SECURITIESPURCHASEAGREEMENT
ThisSECURITIESPURCHASEAGREEMENT(the"Agreement"),datedasof September4,2014,byandbetween AL.KAME HOLDINGS,INC., a Nevadacorporation,with headquarters located at 3651 Lindell Road - Suite D#356, Las Vegas, NV 89013 (the"Company"),and KBM WORLDWIDE, INC., a New York corporation, with its address at 80 Cuttermill Road,Suite 410, Great Neck, NY 11021 (the"Buyer").
WHEREAS:
A. TheCompanyandtheBuyerareexecutinganddeliveringthisAgreementin relianceupontheexemptionfrom securities registration afforded bytherulesandregulations as promulgated by the United States SecuritiesandExchangeCommission (the "SEC")underthe Securities Actof 1933, as amended (the"1933Act");
B. BuyerdesirestopurchaseandtheCompanydesirestoissueandsell,uponthe termsandconditionssetforthin this Agreementan8% convertible noteof the Company, in the formattached hereto as ExhibitA,in the aggregateprincipal amountof$42,500.00 (together withany note(s) issued in replacementthereof or as a dividend thereon or otherwisewith respect thereto in accordance withthe terms thereof, the"Note"), convertible intosharesof common stock,$0.001 parvalue per share, of theCompany (the"CommonStock"), uponthe terms and subject to the limitations and conditions set forth in such Note.
C. TheBuyerwishestopurchase,uponthetermsandconditionsstatedinthis Agreement,suchprincipalamountofNoteasis setforthimmediately below its nameon thesignaturepages hereto; and
NOWTHEREFORE,theCompanyandtheBuyerseverally(andnotjointly)hereby agreeasfollows:
1. PurchaseandSale ofNote.
a. PurchaseofNote.OntheClosingDate(asdefinedbelow),the CompanyshallissueandselltotheBuyerandthe Buyer agrees to purchasefrom the Company suchprincipalamount of Note as is set forth immediatelybelow the Buyer's name on the signature pages hereto.
b. FormofPayment.OntheClosingDate(asdefinedbelow),(i)the Buyershallpaythepurchasepriceforthe Note to be issuedand sold to it at the Closing (as definedbelow) (the"PurchasePrice") by wire transferof immediately available funds to the Company, in accordance withthe Company's written wiring instructions,against deliveryof the Notein theprincipal amount equal to thePurchasePrice as is set forthimmediately belowthe Buyer's name on thesignaturepages hereto,and (ii) theCompany shalldeliver such duly executedNoteon behalfof theCompany,to the Buyer,against delivery of such Purchase Price.
c. ClosingDate.Subjecttothesatisfaction(orwrittenwaiver)ofthe conditionstheretosetforthinSection6andSection 7below, the date andtimeof theissuance and sale of the Note pursuant to this Agreement (the"ClosingDate")shallbe 12:00noon, Eastern Standard Timeon orabout September 8, 2014,orsuch other mutually agreedupon time. Theclosingof thetransactions contemplated by this Agreement (the"Closing")shalloccur on theClosingDate at such location as may be agreed to by the parties.
2. Buyer'sRepresentationsandWarranties.TheBuyerrepresentsand warrantstotheCompanythat:
a. InvestmentPurpose.Asofthedatehereof,theBuyeris purchasingtheNoteandthesharesofCommon Stock issuable upon conversion ofor otherwise pursuant totheNote(including,without limitation, such additional shares of Common Stock,ifany, as are issuable (i) on accountof intereston the Note,(ii) as aresult of the events describedin Sections 1.3 and 1.4(g) of the Note or (iii)inpayment ofthe Standard Liquidated Damages Amount(asdefined in Section 2(f)below) pursuantto thisAgreement, suchsharesof Common Stockbeingcollectively referred toherein as the"ConversionShares" and, collectively with the Note, the"Securities")forits ownaccount andnotwitha present viewtowardsthepublic sale ordistribution thereof,exceptpursuanttosales registered or exempted from registration underthe 1933Act; provided, however, that bymakingthe representationsherein, the Buyer does not agreetoholdanyof the Securitiesforany minimum orotherspecific term andreservestheright todisposeof theSecurities atany time inaccordance with orpursuant to a registration statement or anexemption under the 1933 Act.
b. AccreditedInvestorStatus.TheBuyerisan"accreditedinvestor" asthattermisdefinedinRule501(a)ofRegulationD(an"AccreditedInvestor").
c. RelianceonExemptions.TheBuyerunderstandsthattheSecuritiesarebeingofferedandsoldtoitinrelianceupon specific exemptions fromtheregistration requirements of United States federal andstatesecuritieslawsand that theCompany isrelying upon thetruth and accuracy of, and the Buyer's compliance with, the representations, warranties, agreements, acknowledgments and understandings of theBuyer set forth herein in order todetermine the availability of suchexemptions and theeligibility of the Buyer toacquire theSecurities.
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d. Information.TheBuyeranditsadvisors,ifany,havebeen,andfor solongas theNoteremainoutstandingwill continue to be,furnished with allmaterialsrelating to the business, finances and operations ofthe Company and materials relating to the offer and sale of the Securities which have been requestedby the Buyer oritsadvisors. TheBuyerandits advisors, if any, have been, and for solong as theNote remain outstanding willcontinue tobe, afforded theopportunity to ask questions of the Company. Notwithstanding the foregoing, the Company hasnotdisclosedto theBuyerany materialnonpublic information andwill not disclose suchinformation unless such information is disclosedto thepublic priorto or promptly following such disclosure to the Buyer. Neithersuch inquiries nor any other due diligence investigation conducted by Buyer or any of itsadvisors or representatives shall modify,amend or affect Buyer'srighttorely on theCompany'srepresentations and warrantiescontained in Section 3below.The Buyer understands thatits investment intheSecuritiesinvolvesa significantdegree of risk.The Buyer isnotaware of anyfacts thatmayconstitute a breach ofany of the Company's representations andwarranties madeherein.
e. GovernmentalReview.TheBuyerunderstandsthatnoUnited Statesfederalorstateagencyoranyothergovernmentorgovernmentalagencyhaspassedupon ormade any recommendationor endorsementof theSecurities.
f. TransferorRe-sale.TheBuyer understandsthat(i)thesaleorre- saleoftheSecuritieshasnotbeenand is not being registered underthe 1933 Act orany applicablestate securities laws, and theSecurities may not be transferred unless (a) the Securities are sold pursuant to an effective registration statement under the 1933 Act, (b) theBuyer shall have delivered to theCompany, at thecostof the Buyer, an opinion of counsel that shall beinform, substance and scopecustomary foropinions of counsel in comparable transactionsto the effect that theSecurities to besold or transferredmay be sold or transferredpursuant to an exemption from such registration, which opinion shall be acceptedby the Company, (c)the Securities are soldor transferred to an"affiliate"(as definedin Rule 144 promulgated underthe 1933 Act (or asuccessor rule) ("Rule 144")) of the Buyer who agreestosellor otherwise transferthe Securities onlyin accordance with thisSection 2(f)and who is anAccredited Investor, (d) the Securities are sold pursuant to Rule 144, or (e) the Securities are soldpursuant to Regulation Sunderthe 1933 Act(or a successor rule)("Regulation S"),and the Buyershall have delivered tothe Company, at thecostoftheBuyer, an opinion ofcounsel that shallbe in form, substance and scopecustomary foropinions of counsel incorporatetransactions, which opinion shall be accepted bythe Company; (ii) any sale ofsuch Securities made in reliance on Rule 144 may be made only in accordance with the terms of said Rule and further, if said Rule is not applicable, any re-sale of such Securities under circumstancesin whichthe seller (or the person through whom the sale is made) may be deemed to be an underwriter(as that term is definedinthe 1933 Act) may requirecompliance withsome other exemption under the1933 Act or the rules and regulationsof the SEC thereunder; and (iii) neither the Companynor any other person is under any obligation to register such Securities under the 1933 Actor any state securities lawsor tocomply withthe termsand conditions of any exemptionthereunder (ineach case). Notwithstanding the foregoing or anything else contained herein to the contrary, theSecurities may be pledged as collateral in connection withabonafide margin account or other lending arrangement.
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g. Legends.TheBuyerunderstandsthattheNoteand,untilsuchtime as theConversionShareshavebeenregistered under the 1933Act maybesoldpursuant to Rule 144or Regulation S without anyrestriction as to the number of securities as of aparticular date thatcan then beimmediately sold, the Conversion Shares may bear a restrictive legendin substantiallythe followingform (anda stop-transfer ordermay beplaced against transfer of the certificates forsuchSecurities):
"NEITHERTHE ISSUANCEANDSALEOFTHESECURITIES REPRESENTEDBYTHIS CERTIFICATE NOR THE SECURITIESINTOWIDCHTHESESECURITIESARE EXERCISABLEHAVEBEENREGISTEREDUNDERTHESECURITIES ACTOF1933, AS AMENDED,ORAPPLICABLE STATE SECURITIES LAWS. THE SECURITIESMAYNOT BE OFFEREDFOR SALE,SOLD, TRANSFERRED ORASSIGNED(I) IN THE ABSENCE OF(A)AN EFFECTIVE REGISTRATION STATEMENTFORTHESECURITIES UNDERTHE SECURITIES ACTOF 1933, ASAMENDED, OR (B)AN OPINION OF COUNSEL (WHICHCOUNSEL SHALLBESELECTED BY THEBOLDER), IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATIONISNOT REQUIRED UNDERSAIDACT OR(II) UNLESS SOLD PURSUANT TORULE 144 OR RULE 144AUNDER SAIDACT. NOTWITHSTANDING THE FOREGOING,THE SECURITIESMAY BE PLEDGED IN CONNECTIONWITHA BONA FIDE MARGIN ACCOU NT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES."
ThelegendsetforthaboveshallberemovedandtheCompanyshallissueacertificate withoutsuchlegendtotheholderof any Security upon whichit is stamped,if, unless otherwise required by applicable state securities laws,(a)such Security isregistered for saleunder an effective registrationstatementfiled underthe 1933 Act orotherwisemay besoldpursuant to Rule144 or Regulation S withoutany restrictionas to the number of securities as of a particular date that can then be immediatelysold, or (b) such holder provides the Company with an opinion of counsel, in form, substance and scope customary for opinions of counselin comparable transactions, totheeffect that apublic sale or transfer ofsuch Security may be made without registrationunder the 1933 Act, which opinion shall be accepted by the Companysothat thesale or transferis effected. TheBuyeragreestosell all Securities,including those represented bya certificate(s) from which thelegend has been removed, in compliance with applicable prospectus delivery requirements, ifany. In the event thatthe Company does not accept the opinion of counselprovided by theBuyer with respect to the transfer of Securities pursuant to an exemption fromregistration, suchas Rule 144 or Regulation S, at the Deadline, it will beconsideredanEventof Default pursuant to Section 3.2 of the Note.
h. Authorization;Enforcement.ThisAgreementhasbeendulyand validlyauthorized.ThisAgreementhasbeendulyexecutedanddeliveredonbehalfofthe Buyer,and thisAgreement constitutes a valid and binding agreement of the Buyer enforceable in accordancewith its terms.
i.Residency.TheBuyerisaresidentofthejurisdictionsetforth immediatelybelowtheBuyer'sname on the signaturepages hereto.
3. RepresentationsandWarrantiesoftheCompany. TheCompany representsandwarrantstotheBuyerthat:
a. OrganizationandQualification.TheCompanyandeachofitsSubsidiaries(asdefinedbelow),ifany,isacorporationdulyorganized,validly existing and in good standingunder the laws of the jurisdiction in which itisincorporated,with full powerand authority (corporate and other) to own,lease,use and operate its properties and to carry onits businessasand where now owned, leased,used,operated and conducted. Schedule 3(a) sets forth a list of allof the Subsidiaries of theCompanyand the jurisdiction in which each isincorporated. The Company andeach of its Subsidiariesis dulyqualified asa foreign corporation todo businessandisin good standing in every jurisdiction in which its ownershiporuseof property or the nature ofthe business conducted byit makes suchqualification necessaryexcept where the failure to be so qualifiedor in goodstanding wouldnot have a Material AdverseEffect."Material Adverse Effect" means any material adverse effect on the business,operations, assets,financialcondition or prospectsof the Company or its Subsidiaries, if any,taken as a whole,or on thetransactions contemplated herebyor by the agreementsor instruments to beentered intoinconnection herewith."Subsidiaries" means any corporation or other organization,whetherincorporated or unincorporated,in which the Company owns, directly or indirectly, any equity orother ownership interest.
b. Authorization;Enforcement.(i)TheCompanyhasallrequisite corporatepowerandauthoritytoenterintoandperformthisAgreement,the Note and to consummate the transactions contemplatedherebyand thereby andto issue the Securities, in accordancewith the termshereofand thereof, (ii)the execution anddeliveryof this Agreement, the Note by theCompany and the consummationby it of the transactions contemplated hereby and thereby (includingwithout limitation,theissuanceof the Noteand theissuanceand reservation for issuance oftheConversion Shares issuableupon conversion orexercise thereof) havebeen duly authorizedbytheCompany's Board of Directorsandnofurtherconsentor authorization of the Company, its BoardofDirectors,or its shareholders is required, (iii)this Agreementhas been duly executedanddelivered bythe Companybyits authorized representative,and such authorized representative is the trueandofficial representative with authoritytosign this Agreement and the other documents executed inconnection herewith and bindtheCompany accordingly,and (iv) this Agreement constitutes,and upon execution and delivery by theCompanyof theNote, each ofsuch instruments will constitute,alegal,valid andbinding obligation of theCompanyenforceableagainst the Company in accordancewith its terms.
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c. | Capitalization.Asofthedatehereof,theauthorizedcapitalstock |
oftheCompanyconsistsof:(i)900,000,000authorizedsharesofCommonStock,$0.001par valuepershare,ofwhich 69,878,939 sharesare issued and outstanding;and(ii) 20,000,000 shares of PreferredStock, $0.001 par value per share:
SeriesAConvertiblePreferredstock-$.001parvalue,12,000,000 sharesdesignated;12,000,000sharesissuedandoutstanding
SeriesBConvertiblePreferredstock-$.001parvalue,70,000,000 sharesdesignated;65,210,834sharesissuedandoutstanding
SeriesCConvertiblePreferredstock-$.001parvalue,10,000,000 sharesdesignated;nosharesissuedandoutstanding
nosharesarereservedforissuancepursuanttotheCompany'sstockoptionplans,nosharesare reservedforissuancepursuanttosecurities (other than theNote anda prior convertible promissorynote infavor of the Buyer:
(a)priorconvertiblepromissorynoteinfavor oftheBuyerdatedAugust6,2014inthe amountof$68,000.00forwhich6,000,000 sharesof Common Stock are presently reserved)
exercisablefor,orconvertibleintoorexchangeableforsharesofCommonStockand1,500,000 sharesarereservedforissuance uponconversion of the Note. All of such outstanding sharesof capital stockare,orupon issuance will be, dulyauthorized, validly issued, fully paid and nonassessable. No sharesofcapital stock ofthe Company aresubjecttopreemptive rights orany othersimilarrights ofthe shareholders of the Company oranyliens or encumbrances imposed throughtheactionsorfailure toact of the Company. Asof the effectivedateof this Agreement, (i) there are no outstanding options, warrants, scrip, rights to subscribe for, puts, calls, rights of first refusal, agreements, understandings, claims or other commitments or rights of any character whatsoeverrelating to, or securities or rights convertible into or exchangeable for any shares of capital stock of the Company or any of its Subsidiaries, or arrangements by which the Company or any of its Subsidiaries is or may become bound to issue additional shares of capital stock ofthe Company or any of its Subsidiaries, (ii) there are no agreements or arrangements under which the Companyor anyofitsSubsidiariesisobligatedtoregister thesale ofanyofitsor theirsecurities under the 1933 Act and (iii) there are no anti-dilutionor price adjustment provisions contained inany security issued by the Company (or inanyagreement providingrights tosecurity holders) that willbe triggered by theissuanceof theNoteor the Conversion Shares. The Company has furnished to the Buyer true and correct copies of the Company's Certificate of Incorporation as in effect on the date hereof ("Certificate of Incorporation"), the Company's Bylaws, as in effect on the date hereof (the"By-laws"),and the terms of all securities converti bleinto orexercisable for Common Stockof the Companyand the material rights ofthe holders thereof inrespect thereto. TheCompany shall providethe Buyer with a writtenupdate ofthis representation signed by the Company's ChiefExecutive on behalf of theCompany as of the ClosingDate.
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d. Issuance ofShares.TheConversion Sharesaredulyauthorizedandreservedforissuanceand,uponconversion oftheNoteinaccordancewithitsrespectiveterms, will be validly issued, fully paid and non-assessable, and free from all taxes,liens, claims and encumbranceswithrespect to the issue thereofand shall not be subject to preemptive rights or othersimilarrightsof shareholders of the Company and will not impose personal liabilityupon theholder thereof.
e. AcknowledgmentofDilution.TheCompanyunderstandsandacknowledgesthepotentiallydilutive effecttotheCommonStockupontheissuanceof the ConversionShares upon conversionof the Note. The Company further acknowledges that its obligation toissue Conversion Sharesupon conversionofthe Note inaccordancewith this Agreement, theNoteis absolute and unconditional regardlessof the dilutive effect that such issuance may have ontheownership interests ofother shareholders of the Company.
f. NoConflicts.Theexecution,deliveryandperformanceofthis Agreement,the NotebytheCompanyandtheconsummationbytheCompany of thetransactions contemplated hereby and thereby (including,without limitation,the issuance and reservation forissuanceof the Conversion Shares) will not (i) conflict withor resultin a violationof any provision of theCertificate ofIncorporation orBy-laws, or (ii)violate orconflictwith, or result in a breachofany provision of, or constitute a default(oran event which with notice orlapseof time orboth could become adefault) under, orgiveto others anyrights oftermination, amendment, acceleration or cancellation of, any agreement, indenture, patent, patent license or instrumentto whichtheCompanyor anyof itsSubsidiariesis a party,or(iii) resultin a violationof anylaw, rule,regulation,order, judgment or decree(including federal andstate securities laws and regulations andregulations ofany self-regulatory organizations to which the Companyoritssecurities aresubject) applicable totheCompany orany of its Subsidiariesor by whichany property or assetof the Company or any of its Subsidiariesis bound or affected (except for such conflicts, defaults,terminations, amendments, accelerations, cancellations and violationsas would not,individuallyor inthe aggregate, havea MaterialAdverseEffect). Neither the Companynor anyofits Subsidiaries is in violation of its Certificate of Incorporation,By-lawsor other organizational documents andneither the Company nor anyof its Subsidiaries is indefault (and no event hasoccurred which with noticeorlapse of time orbothcould put the Company or any ofits Subsidiaries in default) under, and neither the Company nor any ofits Subsidiaries hastakenany action or failedtotake anyaction that would give toothers anyrights of termination, amendment,acceleration or cancellationof,any agreement, indenture or instrument to which the Company or any of its Subsidiaries isaparty or by which any property or assets of the Company or any of its Subsidiaries is bound or affected,except for possible defaults as wouldnot, individually or in the aggregate,havea Material Adverse Effect. Thebusinessesof theCompany andits Subsidiaries,if any,arenot beingconducted,andshallnotbe conducted so long as the Buyer owns any of the Securities,inviolation of any law, ordinance or regulation of any governmental entity. Except as specifically contemplated by this Agreement and asrequired under the 1933 Actand any applicable statesecurities laws,theCompany isnot required toobtain anyconsent, authorization or orderof,or make anyfilingor registration with,anycourt,governmental agency,regulatory agency,selfregulatory organization or stockmarket oranythird party in order foritto execute, deliver orperform any of itsobligations under this Agreement,the Note in accordance with the termshereof orthereofor to issue and sell the Notein accordancewiththe terms hereof and to issue the Conversion Shares upon conversion ofthe Note. All consents,authorizations,orders,filings and registrations which theCompanyis required to obtainpursuant tothepreceding sentencehave been obtained oreffected onor prior tothe date hereof.If the Companyis listed onthe OTCBB,the Company isnot in violation of thelisting requirements of the Over-the-CounterBulletin Board (the"OTCBB") and does not reasonably anticipate thatthe Common Stockwill be delisted by the OTCBB in the foreseeable future.The Companyand its Subsidiaries are unawareof any facts or circumstances which might give riseto anyof theforegoing.
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g. SECDocuments;FinancialStatements.TheCompanyhastimely filedallreports,schedules,forms,statementsandotherdocuments required to befiledby itwith the SEC pursuanttothe reporting requirements of the Securities Exchange Act of1934,as amended (the"1934 Act") (all of theforegoing filed prior tothe date hereof andall exhibits included thereinandfinancial statements andschedules theretoand documents (other than exhibits to suchdocuments) incorporatedbyreference therein,being hereinafter referredto herein as the"SECDocuments"). Upon writtenrequestthe Company will deliver tothe Buyer true and complete copiesof the SEC Documents,except forsuch exhibits and incorporateddocuments.As oftheir respectivedates,theSEC Documents complied in allmaterial respectswith the requirements of the 1934 Act andthe rules andregulations of the SEC prom ulgated thereunder applicabletothe SEC Documents,and noneof theSECDocuments,atthetime theywere filedwiththe SEC,contained anyuntrue statement ofamaterial fact oromitted tostate a material fact required to be statedtherein or necessary in order to make thestatements therein,in light of thecircumstances under which they weremade,notmisleading.None of the statements made in any such SEC Documents is, or hasbeen,required to be amended or updated under applicablelaw (except for such statements as havebeen amendedor updated insubsequent filings priorthedate hereof).As oftheirrespectivedates, the financial statementsof the Company included in theSEC Documentscomplied as to form in all material respects with applicable accountingrequirementsand the published rules and regulationsof the SEC with respect thereto. Such financial statementshave been prepared inaccordance withUnited States generally accepted accountingprinciples,consistently applied,during the periods involved and fairlypresent in all material respectsthe consolidated financial position of theCompany and itsconsolidated Subsidiariesasofthe dates thereof and the consolidated results oftheir operations andcashflows fortheperiods then ended(subject,in the case ofunauditedstatements,to normal year-end auditadjustments). Except as set forth in the financial statements of the Company included in the SEC Documents, theCompany has no liabilities,contingent orotherwise,otherthan (i) liabilities incurred inthe ordinary course of business subsequent toJune 30, 2014, and (i)obligationsundercontracts and commitmentsincurred in the ordinarycourseof business and not required undergenerally accepted accountingprinciples to be reflected insuch financialstatements,which, individually orin theaggregate, are not material to thefinancial conditionor operating results of the Company. TheCompany issubject to thereporting requirements ofthe 1934 Act.
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h. AbsenceofCertainChanges.SinceJune30,2014,therehasbeen nomaterialadversechangeandnomaterialadverse development in the assets,liabilities, business, properties, operations, financial condition, resultsofoperations, prospectsor 1934 Act reportingstatus of the Companyor anyof itsSubsidiaries.
i.AbsenceofLitigation.Thereisnoaction,suit,claim,proceeding, inquiryorinvestigationbeforeorbyanycourt,public board,government agency, self-regulatory organization or body pending or,to theknowledge of the Companyor any of its Subsidiaries, threatened againstor affecting the Company or any of itsSubsidiaries, or theirofficersor directors intheir capacity assuch,that could have a Material Adverse Effect. Schedule 3(i) contains acomplete list and summary description of any pending or, to the knowledge of the Company, threatened proceeding against or affecting the Company or any of its Subsidiaries, without regardto whether it would have a MaterialAdverse Effect. The Company andits Subsidiaries are unawareof anyfacts or circumstances whichmight give rise to any of the foregoing.
j. Patents,Copyrights,etc. TheCompanyandeachofitsSubsidiariesownsorpossessestherequisitelicensesorrightstouse all patents, patent applications, patent rights,inventions,know-how, trade secrets, trademarks, trademark applications,service marks,service names,tradenames andcopyrights ("Intellectual Property") necessaryto enable it to conductits businessas now operated (and, as presently contemplated to be operated in the future); there is no claimor actionby any personpertaining to,or proceeding pending,or to the Company's knowledgethreatened,whichchallenges the rightof the Company orof a Subsidiary with respect to anyIntellectualProperty necessary to enable it toconduct its business asnow operated (and, aspresently contemplated to beoperatedin the future); to the best of the Company's knowledge, the Company's or its Subsidiaries' current and intended products, services andprocessesdo notinfringe on any Intellectual Property or otherrights heldby any person;and the Companyis unaware of anyfacts or circumstances which might give rise toany ofthe foregoing. TheCompany and each of its Subsidiaries havetaken reasonable security measures to protect the secrecy, confidentiality and value of their Intellectual Property.
k. NoMateriallyAdverseContracts,Etc.NeithertheCompanynoranyof itsSubsidiariesissubjecttoanycharter, corporate or otherlegal restriction,or any judgment,decree, order,rule or regulationwhich inthe judgmentof the Company'sofficers hasor is expected in the future tohavea Material AdverseEffect.Neither the Company norany ofitsSubsidiaries is a partytoany contract or agreementwhich inthe judgmentof theCompany's officers has or is expected tohave a Material Adverse Effect.
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I. TaxStatus.TheCompanyandeachofitsSubsidiarieshasmadeor filedallfederal,stateandforeignincome and all othertaxreturns,reports and declarationsrequired byany jurisdiction to which itissubject(unless andonly totheextentthattheCompanyandeach of itsSubsidiaries has setaside on its books provisions reasonablyadequatefor the paymentof allunpaidand unreportedtaxes) and has paidall taxes and other governmental assessmentsand charges that are material inamount,shown or determined tobe due on suchreturns,reports anddeclarations,exceptthose being contested in good faith and has setasideon its books provisions reasonably adequate for the payment ofall taxes for periods subsequentto theperiods to whichsuchreturns,reportsordeclarations apply.Thereare no unpaid taxes in any material amount claimed tobe due by thetaxing authority of any jurisdiction,andtheofficers of the Company knowof no basis for any such claim. The Company has not executed a waiver with respect to thestatute of limitations relating to the assessment or collection ofanyforeign,federal, stateor local tax. None ofthe Company's tax returns is presently being audited byanytaxing authority.
m. CertainTransactions.Exceptforarm'slengthtransactionspursuanttowhichtheCompanyoranyofitsSubsidiaries makespayments inthe ordinarycourse ofbusinessupon terms no less favorable than the Company or any of itsSubsidiaries could obtain from third parties and other than the grant of stock options disclosed on Schedule 3(c),none of theofficers,directors,oremployees oftheCompany ispresently aparty to any transaction with the Company orany of its Subsidiaries (other than for services asemployees,officers anddirectors),including anycontract,agreement or otherarrangement providing forthefurnishing of services to orby,providing for rental of real orpersonal property to or from,orotherwise requiringpayments toorfrom anyofficer,directororsuchemployee or,to the knowledgeof the Company, anycorporation,partnership,trust or other entityinwhich any officer,director,orany such employeehasa substantial interestor is an officer,director,trustee or partner.
n. Disclosure.AllinformationrelatingtoorconcerningtheCompany oranyofitsSubsidiariessetforthinthisAgreementand provided to the Buyer pursuant to Section 2(d) hereofandotherwise in connection with the transactions contemplated herebyistrueand correct in all materialrespects and theCompany has not omitted to state any material fact necessary in order to makethe statements made herein ortherein,in light of the circumstancesunder which they weremade,not misleading. No eventorcircumstance has occurred or exists with respect to the Company or anyof itsSubsidiaries or its or theirbusiness,properties, prospects,operationsorfinancial conditions,which,under applicable law,ruleor regulation,requires public disclosureorannouncement by the Companybut which has not beensopubliclyannounced or disclosed (assuming for this purpose that theCompany's reports filed underthe 1934Actare beingincorporated into aneffective registration statementfiledbytheCompanyunderthe1933 Act).
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o. AcknowledgmentRegardingBuyer'PurchaseofSecurities.TheCompanyacknowledgesandagreesthattheBuyerisactingsolely in thecapacity of arm'slength purchaserswith respectto thisAgreement andthe transactions contemplated hereby.The Company further acknowledges that theBuyerisnot actingas a financial advisoror fiduciaryof the Company (or in any similar capacity) with respect to this Agreement and the transactions contemplated hereby and any statementmade by theBuyeror any ofits respective representatives oragents in connection with this Agreement andthe transactions contemplated hereby is notadvice orarecommendationandis merely incidental tothe Buyer'purchase of theSecurities.TheCompany further represents to the Buyer that the Company's decision toenter intothis Agreement has been based solely onthe independent evaluation of theCompany andits representatives.
p. NoIntegratedOffering.NeithertheCompany,noranyofitsaffiliates,noranypersonactingonitsor their behalf,has directlyor indirectly madeany offers orsalesin anysecurity or solicited any offers to buy any security under circumstances thatwould require registrationunder the1933Act of theissuance ofthe Securities to the Buyer. Theissuance of the Securities to the Buyer will not be integrated with any other issuance of the Company's securities (past,current or future) for purposes ofany shareholder approval provisions applicable to the Company or itssecurities.
q. NoBrokers.TheCompanyhastakennoactionwhichwouldgiverisetoanyclaimby anyperson forbrokeragecommissions,transaction fees or similar paymentsrelating to this Agreement or the transactionscontemplated hereby.
r.Permits;Compliance.TheCompanyandeachofitsSubsidiariesis inpossessionofallfranchises,grants,authorizations,licenses,permits,easements,variances,exemptions,consents,certificates,approvalsand orders necessaryto own,lease and operate its properties and tocarryon itsbusinessas it is nowbeing conducted(collectively,the"CompanyPerm its"), and there isno actionpending or,to the knowledgeofthe Company,threatened regarding suspension orcancellation of any of the Company Permits. Neither theCompany nor any of itsSubsidiaries isin conflictwith,or in default or violation of,any of theCompanyPermits,exceptfor anysuch conflicts, defaults or violationswhich,individually orintheaggregate,would notreasonably be expected tohavea Material Adverse Effect. Since June30,2014,neither the Companynoranyofits Subsidiarieshasreceived anynotification with respect to possibleconflicts,defaults or violations ofapplicablelaws,exceptfornotices relating to possible conflicts,defaultsorviolations, whichconflicts,defaultsor violations would not haveaMaterialAdverseEffect.
s. EnvironmentalMatters.
(i) Thereare,totheCompany'sknowledge,withrespecttotheCompanyoranyofitsSubsidiaries orany predecessoroftheCompany,no past orpresentviolations of EnvironmentalLaws (asdefined below),releasesofanymaterial intothe environment,actions, activities,circumstances, conditions,events, incidents,or contractual obligationswhich may give rise to any common law environmental liabilityor any liabilityunder the Comprehensive Environmental Response, Compensation and Liability Actof 1980 or similar federal,state, local orforeign laws andneither the Company nor anyof its Subsidiaries hasreceivedany notice withrespect to anyof the foregoing, noris any action pending or,to the Company's knowledge,threatenedin connection with any ofthe foregoing. Theterm"Environmental Laws"means allfederal, state,local orforeign lawsrelating to pollution or protectionofhuman health or the environment(including, withoutlimitation,ambient air, surface water,groundwater,landsurface or subsurface strata),including,withoutlimitation,laws relatingto emissions, discharges, releases or threatened releases of chemicals, pollutants contaminants, or toxic orhazardous substances orwastes(collectively,"Hazardous Materials") into the environment,or otherwise relating to the manufacture, processing, distribution,use,treatment, storage,disposal,transportor handling ofHazardousMaterials,as wellas allauthorizations,codes, decrees, demandsor demandletters,injunctions,judgments,licenses, notices or notice letters, orders, permits, plansor regulations issued, entered,promulgated orapproved thereunder.
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(ii) Otherthanthosethatareorwerestored,usedordisposed ofincompliancewithapplicablelaw,noHazardousMaterialsarecontainedonoraboutany real propertycurrently owned,leased or used by the Company or any of its Subsidiaries, and no Hazardous Materials were released on or about any real property previously owned,leased or used bytheCompany oranyof itsSubsidiariesduring theperiod thepropertywasowned,leased orused bythe Company oranyofits Subsidiaries, exceptinthenormal courseof theCompany'sorany ofitsSubsidiaries'business.
(iii) Therearenounderground storagetanksonorunderany realpropertyowned,leasedorusedbytheCompanyoranyofitsSubsidiariesthatarenot in compliance with applicable law.
t. TitletoProperty.TheCompanyanditsSubsidiarieshavegood andmarketabletitleinfeesimpletoallrealproperty andgood and marketabletitle to all personalproperty ownedby them whichis materialtothe businessofthe Company and itsSubsidiaries,in each case freeandclearof allliens,encumbrances and defectsexcept such as are described in Schedule 3(t)or such as wouldnot have a Material Adverse Effect. Any real property andfacilities held under lease by the Company and itsSubsidiaries are held by them under valid,subsisting andenforceable leaseswith such exceptions as would not havea Material AdverseEffect.
u. Insurance.TheCompanyandeachofitsSubsidiariesareinsured byinsurersofrecognizedfinancialresponsibilityagainstsuchlosses andrisks and insuch amountsasmanagementofthe Companybelieves tobe prudentand customaryin the businesses in which the Company and its Subsidiaries are engaged. Neither the Company nor any suchSubsidiaryhas any reason to believe that it willnot be able to renew its existinginsurance coverage as and whensuch coverage expires or to obtainsimilar coverage fromsimilarinsurers as may benecessary tocontinue itsbusiness at a costthatwould nothavea Material Adverse Effect. Uponwritten request the Company will provide to theBuyer true and correctcopies of all policies relating to directors' and officers' liability coverage, errorsandomissionscoverage, and commercial general liability coverage.
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v. InternalAccountingControls.TheCompanyandeachofits Subsidiariesmaintainasystemofinternalaccountingcontrolssufficient,inthe judgment of the Company's board of directors, to providereasonable assurancethat (i) transactionsare executed inaccordance with management's general orspecific authorizations, (ii) transactions are recordedas necessary topermit preparationof financial statements in conformity with generally accepted accountingprinciplesand to maintainasset accountability,(iii) access to assets is permitted onlyinaccordancewith management's generalorspecific authorization and(iv)the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriateactionis takenwith respect to any differences.
w. ForeignCorruptPractices.NeithertheCompany,nor anyofitsSubsidiaries,noranydirector,officer,agent,employeeorotherpersonactingonbehalf of the Companyor anySubsidiary has,in the course of his actions for, or on behalf of, the Company, used any corporate fundsfor any unlawful contribution, gift,entertainment or other unlawfulexpenses relating to political activity; made any direct or indirect unlawful payment toany foreign or domestic government official or employee from corporatefunds; violated or is in violation of any provisionof theU.S. Foreign CorruptPractices Actof 1977, asamended, or madeanybribe, rebate, payoff, influence payment, kickbackor other unlawful paymentto any foreign or domestic government official or employee.
x. Solvency.TheCompany(aftergivingeffecttothetransactions contemplatedbythisAgreement)issolvent(i.e.,itsassetshaveafairmarketvalue in excessof the amount required to pay its probableliabilities on its existing debtsas they become absolute and matured)and currently the Companyhas no informationthat would lead it to reasonably conclude thattheCompanywould not,after giving effect to thetransaction contemplatedby this Agreement, havethe abilityto, nor does it intend totakeany actionthat wouldimpair its ability to, pay itsdebts from timeto time incurredinconnection therewith assuch debtsmature.The Companydid not receive a qualifiedopinion from itsauditors withrespect to its most recent fiscal yearend and, aftergiving effect tothetransactions contemplatedby this Agreement, does not anticipate or knowof any basis upon which its auditors might issue a qualified opinionin respect of itscurrent fiscalyear.
y. NoInvestmentCompany.TheCompanyisnot,andupontheissuanceandsaleoftheSecuritiesascontemplatedbythisAgreementwill notbe an "investment company''required tobe registered under theInvestment CompanyActof 1940(an"InvestmentCompany").The Company is not controlled byanInvestment Company.
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z. BreachofRepresentationsandWarrantiesbytheCompany.IftheCompanybreachesanyoftherepresentationsorwarrantiessetforth in thisSection 3,and in additiontoany other remedies availableto the Buyer pursuant to this Agreement,it will be considered an Event of default under Section 3.4of the Note.
4. | COVENANTS. |
a. BestEfforts.Thepartiesshallusetheirbestefforts tosatisfytimelyeachoftheconditionsdescribedinSection 6and 7 ofthis Agreement.
b. FormD;BlueSkyLaws.TheCompanyagreestofileaFormD withrespectto theSecuritiesasrequiredunder Regulation Dand to provide a copythereof to the Buyer promptly aftersuchfiling.The Companyshall,on or before the ClosingDate,takesuchaction as the Companyshall reasonablydetermine is necessaryto qualify the Securities forsaletothe Buyer at theapplicable closing pursuant to this Agreement under applicablesecuritiesor"blue sky"laws of the states ofthe United States(or to obtainan exemption from such qualification),andshallprovideevidence of any such action so takento the Buyer on or priorto the Closing Date.
c.UseofProceeds.TheCompanyshallusetheproceedsforgeneral workingcapitalpurposes.
d. RightofFirstRefusal.UnlessitshallhavefirstdeliveredtotheBuyer,atleastseventy two (72) hours priorto theclosing of such Future Offering(as defined herein),written notice describing theproposed Future Offering ("ROFR Notice"),including the terms and conditionsthereof,identity of the proposedpurchaserand proposed definitive documentation to be enteredinto in connection therewith, andproviding the Buyer an option during the seventytwo (72)hour period following deliveryofsuch notice topurchase the securities beingofferedinthe Future Offering on the same terms as contemplated by such Future Offering(the limitations referred to in thissentenceand the preceding sentenceare collectivelyreferred to as the "Right of FirstRefusal")(and subjectto theexceptionsdescribedbelow),theCompany will not conductanyequity (or debt withan equity component) financing in an amountless than $53,000 ("Future Offering(s)") during the period beginning on the Closing Date and ending six(6)months following the ClosingDate.Notwithstandinganything contained herein tothe contrary, theCompany shall not consummate anyFutureOffering with aninvestor,or an affiliateof such investor (collectively"ProspectiveInvestor"),identified onanROFR Notice whereby the Buyer exercised its Right of First Refusal fora period offorty (45) days following such exercise; and anysubsequent offer bya Prospective Investor is subject tothisSection4(d) and the Right of First Refusal. Intheevent thetermsandconditions of aproposed Future Offering are amended inany respect after delivery of the notice to the Buyerconcerning theproposed FutureOffering,the Company shall deliver a new notice to the Buyer describing the amended termsandconditions of the proposed FutureOffering and theBuyer thereafter shallhave an option during the seventy two (72) hourperiod following delivery of such new notice to purchase its pro rata share of thesecurities being offered on the same terms as contemplated by such proposed FutureOffering,as amended.Theforegoing sentence shallapplyto successive amendments tothe termsand conditionsof any proposed Future Offering. The Right of First Refusal shall not apply to any transactioninvolving (i) issuances of securitiesinafirm commitment underwritten publicoffering(excluding a continuous offering pursuant to Rule 415 under the 1933 Act) or (ii) issuances of securities as consideration for a merger,consolidation or purchase of assets, orin connection with anystrategic partnership or jointventure (theprimary purpose of which isnot to raiseequity capital), or inconnection with the disposition or acquisitionof abusiness,product or license by the Company. The Right ofFirstRefusal also shall not apply totheissuance of securities uponexerciseor conversion ofthe Company'soptions,warrants or otherconvertible securitiesoutstandingas of the date hereof or to the grantof additional optionsor warrants, or the issuance ofadditionalsecurities, under anyCompany stockoption orrestricted stockplan approvedby the shareholders of the Company.
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e. Expenses.AttheClosing,theCompanyshallreimburseBuyerfor expensesincurredbytheminconnectionwiththe negotiation, preparation, execution, delivery and performanceof this Agreementand the other agreements to be executedin connection herewith ("Documents"),including,without limitation,reasonableattorneys' and consultants'feesand expenses, transfer agent fees,fees for stockquotation services,fees relating to any amendments ormodificationsof theDocuments oranyconsents orwaivers of provisions inthe Documents,feesfor the preparation ofopinionsof counsel, escrow fees, andcostsofrestructuring the transactionscontemplated by the Documents. When possible, the Company must paythese fees directly, otherwise theCompany must make immediate payment for reimbursement to the Buyerfor allfees and expenses immediatelyuponwrittennotice bythe Buyeror the submission of an invoice bytheBuyer.The Company's obligationwith respect to this transaction is to reimburse Buyer' expensesshallbe $2,500.
f. FinancialInformation.UponwrittenrequesttheCompanyagrees tosendormakeavailablethefollowingreportstotheBuyeruntiltheBuyertransfers, assigns,orsells allof the Securities: (i) within ten (10) daysafter the filing with the SEC,a copy of its Annual ReportonForm 10-K its QuarterlyReports on Form 10-QandanyCurrentReports on Form 8-K;(ii) within one(1)day afterrelease, copies ofall press releasesissuedby the Company or any of its Subsidiaries;and (iii) contemporaneously with the making available or givingtothe shareholdersof theCompany,copiesof any noticesor otherinformationthe Companymakesavailable or gives to suchshareholders.
g. | [INTENTIONALLYDELETED] |
h. Listing.The Companyshallpromptlysecurethe listingofthe ConversionSharesuponeachnationalsecuritiesexchangeorautomatedquotationsystem,if any, upon which shares of Common Stock are then listed (subjectto official noticeof issuance)and,solongas the Buyer owns any of theSecurities,shall maintain,so long as any other shares ofCommon Stock shall be solisted,suchlistingof all Conversion Sharesfrom time to time issuable uponconversion of the Note. The Company willobtainand,solongasthe Buyerowns any of the Securities, maintain the listing and trading of its Common Stock on the OTCBB or any equivalent replacement exchange orelectronicquotation system(including but not limitedto the Pink Sheets electronic quotation system) and will complyinallrespects with the Company's reporting,filing and other obligationsunder the bylawsorru les oftheFinancial Industry Regulatory Authority ("FINRA") and such exchanges,as applicable. TheCompany shall promptly provide to the Buyer copiesofanynotices itreceives from the OTCBB and any other exchangesor electronic quotation systems on which the Common Stock is thentraded regarding the continuedeligibility of the CommonStock for listing on suchexchangesandquotation systems.
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i.CorporateExistence.SolongastheBuyerbeneficiallyownsanyNote,theCompanyshallmaintainits corporate existence and shall notsell all orsubstantially allof the Company'sassets,except in the eventof a merger or consolidation or sale of all or substantially all ofthe Company's assets,where the surviving or successorentity in such transaction (i) assumesthe Company's obligations hereunder and under theagreementsand instrumentsenteredinto in connection herewithand (ii) is a publicly tradedcorporation whose CommonStock is listed fortrading on the PinkSheets,OTCQX,OTCBB,Nasdaq,NasdaqSmallCap,NYSE or AMEX.
j.NoIntegration.TheCompanyshallnotmakeanyoffersorsalesofanysecurity(otherthan the Securities) undercircumstancesthatwould require registration of the Securitiesbeing offered or soldhereunder underthe 1933 Act or cause the offeringoftheSecuritiesto be integratedwith any otherofferingofsecurities bythe Company for the purpose ofanystockholder approvalprovision applicableto theCompany orits securities.
k. BreachofCovenants.IftheCompanybreachesanyofthecovenantssetforthinthisSection4,and inadditiontoany other remedies availabletothe Buyer pursuant to this Agreement,it will be considered an event of default underSection 3.4 of theNote.
I. FailuretoComplywiththe1934Act.SolongastheBuyerbeneficiallyownstheNote,the Company shall comply with thereporting requirements of the1934Act;and the Company shall continue to be subject to the reportingrequirements of the1934 Act.
m.TradingActivities.NeithertheBuyernoritsaffiliateshasanopen short positioninthecommonstockoftheCompanyand the Buyeragree thatitshallnot,and thatitwillcause its affiliates notto,engage inanyshort sales of or hedging transactions with respectto thecommon stock of theCompany.
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5. TransferAgentInstructions. TheCompanyshallissueirrevocable instructionstoitstransferagenttoissuecertificates,registeredinthenameof the Buyer or its nominee, for the ConversionShares in suchamounts as specified from time totime bythe Buyer to the Companyuponconversionof the Note inaccordance with the terms thereof(the"IrrevocableTransfer Agent Instructions").In the event thatthe Borrower proposes toreplace its transfer agent, the Borrower shall provide,prior to the effective dateof suchreplacement, a fully executedIrrevocable Transfer Agent Instructions in a form asinitially delivered pursuantto the PurchaseAgreement (includingbut not limited to the provision to irrevocably reserve shares of Common Stock in the ReservedAmount) signedby the successortransfer agentto Borrower and theBorrower. Priorto registrationofthe Conversion Shares underthe 1933 Actor the date on which the Conversion Shares may be sold pursuantto Rule 144 withoutany restriction as to the numberofSecuritiesas of aparticular datethatcan thenbeimmediately sold, all such certificates shall bearthe restrictivelegend specifiedinSection 2(g) of this Agreement.The Company warrants that: (i) noinstructionother thantheIrrevocableTransferAgentInstructions referred toin this Section 5,and stoptransferinstructions to give effectto Section 2(t) hereof (in thecase of theConversionShares, prior to registration oftheConversionShares underthe1933 Act or the date on which theConversion Shares maybe sold pursuant to Rule 144 without any restriction as to thenumber ofSecurities as ofa particulardatethat can then beimmediately sold),will begiven by the Company to its transfer agentand that the Securities shall otherwise be freely transferable on the books andrecords of the Company as and to the extent provided in thisAgreementand theNote;(ii) it willnot direct its transferagent not totransfer or delay, impair, and/orhinder its transferagent in transferring(or issuing)(electronicallyorin certificated form) anycertificate for Conversion Shares to be issued to the Buyer upon conversion ofor otherwise pursuanttotheNote asand when required by the Noteand thisAgreement;and (iii) it will notfail toremove(ordirects its transferagent not toremove or impairs, delays, and/or hindersits transferagentfrom removing) anyrestrictive legend(orto withdraw any stop transfer instructions in respectthereof) onanycertificate for any Conversion Shares issued to the Buyer uponconversion of or otherwise pursuantto theNote as and when requiredby the Note and this Agreement. Nothingin this Section shallaffect inany way the Buyer's obligations and agreement set forthinSection2(g) hereof to comply with all applicable prospectus delivery requirements,if any,upon re-saleof theSecurities. If the Buyer provides the Company, at the cost of theBuyer, with (i) anopinion of counselin form, substanceandscope customary for opinions incomparable transactions, to the effect that a public sale or transfer of suchSecurities may be made without registration underthe 1933 Actand suchsale or transfer iseffected or (ii) the Buyerprovidesreasonable assurancesthat the Securitiescanbesold pursuant to Rule 144, theCompanyshall permit thetransfer,and,in thecase of theConversion Shares, promptly instruct its transferagent toissueone or more certificates, free fromrestrictive legend, in such name andin suchdenominationsasspecifiedby theBuyer. The Company acknowledges thata breach by it of its obligations hereunder will cause irreparable harm to the Buyer, by vitiating the intent andpurposeof the transactionscontemplated hereby. Accordingly, the Company acknowledgesthat the remedy atlaw for a breach of its obligationsunder thisSection 5 may be inadequateand agrees, in the event of a breach or threatened breachby the Companyof the provisions of this Section,that the Buyer shall beentitled,inaddition to allotheravailableremedies, to aninjunction restrainingany breach and requiring immediate transfer,without the necessityof showing economic loss and without any bondorother security being required.
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6. ConditionstotheCompany'sObligationtoSell.TheobligationoftheCompanyhereundertoissueandsell the Note to the Buyer at the Closing is subject to the satisfaction, at or before the Closing Date of each of the following conditions thereto,providedthat these conditions are for the Company's solebenefit and may be waived bytheCompany atany time in itssolediscretion: sameto the Company.
a. TheBuyershallhaveexecutedthisAgreementanddeliveredthe same to the Company.
b. TheBuyershallhavedeliveredthePurchasePriceinaccordance withSection1(b)above.
c. TherepresentationsandwarrantiesoftheBuyershallbetrueand correctinallmaterialrespectsasof the datewhen madeand as of the Closing Date as though made at that time (exceptfor representationsand warrantiesthatspeak as of a specific date), and the Buyer shallhaveperformed, satisfied andcomplied in all materialrespects withthe covenants, agreements andconditionsrequired bythis Agreement to beperformed, satisfiedor complied withby the Buyerat or prior to the Closing Date.
c. Nolitigation,statute,rule,regulation,executiveorder,decree, rulingorinjunctionshallhavebeenenacted,entered,promulgatedorendorsedbyorinanycourt orgovernmental authority ofcompetent jurisdiction orany self-regulatory organization having authority over thematters contemplated herebywhichprohibits theconsummation ofanyof the transactions contemplatedby thisAgreement.
7. ConditionstoTheBuyer'sObligationtoPurchase.TheobligationoftheBuyerhereundertopurchasetheNoteat theClosingis subject to thesatisfaction, ator beforethe Closing Date of each of the following conditions,providedthatthese conditions are for theBuyer's sole benefitand may be waivedby the Buyer at any timein its sole discretion:
a. TheCompanyshallhaveexecutedthisAgreementanddeliveredthesametotheBuyer.
b. TheCompanyshallhavedeliveredtotheBuyerthedulyexecuted Note(insuchdenominationsastheBuyershallrequest)inaccordancewith Section l (b) above.
c. TheIrrevocableTransferAgentInstructions,informandsubstance satisfactory to amajority-in-interestoftheBuyer,shallhavebeendeliveredtoandacknowledged inwriting bythe Company's Transfer Agent.
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d. TherepresentationsandwarrantiesoftheCompanyshallbetrue andcorrectinallmaterialrespectsasofthedatewhenmade andasoftheClosingDateas thoughmade at such time (except for representations and warrantiesthatspeak as of a specific date) and theCompanyshall have performed,satisfied andcomplied in all material respects with the covenants, agreements and conditions requiredbythis Agreement to be performed,satisfied orcomplied with by the Company at orprior to the Closing Date. The Buyer shall have received a certificate or certificates,executed by the chief executive officer oftheCompany,dated as of theClosing Date,tothe foregoing effectand as to suchother matters as maybe reasonably requested by theBuyerincluding, but notlimitedto certificates with respect to theCompany's Certificate of Incorporation, By-laws and BoardofDirectors' resolutions relating tothe transactionscontemplated hereby.
e. Nolitigation,statute,rule,regulation,executiveorder,decree,rulingorinjunctionshallhavebeenenacted,entered,promulgated or endorsed by or in any court or governmentalauthorityof competent jurisdictionor any self-regulatory organization having authority over the matters contemplated hereby which prohibits the consummation ofanyof the transactionscontemplated by thisAgreement.
f. Noeventshallhaveoccurredwhichcouldreasonablybeexpected tohaveaMaterialAdverseEffectontheCompanyincludingbutnotlimitedtoachangein the 1934 Act reportingstatus of theCompanyor thefailure of the Companytobe timelyin its1934 Act reporting obligations.
g. TheConversionSharesshallhavebeenauthorizedforquotationon theOTCBBandtradingintheCommonStockontheOTCBBshallnot havebeen suspendedby theSEC or theOTCBB.
h. TheBuyershallhavereceivedanofficer'scertificatedescribedin Section3(c)above,datedasofthe ClosingDate.
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8. | GoverningLaw;Miscellaneous. |
a. GoverningLaw.ThisAgreementshallbegovernedbyand construedinaccordancewiththelawsoftheStateof NewYorkwithout regardto principles of conflictsof laws.Any action brought by either partyagainst theother concerning the transactions contemplated by thisAgreement shallbebrought only in the state courts ofNew York or in the federal courts located inthe state and county ofNassau. The partiesto this Agreement hereby irrevocably waive any objection tojurisdictionand venue of any action instituted hereunderand shall not assertanydefense based on lackof jurisdiction or venueor based uponforum non conveniens.The Company and Buyer waive trial by jury. The prevailing party shall be entitled torecover from the other party its reasonableattorney'sfeesand costs.In the event thatanyprovision of thisAgreement or any other agreementdelivered in connectionherewithis invalid or unenforceableunder any applicable statuteor rule oflaw,then suchprovision shallbe deemed inoperativeto the extentthatitmay conflicttherewith andshall be deemedmodified to conformwith suchstatute orrule of law.Any suchprovision which may prove invalid orunenforceableunder anylaw shall not affectthe validity or enforceability of any otherprovision of any agreement. Each partyhereby irrevocably waives personal serviceof process and consents toprocess being served in any suit,action or proceeding inconnectionwith thisAgreementorany otherTransaction Document bymailing acopy thereofvia registered or certified mail orovernight delivery(with evidenceof delivery) tosuch party at theaddressin effect for notices to it under thisAgreement andagreesthat suchservice shall constitutegood and sufficient service of process and notice thereof. Nothing contained hereinshall bedeemed to limit in any wayany right toserve processin any othermanner permitted by law.
b. Counterparts.ThisAgreementmaybeexecutedinoneormore counterparts,eachofwhichshallbedeemed anoriginal but allof which shall constitute one and the same agreement and shall becomeeffectivewhencounterparts have been signed byeach party anddelivered to the otherparty.
c. Headings.TheheadingsofthisAgreementareforconvenienceofreferenceonlyandshallnotformpartof,oraffecttheinterpretationof, this Agreement.
d. Severability.IntheeventthatanyprovisionofthisAgreementis invalidorunenforceableunderanyapplicablestatuteorrule of law,thensuch provision shall bedeemedinoperative tothe extent that itmayconflicttherewith andshall be deemedmodified to conform with such statute or rule oflaw.Anyprovision hereof whichmay prove invalid orunenforceable underanylaw shall not affectthe validity or enforceability of any other provisionhereof.
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e. EntireAgreement;Amendments.ThisAgreementandtheinstrumentsreferencedhereincontaintheentireunderstandingoftheparties with respectto the matterscoveredherein andthereinand,except as specificallyset forthherein ortherein,neither theCompanynor theBuyermakesanyrepresentation,warranty,covenant or undertaking with respect to such matters. No provision of this Agreement maybe waived or amended other thanbyan instrument in writing signedby the majority in interestof the Buyer.
f. Notices.Allnotices,demands,requests,consents,approvals,andothercommunicationsrequiredorpermittedhereundershall bein writing and,unless otherwisespecifiedherein,shall be (i)personallyserved,(ii)depositedinthe mail,registeredorcertified,return receipt req uested, postage prepaid,(iii) delivered byreputable air courierservicewithchargesprepaid,or (iv) transmitted by handdelivery,telegram, orfacsimile,addressed assetforth below orto suchotheraddress as such partyshall have specifiedmost recentlyby written notice. Anynoticeor othercommunication requiredor permittedto be given hereundershallbe deemed effective (a) upon hand deliveryordelivery byfacsimile,with accurate confirmationgenerated by the transmitting facsimilemachine, at the addressor number designated below(if delivered on a business dayduringnormalbusiness hours where such noticeis tobereceived), or thefirst business day following such delivery (if delivered otherthan ona businessdayduring normal business hours wheresuchnotice isto bereceived) or(b) on the second business day following thedateof mailing byexpress courier service,fully prepaid,addressedto such address,orupon actual receiptof such mailing, whichever shall first occur. The addresses for suchcommunications shall be:
IftotheCompany,to:
ALKAMEHOLDINGS,INC.
3651LindellRoad-SuiteD#356 LasVegas,NV89013
Attn:ROBERTEAKLE,ChiefExecutiveOfficer facsimile:[enterfaxnumber]
Witha copybyfax onlyto(whichcopyshallnotconstitutenotice): [enternameoflawfirm]
Attn:[attorneyname]
[enteraddressline1] [entercity,state,zip]
facsimile:[enterfax number]
IftotheBuyer:
KBMWORLDWIDE,INC.
80CuttermillRoad-Suite410
GreatNeck,NY11021Attn:SethKramer,President e-mail:info@kwbmlaw.com
Witha copybyfaxonlyto(whichcopyshallnotconstitutenotice): NaidichWurmanBirnbaum&MadayLLP
Att:JudahA.Eisner,Esq.
Attn:BernardS.Feldman,Esq. facsimile:516-466-3555
e-mail:dyork@nwbmlaw.com
Eachpartyshallprovidenoticetotheotherpartyofanychangeinaddress.
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g. SuccessorsandAssigns.ThisAgreementshallbebindinguponandinuretothebenefitofthepartiesandtheir successors and assigns. Neither the Company northeBuyer shall assignthis Agreement or any rights orobligations hereunder without the priorwritten consent of theother. Notwithstanding theforegoing,subject to Section2(f), the Buyer may assign itsrights hereunder to any person that purchases Securities in a private transaction from theBuyeror toany of its"affiliates,"asthat term is defined under the1934 Act, withoutthe consent of the Company.
h. ThirdPartyBeneficiaries.ThisAgreementisintendedforthebenefitofthepartiesheretoandtheirrespectivepermittedsuccessorsandassigns,andisnot forthe benefitof,nor mayanyprovision hereof beenforcedby,anyother person.
i. Survival.TherepresentationsandwarrantiesoftheCompanyand theagreementsandcovenantssetforthinthisAgreementshallsurvivethe closing hereunder notwithstanding any due diligence investigation conducted byoronbehalf of the Buyer.The Company agreesto indemnify and hold harmless the Buyer and all their officers,directors,employees and agents for lossor damage arising as a resultof orrelated to any breach oralleged breachbythe Companyof any of itsrepresentations, warrantiesand covenantsset forth in this Agreement or any ofitscovenants andobligations underthisAgreement,includingadvancement ofexpenses as they areincurred.
j. Publicity.TheCompany,andtheBuyershallhavetherightto reviewareasonableperiodoftime beforeissuanceofanypressreleases,SEC,OTCBB or FINRAfilings,oranyotherpublicstatements withrespect to thetransactionscontemplated hereby;provided,however,that the Company shall be entitled, without theprior approval of theBuyer,tomake any press releaseor SEC,OTCBB (orother applicable trading market) or FINRA filings with respect to such transactionsas is required by applicable lawand regulations (althoughthe Buyershallbe consulted by theCompanyinconnection withany such press release prior to its release and shall beprovided witha copythereof andbe given anopportunity to comment thereon).
k. FurtherAssurances.Eachpartyshalldoandperform,orcauseto bedoneandperformed,allsuchfurtheracts andthings, andshallexecuteand deliver all such other agreements, certificates, instruments and documents, as the other party may reasonably requestinordertocarry out the intentandaccomplish thepurposesof thisAgreement and the consummationof the transactionscontemplated hereby.
I. NoStrictConstruction.ThelanguageusedinthisAgreementwill bedeemedtobethelanguagechosenbythepartiestoexpresstheirmutual intent, and no rules of strictconstructionwillbeapplied againstanyparty.
m.Remedies.TheCompanyacknowledgesthatabreachbyitofits obligationshereunderwillcauseirreparableharmto the Buyer by vitiating theintent and purposeof the transactioncontemplatedhereby.Accordingly, theCompany acknowledges that the remedy at law for a breachof its obligations underthis Agreement willbeinadequate andagrees, in the event of a breachorthreatened breach by the Company of the provisions of this Agreement, that the Buyershall be entitled,inadditiontoallother available remed iesat lawor in equity, and in addition to the penaltiesassessable herein, to an injunction or injunctions restraining,preventing orcuring any breach of thisAgreement andtoenforce specifically the termsandprovisions hereof, withoutthe necessity of showing economicloss and without any bond or other security being required.
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INWITNESSWHEREOF,theundersignedBuyerandtheCompanyhavecausedthis Agreementtobedulyexecutedasofthedate firstabove written.
ALKAME HOLDINGS, INC.
By:/s/ Robert Eakle
Robert Eakle
Chief Executive Officer
KBMWORLDWIDE,INC.
By:/s/ Seth Kramer
Name:SethKramer
Title:President
80CuttermillRoad-Suite4I0 GreatNeck,NY11021
AGGREGATE SUBSCRIPTION AMOUNT:
Aggregate Principal Amount of Note: | $42,500.00 |
Aggregate Purchase Price: | $42,500.00 |
Tranche #2 - K-1298 (ALKM) September 4, 2014 |
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