SECURITIES PURCHASE AGREEMENT
Exhibit 10.35
This SECURITIES PURCHASE AGREEMENT (this “Agreement”), dated as of June 4, 2020, is entered into by and between ELECTROMEDICAL TECHNOLOGIES, INC., a Delaware corporation, (the “Company”), and VISTA CAPITAL INVESTMENTS, LLC (the “Buyer”).
A. The Company and the Buyer are executing and delivering this Agreement in reliance upon the exemption from securities registration afforded by the rules and regulations as promulgated by the United States Securities and Exchange Commission (the “SEC”) under the Securities Act of 1933, as amended (the “1933 Act”).
B. Upon the terms and conditions stated in this Agreement, the Buyer desires to purchase and the Company desires to issue and sell, upon the terms and conditions set forth in this Agreement (i) a Promissory Note of the Company, in the form attached hereto as Exhibit A, in the original principal amount of $110,000.00 (together with any note(s) issued in replacement thereof or as a dividend thereon or otherwise with respect thereto in accordance with the terms thereof, the “Note”), (ii) one hundred thousand (100,000) restricted common shares in the Company (“Commitment Shares”) to be delivered to Holder, via overnight courier , within 5 busine ss days following the Closing Date, and (iii) a three -year share purchas e warrant entitling the Buyer to acquire 250,000 com mon shares (“Common Stock” ), in the form attached her eto as Exhibit B (the “Warrant”) (together, the “Securities”).
NOW THEREFORE, the Company and the Buyer hereby agree as follows:
1. Purchase and Sale. On the Closing Date (as defined below), the Company shall issue and sell to the Buyer and the Buyer agrees to purchase from the Company (i) the Note in the original principal amount of $110,000, and (ii) the Commitment Shares.
1.1. Form of Payment. On the Closing Date, (i) the Buyer shall pay the purchase price of $100,000 (the “Purchase Price”) for the Securities to be issued and sold to it at the Closing (as defined below) by wire transfer of immediately available funds to a company account designated by the Company, in accordance with the Company’s written wiring instructions, against delivery of the Securities, and (ii) the Company shall deliver such duly executed Securities on behalf of the Company, to the Buyer, against delivery of such Purchase Price.
1.2. Closing Date. The date and time of the issuance and sale of the Securities pursuant to this Agreement (the “Closing Date”) shall be on or about June 4, 2020, or such other mutually agreed upon time. The closing of the transactions contemplated by this Agreement (the “Closing”) shall occur on the Closing Date at such location as may be agreed to by the parties.
1.3. Commitment Share True-Up. If, during the period beginning on the Closing Date and ending on the later of (i) the Maturity Date, or (ii) the date on which the Note is fully satisfied and cancelled (the “True-Up Period”), the then the greater of (i) $0.25 and (ii) the lowest traded price (as reported by Quotestream ™, a service of Quotemedia, Inc.) of the Company’s common stock (the “Common Stock”) for any Trading Day within the True-Up Period (the “Subsequent Share Price”), as reported on the Company’s Principal Market, is less than the closing price of the Company’s common stock on the Issuance Date, then the Company shall, within three (3) trading days of Holder’s provision of written notice in the form attached hereto as Exhibit C (the “True-Up Notice”), issue and deliver to the Holder an additional number of duly and validly issued, fully paid and non-assessable shares of Common Stock equal to (X) the quotient of the Commitment Value (as defined below) divided by the Subsequent Share Price, multiplied by 1.5, less (Y) the Commitment Shares, less (Z) any True-Up Shares (as defined below) previously issued. The “Commitment Value” shall mean the product of the Commitment Shares multiplied by the closing price of the Company’s common stock on the Closing Date. Any additional shares of Common Stock issuable pursuant to Section 1.d are referred to herein as “True-up Shares.” The Holder shall not submit more than one True-Up Notice. The True-up Shares, if required to be issued pursuant to this Note, shall be issued as provided in this Note, provided, however, that in no event shall the Holder be entitled to receive shares of common stock in excess of the amount that would result in beneficial ownership by the Holder and its affiliates of 9.99% of the outstanding shares of Common Stock at that time. For purposes of the proviso to the immediately preceding sentence, beneficial ownership shall be determined in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and Regulations 13D-G thereunder. Accordingly, the True-up Shares, if required to be issued pursuant to this Note, shall be issued in accordance with the beneficial ownership limitations contained herein, and in successive tranches (each an “Additional Tranche”) if the issuance of one tranche would result in the Holder’s beneficial ownership of more than 9.99% of the outstanding shares of Common Stock at that time. The Company shall issue each respective Additional Tranche of the True-up Shares, if required under this Note, within two (2) Trading Days of the request by Holder, subject to the beneficial ownership limitations contained herein. If the Company fails to issue the True-up Shares or any Additional Tranche within the timeframe specified in this Note, then the amount of Additional Shares in which Holder is entitled shall automatically be multiplied by two. The Company shall at all times reserve shares of its Common Stock for Holder in an amount equal to 300% multiplied by (X) the quotient of the Commitment Value divided by the lowest traded price of the Common Stock during the five Trading Days immediately preceding the respective date of calculation, multiplied by 1.5, less (Y) the Original Shares.
1.4. Registration Rights: The Company shall, within ten (10) calendar days of the effectiveness of the S-1 Registration statement initially filed with the SEC on November 12, 2019, file a registration statement form S-1MEF with the SEC to register 500,000 (five hundred thousand) shares in the name of the Buyer. Failure to do so will result in an Event of Default under the Note.
2. Governing Law; Miscellaneous.
2.1. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Nevada without regard to principles of conflicts of laws. Any action brought by either party against the other concerning the transactions contemplated by this Agreement shall be brought only in the state courts of San Diego County, California or in the federal courts located in San Diego County, California. The parties to this Agreement hereby irrevocably waive any objection to jurisdiction and venue of any action instituted hereunder and shall not assert any defense based on lack of jurisdiction or venue or based upon forum non conveniens. In the event that any provision of this Agreement or any other agreement delivered in connection herewith is invalid or unenforceable under any applicable statute or rule of law, then such provision shall be deemed inoperative to the extent that it may conflict therewith and shall be deemed modified to conform with such statute or rule of law. Any such provision which may prove invalid or unenforceable under any law shall not affect the validity or enforceability of any other provision of any agreement. Each party hereby irrevocably waives personal service of process and consents to process being served in any suit, action or proceeding in connection with this Agreement or any other Transaction Document by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by law. THE COMPANY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.
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2.2. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original but all of which shall constitute one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party.
2.3. Headings. The headings of this Agreement are for convenience of reference only and shall not form part of, or affect the interpretation of, this Agreement.
2.4. Severability. In the event that any provision of this Agreement is invalid or unenforceable under any applicable statute or rule of law, then such provision shall be deemed inoperative to the extent that it may conflict therewith and shall be deemed modified to conform with such statute or rule of law. Any provision hereof which may prove invalid or unenforceable under any law shall not affect the validity or enforceability of any other provision hereof.
2.5. Entire Agreement; Amendments. This Agreement and the instruments referenced herein contain the entire understanding of the parties with respect to the matters covered herein and therein and, except as specifically set forth herein or therein, neither the Company nor the Buyer makes any representation, warranty, covenant or undertaking with respect to such matters. No provision of this Agreement may be waived or amended other than by an instrument in writing signed by the Buyer.
2.6. Notices. Any notice required or permitted hereunder shall be given in writing (unless otherwise specified herein) and shall be deemed effectively given on the earliest of:
(a) the date delivered, if delivered by personal delivery as against written receipt therefor or by e-mail to an executive officer, or by confirmed facsimile,
(b) the fifth Trading Day after deposit, postage prepaid, in the United States Postal Service by registered or certified mail, or
(c) the third Trading Day after mailing by domestic or international express courier, with delivery costs and fees prepaid, in each case, addressed to each of the other parties thereunto entitled at the following addresses (or at such other addresses as such party may designate by ten (10) calendar days’ advance written notice similarly given to each of the other parties hereto):
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If to the Company, to:
Electromedical Technologies, Inc.
00000 X 00xx Xx., Xxxxx 000
Xxxxxxxxxx XX 00000
Attn: Xxxxxxx Xxxxxxx
Email: xxx@xxxxxxxxxxxxxx.xxx
If to the Buyer:
VISTA CAPITAL INVESTMENTS, LLC
000 Xxxxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxx XX 00000
Attn: Xxxxx Xxxxx
Email: xxxxxx@xxx.xx.xxx
2.7. Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their successors and assigns. Notwithstanding anything to the contrary herein, the rights, interests or obligations of the Company hereunder may not be assigned, by operation of law or otherwise, in whole or in part, by the Company without the prior written consent of the Buyer, which consent may be withheld at the sole discretion of the Buyer; provided, however, that in the case of a merger, sale of substantially all of the Company’s assets or other corporate reorganization, the Buyer shall not unreasonably withhold, condition or delay such consent. This Agreement or any of the severable rights and obligations inuring to the benefit of or to be performed by Buyer hereunder may be assigned by Buyer to a third party, including its financing sources, in whole or in part, without the need to obtain the Company’s consent thereto.
2.8. Third Party Beneficiaries. This Agreement is intended for the benefit of the parties hereto and their respective permitted successors and assigns, and is not for the benefit of, nor may any provision hereof be enforced by, any other person.
2.9. Survival. The representations and warranties of the Company and the agreements and covenants set forth in this Agreement shall survive the Closing hereunder notwithstanding any due diligence investigation conducted by or on behalf of the Buyer. The Company agrees to indemnify and hold harmless the Buyer and all its officers, directors, employees, attorneys, and agents for loss or damage arising as a result of or related to any breach or alleged breach by the Company of any of its representations, warranties and covenants set forth in this Agreement or any of its covenants and obligations under this Agreement, including advancement of expenses as they are incurred.
2.10. No Strict Construction. The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent, and no rules of strict construction will be applied against any party.
2.11. Remedies. The Company acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the Buyer by vitiating the intent and purpose of the transaction contemplated hereby. Accordingly, the Company acknowledges that the remedy at law for a breach of its obligations under this Agreement will be inadequate and agrees, in the event of a breach or threatened breach by the Company of the provisions of this Agreement, that the Buyer shall be entitled, in addition to all other available remedies at law or in equity, and in addition to the penalties assessable herein, to an injunction or injunctions restraining, preventing or curing any breach of this Agreement and to enforce specifically the terms and provisions hereof, without the necessity of showing economic loss and without any bond or other security being required.
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2.12. Buyer’s Rights and Remedies Cumulative. All rights, remedies, and powers conferred in this Agreement and the Transaction Documents on the Buyer are cumulative and not exclusive of any other rights or remedies, and shall be in addition to every other right, power, and remedy that the Buyer may have, whether specifically granted in this Agreement or any other Transaction Document, or existing at law, in equity, or by statute; and any and all such rights and remedies may be exercised from time to time and as often and in such order as the Buyer may deem expedient.
2.13. Ownership Limitation. If at any time after the Closing, the Buyer shall or would receive shares of Common Stock in payment of interest or principal under Note, upon conversion of Note, under the Warrant, or upon exercise of the Warrant, so that the Buyer would, together with other shares of Common Stock held by it or its Affiliates, own or beneficially own by virtue of such action or receipt of additional shares of Common Stock a number of shares exceeding 4.99% of the number of shares of Common Stock outstanding on such date (the “Maximum Percentage”), the Company shall not be obligated and shall not issue to the Buyer shares of Common Stock which would exceed the Maximum Percentage, but only until such time as the Maximum Percentage would no longer be exceeded by any such receipt of shares of Common Stock by the Buyer. The foregoing limitations are enforceable, unconditional and non-waivable and shall apply to all Affiliates and assigns of the Buyer. Additionally, for so long as the Buyer or any of its Affiliate own Securities, upon written request from the Buyer, the Company shall post (or cause to be posted), the then-current number of issued and outstanding shares of its capital stock to the Company’s web page located at XXXxxxxxxx.xxx (or such other web page approved by the Buyer).
2.14. Attorneys’ Fees and Cost of Collection. In the event of any action at law or in equity to enforce or interpret the terms of this Agreement or any of the other Transaction Documents, the parties agree that the party who is awarded the most money shall be deemed the prevailing party for all purposes and shall therefore be entitled to an additional award of the full amount of the attorneys’ fees and expenses paid by such prevailing party in connection with the litigation and/or dispute without reduction or apportionment based upon the individual claims or defenses giving rise to the fees and expenses. Nothing herein shall restrict or impair a court’s power to award fees and expenses for frivolous or bad faith pleading.
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SUBSCRIPTION AMOUNT:
| Original Principal Amount of Note: | $110,000.00 |
| Purchase Price: | $100,000.00 |
IN WITNESS WHEREOF, the undersigned Buyer and the Company have caused this Agreement to be duly executed as of the date first above written.
THE COMPANY:
Electromedical Technologies, Inc.
| By: |  |
|
| Xxxxxxx Xxxxxxx | ||
| Chief Executive Officer |
| THE BUYER: | ||
| VISTA CAPITAL INVESTMENTS, LLC | ||
| By: |  |
|
| Xxxxx X. Xxxxx | ||
| Managing Member | ||
EXHIBIT A
NOTE
EXHIBIT B
WARRANT
EXHIBIT C
TRUE-UP NOTICE
VISTA CAPITAL INVESTORS, LLC
Date:
| [Company] |
| [Address] |
TRUE-UP NOTICE
The above-captioned Holder hereby gives notice to [Company], a Nevada corporation (the “Company”), pursuant to that certain Securities Purchase Agreement dated _______ by and between the Company and the Holder (the “Purchase Agreement”), that the Holder elects to receive fully paid and nonassessable True-Up Shares pursuant to Section 1.3 of the Purchase Agreement. Such True-Up Shares shall be calculated as set forth below. In the event of a conflict between this True-Up Notice and the Purchase Agreement, the Purchase Agreement shall govern, or, in the alternative, at the election of the Holder in its sole discretion, the Holder may provide a new form of True-Up Notice to conform to the Purchase Agreement.
| A. | Subsequent Share Price: ______ |
| B. | Commitment Value: $_______ |
| C. | Commitment Shares: ______ * |
| D. | Commitment Shares ______ |
| E. | Previously Issued True-Up Shares _______ |
The number of True-Up Shares Holder is entitled to receive is calculated as follows:
((Commitment Value / Subsequent Share Price) x 1.5) – (Commitment Shares) – (Previously Issued True-Up Shares) = True-Up Shares Deliverable
* Subject to adjustments permitted by the Transaction Documents.
Please transfer the Additional Origination Shares electronically (via DWAC) to the following account:
| Broker: | |||
| Address: | |||
| DTC#: |
Account #:
Account Name:
| To the extent the Additional Origination Shares are not able to be delivered to the Holder electronically via the DWAC system, please deliver a certificate representing all such shares to the Holder via reputable overnight courier after receipt of this True-Up Notice (by facsimile transmission or otherwise) to: |
_____________________________________
_____________________________________
_____________________________________
| Sincerely, | ||
| VISTA CAPITAL INVESTMENTS, LLC | ||
| By: | ||
| Xxxxx X. Xxxxx, President | ||
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