DEBT CONVERSION AND SERIES A PREFERRED STOCK PURCHASE AGREEMENT
EXHIBIT 10.7
DEBT CONVERSION AND SERIES A PREFERRED STOCK
PURCHASE AGREEMENT
This Debt Conversion and Series A Preferred Stock Purchase Agreement (this “Agreement”) is made and entered into effective as of the [___] day of November, 2015 (the “Effective Date”) by and between TransBiotec, Inc., a Delaware corporation (the “Company”), and [________], an individual (the “Purchaser”). The Company and Purchaser shall each be referred to as a “Party” and collectively as the “Parties.”
RECITALS
WHEREAS, the Company currently owes the Purchaser $[________] under a promissory note(s) dated [_______] (the “Note”);
WHEREAS, the Company and the Purchaser desire to have a portion of the outstanding amount owed to Purchaser by the Company converted to shares of the Company’s Series A Convertible Preferred Stock pursuant to the terms of this Agreement.
NOW, THEREFORE, the Parties hereby agree as follows:
AGREEMENT
1. PURCHASE OF SECURITIES: On the Closing Date (as hereinafter defined), subject to the terms and conditions set forth in this Agreement, the Purchaser hereby agrees to purchase, and the Company hereby agrees to sell, [___________] ([________]) shares of the Company’s Series A Convertible Preferred Stock (the “Shares”) at a per-share purchase price of One Dollar ($1.00) per share, for a total purchase price of [______________] ($[________]) (the “Purchase Price”). The Purchase Price will be paid by the Purchaser to the Company through a Notice of Partial Debt Satisfaction in the form attached hereto as Exhibit A, evidencing the partial satisfaction of the Note in an amount equal to the Purchase Price as payment of the Purchase Price. The Company and the Purchaser will enter into an amendment to the Note to cover the remaining amounts due by the Company under the Note.
As set forth in the Certificate of Designation for the Company’s Series A Convertible Preferred Stock, the Shares are convertible into shares of the Company’s common stock at any time once the Shares have been held by the Purchaser for twelve (12) months, but only if the Company’s closing stock price for the conversion period is at least Five Cents ($0.05) as set forth in the Certificate of Designation. In addition, the Parties hereby agree that the Purchaser may not, and will not, convert the Shares into shares of the Company’s common stock if such conversion would cause the Purchaser to beneficially own more than 4.9% of the Company’s common stock after giving effect to such conversion.
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2. CLOSING AND DELIVERY:
a) Upon the terms and subject to the conditions set forth herein, the consummation of the purchase and sale of the Shares (the “Closing”) shall be held simultaneous with the execution of this Agreement, or at such other time mutually agreed upon between the constituent Parties (the “Closing Date”). The Closing shall take place at the offices of counsel for the Company set forth in Section 6 hereof, or by the exchange of documents and instruments by mail, courier, facsimile and wire transfer to the extent mutually acceptable to the Parties hereto.
b) At the Closing:
(i) The Company and the Purchaser shall execute this Agreement, which shall serve as evidence of ownership of the Shares, free from restrictions on transfer except as set forth in this Agreement. Subsequent to the Closing, at a time chosen by the Company in its sole discretion, the Company will issue a stock certificate to the Purchaser to evidence the Shares.
(ii) The Purchaser shall deliver to the Company the Purchase Price through the delivery of the signed Notice of Partial Debt Satisfaction.
3. REPRESENTATIONS, WARRANTIES AND AGREEMENTS BY PURCHASER: The Purchaser hereby represents, warrants and agrees as follows:
a) Purchase for Own Account. Purchaser represents that he is acquiring the Shares solely for his own account and beneficial interest for investment and not for sale or with a view to distribution of the Shares or any part thereof, has no present intention of selling (in connection with a distribution or otherwise), granting any participation in, or otherwise distributing the same, and does not presently have reason to anticipate a change in such intention.
b) Ability to Bear Economic Risk. Purchaser acknowledges that an investment in the Shares involves a high degree of risk, and represents that he is able, without materially impairing his financial condition, to hold the Shares for an indefinite period of time and to suffer a complete loss of his investment.
c) Access to Information. The Purchaser acknowledges that the Purchaser has been furnished with such financial and other information concerning the Company, the directors and officers of the Company, and the business and proposed business of the Company as the Purchaser considers necessary in connection with the Purchaser’s investment in the Shares. As a result, the Purchaser is thoroughly familiar with the proposed business, operations, properties and financial condition of the Company and has discussed with officers of the Company any questions the Purchaser may have had with respect thereto. The Purchaser understands:
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(i) The risks involved in this investment, including the speculative nature of the investment;
(ii) The financial hazards involved in this investment, including the risk of losing the Purchaser’s entire investment;
(iii) The lack of liquidity and restrictions on transfers of the Shares; and
(iv) The tax consequences of this investment.
The Purchaser has consulted with the Purchaser’s own legal, accounting, tax, investment and other advisers with respect to the tax treatment of an investment by the Purchaser in the Shares and the merits and risks of an investment in the Shares.
d) Shares Part of Private Placement. The Purchaser has been advised that the Shares have not been registered under the Securities Act of 1933, as amended (the “Act”), or qualified under the securities law of any state, on the ground, among others, that no distribution or public offering of the Shares is to be effected and the Shares will be issued by the Company in connection with a transaction that does not involve any public offering within the meaning of section 4(a)(2) of the Act and/or Regulation D as promulgated by the Securities and Exchange Commission under the Act, and under any applicable state blue sky authority. The Purchaser understands that the Company is relying in part on the Purchaser’s representations as set forth herein for purposes of claiming such exemptions and that the basis for such exemptions may not be present if, notwithstanding the Purchaser’s representations, the Purchaser has in mind merely acquiring the Shares for resale on the occurrence or nonoccurrence of some predetermined event. The Purchaser has no such intention.
e) Further Limitations on Disposition. Purchaser further acknowledges that the Shares are restricted securities under Rule 144 of the Act, and, therefore, if the Company, in its sole discretion, chooses to issue any certificates reflecting the ownership interest in the Shares, those certificates will contain a restrictive legend substantially similar to the following:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”). THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THE SECURITIES UNDER THE ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.
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Without in any way limiting the representations set forth above, Purchaser further agrees not to make any disposition of all or any portion of the Shares unless and until:
(i) There is then in effect a Registration Statement under the Act covering such proposed disposition and such disposition is made in accordance with such Registration Statement; or
(ii) Purchaser shall have obtained the consent of the Company and notified the Company of the proposed disposition and shall have furnished the Company with a detailed statement of the circumstances surrounding the proposed disposition, and if reasonably requested by the Company, Purchaser shall have furnished the Company with an opinion of counsel, reasonably satisfactory to the Company, that such disposition will not require registration under the Act or any applicable state securities laws.
Notwithstanding the provisions of subparagraphs (i) and (ii) above, no such registration statement or opinion of counsel shall be necessary for a transfer by such Purchaser to a partner (or retired partner) of Purchaser, or transfers by gift, will or intestate succession to any spouse or lineal descendants or ancestors, if all transferees agree in writing to be subject to the terms hereof to the same extent as if they were Purchasers hereunder as long as the consent of the Company is obtained.
f) Sophisticated Investor Status. The Purchaser is a sophisticated investor.
g) Purchaser Authorization. The Purchaser, if not an individual, is empowered and duly authorized to enter into this Agreement under any governing document, partnership agreement, trust instrument, pension plan, charter, certificate of incorporation, bylaw provision or the like; this Agreement constitutes a valid and binding agreement of the Purchaser enforceable against the Purchaser in accordance with its terms; and the person signing this Agreement on behalf of the Purchaser is empowered and duly authorized to do so by the governing document or trust instrument, pension plan, charter, certificate of incorporation, bylaw provision, board of directors or stockholder resolution, or the like.
h) No Backup Withholding. The Social Security Number or taxpayer identification shown in this Agreement is correct, and the Purchaser is not subject to backup withholding because (i) the Purchaser has not been notified that he or she is subject to backup withholding as a result of a failure to report all interest and dividends or (ii) the Internal Revenue Service has notified the Purchaser that he or she is no longer subject to backup withholding.
i) Certificate of Designation. Purchaser has been provided with a copy of the Certificate of Designation for the Series A Convertible Preferred Stock, a copy of which is attached hereto as Exhibit B (the “Certificate of Designation”), which sets forth all of the rights, privileges, and preferences with respect to the Series A Convertible Preferred Stock. Purchaser has had an opportunity to discuss any questions or concerns regarding the Certificate of Designation and the rights and preferences of the Series A Convertible Preferred Stock with the Company’s management team and has received answers to all outstanding questions and had any issues addressed to the satisfaction of Purchaser.
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4. REPRESENTATIONS, WARRANTIES AND AGREEMENTS BY COMPANY: The Company hereby represents, warrants and agrees as follows:
a) Authority of Company. The Company has all requisite authority to execute and deliver this Agreement and to carry out and perform its obligations under the terms of this Agreement.
b) Authorization. All actions on the part of the Company necessary for the authorization, execution, delivery and performance of this Agreement by the Company and the performance of the Company’s obligations hereunder has been taken or will be taken prior to the issuance of the Shares. This Agreement, when executed and delivered by the Company, shall constitute valid and binding obligations of the Company enforceable in accordance with their terms, subject to laws of general application relating to bankruptcy, insolvency, the relief of debtors and, with respect to rights to indemnity, subject to federal and state securities laws. The issuance of the Shares will be validly issued, fully paid and nonassessable, will not violate any preemptive rights, rights of first refusal, or any other rights granted by the Company, and will be issued in compliance with all applicable federal and state securities laws, and will be free of any liens or encumbrances, other than any liens or encumbrances created by or imposed upon the Purchaser through no action of the Company; provided, however, that the Shares may be subject to restrictions on transfer under state and/or federal securities laws as set forth herein or as otherwise required by such laws at the time the transfer is proposed.
c) Governmental Consents. All consents, approvals, orders, or authorizations of, or registrations, qualifications, designations, declarations, or filings with, any governmental authority required on the part of the Company in connection with the valid execution and delivery of this Agreement, the offer, sale or issuance of the Shares, or the consummation of any other transaction contemplated hereby shall have been obtained, except for notices required or permitted to be filed with certain state and federal securities commissions, which notices will be filed on a timely basis.
5. INDEMNIFICATION: The Purchaser hereby agrees to indemnify and defend the Company and its officers and directors and hold them harmless from and against any and all liability, damage, cost or expense incurred on account of or arising out of:
(a) Any breach of or inaccuracy in the Purchaser’s representations, warranties or agreements herein;
(b) Any disposition of any Shares contrary to any of the Purchaser’s representations, warranties or agreements herein;
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(c) Any action, suit or proceeding based on (i) a claim that any of said representations, warranties or agreements were inaccurate or misleading or otherwise cause for obtaining damages or redress from the Company or any director or officer of the Company under the Act, or (ii) any disposition of any Shares.
6. MISCELLANEOUS:
a) Binding Agreement. The terms and conditions of this Agreement shall inure to the benefit of and be binding upon the respective successors and assigns of the Parties. Nothing in this Agreement, expressed or implied, is intended to confer upon any third party any rights, remedies, obligations, or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement.
b) Governing Law; Venue. This Agreement shall be governed by and construed under the laws of the State of California as applied to agreements among California residents, made and to be performed entirely within the State of California. The Parties agree that any action brought to enforce the terms of this Agreement will be brought in the appropriate federal or state court having jurisdiction over Orange County, California, United States of America.
c) Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.
d) Titles and Subtitles. The titles and subtitles used in this Agreement are used for convenience only and are not to be considered in construing or interpreting this Agreement.
e) Notices. All notices required or permitted hereunder shall be in writing and shall be deemed effectively given: (a) upon personal delivery to the Party to be notified, (b) when sent by confirmed facsimile if sent during normal business hours of the recipient, if not, then on the next business day, or (c) one (1) day after deposit with a nationally recognized overnight courier, specifying next day delivery, with written verification of receipt. All communications shall be sent as follows:
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| If to the Company: | 000 X. Xxxxxx Xxx., Xxxxx 000 Xxxxx Xxx, XX 00000 Attn. President Facsimile (___) |
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| with a copy to: | Law Offices of Xxxxx X. Xxxxxx 000 Xxxxxxxx Xxxxxx Xxxxx, Xxxxx 000 Xxxxxx, XX 00000 Attn: Xxxxx X. Xxxxxx, Esq. Facsimile (000) 000-0000 |
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| [______________________] |
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| If to Purchaser: | _______________________ | |
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| _______________________ | |
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| _______________________ | |
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| Facsimile (___) ___________ | |
or at such other address as the Company or Purchaser may designate by ten (10) days advance written notice to the other Party hereto.
f) Modification; Waiver. No modification or waiver of any provision of this Agreement or consent to departure therefrom shall be effective unless in writing and approved by the Company and the Purchaser.
g) Entire Agreement; Successors. This Agreement and the Exhibits hereto constitute the full and entire understanding and agreement between the Parties with regard to the subjects hereof and no Party shall be liable or bound to the other Party in any manner by any representations, warranties, covenants and agreements except as specifically set forth herein. The representations, warranties and agreements contained in this Agreement shall be binding on the Purchaser’s successors, assigns, heirs and legal representatives and shall inure to the benefit of the respective successors and assigns of the Company and its directors and officers.
h) Expenses. Each Party shall pay their own expenses in connection with this Agreement. In addition, should either Party commence any action, suit or proceeding to enforce this Agreement or any term or provision hereof, then in addition to any other damages or awards that may be granted to the prevailing Party, the prevailing Party shall be entitled to have and recover from the other Party such prevailing Party’s reasonable attorneys’ fees and costs incurred in connection therewith.
i) Currency. All currency is expressed in U.S. dollars.
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IN WITNESS WHEREOF, the Parties have executed this Debt Conversion and Series A Preferred Stock Purchase Agreement as of the date first written above.
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| “Purchaser” |
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| [______________], |
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| a Delaware corporation |
| an individual |
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| By: Xxxxxxx Xxxxxxxxxx |
| [_______________] |
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| Its: President |
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Exhibit A
Notice of Partial Debt Satisfaction
| Exhibit A |
Notice of Partial Debt Satisfaction
Pursuant to the terms of that certain Debt Conversion and Stock Purchase Agreement (the “Agreement”) by and between Xxxxxx Xxxxxx (the “Purchaser”) and TransBiotec, Inc., a Delaware corporation (the “Company”) dated November [___], 2015, the Purchaser is irrevocably electing to convert $[___________] of the amount due to the Purchaser under that certain TransBiotec, Inc. Convertible Promissory Note dated [____________] (the “Note”), into [____________] shares of Series A Convertible Preferred Stock of the Company (the “Shares”) according to the conditions set forth in the Agreement.
If shares are to be issued in the name of a person other than the Purchaser, the Purchaser will pay all transfer and other taxes and charges payable with respect thereto.
The Purchaser acknowledges and agrees that upon receipt of the Shares the amount used by the Purchaser to pay the Purchase Price will no longer be due and owing to the undersigned under the Note, and that the Company and the Purchaser will enter into an amendment to the Note to cover the remaining amounts due by the Company under the Note.
Date of Conversion: ______________________________________________________________
Applicable Conversion Price: $1.00/share
[Purchaser Name]
Signature: ______________________________________________________________
[Print Name of Holder and Title of Signer]
Address: ____________________________________________________
_____________________________________________________
SSN or EIN: __________________________________________________
Shares are to be registered in the following name:
Name: _____________________________________________
Address: ___________________________________________
Tel: _______________________________________________
Fax: _______________________________________________
SSN or EIN: _________________________________________
| Exhibit A |
Exhibit B
Series A Convertible Preferred Stock Certificate of Designation
| Exhibit B |
