DEBT EXCHANGE AGREEMENT
THIS DEBT EXCHANGE AGREEMENT (this “Agreement”) is made and entered into as of October 8, 2018, by and among Café Serendipity Holdings, Inc. (the “Issuer”), a Nevada corporation Xxxxxx X. Xxxxxxxxx (the “Investor”).
RECITALS
A. The Investor has heretofore made certain loans to Issuer pursuant to those promissory notes, made by Issuer in favor of the Investor, set forth on Exhibit A hereto (collectively, the “Notes”) as well as certain cash advances for payroll and other working capital expenses (the “Advances”) of approximately $350,000; and
B. The Issuer desires to cause the Notes and Advances to be repaid, and the obligations of the Issuer represented thereby to be cancelled, by exchanging shares of its Common Stock (the “Common Stock”) of the Issuer for the Notes and Advances, as set forth herein; and
D. The Investor desires to acquire shares of the Common Stock in exchange for the satisfaction and cancellation of the Notes and Advances; and
E. The Issuer and the Investor are entering into this Agreement to set forth the terms and conditions applicable to the exchange of the Notes and Advances for shares of Common Stock.
NOW, THEREFORE, for good and valuable consideration, the receipt of which is hereby acknowledged by the parties hereto, the parties hereby agree as follows:
Article 1
EXCHANGE OF STOCK AND DEBT SECURITIES
1.1 Exchange.
(a) The Investor hereby agrees, subject to the terms and conditions set forth herein, to exchange the aggregate principal amount of the Notes, together with all interest thereon accrued up to but not including the effective date of such exchange, as well as the Advances, for Three Hundred Fifty Million (350,000,000) shares of the Common Stock (the “Exchange Shares”) at an exchange price of $0.001 per share (the “Debt Exchange”).
(b) Subject to the terms and conditions of this Agreement, the consummation of the Debt Exchange shall take place at a closing (the “Closing”) to be held at 10:00 a.m., local time, on October 8, 2018, at the offices of Redwood Investment Group, 0000 Xxxxxx Xxxxx, Xxxxx 000, Xxxxxxx Xxxxx, XX 00000, or at such other time, date or place as the parties hereto may mutually agree upon. At the Closing, the Investor shall deliver the Notes and evidence of the Advances for cancellation and the Issuer shall deliver to the Investor a certificate representing the Exchange Shares.
(c) The Exchange Shares will be issued in full satisfaction and payment of the Notes and Advances, and from and after the consummation of the Debt Exchange the Notes and Advances shall represent solely the right to receive the Exchange Shares. In the event that as a result of the Debt Exchange, fractional shares of Common Stock would be required to be issued, such fractional shares shall be rounded up or down to the nearest whole share. The Issuer shall pay any documentary, stamp or similar issue or transfer tax due with respect to the Debt Exchange.
1.2 Legend. Any certificate or certificates representing the Common Shares (or any part thereof) will bear the following legend, together with any and all other legends as may be required pursuant to applicable law (and the Issuer may issue appropriate corresponding stop transfer instructions to any transfer agent for any of such securities):
“THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER ANY APPLICABLE STATE LAW AND MAY NOT BE TRANSFERRED, SOLD OR OTHERWISE DISPOSED OF UNLESS REGISTERED UNDER SUCH ACT AND APPLICABLE STATE LAWS OR UNLESS AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS UNDER SUCH ACT OR APPLICABLE STATE LAW REQUIREMENTS IS AVAILABLE.”
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Such legend and the stop transfer instructions shall be removed and the Issuer shall issue a certificate representing such securities without such legend to the holder thereof if (i) such securities are registered under the Securities Act of 1933, or (ii) if such securities are sold pursuant to Rule 144 under the Securities Act of 1933, or (iii) if such securities are eligible for transfer under Rule 144(k) under the Securities Act of 1933, and, in the case of (ii) or (iii), when the Investor has furnished to the Issuer evidence to such effect that Issuer finds reasonably satisfactory which may include, without limitation, an opinion of counsel reasonably acceptable to issuer (as to form and substance and counsel).
Article 2
REPRESENTATIONS AND WARRANTIES OF THE ISSUER
The Issuer hereby represents and warrants to the Investor that:
2.1 Corporate Status. The Issuer is a corporation duly organized, validly existing and in good standing under the laws of the State of Nevada and has all requisite corporate or other power and authority to carry on its business as now being conducted.
2.2 Capitalization. The authorized capital stock of the Issuer consists of 510,000,000 shares, consisting of 500,000,000 shares of common stock, par value $0.001 per share (the “Common Stock”), and 10,000,000 shares of Preferred Stock. As of the date of this Agreement, 17,481,596 shares of Common Stock are issued and outstanding and no shares of Preferred Stock are issued or outstanding.
2.3 Power and Authority; Binding Agreement. The Issuer has the requisite corporate power and authority to execute and deliver and to perform its obligations under, this Agreement, and the Issuer has taken all necessary corporate action to authorize the execution, delivery and performance of this Agreement and the consummation of the Debt Exchange. This Agreement has been duly executed and delivered by the Issuer and, assuming the due authorization, execution and delivery by each of the other parties hereto, constitutes the valid and binding agreement of the Issuer enforceable against the Issuer in accordance with its terms.
2.4 Non-Contravention. The execution and delivery of this Agreement does not, and the consummation of the transactions contemplated by this Agreement, and compliance with the provisions hereof, will not, conflict with, or result in any violation of, or default (with or without notice or lapse of time, or both) under the Articles of Incorporation or By-laws of the Issuer. The execution and delivery of this Agreement does not, and the consummation of the transactions contemplated by this Agreement and compliance with the provisions hereof will not, conflict with, or result in any violation of, or default (with or without notice or lapse of time, or both) under, or give rise to a right of termination, cancellation or acceleration of any obligation or loss of a benefit under, or result in the creation of any lien or encumbrance upon any of the properties or assets of the Issuer or any of its subsidiaries under, (i) any loan or credit agreement, note, bond, mortgage, indenture, lease or other agreement, obligation, instrument, permit, concession, franchise, license or similar authorization applicable to the Issuer or any of its subsidiaries or their respective properties or assets or (ii) any judgment, order, decree, statute, law, ordinance, rule or regulation applicable to the Issuer or any of its subsidiaries or their respective properties or assets, other than any such conflicts, violations, defaults, rights, losses, liens or encumbrances that, individually or in the aggregate, are not reasonably likely to have a material adverse effect on (x) the business condition of the Issuer and its subsidiaries taken as a whole or (y) the ability of the Issuer to perform its obligations under this Agreement.
2.5 Consents and Governmental Approvals. No consent, approval, order or authorization of, action by or in respect of, or registration, declaration or filing with, any federal, state, local or foreign government, any court, administrative, regulatory or other governmental agency, commission, body or authority or any non-governmental self-regulatory agency, commission, body or authority (each a “Governmental Entity”) is required by the Issuer in connection with the execution and delivery of this Agreement by the Issuer or the consummation by the Issuer of the Debt Exchange or the other transactions contemplated by this Agreement, and such other consents, approvals, orders or authorizations the failure of which to be made or obtained, individually or in the aggregate, is not reasonably likely to have a material adverse effect on the Issuer.
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2.6 Valid Issuance. When issued pursuant to this Agreement in connection with the Debt Exchange, the Exchange Shares will be duly authorized, validly issued, fully paid and nonassessable, and the Investor will receive good title to such shares, free and clear of any liens, claims, security interest or encumbrances.
Article 3
REPRESENTATIONS AND WARRANTIES OF THE INVESTOR
The Investor represents and warrants to the Issuer that:
3.1 Authority. The Investor has all requisite power and authority to execute and deliver, and perform its obligations under, this Agreement. All acts required to be taken by the Investor to enter into this Agreement and consummate the transactions contemplated hereby have been properly taken.
3.2 Title to the Notes and Advances. The Investor is the record and beneficial holder of the Notes and Advances and holds the Notes and Advances free and clear of all claims, liens, security interests, title defects and objections or any other encumbrances of any kind or nature whatsoever.
3.3 Investment Intent. Investor is acquiring the Exchange Shares being delivered to Investor under this Agreement for its own account and with no present intention of distributing or selling any of them in violation of the Securities Act of 1933 or any applicable state securities law. Investor will not sell or otherwise dispose of any of such Exchange Shares unless such sale or other disposition has been registered or is exempt from registration under the Securities Act of 1933 and has been registered or qualified or is exempt from registration or qualification under applicable state securities laws. Investor understands that the Exchange Shares it is acquiring under this Agreement have not been registered under the Securities Act of 1933 by reason of their contemplated issuance in transactions exempt from the registration and prospectus delivery requirements of the Securities Act of 1933 and that the reliance of the Issuer on this exemption is predicated in part on these representations and warranties of Investor. Investor acknowledges and agrees that a restrictive legend consistent with the foregoing has been or will be placed on the certificates for the Exchange Shares and related stop transfer instructions will be noted in the transfer records of the Issuer and/or its transfer agent for the Exchange Shares, and that such Investor will not be permitted to sell, transfer or assign any of the Exchange Shares acquired hereunder until such Exchange Shares are registered or an exemption from the registration and prospectus delivery requirements of the Securities Act of 1933 is available.
3.4 Investor Status. Investor (i) is either (x) a “Qualified Institutional Buyer” as such term is defined in Rule 144A under the Securities Act of 1933 or (y) an “accredited investor” as such term is defined in Rule 501 of Regulation D promulgated under the Securities Act of 1933; (ii) has such knowledge and experience in financial and business matters that it is capable of evaluating the merits and risks of the investments to be made by it hereunder; (iii) has the ability to bear the economic risks of its investments for an indefinite period of time; and (iv) has sole investment discretion with respect to the Debt Exchange; and (v) has been given an opportunity to obtain such information from the Issuer as Investor deems necessary or appropriate with respect to the Debt Exchange.
Article 4
CONDITIONS
4.1 Issuer’s Conditions. The obligations of the Issuer to consummate the transactions contemplated by this Agreement shall be subject to fulfillment of the following conditions on or prior to the date of Closing:
(a) The representations and warranties of the Investor set forth in Article 3 shall be true and correct on and as of the date of Closing.
(b) All proceedings, corporate or otherwise, required to be taken by the Investor on or prior to the date of Closing in connection with this Agreement, and the Debt Exchange contemplated hereby, shall have been duly and validly taken, and all necessary consents, approvals or authorizations required to be obtained by the Investor on or prior to the Closing shall have been obtained.
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(c) The Investor shall have delivered the Notes and evidence of the Advances to the Issuer for cancellation.
(d) The Investor shall have delivered to the Issuer such other documents, certificates or other information as the Issuer or its counsel may reasonably request.
4.2 Investor’s Conditions. The obligations of the Investor to consummate the transaction contemplated by this Agreement shall be subject to fulfillment of the following conditions on or prior to the date of Closing:
(a) The representations and warranties of the Issuer set forth in Article 2 shall be true and correct on and as of the date of Closing.
(b) All proceedings, corporate or otherwise required to be taken by the Issuer on or prior to the date of Closing in connection with this Agreement, and the Debt Exchange contemplated hereby, shall have been duly and validly taken, and all necessary consents, approvals or authorizations required to be obtained by the Issuer on or prior to the Closing shall have been obtained.
(c) The Issuer shall have issued and delivered, or cause to be issued and delivered, to the Investor, stock certificates, registered in the name of the Investor, representing duly authorized, validly issued, fully paid and non-assessable Exchange Shares.
(e) The Issuer shall have delivered to the Investor such other documents, certificates or other information as the Investor or its counsel may reasonably request.
Article 5
MISCELLANEOUS
5.1 Notices. All notices, requests and demands to or upon the respective parties hereto to be effective must be in writing and, unless otherwise expressly provided herein, are deemed to have been duly given or made when delivered by hand or by courier, or by certified mail, or, when transmitted by facsimile and a confirmation of transmission printed by sender’s facsimile machine. A copy of any notice given by facsimile also must be mailed, postage prepaid, to the addressee. Notices to the respective parties hereto must be addressed as follows:
If to the Investor: Xxxxxx X. Xxxxxxxxx
0000 Xxxxxx Xxxxx, Xxxxx 000
Xxxxxxx Xxxxx, XX 00000
Telephone: (000) 000-0000
Email: xxxx@xxxxxxxxxx.xxx
If to the Issuer: Café Serendipity Holdings, Inc.
0000 Xxxxxx Xxxxx, Xxxxx 000
Xxxxxxx Xxxxx, XX 00000
Telephone: (000) 000-0000
Email: xxxxx@xxxxxx.xxx
Attention: Xxxxxx Xxxxxx, CEO
Any party may alter the address to which communications or copies are to be sent by giving notice of the change of address under this Section.
5.2 Headings. The headings in this Agreement are for purposes of reference only and are not to be considered in construing this Agreement.
5.3 Counterparts. This Agreement may be executed in any number of counterparts, each of which when so executed and delivered constitutes an original and all together shall constitute one Agreement.
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5.4 Enforceability. If any term or provision of this Agreement, or the application thereof to any person or circumstance, is, to any extent, invalid or unenforceable, the remaining terms and provisions of this Agreement or application to other Persons and circumstances are not invalidated thereby, and each term and provision hereof is to be construed with all other remaining terms and provisions hereof to effect the intent of the parties hereto to the fullest extent permitted by law.
5.5 Law Governing. This Agreement is to be construed and enforced in accordance with and shall be governed by the laws of the State of California applicable to contracts executed in and to be fully performed in that state without giving effect to the principles of conflicts of laws.
5.6 Confidentiality. Until the Issuer makes a press release or other public announcement about the Exchange, the Investor will maintain the confidentiality of the Debt Exchange and the terms of the Debt Exchange.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed and delivered as of the day and year first above written.
| CAFÉ SERENDIPITY HOLDINGS, INC. | ||
| By: | /s/ Xxxxxx Xxxxxx | |
| Xxxxxx Xxxxxx | ||
| Its: | Chief Executive Officer | |
| XXXXXX X. XXXXXXXXX | ||
| By: | /s/ Xxxxxx X. Xxxxxxxxx | |
| Xxxxxx X. Xxxxxxxxx, an individual | ||
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