibledefaults aswouldnot,individually orintheaggregate,have aMaterialAdverse Effect.Thebusinesses of the Companyand itsSubsidiaries, ifany,are not beingconducted,and shall not beconductedsolongastheBuyer ownsanyof theSecurities,inviolationofanylaw,ordinanceorregulation of anygovernmentalentity.Exceptasspecifically contemplatedby thisAgreementandas requiredunder the 1933Actandanyapplicablestatesecuritieslaws,the Company isnotrequiredtoobtainany consent,authorizationororderof,ormakeany filingorregistrationwith,anycourt,governmentalagency,regulatoryagency,self regulatory organizationorstock market or anythird party inorderfor it toexecute,deliverorperform any of itsobligationsunder thisAgreement,the Note inaccordancewiththe termshereof orthereofor toissueandsellthe Note inaccordancewiththetermshereofandto issue theConversionShares uponconversion of theNote.All consents, authorizations,orders,filings andregistrations 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 unawareofanyfactsor circumstanceswhichmightgiverisetoanyoftheforegoing.
g. SECDocuments; FinancialStatements. TheCompany hastimelyfiled allreports,schedules,forms, statementsandotherdocuments requiredtobefiledbyitwiththeSECpursuanttothereportingrequirementsoftheSecuritiesExchangeActof1934,as amended(the “1934Act”)(all of the foregoingfiledprior to thedatehereofand all exhibitsincludedthereinandfinancialstatements andschedulesthereto and documents(otherthan exhibits tosuchdocuments)incorporatedbyreferencetherein, beinghereinafter referred tohereinasthe “SECDocuments”).Uponwrittenrequest the Company willdelivertothe BuyertrueandcompletecopiesoftheSECDocuments, exceptforsuchexhibits andincorporateddocuments. As of theirrespectivedates, the SECDocumentscomplied inall materialrespectswiththerequirements of the 1934Actand the rulesandregulationsof theSECpromulgatedthereunder applicable to theSECDocuments,and none of theSECDocuments, atthe time theywerefiledwith theSEC,containedanyuntruestatement of amaterialfact oromitted tostate amaterial factrequiredtobestated thereinor necessary inordertomake thestatementstherein,inlight of thecircumstancesunderwhich theyweremade, notmisleading. None of thestatementsmade inanysuchSEC Documents is, orhas been,requiredto beamended orupdated underapplicablelaw (except forsuchstatementsashavebeenamendedorupdatedinsubsequentfilings priorthe datehereof).As oftheir respectivedates,the financialstatementsoftheCompanyincluded inthe SECDocumentscompliedastoform inallmaterialrespectswith applicableaccountingrequirementsandthepublished rulesandregulationsof theSEC withrespectthereto. Suchfinancialstatementshavebeenpreparedinaccordancewith UnitedStates generallyacceptedaccountingprinciples, consistentlyapplied, duringtheperiods involvedand fairlypresentinallmaterialrespectstheconsolidatedfinancial position of the Companyand itsconsolidated Subsidiaries as of thedatesthereof and theconsolidated results oftheir operationsandcashflows fortheperiodsthen ended(subject, in thecaseofunauditedstatements, tonormalyear-end auditadjustments).Exceptas setforth in thefinancialstatementsof the CompanyincludedintheSECDocuments,the Companyhasnoliabilities,contingentorotherwise,other than(i)liabilitiesincurred in theordinary course ofbusinesssubsequentto March 31, 2014, and(ii)obligations undercontractsand commitmentsincurredintheordinary course ofbusiness and notrequiredunder generallyacceptedaccounting principlestobereflectedinsuchfinancialstatements,which, individuallyor in theaggregate,are notmaterial to thefinancial condition oroperatingresults of theCompany. The Companyissubjectto the reportingrequirements of the 1934Act.
h. AbsenceofCertainChanges. SinceMarch31,2014,there hasbeennomaterial adversechangeandnomaterialadversedevelopmentintheassets,liabilities,business, properties,operations,financialcondition, resultsofoperations, prospectsor1934ActreportingstatusoftheCompany or any ofitsSubsidiaries.
i. Absenceof Litigation.Thereisnoaction,suit,claim,proceeding,inquiry orinvestigationbeforeorbyany court,publicboard,governmentagency, self-regulatoryorganizationorbodypendingor,totheknowledgeoftheCompanyorany ofitsSubsidiaries,threatenedagainstor affectingthe CompanyoranyofitsSubsidiaries, ortheirofficersordirectors intheircapacityas such,thatcould have aMaterial AdverseEffect. Schedule 3(i)containsacomplete listand summarydescriptionofanypendingor, to theknowledge of theCompany,threatened proceedingagainst oraffecting the Companyor anyof itsSubsidiaries,without regard towhether itwouldhaveaMaterialAdverseEffect.The Companyand itsSubsidiariesare unawareofanyfactsorcircumstances whichmightgiverisetoanyofthe foregoing.
j. Patents,Copyrights,etc.TheCompanyandeachofitsSubsidiaries ownsorpossessestherequisitelicensesorrightstouseall patents,patentapplications,patent rights,inventions,know-how,trade secrets,trademarks,trademarkapplications, servicemarks,servicenames,tradenames andcopyrights(“IntellectualProperty”)necessary to enable it toconduct itsbusiness as nowoperated(and, as presentlycontemplated to beoperatedinthe future);thereisnoclaimor actionby any personpertaining to,or proceedingpending,or to theCompany’s knowledgethreatened, whichchallenges theright of the Company or of aSubsidiarywith respect to anyIntellectualPropertynecessaryto enableit toconductitsbusinessas nowoperated(and,as presentlycontemplatedtobeoperatedinthefuture); tothebest of theCompany’sknowledge, theCompany’s or itsSubsidiaries’currentand intendedproducts,services andprocessesdonotinfringeonanyIntellectualProperty orotherrightsheld by any person;andthe Company isunawareofany facts orcircumstanceswhich mightgiverise to any of the foregoing.The Companyandeachof itsSubsidiarieshavetakenreasonable securitymeasures toprotectthesecrecy,confidentialityandvalue oftheirIntellectual Property.
k. NoMateriallyAdverseContracts, Etc.NeithertheCompanynoranyofitsSubsidiariesissubjecttoanycharter,corporateorotherlegal restriction,oranyjudgment, decree,order,ruleorregulationwhichinthejudgment of theCompany’s officershasorisexpected inthe future tohave aMaterialAdverse Effect.NeithertheCompanynoranyofitsSubsidiariesisa party toanycontract oragreement whichinthe judgment of theCompany’s officers hasor is expectedtohave a MaterialAdverse Effect.
l. TaxStatus. TheCompanyandeachofitsSubsidiarieshasmadeorfiledall federal,stateandforeignincomeand allothertaxreturns, reportsanddeclarationsrequiredbyanyjurisdiction towhich it issubject(unlessandonlyto theextentthattheCompanyandeachofitsSubsidiarieshasset asideonitsbooksprovisionsreasonablyadequateforthepaymentofallunpaidand unreportedtaxes)andhaspaid alltaxesand othergovernmentalassessments andchargesthatarematerialin amount,shownordeterminedto be due onsuchreturns,reports anddeclarations,except those beingcontested ingood faithand hassetaside on its booksprovisions reasonablyadequatefor thepaymentofall taxesforperiods subsequent to the periods towhichsuchreturns, reports ordeclarationsapply. Thereare nounpaid taxes inanymaterial amountclaimedto be dueby the taxing authorityofanyjurisdiction,and theofficers of the Company know ofnobasisforanysuch claim.TheCompanyhas notexecuted awaiver withrespect to thestatute oflimitationsrelatingtotheassessmentorcollectionofanyforeign,federal, stateorlocal tax.Noneof theCompany’staxreturnsis presentlybeingauditedbyany taxingauthority.
m. CertainTransactions. Exceptfor arm’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,directororsuchemployee or, to theknowledge of theCompany,anycorporation,partnership, trustor other entityinwhichanyofficer,director,oranysuchemployee has a substantialinterest or isanofficer,director,trusteeorpartner.
n. Disclosure.All information relatingto orconcerningtheCompanyoranyofitsSubsidiariesset forthinthisAgreement andprovidedtotheBuyerpursuanttoSection2(d)hereofandotherwiseinconnectionwiththetransactionscontemplatedherebyistrue andcorrect inall materialrespectsandthe Companyhasnotomittedtostate anymaterialfactnecessaryinordertomake thestatementsmade hereinortherein, inlightof thecircumstancesunderwhichtheyweremade, notmisleading. Noevent orcircumstancehas occurredor existswithrespectto the Company or any of itsSubsidiaries or its ortheir business,properties,prospects, operationsorfinancial conditions,which,under applicablelaw,ruleorregulation,requires publicdisclosure or announcement by the Company butwhich has not been so publiclyannounced ordisclosed (assuming for thispurposethat theCompany’sreportsfiled underthe 1934Act arebeingincorporatedintoaneffectiveregistrationstatementfiledbythe Company underthe1933Act).
o. AcknowledgmentRegardingBuyer’Purchase ofSecurities. TheCompanyacknowledges andagreesthatthe Buyerisactingsolelyinthe capacityofarm’slengthpurchaserswithrespecttothisAgreement andthetransactions contemplatedhereby.The Companyfurther acknowledgesthat theBuyer is notactingasafinancialadvisororfiduciaryofthe Company(orinanysimilar capacity)withrespectto thisAgreementandthetransactions contemplated hereby and anystatement madebytheBuyeroranyof itsrespectiverepresentativesor agents inconnectionwith thisAgreementand thetransactions contemplated herebyisnotadviceor arecommendationandismerelyincidentalto theBuyer’purchase of theSecurities.TheCompany furtherrepresents totheBuyer that theCompany’s decision toenterintothisAgreement hasbeenbasedsolely ontheindependentevaluationoftheCompanyanditsrepresentatives.
p. NoIntegrated Offering.NeithertheCompany,nor anyofitsaffiliates,noranypersonactingonitsortheirbehalf,hasdirectlyorindirectlymadeanyoffersor sales inany securityorsolicitedanyofferstobuyanysecurity under circumstancesthatwouldrequireregistrationunderthe1933Act oftheissuanceoftheSecuritiesto theBuyer.Theissuance oftheSecurities tothe Buyerwill not beintegrated with anyotherissuance of theCompany’s securities(past,currentorfuture)for purposes ofanyshareholderapproval provisionsapplicableto theCompanyoritssecurities.
q. NoBrokers.TheCompanyhastakennoactionwhichwould giverisetoanyclaimbyanyperson forbrokeragecommissions,transactionfeesorsimilarpayments relatingtothisAgreement orthetransactionscontemplated hereby.
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 theknowledge of theCompany,threatened regarding suspensionorcancellationof any of the CompanyPermits.Neitherthe Companynor any ofitsSubsidiaries is inconflictwith,or indefault orviolation of,any ofthe CompanyPermits, exceptfor anysuch conflicts,defaults orviolations which,individually or intheaggregate,wouldnotreasonablybeexpected tohaveaMaterialAdverseEffect. SinceMarch 31, 2014,neither the Company nor any of itsSubsidiarieshas received anynotificationwithrespect to possibleconflicts,defaultsorviolationsofapplicable laws,exceptfor notices relating to possible conflicts, defaults or violations,whichconflicts, defaults orviolationswould not have a MaterialAdverseEffect.
s. EnvironmentalMatters.
(i) Thereare,totheCompany’sknowledge, withrespecttotheCompanyoranyofitsSubsidiariesoranypredecessoroftheCompany,nopastorpresentviolationsofEnvironmentalLaws(asdefined below),releasesofanymaterialintotheenvironment,actions, activities,circumstances,conditions, events,incidents, orcontractualobligations whichmaygive riseto anycommonlaw environmentalliability orany liability under theComprehensive EnvironmentalResponse,Compensation andLiabilityAct of 1980 orsimilar federal,state,localorforeign lawsand neither the Company norany of itsSubsidiarieshas receivedanynoticewithrespecttoanyof theforegoing,nor isanyactionpendingor,to theCompany’sknowledge,threatened inconnectionwithanyof theforegoing.The term“EnvironmentalLaws” meansallfederal,state, local orforeignlawsrelatingtopollution orprotection of human health or theenvironment(including, withoutlimitation,ambientair, surfacewater,groundwater, landsurfaceorsubsurfacestrata), including, withoutlimitation,laws relating toemissions, discharges,releasesor threatenedreleasesofchemicals, pollutantscontaminants,ortoxicorhazardoussubstancesorwastes (collectively,“HazardousMaterials”) into theenvironment,orotherwiserelating to themanufacture,processing,distribution, use,treatment,storage,disposal,transport orhandlingofHazardousMaterials,aswell asallauthorizations,codes, decrees, demands ordemandletters, injunctions,judgments,licenses,noticesornoticeletters,orders, permits,plans orregulationsissued,entered,promulgatedorapprovedthereunder.
(ii) Otherthanthosethat areorwerestored,usedordisposedofincompliancewithapplicable law,noHazardous Materialsarecontainedonoraboutanyrealpropertycurrentlyowned,leasedorusedbytheCompanyor anyofitsSubsidiaries,andnoHazardous Materialswerereleased onoraboutanyrealproperty previously owned,leasedorusedby theCompany oranyofitsSubsidiaries during theperiodtheproperty wasowned,leased or usedbytheCompany orany ofitsSubsidiaries,except in thenormal courseofthe Company’s orany ofitsSubsidiaries’ business.
(iii) Thereare noundergroundstoragetanksonorunderanyrealpropertyowned,leasedorusedbytheCompanyoranyofitsSubsidiariesthatarenotincompliance withapplicable law.
t. TitletoProperty.TheCompanyanditsSubsidiarieshavegoodandmarketabletitleinfeesimpletoall realpropertyand goodandmarketabletitletoallpersonalproperty owned bythemwhich ismaterial to thebusiness of the Companyand itsSubsidiaries, ineachcasefreeandclear ofall liens,encumbrancesand defectsexceptsuchasaredescribed in Schedule 3(t) orsuch aswould nothaveaMaterialAdverseEffect.Anyreal propertyandfacilitiesheldunder lease bythe Companyand itsSubsidiaries are held bythem undervalid, subsisting andenforceable leases withsuchexceptionsas wouldnothave aMaterial AdverseEffect.
u. Insurance.The CompanyandeachofitsSubsidiariesareinsuredbyinsurersofrecognizedfinancialresponsibilityagainstsuchlossesandrisksandinsuchamounts asmanagementoftheCompanybelieves to beprudentandcustomary in the businesses inwhichthe Companyand itsSubsidiariesareengaged.Neitherthe Company norany such Subsidiaryhasany reason tobelievethatitwill not beable torenewitsexistinginsurancecoverage asandwhen such coverageexpiresortoobtainsimilarcoveragefrom similarinsurersasmaybe necessarytocontinue itsbusiness at acostthatwouldnot have aMaterialAdverse Effect. Uponwrittenrequest the Companywillprovideto theBuyertrueandcorrectcopies ofallpoliciesrelatingtodirectors’andofficers’liabilitycoverage,errors andomissionscoverage,and commercialgeneral liabilitycoverage.
v. InternalAccountingControls.TheCompanyandeachofitsSubsidiariesmaintainasystemofinternalaccountingcontrolssufficient,inthejudgmentoftheCompany’s boardofdirectors,toprovidereasonableassurance that(i)transactionsare executedinaccordance withmanagement’sgeneralorspecificauthorizations, (ii)transactionsarerecorded asnecessarytopermit preparationoffinancialstatementsinconformitywithgenerallyaccepted accountingprinciples and tomaintainassetaccountability,(iii)access toassets ispermittedonly inaccordancewithmanagement’sgeneralorspecificauthorizationand (iv) therecorded accountability forassetsiscomparedwiththe existingassetsatreasonable intervalsandappropriateactionis takenwith respect toanydifferences.
w. ForeignCorrupt Practices.NeithertheCompany,noranyofitsSubsidiaries,noranydirector,officer, agent,employeeorotherpersonactingonbehalfoftheCompanyor anySubsidiaryhas, in the course of hisactionsfor, or on behalfof,theCompany,usedanycorporatefundsforanyunlawfulcontribution,gift,entertainmentorotherunlawfulexpenses relating topoliticalactivity; made anydirect orindirectunlawful payment toanyforeignordomestic governmentofficial oremployeefromcorporate funds;violatedor is inviolationof anyprovisionof theU.S.ForeignCorruptPracticesActof 1977,asamended,ormadeanybribe,rebate,payoff, influencepayment,kickbackorotherunlawfulpaymenttoanyforeignor domesticgovernment official oremployee.
x. Solvency.TheCompany(aftergivingeffecttothetransactionscontemplatedbythisAgreement)issolvent(i.e.,itsassetshaveafairmarketvalueinexcessof theamountrequiredtopayitsprobable liabilities on its existingdebtsas theybecomeabsolute andmatured)and currently the Company has noinformationthatwould lead it toreasonablyconcludethatthe Companywouldnot,aftergivingeffecttothetransactioncontemplatedbythisAgreement,have the ability to, nordoes itintend totakeanyactionthat wouldimpairits ability to, payitsdebtsfrom time to timeincurred inconnection therewithassuchdebts mature.The Company did notreceiveaqualified opinionfrom itsauditorswithrespectto its mostrecentfiscalyearend and,aftergivingeffecttothetransactionscontemplatedbythisAgreement,does notanticipate or know ofany basis uponwhich itsauditors might issue aqualified opinion inrespect of itscurrentfiscalyear.
y. NoInvestment Company. TheCompanyisnot,andupontheissuance andsaleoftheSecuritiesas contemplatedbythisAgreementwillnotbean “investmentcompany” requiredtoberegisteredundertheInvestmentCompanyActof1940(an “InvestmentCompany”). TheCompany is notcontrolledbyan InvestmentCompany.
z. BreachofRepresentationsand WarrantiesbytheCompany.IftheCompanybreachesanyoftherepresentationsorwarrantiessetforthinthisSection3,andinaddition toany otherremedies available to theBuyer pursuant to thisAgreement,itwill beconsideredan Event of defaultunderSection 3.4 ofthe Note.
4. COVENANTS.
a. BestEfforts.Theparties shallusetheirbesteffortstosatisfytimelyeachoftheconditions described inSection6and7 ofthisAgreement.
b. FormD; BlueSkyLaws. TheCompanyagreestofileaFormDwithrespecttotheSecuritiesas requiredunderRegulationDandtoprovideacopythereoftotheBuyerpromptlyaftersuchfiling. TheCompanyshall, on orbefore the ClosingDate, take suchactionastheCompany shall reasonably determineis necessary to qualifythe Securitiesfor sale to theBuyerat theapplicableclosing pursuant tothisAgreement underapplicable securitiesor“blue sky” laws of thestates of theUnited States(or toobtainanexemptionfrom suchqualification),and shallprovideevidence ofanysuchactionsotaken totheBuyer onorpriorto theClosingDate.
c. Useof Proceeds.TheCompanyshallusethe proceedsforgeneralworking capital purposes.
d. RightofFirstRefusal. Unlessitshall havefirstdeliveredtotheBuyer,atleastseventytwo(72) hourspriortotheclosingofsuch FutureOffering(asdefined herein),writtennoticedescribing theproposedFutureOffering (“ROFRNotice”),includingthetermsand conditionsthereof,identityof theproposed purchaserandproposed definitivedocumentation to beenteredinto inconnectiontherewith,andproviding theBuyer an optionduring the seventytwo(72) hour period following delivery of suchnoticetopurchase thesecurities beingoffered intheFuture Offeringonthesame termsascontemplatedbysuchFutureOffering (thelimitationsreferredtointhissentence andtheprecedingsentenceare collectivelyreferredtoas the“RightofFirstRefusal”) (andsubject totheexceptions describedbelow),the Companywill not conductany equity(ordebtwithanequity component) financing inanamountlessthan$100,000(“FutureOffering(s)”) duringtheperiodbeginningonthe ClosingDateand ending six(6)months following theClosingDate.Notwithstandinganything containedherein to thecontrary, the Companyshall notconsummateanyFutureOffering withan investor, oranaffiliate ofsuch investor(collectively“Prospective Investor”),identified onanROFR Notice whereby theBuyer exerciseditsRightofFirstRefusalforaperiodofforty(45)daysfollowingsuch exercise;andany subsequentofferby aProspectiveInvestoris subject to this Section4(d)andtheRight ofFirstRefusal.In theevent thetermsand conditions of aproposedFutureOffering areamended in anyrespect afterdeliveryofthe notice to theBuyerconcerning theproposedFuture Offering,theCompanyshalldeliveranewnoticetotheBuyerdescribingtheamended termsandconditions of theproposedFuture Offeringand theBuyer thereaftershall havean optionduring the seventytwo(72)hourperiodfollowing delivery ofsuch newnotice topurchaseitsproratashareofthe securitiesbeingoffered onthesame termsascontemplatedbysuchproposed FutureOffering,asamended.Theforegoingsentenceshallapplytosuccessive amendmentstothe termsandconditionsofanyproposed FutureOffering. TheRightofFirstRefusal shallnotapply toanytransactioninvolving(i) issuancesofsecuritiesinafirm commitmentunderwritten publicoffering(excluding acontinuous offeringpursuantto Rule 415under the 1933Act) or(ii)issuances ofsecurities asconsiderationfor amerger, consolidation orpurchase ofassets,orinconnectionwithanystrategicpartnershipor jointventure(the primarypurpose ofwhich is not toraiseequitycapital),or inconnection with the disposition oracquisitionof abusiness,productorlicensebytheCompany.The RightofFirst Refusalalsoshallnot apply to the issuance ofsecurities uponexerciseorconversion of theCompany’soptions,warrantsor otherconvertible securities outstandingasof thedatehereofor to thegrant ofadditionaloptionsorwarrants,ortheissuanceofadditionalsecurities,underanyCompanystockoption or restrictedstockplan approved by the shareholders oftheCompany.
e. Expenses.AttheClosing,theCompanyshall reimburseBuyerforexpenses incurredbytheminconnection withthenegotiation,preparation, execution,deliveryandperformanceofthisAgreement andtheother agreementstobeexecutedinconnectionherewith(“Documents”), including,withoutlimitation,reasonableattorneys’and consultants’feesandexpenses, transferagentfees,fees forstockquotation services,feesrelating to anyamendmentsormodificationsof theDocumentsor anyconsentsorwaiversofprovisionsintheDocuments,feesforthepreparation ofopinions ofcounsel,escrowfees, andcosts ofrestructuring the transactionscontemplatedby theDocuments.Whenpossible, the Companymustpaythesefeesdirectly,otherwisethe Companymustmake immediatepaymentfor reimbursement to theBuyer forallfeesandexpensesimmediately uponwrittennoticeby theBuyer or the submission ofan invoice by theBuyer.TheCompany’s obligationwithrespect to thistransactionis toreimburse Buyer’expensesshallbe$2,500.
f. FinancialInformation. Uponwritten requestthe CompanyagreestosendormakeavailablethefollowingreportstotheBuyer untiltheBuyertransfers, assigns,orsells all of theSecurities:(i) withinten(10)daysafter thefilingwiththeSEC, a copy of itsAnnualReportonForm10-KitsQuarterlyReportsonForm10-QandanyCurrentReportsonForm 8-K;(ii) withinone(1)dayafterrelease, copiesofall pressreleasesissuedbytheCompanyor anyof itsSubsidiaries; and(iii)contemporaneouslywiththemakingavailable orgivingto theshareholders of theCompany,copies of any notices orotherinformationthe Companymakesavailable orgives tosuchshareholders.
g. [INTENTIONALLYDELETED]
h. Listing.TheCompanyshallpromptlysecurethelistingoftheConversion Shares uponeach nationalsecurities exchangeor automated quotationsystem, if any,uponwhichsharesofCommonStockarethen listed(subjecttoofficialnoticeofissuance)and,solongas theBuyer ownsany of theSecurities,shallmaintain,solongasany othersharesof CommonStock shallbe solisted,such listing ofallConversionShares from time to timeissuable uponconversion of theNote. The Companywillobtainand,so longastheBuyerowns anyof theSecurities, maintain the listingandtradingof its CommonStockon theOTCBB or anyequivalentreplacementexchange,the NasdaqNationalMarket(“Nasdaq”), theNasdaqSmallCapMarket(“Nasdaq SmallCap”),theNewYork StockExchange(“NYSE”),or theAmericanStockExchange (“AMEX”)andwill complyinallrespects withtheCompany’sreporting, filingandotherobligations under thebylaws orrulesoftheFinancial IndustryRegulatoryAuthority(“FINRA”) andsuch exchanges,asapplicable.The Companyshall promptly provide totheBuyercopiesofany noticesitreceivesfromtheOTCBBandanyotherexchanges orquotationsystems onwhich the CommonStockisthenlistedregardingthecontinuedeligibilityoftheCommonStockfor listing onsuchexchangesandquotationsystems.
i. CorporateExistence.SolongastheBuyerbeneficiallyownsanyNote,theCompanyshallmaintainitscorporateexistenceand shall notsellallorsubstantiallyallof theCompany’s assets,exceptin theevent of amerger or consolidation orsale ofall or substantiallyalloftheCompany’sassets, where thesurvivingorsuccessorentity insuchtransaction(i) assumestheCompany’sobligations hereunderand under theagreementsandinstrumentsenteredinto inconnectionherewith and(ii)is apubliclytradedcorporationwhoseCommonStockislisted for trading on theOTCBB,Nasdaq,NasdaqSmallCap, NYSE orAMEX.
j. NoIntegration. TheCompanyshallnot makeanyoffers orsalesofanysecurity(otherthantheSecurities)undercircumstancesthatwouldrequireregistrationoftheSecurities beingofferedorsoldhereunderunderthe1933ActorcausetheofferingoftheSecuritiesto beintegratedwithanyotheroffering ofsecurities bytheCompanyfor thepurpose ofanystockholder approvalprovisionapplicabletotheCompany orits securities.
k. Breachof Covenants.IftheCompanybreachesanyofthecovenantsset forthinthisSection4,andinadditiontoanyotherremedies availabletotheBuyerpursuantto thisAgreement, itwillbe consideredaneventofdefaultunderSection 3.4of theNote.
l. �� Failureto Complywiththe1934Act.SolongastheBuyerbeneficiallyownstheNote,theCompanyshallcomplywiththereportingrequirementsofthe1934Act;and the Companyshall continuetobesubject tothereporting requirementsof the 1934Act.
m. TradingActivities. Neitherthe Buyernor itsaffiliateshasan openshort position in the commonstock oftheCompanyand theBuyer agreethat itshall not,andthatitwillcauseitsaffiliatesnotto,engageinanyshortsalesoforhedgingtransactionswith respectto the commonstockofthe Company.
5. TransferAgent Instructions.TheCompanyshallissueirrevocableinstructionstoitstransferagenttoissuecertificates,registeredinthenameoftheBuyeroritsnominee, fortheConversion Sharesinsuch amountsasspecifiedfrom timetotimeby theBuyerto the Company uponconversion of theNoteinaccordancewith theterms thereof(the“IrrevocableTransferAgent Instructions”). Intheevent thattheBorrower proposestoreplaceitstransferagent, theBorrower shallprovide,prior to theeffectivedateofsuchreplacement,a fullyexecutedIrrevocableTransferAgent Instructions in aformasinitiallydelivered pursuant to thePurchase Agreement(including but notlimitedto theprovision to irrevocablyreserve shares of CommonStock in theReserved Amount) signedby thesuccessortransfer agent toBorrowerandtheBorrower.Prior toregistrationof the ConversionSharesunder the 1933Act or thedate onwhichtheConversionSharesmaybe sold pursuant to Rule 144without anyrestriction as tothenumberof Securitiesasof aparticulardatethatcan then be immediatelysold,all suchcertificatesshallbeartherestrictivelegendspecifiedinSection 2(g) ofthisAgreement. The Companywarrantsthat:(i)noinstructionotherthantheIrrevocableTransferAgent InstructionsreferredtointhisSection5,andstoptransferinstructionstogiveeffecttoSection2(f)hereof (in thecase of the ConversionShares, prior toregistration of the ConversionShares under the 1933Act or the date onwhichtheConversionShares maybesoldpursuant to Rule 144without anyrestrictionasto the numberofSecuritiesas of aparticulardatethatcanthenbe immediatelysold), will begivenby the Company to itstransferagent andthattheSecuritiesshallotherwisebe freelytransferable on the booksandrecords of the Companyas and to the extentprovided in thisAgreement and theNote;(ii) itwillnotdirect itstransferagentnot totransferordelay, impair,and/orhinderitstransfer agentintransferring (orissuing)(electronically or incertificatedform)anycertificateforConversion Shares to beissued to theBuyer uponconversion of orotherwisepursuantto theNoteasand whenrequiredby theNote and thisAgreement;and (iii) itwill notfail toremove (ordirects itstransferagent not to remove or impairs,delays, and/orhindersitstransfer agentfromremoving)anyrestrictive legend(or towithdrawanystoptransferinstructions inrespect thereof) on anycertificateforany ConversionSharesissuedto theBuyer uponconversion of orotherwisepursuant to theNote asandwhenrequiredby theNoteand thisAgreement.Nothing in thisSectionshallaffect in anyway theBuyer’s obligationsandagreement setforth inSection2(g)hereof to complywithallapplicable prospectus deliveryrequirements, ifany,uponre-saleof theSecurities.If theBuyer provides theCompany,at thecost of theBuyer, with(i)an opinion of counsel inform, substanceandscopecustomary for opinions incomparabletransactions,to theeffectthat a publicsale ortransfer ofsuchSecuritiesmaybemade withoutregistration under the 1933Act and suchsaleortransferiseffected or(ii) theBuyerprovidesreasonableassurances thattheSecuritiescanbesoldpursuanttoRule144, the Companyshallpermitthetransfer,and,in the caseof the ConversionShares,promptlyinstructitstransferagenttoissue one ormorecertificates, freefromrestrictivelegend,insuchnameand in such denominationsasspecified by theBuyer.The Companyacknowledgesthat abreach by it ofitsobligations hereunderwillcause irreparableharm to theBuyer,by vitiating theintentandpurposeofthetransactionscontemplated hereby.Accordingly, the Companyacknowledges that the remedyatlaw for abreach of itsobligationsunderthisSection 5 maybeinadequate andagrees, in theevent of abreachorthreatened breach by the Company of theprovisionsof thisSection,thattheBuyershallbeentitled, inaddition toall otheravailableremedies,toaninjunctionrestraininganybreachandrequiring immediatetransfer,withoutthe necessity ofshowing economiclossandwithout any bond orothersecuritybeingrequired.
6. Conditionsto theCompany’sObligationtoSell. TheobligationoftheCompanyhereundertoissueand selltheNotetotheBuyerattheClosingissubjecttothesatisfaction,atorbeforetheClosingDateofeach ofthefollowingconditionsthereto,providedthat theseconditions arefor theCompany’ssolebenefit andmay bewaived by the Companyat any timein its sole discretion: sametotheCompany.
The Buyershall haveexecutedthisAgreementanddeliveredthe:
a. TheBuyershallhavedeliveredthePurchasePriceinaccordancewith Section1(b) above.
b. Therepresentations andwarranties ofthe Buyershall betrueandcorrectinall materialrespectsas ofthedatewhenmade andasoftheClosingDateasthough madeatthattime(except forrepresentationsand warrantiesthatspeakasofaspecificdate),and theBuyershall haveperformed, satisfiedandcompliedinallmaterialrespects with thecovenants,agreementsandconditionsrequiredby thisAgreementtobeperformed,satisfiedorcomplied with by theBuyerat orpriorto theClosingDate.
c. Nolitigation, statute,rule, regulation,executive order,decree, rulingorinjunction shallhavebeenenacted,entered,promulgatedorendorsed byorinanycourtorgovernmentalauthorityofcompetentjurisdictionoranyself-regulatoryorganization having authority over thematterscontemplatedhereby whichprohibits theconsummationof anyof thetransactions contemplatedby thisAgreement.
7. ConditionstoTheBuyer’s ObligationtoPurchase. TheobligationoftheBuyerhereundertopurchasetheNoteattheClosingissubjecttothesatisfaction,atorbeforetheClosingDateofeachofthefollowingconditions, providedthattheseconditions arefortheBuyer’s sole benefitand maybe waivedby the Buyeratany timein its sole discretion: thesameto theBuyer.
a. TheCompanyshallhaveexecutedthisAgreementand delivered
b. TheCompanyshallhave deliveredtotheBuyerthedulyexecutedNote (insuch denominationsasthe Buyer shallrequest)inaccordancewithSection1(b) above.
c. TheIrrevocable TransferAgent Instructions, informand substancesatisfactorytoamajority-in-interest of theBuyer,shall havebeendeliveredtoand acknowledgedinwritingbythe Company’s TransferAgent.
d. Therepresentations andwarrantiesoftheCompanyshallbetrueandcorrectinallmaterialrespectsasof thedatewhen madeandasoftheClosingDate asthoughmadeatsuchtime(except forrepresentationsandwarranties thatspeakasof aspecificdate) andthe Company shallhaveperformed, satisfiedandcomplied inall materialrespectswiththecovenants, agreementsandconditionsrequiredby thisAgreement to beperformed, satisfied orcompliedwithby the Companyat orpriorto theClosingDate.TheBuyer shallhavereceivedacertificateorcertificates,executedbythechief executiveofficerofthe Company,datedas of theClosingDate,totheforegoing effectandastosuchother mattersasmaybereasonablyrequestedby theBuyerincluding, but notlimited tocertificateswith respect to theCompany’sCertificateofIncorporation,By-laws andBoard ofDirectors’resolutionsrelating to thetransactions contemplated hereby.
e. Nolitigation, statute,rule, regulation,executive order,decree, rulingorinjunction shallhavebeenenacted,entered,promulgatedorendorsed byorinanycourtorgovernmentalauthorityofcompetentjurisdictionoranyself-regulatoryorganization having authority over thematterscontemplatedhereby whichprohibits theconsummationof anyof thetransactions contemplatedby thisAgreement.
f. Noevent shallhave occurredwhich couldreasonably beexpectedtohaveaMaterialAdverseEffect ontheCompanyincludingbutnotlimitedtoachangeinthe1934Actreporting statusoftheCompanyorthefailureoftheCompanytobetimelyinits1934Act reportingobligations.
g. TheConversion SharesshallhavebeenauthorizedforquotationontheOTCBBandtradingintheCommonStockontheOTCBBshallnothavebeensuspendedbythe SEC orthe OTCBB.
h. TheBuyershallhave receivedanofficer’scertificate describedinSection3(c)above, datedasofthe ClosingDate.
8. GoverningLaw;Miscellaneous.
a. GoverningLaw.ThisAgreementshallbegovernedbyand construedinaccordance withthelawsoftheStateofNew Yorkwithoutregardtoprinciplesofconflictsoflaws.Any actionbroughtbyeither partyagainst theother concerning thetransactionscontemplatedbythisAgreement shallbebroughtonlyin thestatecourtsof NewYork or in thefederal courtslocated in the stateand county of Nassau.Thepartiesto thisAgreement herebyirrevocablywaiveanyobjection tojurisdictionandvenue ofanyactioninstitutedhereunder andshallnotassertanydefense based onlack of jurisdiction orvenueorbased uponforum nonconveniens.The CompanyandBuyerwaivetrialbyjury.The prevailing partyshall beentitled torecoverfromtheother party itsreasonableattorney'sfeesand costs.In theeventthatanyprovisionof thisAgreement oranyotheragreement deliveredinconnectionherewithisinvalid orunenforceable under anyapplicablestatuteorrule oflaw,then suchprovisionshallbe deemedinoperative totheextentthatitmayconflict therewithandshallbedeemedmodified toconform withsuchstatuteorruleoflaw.Anysuchprovisionwhichmayproveinvalidorunenforceableunder any lawshallnotaffectthevalidityorenforceabilityof anyotherprovisionofanyagreement.Each party herebyirrevocablywaivespersonalserviceofprocessandconsentstoprocessbeingservedinany suit,actionorproceeding inconnectionwith thisAgreementoranyotherTransaction Documentbymailinga copythereof viaregistered orcertifiedmailorovernight delivery(with evidenceofdelivery)tosuch partyattheaddressineffect fornotices to it under thisAgreement andagreesthat suchserviceshall constitutegoodandsufficient serviceofprocess andnoticethereof.Nothing contained hereinshall be deemed to limit in anywayany right toserve process in anyother manner permitted bylaw.
b. Counterparts.This Agreementmaybeexecutedinoneormorecounterparts, eachofwhichshallbedeemedan originalbutallofwhichshallconstituteoneandthesame agreementandshallbecome effectivewhencounterpartshave beensignedbyeachpartyanddelivered to theother party.
c. Headings.TheheadingsofthisAgreementareforconvenienceofreferenceonlyandshallnotformpartof,oraffectthe interpretationof, thisAgreement.
d. Severability.IntheeventthatanyprovisionofthisAgreementisinvalidorunenforceableunderanyapplicablestatuteorruleoflaw,thensuchprovisionshallbedeemedinoperativetotheextentthatitmayconflict therewithandshallbedeemed modified toconformwithsuch statute orrule oflaw.Anyprovisionhereof which may proveinvalid orunenforceable underanylaw shallnotaffectthevalidity orenforceabilityofany otherprovisionhereof.
e. EntireAgreement; Amendments.ThisAgreementandtheinstruments referencedhereincontaintheentireunderstandingofthepartieswith respecttothematterscovered hereinandtherein and,exceptasspecificallysetforthhereinortherein,neither the Company nor theBuyermakes any representation,warranty, covenant orundertakingwith respecttosuch matters.Noprovisionof thisAgreementmaybewaivedoramendedotherthan byaninstrumentin writingsigned by the majority ininterestof theBuyer.
f. Notices.All notices,demands,requests,consents,approvals,and othercommunicationsrequiredorpermittedhereundershallbeinwritingand, unlessotherwise specifiedherein,shallbe(i)personallyserved,(ii)depositedinthemail,registeredorcertified,returnreceiptrequested,postage prepaid,(iii)deliveredbyreputableaircourierservicewithcharges prepaid,or(iv)transmittedbyhanddelivery, telegram,or facsimile,addressedas setforthbelowortosuchotheraddressassuchpartyshallhave specifiedmostrecentlybywrittennotice.Anynotice or othercommunication required orpermitted to begiven hereundershallbedeemed effective (a) uponhand deliveryor delivery byfacsimile,withaccurate confirmationgeneratedbythetransmittingfacsimilemachine,attheaddress ornumberdesignated below(if delivered on a businessday duringnormal businesshourswhere such noticeis to bereceived),or thefirstbusinessdayfollowingsuch delivery(ifdeliveredotherthanonabusinessdayduringnormalbusinesshours 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-SIGNER,INC.
8275 SouthEastern Avenue-Suite 200-661
LasVegas,NV89123
Attn: KURTISA. KRAMARENKO,ChiefExecutiveOfficer
facsimile:[enter faxnumber]
With acopybyfaxonlyto(which copyshall notconstitute notice):
[enter name oflaw firm]
Attn: [attorneyname]
[enter addressline1]
[enter city, state,zip]
facsimile: [enter faxnumber]
IftotheBuyer:
KBM WORLDWIDE,INC.
80CuttermillRoad –Suite410
GreatNeck,NY11021
Attn: SethKramer, President
e-mail:info@kwbmlaw.com
With acopybyfaxonlyto(which copyshall not constitute notice):
NaidichWurman Birnbaum & MadayLLP
Attn: Bernard S.Feldman,Esq.
facsimile: 516-466-3555
e-mail: dyork@nwbmlaw.com
Eachpartyshallprovide noticeto the otherpartyofanychangeinaddress.
g. Successorsand Assigns.ThisAgreementshallbebindinguponandinuretothebenefitoftheparties andtheirsuccessorsand assigns.NeithertheCompany northeBuyershall assignthisAgreementoranyrightsorobligationshereunderwithoutthepriorwritten consentof the other.Notwithstandingtheforegoing,subject to Section2(f), theBuyer mayassignitsrightshereunder toanyperson thatpurchasesSecuritiesin aprivatetransactionfromtheBuyeror to anyof its“affiliates,”as thatterm isdefinedunder the 1934 Act,without the consentofthe Company.
h. ThirdPartyBeneficiaries. ThisAgreementisintendedforthebenefitofthe partiesheretoandtheir respectivepermittedsuccessorsand assigns,andisnotforthe benefitof, normayanyprovisionhereofbeenforcedby,anyotherperson.
i. Survival.The representationsand warrantiesof theCompanyand theagreementsandcovenants setforthinthisAgreement shallsurvivetheclosinghereundernotwithstandinganyduediligenceinvestigationconducted byor onbehalf oftheBuyer. The Companyagrees to indemnifyand holdharmlesstheBuyerandall theirofficers,directors,employees and agents for loss ordamagearising as aresultofor relatedto any breachoralleged breach bythe Company ofanyof itsrepresentations, warrantiesand covenantssetforth in thisAgreementor any ofitscovenants andobligationsunderthisAgreement, includingadvancement ofexpensesas they are incurred.
j. Publicity.TheCompany,andtheBuyershallhavetherighttoreviewareasonableperiodoftimebeforeissuanceof anypressreleases, SEC,OTCBBorFINRAfilings,oranyotherpublicstatements withrespecttothetransactionscontemplated hereby;provided,however,thatthe Company shall beentitled,withoutthepriorapproval of theBuyer,tomakeanypressreleaseorSEC, OTCBB(orotherapplicabletradingmarket) orFINRA filingswithrespect tosuch transactions as isrequiredbyapplicablelawand regulations(althoughtheBuyershallbeconsultedbytheCompanyinconnectionwithanysuchpressreleasepriorto 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.ThelanguageusedinthisAgreementwillbedeemedtobethelanguagechosenbythepartiestoexpresstheir mutualintent,andnorulesofstrictconstruction will beappliedagainstanyparty.
m. Remedies. TheCompanyacknowledgesthatabreachbyitofits obligationshereunderwillcauseirreparableharmtothe Buyerbyvitiatingthe intent and purpose of the transactioncontemplated hereby.Accordingly, the Company acknowledges thatthe remedy at lawfor a breach of its obligations under thisAgreementwill be inadequate andagrees, in the event of a breach orthreatened breach bythe Company ofthe provisions of this Agreement, that the Buyer shallbe entitled, in addition to all other availableremedies at lawor in equity, and in addition tothe penalties assessable herein, to an injunction or injunctions restraining, preventing or curing any breach of this Agreement and to enforce specificallythe terms and provisions hereof, without the necessity of showing economic loss and without any bond or other security beingrequired.
IN WITNESSWHEREOF,theundersignedBuyerandtheCompanyhavecausedthis Agreementtobedulyexecutedas of the datefirst abovewritten.
CO-SIGNER, INC.
/s/ Kurtis A. Kramarenko
By: Kurtis A. Kramarenko
Chief Executive Officer
KBM WORLDWIDE, INC.
/s/ Seth Kramer
By: Seth Kramer
Title: President
80 Cuttermill Road - Suite 410
Great Neck, NY 11021
| AGGREGATE SUBSCRJPTIONAMOUNT: | |
| Aggregate PrincipalAmountofNote: | $32,500.00 |
| Aggregate PurchasePrice: | $32,500.00 |
K-1149(2) 6-5-2014 irary@co-signer.com | |
| kurt@co-signer.com | |
