EXHIBIT 10.2
INVESTMENT AGREEMENT
This INVESTMENT AGREEMENT (the "Agreement"), dated as of May 11, 2017 (the
"Execution Date"), is entered into by and between HD View 360, Inc. (the
"Company"), with its principal executive offices at 000 XX 0xx Xxx Xxxxx 000
Xxxxx, Xxxxxxx 00000, and WT Consulting Group, LLC (the "Investor"), with its
principal executive offices at 0000 XX 000xx Xx. Xx., Xxxxx, XX 00000.
RECITALS:
WHEREAS, the parties desire that, upon the terms and subject to the
conditions contained herein, the Investor shall invest up to Two Million Dollars
($2,000,000) (the "Commitment Amount") to purchase the Company's common stock,
no par value per share (the "Common Stock");
WHEREAS, such investments will be made in reliance upon the exemption from
securities registration afforded by Section 4(a)(2) of the Securities Act of
1933, as amended (the "1933 Act"), Rule 506 of Regulation D promulgated by the
SEC under the 1933 Act, and/or upon such other exemption from the registration
requirements of the 1933 Act as may be available with respect to any or all of
the investments in Common Stock to be made hereunder; and
NOW THEREFORE, in consideration of the foregoing recitals, which shall be
considered an integral part of this Agreement, the covenants and agreements set
forth hereafter, and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Company and the Investor hereby
agree as follows:
SECTION I.
DEFINITIONS
For all purposes of and under this Agreement, the following terms shall
have the respective meanings below, and such meanings shall be equally
applicable to the singular and plural forms of such defined terms.
"1933 Act" shall have the meaning set forth in the recitals.
"1934 Act" shall mean the Securities Exchange Act of 1934, as amended, or
any similar federal statute, and the rules and regulations of the SEC
thereunder, all as the same will then be in effect.
"Affiliate" shall mean any individual or entity that, directly or
indirectly through one or more intermediaries, controls or is controlled
by or is under common control with another individual or entity as such
terms are used in and construed under Rule 405 under the 1933 Act.
"Agreement" shall have the meaning set forth in the preamble.
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"Articles of Incorporation" shall have the meaning set forth in Section
4.3.
"By-laws" shall have the meaning set forth in Section 4.3.
"Certificate" shall have the meaning set forth in Section 2.5.
"Closing" shall have the meaning set forth in Section 2.5.
"Closing Date" shall have the meaning set forth in Section 2.5.
"Commitment Fee Note" shall have the meaning set forth in Section 10.17
"Commitment Amount" shall have the meaning set forth in the recitals.
"Common Stock" shall have the meaning set forth in the recitals.
"Company" shall have the meaning set forth in the preamble.
"DTC" shall have the meaning set forth in Section 2.5.
"DWAC" shall mean Deposit and Withdrawal at Custodian service provided by
the Depository Trust Company.
"Effective Date" shall mean the date the SEC declares effective under the
1933 Act the Registration Statement covering the Securities.
"Environmental Laws" shall have the meaning set forth in Section 4.13.
"Execution Date" shall have the meaning set forth in the preamble.
"FAST" shall have the meaning set forth in Section 2.5.
"Investor" shall have the meaning set forth in the preamble.
"Material Adverse Effect" shall have the meaning set forth in Section 4.1.
"Maximum Common Stock Issuance" shall have the meaning set forth in
Section 2.6.
"Open Period" shall mean the period beginning on and including the Trading
Day immediately following the Effective Date and ending on the earlier to
occur of (i) the date which is thirty-six (36) months from the Effective
Date; or (ii) termination of the Agreement in accordance with Section 8.
"PCAOB" shall have the meaning set forth in Section 4.6.
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"Pricing Period" shall mean, with respect to a particular Put Notice, the
five (5) consecutive Trading Days including and immediately following the
applicable Put Notice Date.
"Principal Market" shall mean the New York Stock Exchange, the NYSE MKT,
the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global
Select Market, the OTC Bulletin Board or the OTC Markets Group, whichever
is the principal market on which the Common Stock is traded.
"Purchase Amount" shall mean the total amount being paid by the Investor
on a particular Closing Date to purchase the Securities, calculated by
multiplying the Purchase Price by the Put Amount.
"Purchase Price" shall mean the 85% of the average of the 2 lowest trading
prices of the Common Stock during the Pricing Period applicable to the Put
Notice, provided, however, an additional 10% will be added to the discount
of each Put if (i) the Company is not DWAC eligible and (ii) an additional
15% will be added to the discount of each Put if the Company is under DTC
"chill" status on the applicable Put Notice Date.
"Put" shall have the meaning set forth in Section 0.
"Put Amount" shall have the meaning set forth in Section 0.
"Put Notice" shall mean a written notice sent to the Investor by the
Company stating the number of shares that the Company intends to sell to
the Investor pursuant to the terms of the Agreement and stating the
current number of Shares issued and outstanding on such date.
"Put Notice Date" shall mean the Trading Day on which the Investor
receives a Put Notice, determined as follows: a Put Notice shall be deemed
delivered on (a) the Trading Day it is received by electronic mail or
otherwise by the Investor if such notice is received prior to 9:30 a.m.
(Pacific time), or (b) the immediately succeeding Trading Day if it is
received by electronic mail or otherwise after 9:30 a.m. (Pacific time) on
a Trading Day. No Put Notice may be deemed delivered on a day that is not
a Trading Day.
"Put Settlement Sheet" shall mean a written letter to the Company by the
Investor, evidencing acceptance of the Put and providing instructions for
delivery of the Securities to the Investor.
"Put Shares Due" shall mean the Shares to be sold to the Investor pursuant
to the Put.
"Registered Offering Transaction Documents" shall mean this Agreement and
the Registration Rights Agreement between the Company and the Investor as
of the date herewith.
"Registration Rights Agreement" shall have the meaning set forth in the
recitals.
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"Registration Statement" means the registration statement of the
Company filed under the 1933 Act covering the resale of the Securities
issuable hereunder by the Investor, in the manner described in such
Registration Statement.
"Resolutions" shall have the meaning set forth in Section 7.5.
"SEC" shall mean the U.S. Securities and Exchange Commission.
"SEC Documents" shall have the meaning set forth in Section 4.6.
"Securities" shall mean the shares of Common Stock issued pursuant to the
terms of the Agreement.
"Shares" shall mean the shares of the Company's Common Stock.
"Subsidiaries" shall have the meaning set forth in Section 4.1.
"Trading Day" shall mean any day on which the Principal Market for the
Common Stock is open for trading, from the hours of 9:30 am until 4:00 pm.
"VWAP" shall mean, for any date, the price determined by the first of the
following clauses that applies: (a) if the Common Stock is then listed or
quoted on a Trading Market, the daily volume weighted average price of the
Common Stock for such date (or the nearest preceding date) on the Trading
Market on which the Common Stock is then listed or quoted for trading as
reported by (i) Bloomberg Financial L.P. or (ii) Stock Charts/Quote Media
if the Investor does not promptly provide the Company the Bloomberg
quote/pricing charts for the days involved upon the Company's request
(based on a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m.
(New York City time)) and (b) in all other cases, the fair market value of
a share of Common Stock as determined by an independent appraiser selected
in good faith by the Investor and to the Company.
"Waiting Period" shall have the meaning set forth in Section .
SECTION II
PURCHASE AND SALE OF COMMON STOCK
2.1 PURCHASE AND SALE OF COMMON STOCK. Subject to the terms and conditions
set forth herein, the Company shall issue and sell to the Investor, and the
Investor shall purchase from the Company, up to that number of Shares having an
aggregate Purchase Price of Two Million Dollars ($2,000,000).
2.2 DELIVERY OF PUT NOTICES. Subject to the terms and conditions of the
Registered Offering Transaction Documents, and from time to time during the Open
Period, the Company may, in its sole discretion, deliver a Put Notice to the
Investor which states the share amount (designated in whole shares of the
Company's Common Stock), which the Company intends to sell to the Investor on a
Closing Date (the "Put"). The Put Notice shall be in the form attached hereto as
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Exhibit B and incorporated herein by reference. On the Closing Date the Investor
shall deliver to the Company a Put Settlement Sheet on the Put Notice Date. The
Put Settlement Sheet shall be in the form attached hereto as Exhibit C and
incorporated herein by reference.
2.3 PUT FORMULA. The maximum amount that the Company shall be entitled to
Put to the Investor per any applicable Put Notice is that number of shares of
Common Stock up to or equal to one hundred percent (100%) of the average of the
daily trading volume (U.S. market only) of the Common Stock for the ten (10)
consecutive Trading Days immediately prior to the applicable Put Notice Date
(the "Put Amount") so long as the Put Amount dollar value is at least $5,000 and
does not exceed $50,000, as calculated by multiplying the Put Amount by the
average daily VWAP for the ten (10) consecutive Trading Days immediately prior
to the applicable Put Notice Date. During the Open Period, the Company shall not
be entitled to submit a Put Notice until after the previous Closing has been
completed. Notwithstanding the foregoing, the Company may not deliver a Put
Notice on or earlier of the tenth (10th) Trading Day immediately following the
preceding Put Notice Date (the "Waiting Period").
2.4 CONDITIONS TO INVESTOR'S OBLIGATION TO PURCHASE SHARES. Notwithstanding
anything to the contrary in this Agreement, the Company shall not be entitled to
deliver a Put Notice and the Investor shall not be obligated to purchase any
Shares at a Closing unless each of the following conditions are satisfied:
i. a Registration Statement shall have been declared effective and
shall remain effective and available for the resale of all the
Put Shares Due at all times until the Closing with respect to the
applicable Put Notice;
ii. at all times during the period beginning on the related Put
Notice Date and ending on and including the related Closing Date,
the Common Stock shall have been listed or quoted for trading on
the Principal Market and shall not have been suspended from
trading thereon during the Pricing Period;
iii. the Company has complied with its obligations and is otherwise
not in material breach of or in material default under, this
Agreement, the Registration Rights Agreement or any other
agreement executed in connection herewith which has not been
cured prior to delivery to the Investor of the applicable Put
Notice;
iv. no injunction shall have been issued and remain in force, or
action commenced by a governmental authority which has not been
stayed or abandoned, prohibiting the purchase or the issuance of
the Securities; and
v. the issuance of the Securities will not violate any shareholder
approval requirements of the Principal Market.
If any of the events described in clauses (i) through (v) above occurs
during a Pricing Period, then the Investor shall have no obligation to purchase
the Put Amount of Common Stock set forth in the applicable Put Notice.
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2.5 MECHANICS OF PURCHASE OF SHARES BY INVESTOR. Subject to the
satisfaction of the conditions set forth in Sections 2.6 and 7 of this
Agreement, the closing of the purchase by the Investor of Securities (a
"Closing") shall occur on the date which is no earlier than five (5) Trading
Days following and no later than seven (7) Trading Days following the applicable
Put Notice Date (each a "Closing Date"). On each such Closing Date, if the
Company's transfer agent is participating in The Depository Trust Company
("DTC") Fast Automated Securities Transfer ("FAST") program and that the
Securities are eligible for inclusion in the FAST program, the Company shall use
all commercially reasonable efforts to cause its transfer agent to
electronically transmit the Securities to be issued to the Investor on such date
by crediting the account of the Investor's prime broker (as specified by the
Investor in a Put Settlement Sheet) with DTC through its DWAC service. If the
Company is not DWAC eligible or the Company is under DTC "chill" on such Closing
Date, the Company shall deliver to the Investor pursuant to this Agreement,
certificates representing the Securities to be issued to the Investor on such
date and registered in the name of the Investor (the "Certificate"). On such
Closing Date, after receipt of confirmation of delivery of such Securities to
the Investor, the Investor shall disburse the funds constituting the Purchase
Amount to the Company's designated account by wire transfer of (i) immediately
available funds if the Investor receives the Securities by 9:30 a.m. (Pacific
time) or (ii) next day available funds if the Investor receives the Securities
thereafter.
2.6 OVERALL LIMIT ON COMMON STOCK ISSUABLE. Notwithstanding anything
contained herein to the contrary, if during the Open Period the Company becomes
listed on an exchange that limits the number of shares of Common Stock that may
be issued without shareholder approval, then the number of Shares issuable by
the Company and purchasable by the Investor, shall not exceed that number of the
shares of Common Stock that may be issuable without shareholder approval (the
"Maximum Common Stock Issuance"). If such issuance of shares of Common Stock
could cause a delisting on the Principal Market, then the Maximum Common Stock
Issuance shall first be approved by the Company's shareholders in accordance
with applicable law and the By-laws and the Articles of Incorporation of the
Company, if such issuance of shares of Common Stock could cause a delisting on
the Principal Market. The parties understand and agree that the Company's
failure to seek or obtain such shareholder approval shall in no way adversely
affect the validity and due authorization of the issuance and sale of Securities
or the Investor's obligation in accordance with the terms and conditions hereof
to purchase a number of Shares in the aggregate up to the Maximum Common Stock
Issuance limitation, and that such approval pertains only to the applicability
of the Maximum Common Stock Issuance limitation provided in this Section 2.6.
2.7 LIMITATION ON AMOUNT OF OWNERSHIP. Notwithstanding anything to the
contrary in this Agreement, in no event shall the Investor be entitled to
purchase that number of Shares, which when added to the sum of the number of
shares of Common Stock beneficially owned (as such term is defined under Section
13(d) and Rule 13d-3 of the 1934 Act), by the Investor, would exceed 9.99% of
the number of shares of Common Stock outstanding on the Closing Date, as
determined in accordance with Rule 13d-1(j) of the 1934 Act.
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SECTION III
INVESTOR'S REPRESENTATIONS, WARRANTIES AND COVENANTS
The Investor represents and warrants to the Company, and covenants, that:
3.1 SOPHISTICATED INVESTOR. The Investor has, by reason of its business and
financial experience, such knowledge, sophistication and experience in financial
and business matters and in making investment decisions of this type that it is
capable of (i) evaluating the merits and risks of an investment in the
Securities and making an informed investment decision; (ii) protecting its own
interest; and (iii) bearing the economic risk of such investment for an
indefinite period of time.
3.2 AUTHORIZATION; ENFORCEMENT. This Agreement has been duly and validly
authorized, executed and delivered on behalf of the Investor and is a valid and
binding agreement of the Investor enforceable against the Investor in accordance
with its terms, subject as to enforceability to general principles of equity and
to applicable bankruptcy, insolvency, reorganization, moratorium, liquidation
and other similar laws relating to, or affecting generally, the enforcement of
applicable creditors' rights and remedies.
3.3 COMPLIANCE WITH THE 1934 ACT. During the term of this Agreement, the
Investor will comply with the provisions of the 1934 Act, and the rules
promulgated thereunder, with respect to transactions involving the Common Stock.
The Investor agrees not to short sell the Company's stock, either directly or
indirectly through its affiliates, principals or advisors, during the term of
this Agreement. The Investor will only sell Company stock that it has in its
possession.
3.4 ACCREDITED INVESTOR. The Investor is an "accredited investor" as that
term is defined in Rule 501(a) of Regulation D of the 1933 Act.
3.5 NO CONFLICTS. The execution, delivery and performance of the Registered
Offering Transaction Documents by the Investor and the consummation by the
Investor of the transactions contemplated hereby and thereby will not result in
a violation of limited liability company agreement or other organizational
documents of the Investor.
3.6 OPPORTUNITY TO DISCUSS. The Investor has received all materials
relating to the Company's business, finance and operations which it has
requested. The Investor has had an opportunity to discuss the business,
management and financial affairs of the Company with the Company's management.
3.7 INVESTMENT PURPOSES. The Investor is purchasing the Securities for its
own account for investment purposes and not with a view towards distribution and
agrees to resell or otherwise dispose of the Securities solely in accordance
with the registration provisions of the 1933 Act (or pursuant to an exemption
from such registration provisions).
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3.8 NO REGISTRATION AS A DEALER. The Investor is not and will not be
required to be registered as a "dealer" under the 1934 Act, either as a result
of its execution and performance of its obligations under this Agreement or
otherwise.
3.9 GOOD STANDING. The Investor is a limited liability company, duly
organized, validly existing and in good standing in the State of Colorado.
3.10 TAX LIABILITIES. The Investor understands that it is liable for its
own tax liabilities.
3.11 REGULATION M. The Investor will comply with Regulation M under the
1934 Act, if applicable.
3.12 GENERAL SOLICITATION. The Investor is not purchasing the Securities as
a
result of any advertisement, article, notice or other communication regarding
the Securities published in any newspaper, magazine or similar media or
broadcast over television or radio or presented at any seminar or any other
general solicitation or general advertisement.
3.13 TRANSFER RESTRICTIONS. The Securities may only be disposed of in
compliance with federal and state securities laws. In connection with any
transfer of Securities other than pursuant to an effective registration
statement, to the Company or to an affiliate of the Investor, the Company may
require the transferor thereof to provide to the Company an opinion of counsel
selected by the transferor and reasonably acceptable to the Company, the form
and substance of which opinion shall be reasonably satisfactory to the Company,
to the effect that such transfer does not require registration of such
transferred Securities under the 1933 Act; provided, however, that in connection
with any transfer of Securities pursuant to Rule 144, the Company may require
the transferor to provide a customary Rule 144 sellers representation letter. As
a condition of transfer, any such transferee shall agree in writing to be bound
by the terms of this Agreement and shall have the rights of the Investor under
this Agreement and the Registration Rights Agreement, as to issued Securities
only.
SECTION IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in the Schedules attached hereto, or as disclosed on
the Company's SEC Documents, the Company represents and warrants to the Investor
that:
4.1 ORGANIZATION AND QUALIFICATION. The Company is a corporation duly
organized and validly existing in good standing under the laws of the State of
Colorado, and has the requisite corporate power and authorization to own its
properties and to carry on its business as now being conducted. Both the Company
and the companies it owns or controls ("Subsidiaries") are duly qualified to do
business and are in good standing in every jurisdiction in which its ownership
of property or the nature of the business conducted by it makes such
qualification necessary, except to the extent that the failure to be so
qualified or be in good standing would not have a Material Adverse Effect. As
used in this Agreement, "Material Adverse Effect" means a change, event,
circumstance, effect or state of facts that has had or is reasonably likely to
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have, a material adverse effect on the business, properties, assets, operations,
results of operations, financial condition or prospects of the Company and its
Subsidiaries, if any, taken as a whole, or on the transactions contemplated
hereby or by the agreements and instruments to be entered into in connection
herewith, or on the authority or ability of the Company to perform its
obligations under the Registered Offering Transaction Documents.
4.2 AUTHORIZATION; ENFORCEMENT; COMPLIANCE WITH OTHER INSTRUMENTS.
i. The Company has the requisite corporate power and authority to
enter into and perform the Registered Offering Transaction
Documents, and to issue the Securities in accordance with the
terms hereof and thereof.
ii. The execution and delivery of the Registered Offering Transaction
Documents by the Company and the consummation by it of the
transactions contemplated hereby and thereby, including without
limitation the issuance of the Securities pursuant to this
Agreement, have been duly and validly authorized by the Company's
board of directors and no further consent or authorization is
required by the Company, its board of directors, or its
shareholders.
iii. The Registered Offering Transaction Documents have been duly and
validly executed and delivered by the Company.
iv. The Registered Offering Transaction Documents constitute the
valid and binding obligations of the Company enforceable against
the Company in accordance with their terms, except as such
enforceability may be limited by general principles of equity or
applicable bankruptcy, insolvency, reorganization, moratorium,
liquidation or similar laws relating to, or affecting generally,
the enforcement of creditors' rights and remedies.
4.3 CAPITALIZATION. As of the date hereof, the authorized capital stock of
the Company consists of 90,000,000 shares of Common Stock, no par value, of
which 49,508,733 are issued and outstanding and 10,000,000 shares of preferred
stock, no par value, of which no shares are issued and outstanding. All of such
outstanding shares have been, or upon issuance will be, validly issued and are
fully paid and non-assessable.
Except as disclosed in the Company's publicly available filings with the
SEC or as otherwise set forth on Schedule 4.3:
i. no shares of the Company's capital stock are subject to
preemptive rights or any other similar rights or any liens or
encumbrances suffered or permitted by the Company;
ii. there are no outstanding debt securities;
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iii. there are no outstanding shares of capital stock, options,
warrants, scrip, rights to subscribe to, calls or commitments of
any character whatsoever relating to, or securities or rights
convertible into, any shares of capital stock of the Company or
any of its Subsidiaries, or contracts, commitments,
understandings or arrangements by which the Company or any of its
Subsidiaries is or may become bound to issue additional shares of
capital stock of the Company or any of its Subsidiaries or
options, warrants, scrip, rights to subscribe to, calls or
commitments of any character whatsoever relating to, or
securities or rights convertible into, any shares of capital
stock of the Company or any of its Subsidiaries;
iv. there are no agreements or arrangements under which the Company
or any of its Subsidiaries is obligated to register the sale of
any of their securities under the 1933 Act;
v. there are no outstanding securities of the Company or any of its
Subsidiaries which contain any redemption or similar provisions,
and there are no contracts, commitments, understandings or
arrangements by which the Company or any of its Subsidiaries is
or may become bound to redeem a security of the Company or any of
its Subsidiaries;
vi. there are no securities or instruments containing anti-dilution
or similar provisions that will be triggered by the issuance of
the Securities as described in this Agreement;
vii. the Company does not have any stock appreciation rights or
"phantom stock" plans or agreements or any similar plan or
agreement; and
viii. there is no dispute as to the classification of any shares of
the Company's capital stock.
The Company has furnished to the Investor, or the Investor has had access
through XXXXX to, true and correct copies of the Company's Articles of
Incorporation, as in effect on the date hereof (the "Articles of
Incorporation"), and the Company's By-laws, as in effect on the date hereof (the
"By-laws"), and the terms of all securities convertible into or exercisable for
Common Stock and the material rights of the holders thereof in respect thereto.
4.4 ISSUANCE OF SHARES. As of the Effective Date, the Company will have
reserved the amount of Shares included in the Registration Statement for
issuance pursuant to the Registered Offering Transaction Documents, which will
have been duly authorized and reserved (subject to adjustment pursuant to the
Company's covenant set forth in Section 5.5 below) pursuant to this Agreement.
Upon issuance in accordance with this Agreement, the Securities will be validly
issued, fully paid for and non-assessable and free from all taxes, liens and
charges with respect to the issuance thereof. In the event the Company cannot
reserve a sufficient number of Shares for issuance pursuant to this Agreement,
the Company will use its best efforts to authorize and reserve for issuance the
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number of Shares required for the Company to perform its obligations hereunder
as soon as reasonably practicable.
4.5 NO CONFLICTS. The execution, delivery and performance of the Registered
Offering Transaction Documents by the Company and the consummation by the
Company of the transactions contemplated hereby and thereby will not (i) result
in a violation of the Articles of Incorporation or the By-laws; or (ii) conflict
with, or constitute a material default (or an event which with notice or lapse
of time or both would become a material default) under, or give to others any
rights of termination, amendment, acceleration or cancellation of, any material
agreement, contract, indenture mortgage, indebtedness or instrument to which the
Company or any of its Subsidiaries is a party, or to the Company's knowledge
result in a violation of any law, rule, regulation, order, judgment or decree
(including United States federal and state securities laws and regulations and
the rules and regulations of the Principal Market or principal securities
exchange or trading market on which the Common Stock is traded or listed)
applicable to the Company or any of its Subsidiaries or by which any property or
asset of the Company or any of its Subsidiaries is bound or affected. Neither
the Company nor its Subsidiaries is in violation of any term of, or in default
under, the Articles of Incorporation or the By-laws or their organizational
charter or by-laws, respectively, or any contract, agreement, mortgage,
indebtedness, indenture, instrument, judgment, decree or order or any statute,
rule or regulation applicable to the Company or its Subsidiaries, except for
possible conflicts, defaults, terminations, amendments, accelerations,
cancellations and violations that would not individually or in the aggregate
have or constitute a Material Adverse Effect. The business of the Company and
its Subsidiaries is not being conducted, and shall not be conducted, in
violation of any law, statute, ordinance, rule, order or regulation of any
governmental authority or agency, regulatory or self-regulatory agency, or
court, except for possible violations the sanctions for which either
individually or in the aggregate would not have a Material Adverse Effect.
Except as specifically contemplated by this Agreement and as required under the
1933 Act or any securities laws of any states, to the Company's knowledge, the
Company is not required to obtain any consent, authorization, permit or order
of, or make any filing or registration (except the filing of a registration
statement as outlined in the Registration Rights Agreement between the parties)
with, any court, governmental authority or agency, regulatory or self-regulatory
agency or other third party in order for it to execute, deliver or perform any
of its obligations under, or contemplated by, the Registered Offering
Transaction Documents in accordance with the terms hereof or thereof. All
consents, authorizations, permits, orders, filings and registrations which the
Company is required to obtain pursuant to the preceding sentence have been
obtained or effected on or prior to the date hereof and are in full force and
effect as of the date hereof. The Company and its Subsidiaries are unaware of
any facts or circumstances which might give rise to any of the foregoing. The
Company is not, and will not be, in violation of the listing requirements of the
Principal Market as in effect on the date hereof and on each of the Closing
Dates and is not aware of any facts which would reasonably lead to delisting of
the Common Stock by the Principal Market in the foreseeable future.
4.6 SEC DOCUMENTS; FINANCIAL STATEMENTS. As of the date hereof, the Company
has filed all reports, schedules, forms, statements and other documents required
to be filed by it with the SEC pursuant to the reporting requirements of the
1934 Act (all of the foregoing filed prior to the date hereof and all exhibits
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included therein and financial statements and schedules thereto and documents
incorporated by reference therein, and amendments thereto, being hereinafter
referred to as the "SEC Documents"). The Company has delivered to the Investor
or its representatives, or they have had access through XXXXX to, true and
complete copies of the SEC Documents. As of their respective filing dates, the
SEC Documents complied in all material respects with the requirements of the
1934 Act and the rules and regulations of the SEC promulgated thereunder
applicable to the SEC Documents, and none of the SEC Documents, at the time they
were filed with the SEC or the time they were amended, if amended, contained any
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading. As of their
respective dates, the financial statements of the Company included in the SEC
Documents complied as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC with
respect thereto. Such financial statements have been prepared in accordance with
generally accepted accounting principles, by a firm that is a member of the
Public Companies Accounting Oversight Board ("PCAOB") consistently applied,
during the periods involved (except (i) as may be otherwise indicated in such
financial statements or the notes thereto, or (ii) in the case of unaudited
interim statements, to the extent they may exclude footnotes or may be condensed
or summary statements) and fairly present in all material respects the financial
position of the Company as of the dates thereof and the results of its
operations and cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal year-end audit adjustments). No other written
information provided by or on behalf of the Company to the Investor which is not
included in the SEC Documents, including, without limitation, information
referred to in Section 4.3 of this Agreement, contains any untrue statement of a
material fact or omits to state any material fact necessary to make the
statements therein, in the light of the circumstance under which they are or
were made, not misleading. The Company's knowledge, neither the Company nor any
of its Subsidiaries or any of their officers, directors, employees or agents
have provided the Investor with any material, nonpublic information which was
not publicly disclosed prior to the date hereof and any material, nonpublic
information provided to the Investor by the Company or its Subsidiaries or any
of their officers, directors, employees or agents prior to any Closing Date
shall be publicly disclosed by the Company prior to such Closing Date.
4.7 ABSENCE OF CERTAIN CHANGES. Except as otherwise set forth in the SEC
Documents, the Company does not intend to change the business operations of the
Company in any material way. The Company has not taken any steps, and does not
currently expect to take any steps, to seek protection pursuant to any
bankruptcy law nor does the Company or its Subsidiaries have any knowledge or
reason to believe that its creditors intend to initiate involuntary bankruptcy
proceedings.
4.8 ABSENCE OF LITIGATION AND/OR REGULATORY PROCEEDINGS. Except as set
forth in the SEC Documents, or disclosed on Schedule 4.8, there is no action,
suit, proceeding, inquiry or investigation before or by any court, public board,
government agency, self-regulatory organization or body pending or, to the
knowledge of the executive officers of Company or any of its Subsidiaries,
threatened against or affecting the Company, the Common Stock or any of the
Company's Subsidiaries or any of the Company's or the Company's Subsidiaries'
officers or directors in their capacities as such, in which an adverse decision
could have a Material Adverse Effect.
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4.9 ACKNOWLEDGMENT REGARDING INVESTOR'S PURCHASE OF SHARES. The Company
acknowledges and agrees that the Investor is acting solely in the capacity of an
arm's length purchaser with respect to the Registered Offering Transaction
Documents and the transactions contemplated hereby and thereby. The Company
further acknowledges that the Investor is not acting as a financial advisor or
fiduciary of the Company (or in any similar capacity) with respect to the
Registered Offering Transaction Documents and the transactions contemplated
hereby and thereby and any advice given by the Investor or any of its respective
representatives or agents in connection with the Registered Offering Transaction
Documents and the transactions contemplated hereby and thereby is merely
incidental to the Investor's purchase of the Securities, and is not being relied
on by the Company. The Company further represents to the Investor that the
Company's decision to enter into the Registered Offering Transaction Documents
has been based solely on the independent evaluation by the Company and its
representatives.
4.10 NO UNDISCLOSED EVENTS, LIABILITIES, DEVELOPMENTS OR CIRCUMSTANCES.
Except as set forth in the SEC Documents or required with respect to the
Registered Offering Transaction Documents, as of the date hereof, no event,
liability, development or circumstance has occurred or exists, or to the
Company's knowledge is contemplated to occur, with respect to the Company or its
Subsidiaries or their respective business, properties, assets, prospects,
operations or financial condition, that would be required to be disclosed by the
Company under applicable securities laws on a registration statement filed with
the SEC relating to an issuance and sale by the Company of its Common Stock and
which has not been publicly announced.
4.11 EMPLOYEE RELATIONS. Neither the Company nor any of its Subsidiaries is
involved in any union labor dispute nor, to the knowledge of the Company or any
of its Subsidiaries, is any such dispute threatened. Neither the Company nor any
of its Subsidiaries is a party to a collective bargaining agreement, and the
Company and its Subsidiaries believe that relations with their employees are
good. No executive officer (as defined in Rule 501(f) of the 0000 Xxx) has
notified the Company that such officer intends to leave the Company's employ or
otherwise terminate such officer's employment with the Company.
4.12 INTELLECTUAL PROPERTY RIGHTS. The Company and its Subsidiaries own or
possess adequate rights or licenses to use all trademarks, trade names, service
marks, service xxxx registrations, service names, patents, patent rights,
copyrights, inventions, licenses, approvals, governmental authorizations, trade
secrets and rights necessary to conduct their respective businesses as now
conducted. Except as set forth in the SEC Documents, none of the Company's
trademarks, trade names, service marks, service xxxx registrations, service
names, patents, patent rights, copyrights, inventions, licenses, approvals,
government authorizations, trade secrets or other intellectual property rights
necessary to conduct its business as now or as proposed to be conducted have
expired or terminated, or are expected to expire or terminate within two (2)
years from the date of this Agreement. The Company and its Subsidiaries do not
have any knowledge of any infringement by the Company or its Subsidiaries of
trademark, trade name rights, patents, patent rights, copyrights, inventions,
13
licenses, service names, service marks, service xxxx registrations, trade secret
or other similar rights of others, or of any such development of similar or
identical trade secrets or technical information by others and, except as set
forth in the SEC Documents, there is no claim, action or proceeding being made
or brought against, or to the Company's knowledge, being threatened against, the
Company or its Subsidiaries regarding trademark, trade name, patents, patent
rights, invention, copyright, license, service names, service marks, service
xxxx registrations, trade secret or other infringement; and the Company and its
Subsidiaries are unaware of any facts or circumstances which might give rise to
any of the foregoing. The Company and its Subsidiaries have taken commercially
reasonable security measures to protect the secrecy, confidentiality and value
of all of their intellectual properties.
4.13 ENVIRONMENTAL LAWS. The Company and its Subsidiaries (i) are, to the
knowledge of the management and directors of the Company and its Subsidiaries,
in compliance with any and all applicable foreign, federal, state and local laws
and regulations relating to the protection of human health and safety, the
environment or hazardous or toxic substances or wastes, pollutants or
contaminants ("Environmental Laws"); (ii) have, to the knowledge of the
management and directors of the Company, received all permits, licenses or other
approvals required of them under applicable Environmental Laws to conduct their
respective businesses as currently conducted; and (iii) are in compliance, to
the knowledge of the management and directors of the Company, with all terms and
conditions of any such permit, license or approval where, in each of the three
(3) foregoing cases, the failure to so comply would have, individually or in the
aggregate, a Material Adverse Effect.
4.14 TITLE. The Company and its Subsidiaries have good and marketable title
to all personal property owned by them which is material to the business of the
Company and its Subsidiaries, in each case free and clear of all liens,
encumbrances and defects except such as are described in the SEC Documents or
such as do not materially affect the value of such property and do not interfere
with the use made and proposed to be made of such property by the Company or any
of its Subsidiaries. Any real property and facilities held under lease by the
Company or any of its Subsidiaries are held by them under valid, subsisting and
enforceable leases with such exceptions as are not material and do not interfere
with the use made and proposed to be made of such property and buildings by the
Company and its Subsidiaries.
4.15 INSURANCE. Each of the Company's Subsidiaries are insured by insurers
of recognized financial responsibility against such losses and risks and in such
amounts as management of the Company reasonably believes to be prudent and
customary in the businesses in which the Company and its Subsidiaries are
engaged. Neither the Company nor any of its Subsidiaries has been refused any
insurance coverage sought or applied for and neither the Company nor its
Subsidiaries has any reason to believe that it will not be able to renew its
existing insurance coverage as and when such coverage expires or to obtain
similar coverage from similar insurers as may be necessary to continue its
business at a cost that would not have a Material Adverse Effect.
4.16 REGULATORY PERMITS. The Company and its Subsidiaries have in full
force and effect all certificates, approvals, authorizations and permits from
the appropriate federal, state, local or foreign regulatory authorities and
comparable foreign regulatory agencies, necessary to own, lease or operate their
respective properties and assets and conduct their respective businesses in the
14
manner currently being conducted, and neither the Company nor any such
Subsidiary has received any notice of proceedings relating to the revocation or
modification of any such certificate, approval, authorization or permit, except
for such certificates, approvals, authorizations or permits which if not
obtained, or such revocations or modifications which, would not have a Material
Adverse Effect.
4.17 INTERNAL ACCOUNTING CONTROLS. Except as otherwise set forth in the SEC
Documents, the Company and each of its Subsidiaries maintain a system of
internal accounting controls sufficient to provide reasonable assurance that (i)
transactions are executed in accordance with management's general or specific
authorizations; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles by a firm with membership to the PCAOB and to maintain
asset accountability; (iii) access to assets is permitted only in accordance
with management's general or specific authorization; and (iv) the recorded
accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences. The
Company's management has determined that the Company's internal accounting
controls were not effective as of the date of this Agreement as further
described in the SEC Documents.
4.18 NO MATERIALLY ADVERSE CONTRACTS, ETC. Neither the Company nor any of
its Subsidiaries is subject to any charter, corporate or other legal
restriction, or any judgment, decree, order, rule or regulation which in the
judgment of the Company's officers has or is expected in the future to have a
Material Adverse Effect. Neither the Company nor any of its Subsidiaries is a
party to any contract or agreement which in the judgment of the Company's
officers has or is expected to have a Material Adverse Effect.
4.19 TAX STATUS. The Company and each of its Subsidiaries has made or filed
all United States federal and state income and all other tax returns, reports
and declarations required by any jurisdiction to which it is subject (unless and
only to the extent that the Company and each of its Subsidiaries has set aside
on its books provisions reasonably adequate for the payment of all unpaid and
unreported taxes) and has paid all taxes and other governmental assessments and
charges that are material in amount, shown or determined to be due on such
returns, reports and declarations, except those being contested in good faith
and has set aside on its books provision reasonably adequate for the payment of
all taxes for periods subsequent to the periods to which such returns, reports
or declarations apply. There are no unpaid taxes in any material amount claimed
to be due by the taxing authority of any jurisdiction, and the officers of the
Company know of no basis for any such claim.
4.20 CERTAIN TRANSACTIONS. Except as set forth in the SEC Documents and
except for transactions pursuant to which the Company makes payments in the
ordinary course of business upon terms no less favorable than the Company could
obtain from disinterested third parties and other than the grant of stock
options disclosed in the SEC Documents, none of the officers, directors, or
employees of the Company is presently a party to any transaction with the
Company or any of its Subsidiaries (other than for services as employees,
consultants, officers and directors), including any contract, agreement or other
arrangement providing for the furnishing of services to or by, providing for
rental of real or personal property to or from, or otherwise requiring payments
to or from any officer, director or such employee or, to the knowledge of the
15
Company, any corporation, partnership, trust or other entity in which any
officer, director, or any such employee has a substantial interest or is an
officer, director, trustee or partner, such that disclosure would be required in
the SEC Documents.
4.21 DILUTIVE EFFECT. The Company understands and acknowledges that the
number of shares of Common Stock issuable upon purchases pursuant to this
Agreement will increase in certain circumstances including, but not necessarily
limited to, the circumstance wherein the trading price of the Common Stock
declines during the period between the Effective Date and the end of the Open
Period. The Company's executive officers and directors have studied and fully
understand the nature of the transactions contemplated by this Agreement and
recognize that they have a potential dilutive effect on the shareholders of the
Company. The board of directors of the Company has concluded, in its good faith
business judgment, and with full understanding of the implications, that such
issuance is in the best interests of the Company. The Company specifically
acknowledges that, subject to such limitations as are expressly set forth in the
Registered Offering Transaction Documents, its obligation to issue shares of
Common Stock upon purchases pursuant to this Agreement is absolute and
unconditional regardless of the dilutive effect that such issuance may have on
the ownership interests of other shareholders of the Company.
4.22 LOCK-UP. The Company shall cause its officers, insiders, directors,
and affiliates or other related parties under control of the Company, to refrain
from selling Common Stock during each Pricing Period.
4.23 NO GENERAL SOLICITATION. Neither the Company, nor any of its
affiliates, nor any person acting on its behalf, has engaged in any form of
general solicitation or general advertising (within the meaning of Regulation D)
in connection with the offer or sale of the Common Stock to be offered as set
forth in this Agreement.
SECTION V
COVENANTS OF THE COMPANY
5.1 BEST EFFORTS. The Company shall use all commercially reasonable efforts
to timely satisfy each of the conditions set forth in Section 7 of this
Agreement.
5.2 REPORTING STATUS. During the Open Period and until one of the following
occurs, the Company shall file all reports required to be filed with the SEC
pursuant to the 1934 Act, and the Company shall not terminate its status, or
take an action or fail to take any action, which would terminate its status as a
reporting company under the 1934 Act: (i) this Agreement terminates pursuant to
Section 8 and the Investor has the right to sell all of the Securities without
volume restrictions pursuant to Rule 144 promulgated under the 1933 Act, or such
other exemption, or (ii) the date on which the Investor has sold all the
Securities and this Agreement has been terminated pursuant to Section 8.
5.3 USE OF PROCEEDS. The Company will use the proceeds from the sale of the
Securities (excluding amounts paid or to be paid by the Company for fees as set
forth in the Registered Offering Transaction Documents, if any) for general
16
corporate and working capital purposes and acquisitions or assets, businesses or
operations or for other purposes that the board of directors of the Company, in
its good xxxxx xxxx to be in the best interest of the Company.
5.4 FINANCIAL INFORMATION. During the Open Period, the Company agrees to
make available to the Investor via XXXXX or other electronic means the following
documents and information on the forms set forth: (i) within five (5) Trading
Days after the filing thereof with the SEC, a copy of its Annual Reports on Form
10-K, its Quarterly Reports on Form 10-Q, any Current Reports on Form 8-K and
any Registration Statements or amendments filed pursuant to the 1933 Act; (ii)
copies of any notices and other information made available or given to the
shareholders of the Company generally, contemporaneously with the making
available or giving thereof to the shareholders; and (iii) within two (2)
calendar days of filing or delivery thereof, copies of all documents filed with,
and all correspondence sent to, the Principal Market, any securities exchange or
market, or the Financial Industry Regulatory Association, unless such
information is material nonpublic information.
5.5 RESERVATION OF SHARES. The Company shall take all action necessary to
at all times have authorized, and reserved the amount of Shares included in the
Registration Statement for issuance pursuant to the Registered Offering
Transaction Documents. In the event that the Company determines that it does not
have a sufficient number of authorized shares of Common Stock to reserve and
keep available for issuance as described in this Section 5.5, the Company shall
use all commercially reasonable efforts to increase the number of authorized
shares of Common Stock by seeking shareholder approval for the authorization of
such additional shares.
5.6 LISTING. The Company shall use all commercially reasonable efforts to
promptly secure and maintain the listing of all of the Registrable Securities
(as defined in the Registration Rights Agreement) on the Principal Market and
each other national securities exchange and automated quotation system, if any,
upon which shares of Common Stock are then listed (subject to official notice of
issuance) and shall maintain, such listing of all Registrable Securities from
time to time issuable under the terms of the Registered Offering Transaction
Documents. Neither the Company nor any of its Subsidiaries shall take any action
which would be reasonably expected to result in the delisting or suspension of
the Common Stock on the Principal Market (excluding suspensions of not more than
one (1) Trading Day resulting from business announcements by the Company). The
Company shall promptly provide to the Investor copies of any notices it receives
from the Principal Market regarding the continued eligibility of the Common
Stock for listing on such automated quotation system or securities exchange. The
Company shall pay all fees and expenses in connection with satisfying its
obligations under this Section 5.6.
5.7 FILING OF FORM 8-K. On or before the date which is four (4) Trading
Days after the Execution Date, the Company shall file a Current Report on Form
8-K with the SEC describing the terms of the transaction contemplated by the
Registered Offering Transaction Documents in the form required by the 1934 Act,
if such filing is required.
5.8 CORPORATE EXISTENCE. The Company shall use all commercially reasonable
efforts to preserve and continue the corporate existence of the Company.
17
5.9 NOTICE OF CERTAIN EVENTS AFFECTING REGISTRATION; SUSPENSION OF RIGHT TO
MAKE A PUT. The Company shall promptly notify the Investor upon the occurrence
of any of the following events in respect of a Registration Statement or related
prospectus in respect of an offering of the Securities: (i) receipt of any
request for additional information by the SEC or any other federal or state
governmental authority during the period of effectiveness of the Registration
Statement for amendments or supplements to the Registration Statement or related
prospectus; (ii) the issuance by the SEC or any other federal or state
governmental authority of any stop order suspending the effectiveness of any
Registration Statement or the initiation of any proceedings for that purpose;
(iii) receipt of any notification with respect to the suspension of the
qualification or exemption from qualification of any of the Securities for sale
in any jurisdiction or the initiation or notice of any proceeding for such
purpose; (iv) the happening of any event that makes any statement made in such
Registration Statement or related prospectus or any document incorporated or
deemed to be incorporated therein by reference untrue in any material respect or
that requires the making of any changes in the Registration Statement, related
prospectus or documents so that, in the case of a Registration Statement, it
will not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading, and that in the case of the related prospectus, it will
not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading; and (v) the Company's reasonable determination that a post-effective
amendment or supplement to the Registration Statement would be appropriate, and
the Company shall promptly make available to Investor any such supplement or
amendment to the related prospectus. The Company shall not deliver to Investor
any Put Notice during the continuation of any of the foregoing events in this
Section 5.9.
5.10 TRANSFER AGENT. Upon effectiveness of the Registration Statement, and
for so long as the Registration Statement is effective, following delivery of a
Put Notice, the Company shall deliver instructions to its transfer agent to
issue Shares to the Investor that are covered for resale by the Registration
Statement free of restrictive legends.
5.11 ACKNOWLEDGEMENT OF TERMS. The Company hereby represents and warrants
to the Investor that: (i) it is voluntarily entering into this Agreement of its
own freewill, (ii) it is not entering this Agreement under economic duress,
(iii) the terms of this Agreement are reasonable and fair to the Company, and
(iv) the Company has had independent legal counsel of its own choosing review
this Agreement, advise the Company with respect to this Agreement, and represent
the Company in connection with this Agreement.
SECTION VI
CONDITIONS OF THE COMPANY'S ELECTION TO SELL
There is no obligation hereunder of the Company to issue and sell the
Securities to the Investor. However, an election by the Company to issue and
sell the Securities hereunder, from time to time as permitted hereunder, is
further subject to the satisfaction, at or before each Closing Date, of each of
the following conditions set forth below. These conditions are for the Company's
sole benefit and may be waived by the Company at any time in its sole
discretion.
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6.1 The Investor shall have executed this Agreement and the Registration
Rights Agreement and delivered the same to the Company.
6.2 The Investor shall have delivered to the Company a Put Settlement Sheet
in the form attached here to as Exhibit C on the Put Notice Date.
6.3 No statute, rule, regulation, executive order, decree, ruling or
injunction shall have been enacted, entered, promulgated or endorsed by any
court or governmental authority of competent jurisdiction which prohibits the
consummation of any of the transactions contemplated by this Agreement.
SECTION VII
FURTHER CONDITIONS OF THE INVESTOR'S OBLIGATION TO PURCHASE
The obligation of the Investor hereunder to purchase Securities is subject
to the satisfaction, on or before each Closing Date, of each of the following
conditions set forth below.
7.1 The Company shall have executed the Registered Offering Transaction
Documents and delivered the same to the Investor.
7.2 The Common Stock shall be authorized for quotation on the Principal
Market and trading in the Common Stock shall not have been suspended by the
Principal Market or the SEC, at any time beginning on the date hereof and
through and including the respective Closing Date (excluding suspensions of not
more than one (1) Trading Day resulting from business announcements by the
Company, provided that such suspensions occur prior to the Company's delivery of
the Put Notice related to such Closing).
7.3 The representations and warranties of the Company shall be true and
correct in all material respects as of the date when made and as of the
applicable Closing Date as though made at that time and the Company shall have
materially performed, satisfied and complied with the covenants, agreements and
conditions required by the Registered Offering Transaction Documents to be
performed, satisfied or complied with by the Company on or before such Closing
Date. The Investor may request an update as of such Closing Date regarding the
representation contained in Section 4.3.
7.4 The Company shall have executed and delivered to the Investor the
certificates representing, or have executed electronic book-entry transfer of,
the Securities (in such denominations as the Investor shall request) being
purchased by the Investor at such Closing.
7.5 The board of directors of the Company shall have adopted resolutions
consistent with Section 4.2(ii) (the "Resolutions") and such Resolutions shall
not have been materially amended or rescinded prior to such Closing Date.
7.6 No statute, rule, regulation, executive order, decree, ruling or
injunction shall have been enacted, entered, promulgated or endorsed by any
19
court or governmental authority of competent jurisdiction which prohibits the
consummation of any of the transactions contemplated by this Agreement.
7.7 The Registration Statement shall be effective on each Closing Date and
no stop order suspending the effectiveness of the Registration statement shall
be in effect or to the Company's knowledge shall be pending or threatened.
Furthermore, on each Closing Date (i) neither the Company nor the Investor shall
have received notice that the SEC has issued or intends to issue a stop order
with respect to such Registration Statement or that the SEC otherwise has
suspended or withdrawn the effectiveness of such Registration Statement, either
temporarily or permanently, or intends or has threatened to do so (unless the
SEC's concerns have been addressed), and (ii) no other suspension of the use or
withdrawal of the effectiveness of such Registration Statement or related
prospectus shall exist.
7.8 At the time of each Closing, the Registration Statement (including
information or documents incorporated by reference therein) and any amendments
or supplements thereto shall not contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary to
make the statements therein not misleading or which would require public
disclosure or an update supplement to the prospectus.
7.9 If applicable, the shareholders of the Company shall have approved the
issuance of any Shares in excess of the Maximum Common Stock Issuance in
accordance with Section 2.6 or the Company shall have obtained appropriate
approval pursuant to the requirements of Nevada law and the Company's Articles
of Incorporation and By-laws.
7.10 The conditions to such Closing set forth in Section 2.4 shall have
been satisfied on or before such Closing Date.
7.11 The Company shall have certified to the Investor the number of Shares
of Common Stock outstanding when a Put Notice is given to the Investor. The
Company's delivery of a Put Notice to the Investor constitutes the Company's
certification of the existence of the necessary number of shares of Common Stock
reserved for issuance.
SECTION VIII
TERMINATION
This Agreement shall terminate upon any of the following events:
i. when the Investor has purchased an aggregate of Two Million
Dollars ($2,000,000) in the Common Stock of the Company pursuant
to this Agreement;
ii. on the date which is thirty-six (36) months after the Effective
Date; or
iii. at such time that the Registration Statement is no longer in
effect; or
iv. at any time at the election of the Company upon 15 days written
notice.
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Any and all shares, or penalties, if any, due under this Agreement shall be
immediately payable and due upon termination of this Agreement.
SECTION IX
SUSPENSION
This Agreement shall be suspended upon any of the following events, and
shall remain suspended until such event is rectified:
i. The trading of the Common Stock is suspended by the SEC, the
Principal Market or FINRA for a period of two (2) consecutive
Trading Days during the Open Period; or,
ii. During the Open Period the Common Stock ceases to be registered
under the 1934 Act or listed or traded on the Principal Market or
the Registration Statement is no longer effective (except as
permitted hereunder).
Immediately upon the occurrence of one of the above-described events, the
Company shall send written notice of such event to the Investor.
SECTION X
MISCELLANEOUS
10.1 LAW GOVERNING THIS AGREEMENT. This Agreement shall be governed by, and
construed and interpreted in accordance with, the substantive laws of the State
of New York without giving effect to any conflict of laws rule or principle that
might require the application of the laws of another jurisdiction. Any dispute,
claim, suit, action or other legal proceeding arising out of the transactions
contemplated by this Agreement or the rights and obligations of each of the
parties shall be brought only in a competent court in New York or in the federal
courts of the United States of America located in New York. 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. The parties
executing this Agreement and other agreements referred to herein or delivered in
connection herewith agree to submit to the in personam jurisdiction of such
courts. The prevailing party shall be entitled to recover from the other party
its reasonable attorney's fees and costs. 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 Documents 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
21
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.
10.2 LEGAL FEES; AND MISCELLANEOUS FEES. EXCEPT AS OTHERWISE SET FORTH IN
THE Registered Offering Transaction Documents (including but not limited to
Section 5 of the Registration Rights Agreement), each party shall pay the fees
and expenses of its advisers, counsel, accountants and other experts, if any,
and all other expenses incurred by such party incident to the negotiation,
preparation, execution, delivery and performance of this Agreement. Any
attorneys' fees and expenses incurred by either the Company or the Investor in
connection with the preparation, negotiation, execution and delivery of any
amendments to this Agreement or relating to the enforcement of the rights of any
party, after the occurrence of any breach of the terms of this Agreement by
another party or any default by another party in respect of the transactions
contemplated hereunder, shall be paid on demand by the party which breached the
Agreement and/or defaulted, as the case may be. The Company shall pay all stamp
and other taxes and duties levied in connection with the issuance of any
Securities.
10.3 COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by the different signatories hereto on separate counterparts,
each of which, when so executed, shall be deemed an original, but all such
counterparts shall constitute but one and the same instrument. This Agreement
may be executed by facsimile transmission, PDF, electronic signature or other
similar electronic means with the same force and effect as if such signature
page were an original thereof.
10.4 HEADINGS; SINGULAR/PLURAL. The headings of this Agreement are for
convenience of reference and shall not form part of, or affect the
interpretation of, this Agreement. Whenever required by the context of this
Agreement, the singular shall include the plural and masculine shall include the
feminine.
10.5 SEVERABILITY. If any provision of this Agreement shall be invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall not
affect the validity or enforceability of the remainder of this Agreement in that
jurisdiction or the validity or enforceability of any provision of this
Agreement in any other jurisdiction.
10.6 ENTIRE AGREEMENT; AMENDMENTS. This Agreement is the FINAL AGREEMENT
between the Company and the Investor with respect to the terms and conditions
set forth herein, and, the terms of this Agreement may not be contradicted by
evidence of prior, contemporaneous, or subsequent oral agreements of the
Parties.
10.7 NOTICES. Any notices or other communications required or permitted to
be given under the terms of this Agreement must be in writing and will be deemed
to have been delivered (i) upon receipt, when delivered personally; (ii) upon
receipt, when sent by electronic mail (provided confirmation of transmission is
mechanically or electronically generated and kept on file by the sending party);
or (iii) one (1) day after deposit with a nationally recognized overnight
delivery service, in each case properly addressed to the party to receive the
same. The addresses and email addresses for such communications shall be:
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If to the Company: HD View 360, Inc.
000 XX 0xx Xxx Xxxxx 000
Xxxxx, Xxxxxxx 00000
Attn: Xxxxxx Xxxxxxx
Email: xxxxxx@xxxxxx000.xxx
If to the Investor: WT Consulting Group, LLC
0000 XX 000xx Xx. Xx.
Xxxxx, XX 00000
Attn: Xxxx Xxxxxxx
Email: xxxx@xxxxxxxxxxxxxx.xxx
Each party shall provide five (5) business days prior written notice to the
other party of any change in address or email address.
10.8 NO ASSIGNMENT. This Agreement may not be assigned.
10.9 NO THIRD PARTY BENEFICIARIES. This Agreement is intended for the
benefit of the parties hereto and is not for the benefit of, nor may any
provision hereof be enforced by, any other person.
10.10 SURVIVAL. The representations and warranties of the Company and the
Investor contained in Sections 3 and 4, the agreements and covenants set forth
in Section 5 and this Section 11, shall survive each of the Closings and the
termination of this Agreement.
10.11 PUBLICITY. The Company and the Investor shall consult with each other
in issuing any press releases or otherwise making public statements with respect
to the transactions contemplated hereby and no party shall issue any such press
release or otherwise make any such public statement without the prior consent of
the other party, which consent shall not be unreasonably withheld or delayed,
except that no prior consent shall be required if such disclosure is required by
law, as determined solely by the Company in consultation with its counsel. The
Investor acknowledges that this Agreement and all or part of the Registered
Offering Transaction Documents may be deemed to be "material contracts" as that
term is defined by Item 601(b)(10) of Regulation S-K, and that the Company may
therefore be required to file such documents as exhibits to reports or
registration statements filed under the 1933 Act or the 1934 Act. The Investor
further agrees that the status of such documents and materials as material
contracts shall be determined solely by the Company, in consultation with its
counsel.
10.12 EXCLUSIVITY. The Company shall not pursue an equity line transaction
similar to the transactions contemplated in this Agreement with any other person
or entity until the earlier of (i) the Effective Date and (ii) termination of
this Agreement in accordance with Section 8.
10.13 FURTHER ASSURANCES. Each party shall do and perform, or cause to be
done and performed, all such further acts and things, and shall execute and
deliver all such other agreements, certificates, instruments and documents, as
23
the other party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.
10.14 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, as the
parties mutually agree that each has had a full and fair opportunity to review
this Agreement and seek the advice of counsel on it.
10.15 REMEDIES. The Investor shall have all rights and remedies set forth
in this Agreement and the Registration Rights Agreement and all rights and
remedies which such holders have been granted at any time under any other
agreement or contract and all of the rights which the Investor has by law. Any
person having any rights under any provision of this Agreement shall be entitled
to enforce such rights specifically (without posting a bond or other security),
to recover damages by reason of any default or breach of any provision of this
Agreement, including the recovery of reasonable attorney's fees and costs, and
to exercise all other rights granted by law.
10.16 PAYMENT SET ASIDE. To the extent that the Company makes a payment or
payments to the Investor hereunder or under the Registration Rights Agreement or
the Investor enforces or exercises its rights hereunder or thereunder, and such
payment or payments or the proceeds of such enforcement or exercise or any part
thereof are subsequently invalidated, declared to be fraudulent or preferential,
set aside, recovered from, disgorged by or are required to be refunded, repaid
or otherwise restored to the Company, a trustee, receiver or any other person
under any law (including, without limitation, any bankruptcy law, state or
federal law, common law or equitable cause of action), then to the extent of any
such restoration the obligation or part thereof originally intended to be
satisfied shall be revived and continued in full force and effect as if such
payment had not been made or such enforcement or setoff had not occurred.
SECTION XI
NON-DISCLOSURE OF NON-PUBLIC INFORMATION
The Company shall not disclose non-public information to the Investor, its
advisors, or its representatives.
Nothing in the Registered Offering Transaction Documents shall require or
be deemed to require the Company to disclose non-public information to the
Investor or its advisors or representatives, and the Company represents that it
does not disseminate non-public information to any investors who purchase stock
in the Company in a public offering, to money managers or to securities
analysts, provided, however, that notwithstanding anything herein to the
contrary, the Company will, as hereinabove provided, immediately notify the
advisors and representatives of the Investor and, if any, underwriters, of any
event or the existence of any circumstance (without any obligation to disclose
the specific event or circumstance) of which it becomes aware, constituting
non-public information (whether or not requested of the Company specifically or
generally during the course of due diligence by such persons or entities),
which, if not disclosed in the prospectus included in the Registration Statement
24
would cause such prospectus to include a material misstatement or to omit a
material fact required to be stated therein in order to make the statements,
therein, in light of the circumstances in which they were made, not misleading.
Nothing contained in this Section 12 shall be construed to mean that such
persons or entities other than the Investor (without the written consent of the
Investor prior to disclosure of such information) may not obtain non-public
information in the course of conducting due diligence in accordance with the
terms of this Agreement and nothing herein shall prevent any such persons or
entities from notifying the Company of their opinion that based on such due
diligence by such persons or entities, that the Registration Statement contains
an untrue statement of material fact or omits a material fact required to be
stated in the Registration Statement or necessary to make the statements
contained therein, in light of the circumstances in which they were made, not
misleading.
SECTION XII
ACKNOWLEDGEMENTS OF THE PARTIES
Notwithstanding anything in this Agreement to the contrary, the parties
hereto hereby acknowledge and agree to the following: (i) the Investor makes no
representations or covenants that it will not engage in trading in the
securities of the Company, other than the Investor will not short or pre-sell,
either directly or indirectly through its affiliates, principals or advisors,
the Common Stock at any time during the Open Period; (ii) the Company shall
comply with its obligations under Section 5.8 in a timely manner; (iii) the
Company has not and shall not provide material non-public information to the
Investor unless prior thereto the Investor shall have executed a written
agreement regarding the confidentiality and use of such information; and (iv)
the Company understands and confirms that the Investor will be relying on the
acknowledgements set forth in clauses (i) through (iii) above if the Investor
effects any transactions in the securities of the Company.
[Signature Page to Follow.]
25
Your signature on this Signature Page evidences your agreement to be bound
by the terms and conditions of the Investment Agreement as of the date first
written above. The undersigned signatory hereby certifies that he has read and
understands the Investment Agreement, and the representations made by the
undersigned in this Investment Agreement are true and accurate, and agrees to be
bound by its terms.
WT CONSULTING GROUP, LLC
By: /s/ Billo Xxxxxxx
--------------------------
Name: Xxxx Xxxxxxx
Title: Managing Member
HD VIEW 360, INC.
By: /s/ Xxxxxx Xxxxxxx
----------------------------
Name: Xxxxxx Xxxxxxx
Title: Chief Executive Officer
[SIGNATURE PAGE OF INVESTMENT AGREEMENT]
26
LIST OF EXHIBITS
EXHIBIT A Put Notice
EXHIBIT B Put Settlement Sheet
27
EXHIBIT A
FORM OF PUT NOTICE
Date:
RE: Put Notice Number __
Dear Mr.__________,
This is to inform you that as of today, HD View 360, Inc., a Florida corporation
(the "Company"), hereby elects to exercise its right pursuant to the Investment
Agreement to require WT Conslulting Group, LLC to purchase shares of its common
stock. The Company hereby certifies that:
Put Amount in Shares __________.
The Pricing Period runs from _______________ until _______________.
The current number of shares of common stock issued and outstanding is:
_________________.
The number of shares currently available for resale on the S-1 is:
________________________.
Regards,
HD View 360, Inc.
By: __________________________________
Name: Xxxxxx Xxxxxxx
Title: Chief Executive Officer
28
EXHIBIT B
PUT SETTLEMENT SHEET
Date: ________________
Dear ________,
Pursuant to the Put given by HD View 360, Inc. to WT Consulting Group, LLC.
("WT") on _________________ 201_, we are now submitting the purchase price for
the shares of common stock.
Purchase Price per Share _________________.
Shares Being Purchased___________________.
Total Purchase Price _____________________.
Please have a certificate bearing no restrictive legend issued to WT immediately
and sent via DWAC to the following account:
[INSERT]
If not DWAC eligible, please send FedEx Priority Overnight to:
[INSERT ADDRESS]
Once these shares are received by us, we will have the funds wired to the
Company. Regards,
WT CONSULTING GROUP, LLC
By: _________________________________
Name: Xxxx Xxxxxxx
Title: Chief Executive Officer
29
SCHEDULE 4.3
See attached.
30
