SECURITIES PURCHASE AGREEMENT
This SECURITIES PURCHASE AGREEMENT (the “Agreement”), dated as of December 10, 2018, by
and between ELITE PERFORMANCE HOLDINGS CORPORATION, a Nevada corporation, with headquarters
located at 0000 Xxxxxxxxxx Xxx, Xxxx Xx. Xxxxx, XX 00000 (the “Company”), and FIRSTFIRE GLOBAL
OPPORTUNITIES FUND, LLC, a Delaware limited liability company, with its address at 0000 Xxxxx Xxxxxx,
Xxxxx 000, Xxx Xxxx, XX 00000 (the “Buyer”).
WHEREAS:
A. The Company and the Buyer are executing and delivering this Agreement 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”) and Rule 506(b) promulgated by the United States Securities and Exchange Commission (the “SEC”)
under the 1933 Act;
B. Buyer desires to purchase from the Company, and the Company desires to issue and sell to the Buyer,
upon the terms and conditions set forth in this Agreement, a Senior Secured Convertible Promissory Note of the
Company, in the aggregate principal amount of $157,500.00 (as the principal amount thereof may be increased
pursuant to the terms thereof, and together with any note(s) issued in replacement thereof or as a dividend thereon or
otherwise with respect thereto in accordance with the terms thereof, in the form attached hereto as Exhibit A, the
“Note”), convertible into shares of common stock, $0.0001 par value per share, of the Company (the “Common
Stock”), upon the terms and subject to the limitations and conditions set forth in such Note; and
C. The Buyer wishes to purchase, upon the terms and conditions stated in this Agreement, such principal
amount of the Note as is set forth immediately below its name on the signature pages hereto.
D. The Company wishes to issue 400,000 shares of the Company’s common stock (the “Commitment
Shares”) to the Buyer as additional consideration for the purchase of the Note.
NOW THEREFORE, in consideration of the foregoing and of the agreements and covenants herein
contained, and for other good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the Company and the Buyer hereby agree as follows:
1. Purchase and Sale of Note.
a. Purchase of Note. On the Closing Date (as defined below), the Company shall
issue and sell to the Buyer, and the Buyer agrees to purchase from the Company, the Note, as further provided
herein. Additionally, on or before the Closing Date, the Company shall issue the Commitment Shares to the
Buyer.
b. Form of Payment. On the Closing Date: (i) the Buyer shall pay the purchase price of
$150,000.00 (the “Purchase Price”) for the Note, to be issued and sold to it at the Closing (as defined below), by
wire transfer of immediately available funds to the Company, in accordance with the Company’s written wiring
instructions, against delivery of the Note, and (ii) the Company shall deliver such duly executed Note on behalf of
the Company, to the Buyer, against delivery of such Purchase Price.
c. Closing Date. Subject to the satisfaction (or written waiver) of the conditions thereto
set forth in Section 6 and Section 7 below, the date and time of the issuance and sale of the Note pursuant to this
Agreement (the “Closing Date”) shall be 4:00 PM, Eastern Time on the date first written above, or such other
mutually agreed upon time.
d. Closing. The closing of the transactions contemplated by this Agreement (the
“Closing”) shall occur on the Closing Date at such location as may be agreed to by the parties (including via
exchange of electronic signatures).
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2. Buyer’s Representations and Warranties. The Buyer represents and warrants to the Company as
of the Closing Date that:
a. Investment Purpose. As of the Closing Date, the Buyer is purchasing the Note and the
shares of Common Stock issuable upon conversion of or otherwise pursuant to the Note and such additional shares
of Common Stock, if any, as are issuable on account of interest on the Note pursuant to this Agreement, such shares
of Common Stock being collectively referred to herein as the “Conversion Shares” and, collectively with the Note
(the “Securities”) for its own account and not with a present view towards the public sale or distribution thereof,
except pursuant to sales registered or exempted from registration under the 1933 Act; provided, however, that by
making the representations herein, the Buyer does not agree to hold any of the Securities for any minimum or other
specific term and reserves the right to dispose of the Securities at any time in accordance with or pursuant to a
registration statement or an exemption under the 1933 Act.
b. Accredited Investor Status. The Buyer is an “accredited investor” as that term is
defined in Rule 501(a) of Regulation D (an “Accredited Investor”).
c. Reliance on Exemptions. The Buyer understands that the Securities are being offered
and sold to it in reliance upon specific exemptions from the registration requirements of United States federal and
state securities laws and that the Company is relying upon the truth and accuracy of, and the Buyer’s compliance
with, the representations, warranties, agreements, acknowledgments and understandings of the Buyer set forth herein
in order to determine the availability of such exemptions and the eligibility of the Buyer to acquire the Securities.
d. Information. The Buyer and its advisors, if any, have been, and for so long as the Note
remains outstanding will continue to be, furnished with all materials relating to the business, finances and
operations of the Company and materials relating to the offer and sale of the Securities which have been requested
by the Buyer or its advisors. The Buyer and its advisors, if any, have been, and for so long as the Note remains
outstanding will continue to be, afforded the opportunity to ask questions of the Company regarding its business
and affairs. Notwithstanding the foregoing, the Company has not disclosed to the Buyer any material nonpublic
information regarding the Company or otherwise and will not disclose such information unless such information is
disclosed to the public prior to or promptly following such disclosure to the Buyer. Neither such inquiries nor any
other due diligence investigation conducted by Buyer or any of its advisors or representatives shall modify, amend
or affect Buyer’s right to rely on the Company’s representations and warranties contained in Section 3 below.
e. Governmental Review. The Buyer understands that no United States federal or state
agency or any other government or governmental agency has passed upon or made any recommendation or
endorsement of the Securities.
f. Transfer or Re-sale. The Buyer understands that (i) the sale or resale of the Securities has
not been and is not being registered under the 1933 Act or any applicable state securities laws, and the Securities may
not be transferred unless (a) the Securities are sold pursuant to an effective registration statement under the 1933 Act,
(b) the Buyer shall have delivered to the Company, at the cost of the Company, an opinion of counsel (which may be
the Legal Counsel Opinion (as defined below)) that shall be in form, substance and scope customary for opinions of
counsel in comparable transactions to the effect that the Securities to be sold or transferred may be sold or transferred
pursuant to an exemption from such registration, which opinion shall be accepted by the Company, (c) the Securities
are sold or transferred to an “affiliate” (as defined in Rule 144 promulgated under the 1933 Act (or a successor rule)
(“Rule 144”)) of the Buyer who agrees to sell or otherwise transfer the Securities only in accordance with this Section
2(f) and who is an Accredited Investor, (d) the Securities are sold pursuant to Rule 144, or (e) the Securities are sold
pursuant to Regulation S under the 1933 Act (or a successor rule) (“Regulation S”), and the Buyer shall have delivered
to the Company, at the cost of the Company, an opinion of counsel that shall be in form, substance and scope
customary for opinions of counsel in corporate transactions, which opinion shall be accepted by the Company; (ii) any
sale of such Securities made in reliance on Rule 144 may be made only in accordance with the terms of said Rule and
further, if said Rule is not applicable, any re-sale of such Securities under circumstances in which the seller (or the
person through whom the sale is made) may be deemed to be an underwriter (as that term is defined in the 0000 Xxx)
may require compliance with some other exemption under the 1933 Act or the rules and regulations of the SEC
thereunder; and (iii) neither the Company nor any other person is under any obligation to register such Securities
under the 1933 Act or any state securities laws or to comply with the terms and conditions of any exemption
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thereunder (in each case). Notwithstanding the foregoing or anything else contained herein to the contrary, the
Securities may be pledged in connection with a bona fide margin account or other lending arrangement secured by
the Securities, and such pledge of Securities shall not be deemed to be a transfer, sale or assignment of the
Securities hereunder, and the Buyer in effecting such pledge of Securities shall be not required to provide the
Company with any notice thereof or otherwise make any delivery to the Company pursuant to this Agreement or
otherwise.
g. Legends. The Buyer understands that until such time as the Note, and, upon conversion
of the Note in accordance with its respective terms, the Conversion Shares, have been registered under the 1933 Act
or may be sold pursuant to Rule 144, Rule 144A under the 1933 Act or Regulation S without any restriction as to
the number of securities as of a particular date that can then be immediately sold, the Securities may bear a
restrictive legend in substantially the following form (and a stop-transfer order may be placed against transfer of the
certificates for such Securities):
“NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY
THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES
ARE [CONVERTIBLE/EXERCISABLE] HAVE BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES
LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD,
TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE
REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL (WHICH COUNSEL
SHALL BE SELECTED BY THE HOLDER), IN A GENERALLY ACCEPTABLE FORM,
THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD
PURSUANT TO RULE 144, RULE 144A OR REGULATION S UNDER SAID ACT.
NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN
CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR
FINANCING ARRANGEMENT SECURED BY THE SECURITIES.”
The legend set forth above shall be removed and the Company shall issue a certificate for the applicable
shares of Common Stock without such legend to the holder of any Security upon which it is stamped or (as requested
by such holder) issue the applicable shares of Common Stock to such holder by electronic delivery by crediting the
account of such holder’s broker with The Depository Trust Company (“DTC”), if, unless otherwise required by
applicable state securities laws, (a) such Security is registered for sale under an effective registration statement filed
under the 1933 Act or otherwise may be sold pursuant to Rule 144, Rule 144A or Regulation S without any restriction
as to the number of securities as of a particular date that can then be immediately sold, or (b) the Company or the
Buyer provides the Legal Counsel Opinion (as contemplated by and in accordance with Section 4(m) hereof) to the
effect that a public sale or transfer of such Security may be made without registration under the 1933 Act, which
opinion shall be accepted by the Company so that the sale or transfer is effected. The Company shall be responsible
for the fees of its transfer agent and all DTC fees associated with any such issuance. The Buyer agrees to sell all
Securities, including those represented by a certificate(s) from which the legend has been removed, in compliance
with applicable prospectus delivery requirements, if any. In the event that the Company does not accept the opinion
of counsel provided by the Buyer with respect to the transfer of Securities pursuant to an exemption from
registration, such as Rule 144, Rule 144A or Regulation S, at the Deadline (as defined in the Note), it will be
considered an Event of Default pursuant to Section 3.2 of the Note.
h. Authorization; Enforcement. This Agreement has been duly and validly authorized by
the Buyer and has been duly executed and delivered on behalf of the Buyer, and this Agreement constitutes a valid
and binding agreement of the Buyer enforceable in accordance with its terms, except as enforcement may be limited
by bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting creditors’ rights generally and
except as may be limited by the exercise of judicial discretion in applying principles of equity.
i. Residency. The Buyer is a resident of the jurisdiction set forth immediately below the
Buyer’s name on the signature pages hereto.
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3. Representations and Warranties of the Company. The Company represents and
warrants to the Buyer as of the Closing Date that:
a. Organization and Qualification. The Company and each of its Subsidiaries (as defined
below), if any, is a corporation duly organized, validly existing and in good standing under the laws of the
jurisdiction in which it is incorporated, with full power and authority (corporate and other) to own, lease, use and
operate its properties and to carry on its business as and where now owned, leased, used, operated and conducted.
Schedule 3(a), if attached hereto, sets forth a list of all of the Subsidiaries of the Company and the jurisdiction in
which each is incorporated. The Company and each of its Subsidiaries is duly qualified as a foreign corporation to
do business and is in good standing in every jurisdiction in which its ownership or use of property or the nature of
the business conducted by it makes such qualification necessary except where the failure to be so qualified or in
good standing would not have a Material Adverse Effect. “Material Adverse Effect” means any material adverse
effect on the business, operations, assets, financial condition or prospects of the Company or its Subsidiaries, if
any, taken as a whole, or on the transactions contemplated hereby or by the agreements or instruments to be
entered into in connection herewith. “Subsidiaries” means any corporation or other organization, whether
incorporated or unincorporated, in which the Company owns, directly or indirectly, any equity or other ownership
interest.
b. Authorization; Enforcement. (i) The Company has all requisite corporate power and
authority to enter into and perform this Agreement, the Note, and to consummate the transactions contemplated
hereby and thereby and to issue the Securities, in accordance with the terms hereof and thereof, (ii) the execution
and delivery of this Agreement, the Note, and the Conversion Shares by the Company and the consummation by it
of the transactions contemplated hereby and thereby (including without limitation, the issuance of the Note, as well
as the issuance and reservation for issuance of the Conversion Shares issuable upon conversion of the Note) have
been duly authorized by the Company’s Board of Directors and no further consent or authorization of the Company,
its Board of Directors, its shareholders, or its debt holders is required, (iii) this Agreement and the Note (together
with any other instruments executed in connection herewith or therewith) have been duly executed and delivered by
the Company by its authorized representative, and such authorized representative is the true and official
representative with authority to sign this Agreement, the Note and the other instruments documents executed in
connection herewith or therewith and bind the Company accordingly, and (iv) this Agreement constitutes, and
upon execution and delivery by the Company of the Note, each of such instruments will constitute, a legal, valid
and binding obligation of the Company, enforceable against the Company in accordance with their terms.
c. Capitalization; Governing Documents. As of December 10, 2018, the authorized
capital stock of the Company consists of: 465,000,000 authorized shares of Common Stock, of which 53,970,000
shares were issued and outstanding, and 35,000,000 authorized shares of preferred stock, of which 10,000,000
were issued and outstanding. All of such outstanding shares of capital stock of the Company and the Conversion
Shares, are, or upon issuance will be, duly authorized, validly issued, fully paid and non-assessable. No shares of
capital stock of the Company are subject to preemptive rights or any other similar rights of the shareholders of the
Company or any liens or encumbrances imposed through the actions or failure to act of the Company. As of the
effective date of this Agreement, other than as publicly announced prior to such date and reflected in the SEC
filings of the Company (i) there are no outstanding options, warrants, scrip, rights to subscribe for, puts, calls,
rights of first refusal, agreements, understandings, claims or other commitments or rights of any character
whatsoever relating to, or securities or rights convertible into or exchangeable for any shares of capital stock of the
Company or any of its Subsidiaries, or arrangements by which the Company or any of its Subsidiaries is or may
become bound to issue additional shares of capital stock of the Company or any of its Subsidiaries, (ii) there are no
agreements or arrangements under which the Company or any of its Subsidiaries is obligated to register the sale of
any of its or their securities under the 1933 Act and (iii) there are no anti-dilution or price adjustment provisions
contained in any security issued by the Company (or in any agreement providing rights to security holders) that
will be triggered by the issuance of any of the Securities. The Company has furnished to the Buyer true and correct
copies of the Company’s Certificate of Incorporation as in effect on the date hereof (“Certificate of
Incorporation”), the Company’s 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 of the Company and the material rights of the holders
thereof in respect thereto.
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d. Issuance of Conversion Shares. The Conversion Shares are duly authorized and
reserved for issuance and, upon conversion of the Note in accordance with its terms, will be validly issued, fully
paid and non-assessable, and free from all taxes, liens, claims and encumbrances with respect to the issue thereof
and shall not be subject to preemptive rights or other similar rights of shareholders of the Company and will not
impose personal liability upon the holder thereof.
e. [Intentionally Omitted].
f. Acknowledgment of Dilution. The Company understands and acknowledges the
potentially dilutive effect of the Conversion Shares to the Common Stock upon the conversion of the Note. The
Company further acknowledges that its obligation to issue, upon conversion of the Note, the Conversion Shares, in
accordance with this Agreement, and the Note are absolute and unconditional regardless of the dilutive effect that
such issuance may have on the ownership interests of other shareholders of the Company.
g. Ranking; No Conflicts. The Note shall be a senior debt obligation of the Company, with
priority in payment and performance over all existing and future indebtedness of the Company. The execution,
delivery and performance of this Agreement and the Note by the Company and the consummation by the Company of
the transactions contemplated hereby and thereby (including, without limitation, the issuance and reservation for
issuance of the Conversion Shares) will not (i) conflict with or result in a violation of any provision of the Certificate
of Incorporation or By-laws, or (ii) violate or conflict with, or result in a breach of any provision of, or constitute a
default (or an event which with notice or lapse of time or both could become a default) under, or give to others any
rights of termination, amendment, acceleration or cancellation of, any agreement, note, evidence of indebtedness,
indenture, patent, patent license or instrument to which the Company or any of its Subsidiaries is a party, or (iii) result
in a violation of any law, rule, regulation, order, judgment or decree (including federal and state securities laws and
regulations and regulations of any self-regulatory organizations to which the Company or its securities is subject)
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 (except for such conflicts, defaults, terminations, amendments, accelerations,
cancellations and violations as would not, individually or in the aggregate, have a Material Adverse Effect), or (iv)
trigger any anti-dilution and/or ratchet provision contained in any other contract in which the Company is a party
thereto or any security issued by the Company. Neither the Company nor any of its Subsidiaries is in violation of its
Certificate of Incorporation, By-laws or other organizational documents and neither the Company nor any of its
Subsidiaries is in default (and no event has occurred which with notice or lapse of time or both could put the
Company or any of its Subsidiaries in default) under, and neither the Company nor any of its Subsidiaries has taken
any action or failed to take any action that would give to others any rights of termination, amendment, acceleration or
cancellation of, any agreement, indenture or instrument to which the Company or any of its Subsidiaries is a party or
by which any property or assets of the Company or any of its Subsidiaries is bound or affected, except for possible
defaults as would not, individually or in the aggregate, have a Material Adverse Effect. The businesses of the
Company and its Subsidiaries, if any, are not being conducted, and shall not be conducted so long as the Buyer owns
any of the Securities, in violation of any law, ordinance or regulation of any governmental entity. Except as
specifically contemplated by this Agreement and as required under the 1933 Act and any applicable state securities
laws, the Company is not required to obtain any consent, authorization or order of, or make any filing or registration
with, any court, governmental agency, regulatory agency, self-regulatory organization or stock market or any third
party in order for it to execute, deliver or perform any of its obligations under this Agreement and the Note in
accordance with the terms hereof or thereof or to issue and sell the Note in accordance with the terms hereof and,
upon conversion of the Note, issue Conversion Shares. All consents, authorizations, 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. If the Company is listed on the Over-the-Counter Bulletin Board, the OTCQB Market, any
principal market operated by OTC Markets Group, Inc. or any successor to such markets (collectively, the “OTC
Markets”), the Company is not in violation of the listing requirements of the OTC Markets and does not reasonably
anticipate that the Common Stock will be delisted by the OTC Markets in the foreseeable future. The Company and
its Subsidiaries are unaware of any facts or circumstances which might give rise to any of the foregoing.
h. SEC Documents; Financial Statements. The Company has timely 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 Securities Exchange Act of 1934, as amended (the “1934 Act”) (all of the foregoing filed prior
to the date hereof and all exhibits included therein and financial statements and schedules thereto and documents
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(other than exhibits to such documents) incorporated by reference therein, being hereinafter referred to herein as
the “SEC Documents”). As of their respective 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, contained any untrue
statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were made, not misleading. None of
the statements made in any such SEC Documents is, or has been, required to be amended or updated under
applicable law (except for such statements as have been amended or updated in subsequent filings prior the date
hereof). 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
United States generally accepted accounting principles, consistently applied, during the periods involved and fairly
present in all material respects the consolidated financial position of the Company and its consolidated Subsidiaries
as of the dates thereof and the consolidated results of their operations and cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal year-end audit adjustments). Except as set forth in the
financial statements of the Company included in the SEC Documents, the Company has no liabilities, contingent or
otherwise, other than (i) liabilities incurred in the ordinary course of business subsequent to June 30, 2018, and (ii)
obligations under contracts and commitments incurred in the ordinary course of business and not required under
generally accepted accounting principles to be reflected in such financial statements, which, individually or in the
aggregate, are not material to the financial condition or operating results of the Company. The Company is subject
to the reporting requirements of the 1934 Act. The Company has never been a “shell company” as described in
Rule 144(i)(1)(i).
i. Absence of Certain Changes. Since June 30, 2018, there has been no material adverse
change and no material adverse development in the assets, liabilities, business, properties, operations, financial
condition, results of operations, prospects or 1934 Act reporting status of the Company or any of its Subsidiaries.
j. Absence of Litigation. There is no action, suit, claim, 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 Company or any of its Subsidiaries, threatened against or affecting the
Company or any of its Subsidiaries, or their officers or directors in their capacity as such, that could have a Material
Adverse Effect. The SEC Documents contain a complete list and summary description of any pending or, to the
knowledge of the Company, threatened proceeding against or affecting the Company or any of its Subsidiaries,
without regard to whether it would have a Material Adverse Effect. The Company and its Subsidiaries are unaware
of any facts or circumstances which might give rise to any of the foregoing.
k. Intellectual Property. The Company and each of its Subsidiaries owns or possesses the
requisite licenses or rights to use all patents, patent applications, patent rights, inventions, know-how, trade secrets,
trademarks, trademark applications, service marks, service names, trade names and copyrights (“Intellectual
Property”) necessary to enable it to conduct its business as now operated (and, as presently contemplated to be
operated in the future); there is no claim or action by any person pertaining to, or proceeding pending, or to the
Company’s knowledge threatened, which challenges the right of the Company or of a Subsidiary with respect to any
Intellectual Property necessary to enable it to conduct its business as now operated (and, as presently contemplated to
be operated in the future); to the best of the Company’s knowledge, the Company’s or its Subsidiaries’ current and
intended products, services and processes do not infringe on any Intellectual Property or other rights held by any
person; and the Company is unaware of any facts or circumstances which might give rise to any of the foregoing.
The Company and each of its Subsidiaries have taken reasonable security measures to protect the secrecy,
confidentiality and value of their Intellectual Property.
l. 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.
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m. Tax Status. The Company and each of its Subsidiaries has made or filed all federal, state
and foreign 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 provisions 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. The Company has not
executed a waiver with respect to the statute of limitations relating to the assessment or collection of any foreign,
federal, state or local tax. None of the Company’s tax returns is presently being audited by any taxing authority.
n. Transactions with Affiliates. Except for arm’s length transactions pursuant to which
the Company or any of its Subsidiaries makes payments in the ordinary course of business upon terms no less
favorable than the Company or any of its Subsidiaries could obtain from third parties and other than the grant of
stock options described 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, 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 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.
o. Disclosure. All information relating to or concerning the Company or any of its
Subsidiaries set forth in this Agreement and provided to the Buyer pursuant to Section 2(d) hereof and otherwise in
connection with the transactions contemplated hereby is true and correct in all material respects and the Company
has not omitted to state any material fact necessary in order to make the statements made herein or therein, in light
of the circumstances under which they were made, not misleading. No event or circumstance has occurred or exists
with respect to the Company or any of its Subsidiaries or its or their business, properties, prospects, operations or
financial conditions, which, under applicable law, rule or regulation, requires public disclosure or announcement by
the Company but which has not been so publicly announced or disclosed (assuming for this purpose that the
Company’s reports filed under the 1934 Act are being incorporated into an effective registration statement filed by
the Company under the 1933 Act).
p. Acknowledgment Regarding Buyer’s Purchase of Securities. The Company
acknowledges and agrees that the Buyer is acting solely in the capacity of arm’s length purchaser with respect to this
Agreement and the transactions contemplated hereby. The Company further acknowledges that the Buyer is not
acting as a financial advisor or fiduciary of the Company (or in any similar capacity) with respect to this Agreement
and the transactions contemplated hereby and any statement made by the Buyer or any of its respective
representatives or agents in connection with this Agreement and the transactions contemplated hereby is not advice
or a recommendation and is merely incidental to the Buyer’s purchase of the Securities. The Company further
represents to the Buyer that the Company’s decision to enter into this Agreement has been based solely on the
independent evaluation of the Company and its representatives.
q. No Integrated Offering. Neither the Company, nor any of its affiliates, nor any person
acting on its or their behalf, has directly or indirectly made any offers or sales in any security or solicited any offers
to buy any security under circumstances that would require registration under the 1933 Act of the issuance of the
Securities to the Buyer. The issuance of the Securities to the Buyer will not be integrated with any other issuance of
the Company’s securities (past, current or future) for purposes of any shareholder approval provisions applicable to
the Company or its securities.
r. No Brokers. The Company has taken no action which would give rise to any claim by
any person for brokerage commissions, transaction fees or similar payments relating to this Agreement or the
transactions contemplated hereby.
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s. Permits; Compliance. The Company and each of its Subsidiaries is in possession of all
franchises, grants, authorizations, licenses, permits, easements, variances, exemptions, consents, certificates,
approvals and orders necessary to own, lease and operate its properties and to carry on its business as it is now
being conducted (collectively, the “Company Permits”), and there is no action pending or, to the knowledge of the
Company, threatened regarding suspension or cancellation of any of the Company Permits. Neither the Company
nor any of its Subsidiaries is in conflict with, or in default or violation of, any of the Company Permits, except for
any such conflicts, defaults or violations which, individually or in the aggregate, would not reasonably be expected
to have a Material Adverse Effect. Since June 30, 2018, neither the Company nor any of its Subsidiaries has
received any notification with respect to possible conflicts, defaults or violations of applicable laws, except for
notices relating to possible conflicts, defaults or violations, which conflicts, defaults or violations would not have a
Material Adverse Effect.
t. Environmental Matters.
(i) There are, to the Company’s knowledge, with respect to the Company or any
of its Subsidiaries or any predecessor of the Company, no past or present violations of Environmental Laws (as
defined below), releases of any material into the environment, actions, activities, circumstances, conditions, events,
incidents, or contractual obligations which may give rise to any common law environmental liability or any liability
under the Comprehensive Environmental Response, Compensation and Liability Act of 1980 or similar federal,
state, local or foreign laws and neither the Company nor any of its Subsidiaries has received any notice with respect
to any of the foregoing, nor is any action pending or, to the Company’s knowledge, threatened in connection with
any of the foregoing. The term ”Environmental Laws” means all federal, state, local or foreign laws relating to
pollution or protection of human health or the environment (including, without limitation, ambient air, surface
water, groundwater, land surface or subsurface strata), including, without limitation, laws relating to emissions,
discharges, releases or threatened releases of chemicals, pollutants contaminants, or toxic or hazardous
substances or wastes (collectively, “Hazardous Materials”) into the environment, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of Hazardous
Materials, as well as all authorizations, codes, decrees, demands or demand letters, injunctions, judgments,
licenses, notices or notice letters, orders, permits, plans or regulations issued, entered, promulgated or approved
thereunder.
(ii) Other than those that are or were stored, used or disposed of in compliance
with applicable law, no Hazardous Materials are contained on or about any real property currently owned, leased or
used by the Company or any of its Subsidiaries, and no Hazardous Materials were released on or about any real
property previously owned, leased or used by the Company or any of its Subsidiaries during the period the property
was owned, leased or used by the Company or any of its Subsidiaries, except in the normal course of the Company’s
or any of its Subsidiaries’ business.
(iii) There are no underground storage tanks on or under any real property
owned, leased or used by the Company or any of its Subsidiaries that are not in compliance with applicable law.
u. Title to Property. The Company and its Subsidiaries have good and marketable title in
fee simple to all real property and 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 Schedule 3(u), if attached hereto, or such as would not have a Material
Adverse Effect. Any real property and facilities held under lease by the Company and its Subsidiaries are held by
them under valid, subsisting and enforceable leases with such exceptions as would not have a Material Adverse
Effect.
v. Insurance. The Company and each of its Subsidiaries are insured by insurers of
recognized financial responsibility against such losses and risks and in such amounts as management of the
Company believes to be prudent and customary in the businesses in which the Company and its Subsidiaries are
engaged. Neither the Company nor any such Subsidiary 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. Upon
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8
written request the Company will provide to the Buyer true and correct copies of all policies relating to directors’
and officers’ liability coverage, errors and omissions coverage, and commercial general liability coverage.
w. Internal Accounting Controls. The Company and each of its Subsidiaries maintain a
system of internal accounting controls sufficient, in the judgment of the Company’s board of directors, 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 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.
x. Foreign Corrupt Practices. Neither the Company, nor any of its Subsidiaries, nor any
director, officer, agent, employee or other person acting on behalf of the Company or any Subsidiary has, in the
course of his actions for, or on behalf of, the Company, used any corporate funds for any unlawful contribution, gift,
entertainment or other unlawful expenses relating to political activity; made any direct or indirect unlawful payment
to any foreign or domestic government official or employee from corporate funds; violated or is in violation of any
provision of the U.S. Foreign Corrupt Practices Act of 1977, as amended, or made any bribe, rebate, payoff,
influence payment, kickback or other unlawful payment to any foreign or domestic government official or
employee.
y. Solvency. The Company (after giving effect to the transactions contemplated by this
Agreement) is solvent (i.e., its assets have a fair market value in excess of the amount required to pay its probable
liabilities on its existing debts as they become absolute and matured) and currently the Company has no information
that would lead it to reasonably conclude that the Company would not, after giving effect to the transaction
contemplated by this Agreement, have the ability to, nor does it intend to take any action that would impair its
ability to, pay its debts from time to time incurred in connection therewith as such debts mature. The Company’s
financial statements for its most recent fiscal year end and interim financial statements have been prepared assuming
the Company will continue as a going concern, which contemplates the realization of assets and the satisfaction of
liabilities in the normal course of business.
z. No Investment Company. The Company is not, and upon the issuance and sale of the
Securities as contemplated by this Agreement will not be an “investment company” required to be registered under
the Investment Company Act of 1940 (an “Investment Company”). The Company is not controlled by an Investment
Company.
aa. No Off Balance Sheet Arrangements. There is no transaction, arrangement, or other
relationship between the Company or any of its Subsidiaries and an unconsolidated or other off balance sheet entity
that is required to be disclosed by the Company in its 1934 Act filings and is not so disclosed or that otherwise could
be reasonably likely to have a Material Adverse Effect.
bb. No Disqualification Events. None of the Company, any of its predecessors, any
affiliated issuer, any director, executive officer, other officer of the Company participating in the offering hereunder,
any beneficial owner of 20% or more of the Company’s outstanding voting equity securities, calculated on the basis
of voting power, nor any promoter (as that term is defined in Rule 405 under the 0000 Xxx) connected with the
Company in any capacity at the time of sale (each, an “Issuer Covered Person”) is subject to any of the “Bad Actor”
disqualifications described in Rule 506(d)(1)(i) to (viii) under the 1933 Act (a “Disqualification Event”), except for
a Disqualification Event covered by Rule 506(d)(2) or (d)(3). The Company has exercised reasonable care to
determine whether any Issuer Covered Person is subject to a Disqualification Event.
cc. Manipulation of Price. The Company has not, and to its knowledge no one acting on
its behalf has: (i) taken, directly or indirectly, any action designed to cause or to result, or that could reasonably be
expected to cause or result, in the stabilization or manipulation of the price of any security of the Company to
facilitate the sale or resale of any of the Securities, (ii) sold, bid for, purchased, or paid any compensation for
soliciting purchases of, any of the Securities, or (iii) paid or agreed to pay to any person any compensation for
soliciting another to purchase any other securities of the Company.
{00481385.DOCX.3}
9
dd. Breach of Representations and Warranties by the Company. The Company agrees
that if the Company breaches any of the representations or warranties set forth in this Section 3 and in addition to
any other remedies available to the Buyer pursuant to this Agreement, it will be considered an Event of Default
under Section 3.4 of the Note.
4. ADDITIONAL COVENANTS, AGREEMENTS AND ACKNOWLEDGEMENTS.
a. Best Efforts. The parties shall use their best efforts to satisfy timely each of the
conditions described in Section 6 and 7 of this Agreement.
b
c. Use of Proceeds. The Company shall use the proceeds for business development, and
not for the repayment of any indebtedness owed to officers, directors or employees of the Company or their affiliates
or in violation or contravention of any applicable law, rule or regulation.
d. Right of Participation in Subsequent Offerings.
i.
Except with respect to the Company’s registration statement filed prior to the
date of this Agreement (and any amendment thereto), from the date first written above until the
date which is twelve (12) months after the date first written above, the Company will not, (i)
directly or indirectly, offer, sell, grant any option to purchase, or otherwise dispose of (or
announce any offer, sale, grant or any option to purchase or other disposition of) any of its or its
Subsidiaries' debt, equity or equity equivalent securities, including without limitation any debt,
preferred shares or other instrument or security that is, at any time during its life and under any
circumstances, convertible into or exchangeable or exercisable for Common Stock (any such offer,
sale, grant, disposition or announcement being referred to as a "Subsequent Placement") or (ii)
enter into any definitive agreement with regard to the foregoing, in each case unless the Company
shall have first complied with this Section 4(d).
ii.
The Company shall deliver to the Buyer an irrevocable written notice (the "Offer
Notice") of any proposed or intended issuance or sale or exchange (the "Offer") of the securities
being offered (the "Offered Securities") in a Subsequent Placement, which Offer Notice shall (w)
identify and describe the Offered Securities, (x) describe the price and other terms upon which
they are to be issued, sold or exchanged, and the number or amount of the Offered Securities to be
issued, sold or exchanged, (y) identify the persons or entities (if known) to which or with which
the Offered Securities are to be offered, issued, sold or exchanged and (z) offer to issue and sell to
or exchange with the Buyer at least $157,500.00 of the Offered Securities (the “Subscription
Amount”).
iii.
To accept an Offer, in whole or in part, the Buyer must deliver a written notice
to the Company prior to the end of the tenth (10th) business day after the Buyer’s receipt of the
Offer Notice (the “Offer Period”), setting forth the portion of the Subscription Amount that the
Buyer elects to purchase (the “Notice of Acceptance”). The Company shall have ten (10) business
days from the expiration of the Offer Period to complete the Subsequent Placement and in
connection therewith to issue and sell the Subscription Amount to the Buyer but only upon terms
and conditions (including, without limitation, unit prices and interest rates) that are not more
favorable to the Buyer or less favorable to the Company than those set forth in the Offer Notice.
Following such ten (10) business day period, the Company shall publicly announce either (A) the
consummation of the Subsequent Placement or (B) the termination of the Subsequent Placement.
iv.
Notwithstanding anything to the contrary contained herein, if the Company
desires to modify or amend the terms and conditions of the Offer prior to the expiration of the
Offer Period, the Company shall deliver to the Buyer a new Offer Notice and the Offer Period
shall expire on the tenth (10th) business day after the Buyer's receipt of such new Offer Notice.
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10
v.
If by the fifteenth (15th) business day following delivery of the Offer Notice no
public disclosure regarding a transaction with respect to the Offered Securities has been made, and
no notice regarding the abandonment of such transaction has been received by the Buyer, such
transaction shall be deemed to have been abandoned and the Buyer shall not be deemed to be in
possession of any material, non-public information with respect to the Company.
As used in this Agreement, the term “business day” shall mean any day other than a
Saturday, Sunday or a day on which commercial banks in the city of New York, New York are authorized or
required by law or executive order to remain closed.
e. Usury. To the extent it may lawfully do so, the Company hereby agrees not to insist
upon or plead or in any manner whatsoever claim, and will resist any and all efforts to be compelled to take the
benefit or advantage of, usury laws wherever enacted, now or at any time hereafter in force, in connection with any
action or proceeding that may be brought by the Buyer in order to enforce any right or remedy under this
Agreement, the Note and any document, agreement or instrument contemplated thereby. Notwithstanding any
provision to the contrary contained in this Agreement, the Note and any document, agreement or instrument
contemplated thereby, it is expressly agreed and provided that the total liability of the Company under this
Agreement, the Note or any document, agreement or instrument contemplated thereby for payments which under
applicable law are in the nature of interest shall not exceed the maximum lawful rate authorized under applicable
law (the “Maximum Rate”), and, without limiting the foregoing, in no event shall any rate of interest or default
interest, or both of them, when aggregated with any other sums which under applicable law in the nature of interest
that the Company may be obligated to pay under this Agreement, the Note and any document, agreement or
instrument contemplated thereby exceed such Maximum Rate. It is agreed that if the maximum contract rate of
interest allowed by law applicable to this Agreement, the Note and any document, agreement or instrument
contemplated thereby is increased or decreased by statute or any official governmental action subsequent to the date
hereof, the new maximum contract rate of interest allowed by law will be the Maximum Rate applicable to this
Agreement, the Note and any document, agreement or instrument contemplated thereby from the effective date
thereof forward, unless such application is precluded by applicable law. If under any circumstances whatsoever,
interest in excess of the Maximum Rate is paid by the Company to the Buyer with respect to indebtedness evidenced
by this Agreement, the Note and any document, agreement or instrument contemplated thereby, such excess shall be
applied by the Buyer to the unpaid principal balance of any such indebtedness or be refunded to the Company, the
manner of handling such excess to be at the Buyer’s election.
f. Restriction on Activities. Commencing as of the date first above written, and until the
earlier of payment of the Note in full or full conversion of the Note, the Company shall not, directly or indirectly,
without the Buyer’s prior written consent, which consent shall not be unreasonably withheld: (a) change the nature
of its business; or (b) sell, divest, acquire, change the structure of any material assets other than in the ordinary
course of business.
g. Listing. Beginning on the date which is three (3) months after December 10, 2018, and
continuing so long as the Buyer owns any of the Securities, the Company will maintain the listing and trading of its
Common Stock on the OTC Markets or any equivalent replacement exchange or electronic quotation system
(including but not limited to the Pink Sheets electronic quotation system) and will comply in all respects with the
Company’s reporting, filing and other obligations under the bylaws or rules of the Financial Industry Regulatory
Authority (“FINRA”) and such exchanges, as applicable. The Company shall promptly provide to the Buyer copies
of any notices it receives from the OTC Markets and any other exchanges or electronic quotation systems on which
the Common Stock is then traded regarding the continued eligibility of the Common Stock for listing on such
exchanges and quotation systems.
h. Corporate Existence. The Company will, so long as the Buyer beneficially owns any of
the Securities, maintain its corporate existence and shall not sell all or substantially all of the Company’s assets,
except in the event of a merger or consolidation or sale of all or substantially all of the Company’s assets, where the
surviving or successor entity in such transaction (i) assumes the Company’s obligations hereunder and under the
agreements and instruments entered into in connection herewith and (ii) is a publicly traded corporation whose
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11
Common Stock is listed for trading or quotation on the OTC Markets, any tier of the NASDAQ Stock Market, the
New York Stock Exchange or the NYSE MKT.
i. No Integration. The Company shall not make any offers or sales of any security (other
than the Securities) under circumstances that would require registration of the Securities being offered or sold
hereunder under the 1933 Act or cause the offering of the Securities to be integrated with any other offering of
securities by the Company for the purpose of any stockholder approval provision applicable to the Company or its
securities.
j. Breach of Covenants. The Company acknowledges and agrees that if the Company
breaches any of the covenants set forth in this Section 4, in addition to any other remedies available to the Buyer
pursuant to this Agreement, it will be considered an Event of Default under Section 3.4 of the Note.
k. Compliance with 1934 Act; Public Information Failures. Beginning on the date which
is three (3) months after December 10, 2018, and continuing so long as the Buyer owns any of the Securities, the
Company shall comply with the reporting requirements of the 1934 Act; and the Company shall continue to be
subject to the reporting requirements of the 1934 Act. During the period that the Buyer beneficially owns the Note,
if the Company shall (i) fail for any reason to satisfy the requirements of Rule 144(c)(1), including, without
limitation, the failure to satisfy the current public information requirements under Rule 144(c) or (ii) if the
Company has ever been an issuer described in Rule 144(i)(1)(i) or becomes such an issuer in the future, and the
Company shall fail to satisfy any condition set forth in Rule 144(i)(2) (each, a “Public Information Failure”) then,
as partial relief for the damages to the Buyer by reason of any such delay in or reduction of its ability to sell the
Securities (which remedy shall not be exclusive of any other remedies available pursuant to this Agreement, the
Note, or at law or in equity), the Company shall pay to the Buyer an amount in cash equal to three percent (3%) of
the Purchase Price on each of the day of a Public Information Failure and on every thirtieth day (pro rated for
periods totaling less than thirty days) thereafter until the date such Public Information Failure is cured. The
payments to which a holder shall be entitled pursuant to this Section 4(k) are referred to herein as “Public
Information Failure Payments.” Public Information Failure Payments shall be paid on the earlier of (i) the last day
of the calendar month during which such Public Information Failure Payments are incurred and (iii) the third
business day after the event or failure giving rise to the Public Information Failure Payments is cured. In the event
the Company fails to make Public Information Failure Payments in a timely manner, such Public Information
Failure Payments shall bear interest at the rate of 5% per month (prorated for partial months) until paid in full.
l. Acknowledgement Regarding Buyer’s Trading Activity. The Company acknowledges
and agrees that (i) the Buyer has not been asked to agree, nor has the Buyer agreed, to desist from purchasing or
selling, long and/or short, securities of the Company, or “derivative” securities based on securities issued by the
Company or to hold the Securities for any specified term; (ii) the Buyer, and counter-parties in “derivative”
transactions to which any the Buyer is a party, directly or indirectly, presently may have a “short” position in the
Common Stock, and (iii) the Buyer shall not be deemed to have any affiliation with or control over any arm’s
length counter-party in any “derivative” transaction. The Company further understands and acknowledges that the
Buyer may engage in hedging and/or trading activities at various times during the period that the Securities are
outstanding, including, without limitation, during the periods that the value of the Conversion Shares are being
determined and (b) such hedging and/or trading activities, if any, can reduce the value of the existing stockholders’
equity interest in the Company both at and after the time the hedging and/or trading activities are being conducted.
The Company acknowledges that such aforementioned hedging and/or trading activities do not constitute a breach
of this Agreement or any of the documents executed in connection herewith.
m. Disclosure of Transactions and Other Material Information. By 9:00 a.m., New York
time, on the fourth business day following date this Agreement has been fully executed, the Company shall file a
Current Report on Form 8-K describing the terms of the transactions contemplated by this Agreement in the form
required by the 1934 Act and attaching this Agreement, the form of Note (the “8-K Filing”). From and after the
filing of the 8-K Filing with the SEC, the Buyer shall not be in possession of any material, nonpublic information
received from the Company, any of its Subsidiaries or any of their respective officers, directors, employees or
agents that is not disclosed in the 8-K Filing. In addition, effective upon the filing of the 8-K Filing, the Company
acknowledges and agrees that any and all confidentiality or similar obligations under any agreement, whether
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12
written or oral, between the Company, any of its Subsidiaries or any of their respective officers, directors, affiliates,
employees or agents, on the one hand, and the Buyer or any of its affiliates, on the other hand, shall terminate.
n. Legal Counsel Opinions. Upon the request of the Buyer from to time to time, the
Company shall be responsible (at its cost) for promptly supplying to the Company’s transfer agent and the Buyer a
customary legal opinion letter of its counsel (the “Legal Counsel Opinion”) to the effect that the resale of the
Conversion Shares by the Buyer or its affiliates, successors and assigns is exempt from the registration
requirements of the 1933 Act pursuant to Rule 144 (provided the requirements of Rule 144 are satisfied and
provided the Conversion Shares are not then registered under the 1933 Act for resale pursuant to an effective
registration statement). Should the Company’s legal counsel fail for any reason to issue the Legal Counsel
Opinion, the Buyer may (at the Company’s cost) secure another legal counsel to issue the Legal Counsel Opinion,
and the Company will instruct its transfer agent to accept such opinion. The Company hereby agrees that it may
never take the position that it is a “shell company” in connection with its obligations under this Agreement or
otherwise.
o. Piggyback Registration Rights. Except with respect to the Company’s registration
statement filed prior to the date of this Agreement (and any amendment thereto), the Company hereby grants to the
Buyer the registration rights set forth on Exhibit B hereto
p. Most Favored Nation. While the Note or any principal amount, interest or fees or
expenses due thereunder remain outstanding and unpaid, the Company shall not enter into any public or private
offering of its securities (including securities convertible into shares of Common Stock) with any individual or
entity (an “Other Investor”) that has the effect of establishing rights or otherwise benefiting such Other Investor in a
manner more favorable in any material respect to such Other Investor than the rights and benefits established in
favor of the Buyer by this Agreement or the Note unless, in any such case, the Buyer has been provided with such
rights and benefits pursuant to a definitive written agreement or agreements between the Company and the Buyer.
q. Subsequent Variable Rate Transactions. From the date hereof until such time as the
Buyer no longer holds the Note or any of the Conversion Shares, the Company shall be prohibited from effecting or
entering into an agreement involving a Variable Rate Transaction. “Variable Rate Transaction” means a transaction
in which the Company (i) issues or sells any debt or equity securities that are convertible into, exchangeable or
exercisable for, or include the right to receive, additional shares of Common Stock either (A) at a conversion price,
exercise price or exchange rate or other price that is based upon, and/or varies with, the trading prices of or
quotations for the shares of Common Stock at any time after the initial issuance of such debt or equity securities or
(B) with a conversion, exercise or exchange price that is subject to being reset at some future date after the initial
issuance of such debt or equity security or upon the occurrence of specified or contingent events directly or
indirectly related to the business of the Company or the market for the Common Stock or (ii) enters into any
agreement, including, but not limited to, an equity line of credit, whereby the Company may issue securities at a
future determined price. Any Purchaser shall be entitled to obtain injunctive relief against the Company to preclude
any such issuance, which remedy shall be in addition to any right to collect damages.
r. Brokerage Account Restrictions. If the Common Stock issued upon conversion of the
Note cannot be delivered to a brokerage account of the Buyer as a result of restrictions imposed by such brokerage
firm, then the Company agrees to take any such action required, including but not limited to a reverse stock split, to
remove any such restrictions on depositing the Common Stock into such brokerage account or to satisfy any
requirement for deposit of the Common Stock into such brokerage account.
5. Transfer Agent Instructions. The Company shall issue irrevocable instructions to the
Company’s transfer agent to issue certificates, registered in the name of the Buyer or its nominee, upon conversion of
the Note, the Conversion Shares, in such amounts as specified from time to time by the Buyer to the Company in
accordance with the terms thereof (the “Irrevocable Transfer Agent Instructions”). In the event that the Company
proposes to replace its transfer agent, the Company shall provide, prior to the effective date of such replacement, a
fully executed Irrevocable Transfer Agent Instructions in a form as initially delivered pursuant to this Agreement
(including but not limited to the provision to irrevocably reserved shares of Common Stock in the Reserved Amount
(as defined in the Note)) signed by the successor transfer agent to the Company and the Company. Prior to
registration of the Conversion Shares under the 1933 Act or the date on which the Conversion Shares may be sold
{00481385.DOCX.3}
13
pursuant to Rule 144 without any restriction as to the number of Securities as of a particular date that can then be
immediately sold, all such certificates shall bear the restrictive legend specified in Section 2(g) of this Agreement.
The Company warrants that: (i) no instruction other than the Irrevocable Transfer Agent Instructions referred to in
this Section 5 will be given by the Company to its transfer agent and that the Securities shall otherwise be freely
transferable on the books and records of the Company as and to the extent provided in this Agreement and the Note;
(ii) it will not direct its transfer agent not to transfer or delay, impair, and/or hinder its transfer agent in transferring
(or issuing)(electronically or in certificated form) any certificate for Securities to be issued to the Buyer upon
conversion of or otherwise pursuant to the Note as and when required by the Note and this Agreement; (iii) it will
not fail to remove (or directs its transfer agent not to remove or impairs, delays, and/or hinders its transfer agent
from removing) any restrictive legend (or to withdraw any stop transfer instructions in respect thereof) on any
certificate for any Securities issued to the Buyer upon conversion of or otherwise pursuant to the Note as and when
required by the Note and this Agreement and (iv) it will provide any required corporate resolutions and issuance
approvals to its transfer agent within 6 hours of each conversion of the Note. Nothing in this Section shall affect in
any way the Buyer’s obligations and agreement set forth in Section 2(g) hereof to comply with all applicable
prospectus delivery requirements, if any, upon re-sale of the Securities. If the Buyer provides the Company, at the
cost of the Company, with (i) an opinion of counsel in form, substance and scope customary for opinions in
comparable transactions, to the effect that a public sale or transfer of such Securities may be made without
registration under the 1933 Act and such sale or transfer is effected or (ii) the Buyer provides reasonable assurances
that the Securities can be sold pursuant to Rule 144, the Company shall permit the transfer, and, in the case of the
Securities, promptly instruct its transfer agent to issue one or more certificates, free from restrictive legend, in such
name and in such denominations as specified by the Buyer. The Company acknowledges that a breach by it of its
obligations hereunder will cause irreparable harm to the Buyer, by vitiating the intent and purpose of the
transactions contemplated hereby. Accordingly, the Company acknowledges that the remedy at law for a breach of
its obligations under this Section 5 may be inadequate and agrees, in the event of a breach or threatened breach by
the Company of the provisions of this Section, that the Buyer shall be entitled, in addition to all other available
remedies, to an injunction restraining any breach and requiring immediate transfer, without the necessity of showing
economic loss and without any bond or other security being required.
6. Conditions to the Company’s Obligation to Sell. The obligation of the Company hereunder to
issue and sell the Note to the Buyer at the Closing is subject to the satisfaction, at or before the Closing Date, of each
of the following conditions thereto, provided that these conditions are for the Company’s sole benefit and may be
waived by the Company at any time in its sole discretion:
a. The Buyer shall have executed this Agreement and delivered the same to the Company.
b. The Buyer shall have delivered the Purchase Price in accordance with Section 1(b)
above.
c. The representations and warranties of the Buyer shall be true and correct in all material
respects as of the date when made and as of the Closing Date, as though made at that time (except for
representations and warranties that speak as of a specific date), and the Buyer shall have performed, satisfied and
complied in all material respects with the covenants, agreements and conditions required by this Agreement to be
performed, satisfied or complied with by the Buyer at or prior to the Closing Date.
d. No litigation, statute, rule, regulation, executive order, decree, ruling or injunction
shall have been enacted, entered, promulgated or endorsed by or in any court or governmental authority of
competent jurisdiction or any self-regulatory organization having authority over the matters contemplated hereby
which prohibits the consummation of any of the transactions contemplated by this Agreement.
7. Conditions to The Buyer’s Obligation to Purchase. The obligation of the Buyer hereunder to
purchase the Note, on the Closing Date, is subject to the satisfaction, at or before the Closing Date, of each of the
following conditions, provided that these conditions are for the Buyer’s sole benefit and may be waived by the
Buyer at any time in its sole discretion:
a. The Company shall have executed this Agreement and delivered the same to the Buyer.
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14
b. The Company shall have delivered to the Buyer the duly executed Note in such
denominations as the Buyer shall request and in accordance with Section 1(b) above.
c.[Intentionally Omitted].
d. The Irrevocable Transfer Agent Instructions, in form and substance satisfactory to the
Buyer, shall have been delivered to and acknowledged in writing by the Company’s Transfer Agent.
e. 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 Closing Date, as though made at such time (except for
representations and warranties that speak as of a specific date) and the Company shall have performed, satisfied and
complied in all material respects with the covenants, agreements and conditions required by this Agreement to be
performed, satisfied or complied with by the Company at or prior to the Closing Date.
f. No litigation, statute, rule, regulation, executive order, decree, ruling or injunction shall
have been enacted, entered, promulgated or endorsed by or in any court or governmental authority of competent
jurisdiction or any self-regulatory organization having authority over the matters contemplated hereby which
prohibits the consummation of any of the transactions contemplated by this Agreement.
g. No event shall have occurred which could reasonably be expected to have a Material
Adverse Effect on the Company including but not limited to a change in the 1934 Act reporting status of the
Company or the failure of the Company to be timely in its 1934 Act reporting obligations.
h. Trading in the Common Stock on the OTC Markets shall not have been suspended by
the SEC, FINRA or the OTC Markets.
i. The Company shall have delivered to the Buyer (i) a certificate evidencing the
formation and good standing of the Company and each of its Subsidiaries in such entity’s jurisdiction of formation
issued by the Secretary of State (or comparable office) of such jurisdiction, as of a date within ten (10) days of the
Closing Date and (ii) resolutions adopted by the Company’s Board of Directors at a duly called meeting or by
unanimous written consent authorizing this Agreement and all other documents, instruments and transactions
contemplated hereby.
8. Governing Law; Miscellaneous.
a. Governing Law; Venue. This Agreement shall be governed by and construed
in accordance with the laws of the State of Nevada without regard to principles of conflicts of laws. Any action
brought by either party against the other concerning the transactions contemplated by this Agreement, the Note, or
any other agreement, certificate, instrument or document contemplated hereby shall be brought only in the state
courts or in the federal courts located in the state and county of 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. EACH PARTY HEREBY
IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY
TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR
ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTIONS CONTEMPLATED HEREBY. The
prevailing party shall be entitled to recover from the other party its reasonable attorney’s fees and costs. 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, the Note, or any other agreement, certificate, instrument or document
contemplated hereby or thereby by mailing a copy thereof via registered or certified mail or overnight delivery (with
evidence of delivery) to such party at the address in effect for notices to it under this Agreement and agrees that such
service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be
deemed to limit in any way any right to serve process in any other manner permitted by law.
b. Counterparts. This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original but all of which shall constitute one and the same agreement and shall become
effective when counterparts have been signed by each party and delivered to the other party. A facsimile or .pdf
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15
signature shall be considered due execution and shall be binding upon the signatory thereto with the same force and
effect as if the signature were an original, not a facsimile or .pdf signature. Delivery of a counterpart signature
hereto by facsimile or email/.pdf transmission shall be deemed validly delivery thereof.
c. Construction; Headings. This Agreement shall be deemed to be jointly drafted by the
Company and the Buyer and shall not be construed against any person as the drafter hereof. The headings of this
Agreement are for convenience of reference only and shall not form part of, or affect the interpretation of, this
Agreement.
d. Severability. In the event that any provision of this Agreement, the Note, or any other
agreement or instrument 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 this Agreement,
the Note, or any other agreement, certificate, instrument or document contemplated hereby or thereby.
e. Entire Agreement; Amendments. This Agreement, the Note, and the instruments
referenced herein contain the entire understanding of the parties with respect to the matters covered herein and
therein and, except as specifically set forth herein or therein, neither the Company nor the Buyer makes any
representation, warranty, covenant or undertaking with respect to such matters. No provision of this Agreement or
any agreement or instrument contemplated hereby may be waived or amended other than by an instrument in writing
signed by the Buyer.
f. Notices. All notices, demands, requests, consents, approvals, and other
communications required or permitted hereunder shall be in writing and, unless otherwise specified herein, shall be
(i) personally served, (ii) deposited in the mail, registered or certified, return receipt requested, postage prepaid, (iii)
delivered by reputable air courier service with charges prepaid, or (iv) transmitted by hand delivery, telegram, e-mail
or facsimile, addressed as set forth below or to such other address as such party shall have specified most recently by
written notice. Any notice or other communication required or permitted to be given hereunder shall be deemed
effective (a) upon hand delivery or delivery by e-mail or facsimile, with accurate confirmation generated by the
transmitting facsimile machine, at the address or number designated below (if delivered on a business day during
normal business hours where such notice is to be received), or the first business day following such delivery (if
delivered other than on a business day during normal business hours where such notice is to be received) or (b) on
the second business day following the date of mailing by express courier service, fully prepaid, addressed to such
address, or upon actual receipt of such mailing, whichever shall first occur. The addresses for such communications
shall be:
If to the Company, to:
ELITE PERFORMANCE HOLDINGS CORPORATION
0000 Xxxxxxxxxx Xxx
Xxxx Xx. Xxxxx, XX 00000
Attention: Xxx XxXxxxxx
e-mail: xxxx@xxxxxxxxxxxxxxxxxxxxxxx.xxx
If to the Buyer:
FIRSTFIRE GLOBAL OPPORTUNITIES FUND, LLC
0000 Xxxxx Xxxxxx, Xxxxx 000
Xxx Xxxx, XX 00000
Attn: Xxx Fireman
e-mail: xxx@xxxxxxxxxxxxxxxx.xxx
With a copy by e-mail only to (which copy shall not constitute notice):
ANTHONY L.G., PLLC
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16
000 Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxx Xxxx Xxxxx, XX 00000
Attn: Xxxx Friend, Esq., LL.M.
e-mail: XXxxxxx@XxxxxxxXXXX.xxx
g. Successors and Assigns. This Agreement shall be binding upon and inure to the benefit
of the parties and their successors and assigns. Neither the Company nor the Buyer shall assign this Agreement or
any rights or obligations hereunder without the prior written consent of the other. Notwithstanding the foregoing,
subject to Section 2(f), the Buyer may assign its rights hereunder to any person that purchases Securities in a private
transaction from the Buyer or to any of its “affiliates,” as that term is defined under the 1934 Act, without the
consent of the Company.
h. Third Party Beneficiaries. This Agreement is intended for the benefit of the parties
hereto and their respective permitted successors and assigns, and is not for the benefit of, nor may any provision
hereof be enforced by, any other person.
i. Survival. The representations and warranties of the Company and the agreements and
covenants set forth in this Agreement shall survive the closing hereunder notwithstanding any due diligence
investigation conducted by or on behalf of the Buyer. The Company agrees to indemnify and hold harmless the
Buyer and all their officers, directors, employees and agents for loss or damage arising as a result of or related to any
breach or alleged breach by the Company of any of its representations, warranties and covenants set forth in this
Agreement or any of its covenants and obligations under this Agreement, including advancement of expenses as
they are incurred.
j. Publicity. The Company, and the Buyer shall have the right to review a reasonable
period of time before issuance of any press releases, SEC, OTC Markets or FINRA filings, or any other public
statements with respect to the transactions contemplated hereby; provided, however, that the Company shall be
entitled, without the prior approval of the Buyer, to make any press release or SEC, OTC Markets (or other
applicable trading market) or FINRA filings with respect to such transactions as is required by applicable law and
regulations (although the Buyer shall be consulted by the Company in connection with any such press release prior
to its release and shall be provided with a copy thereof and be given an opportunity to comment thereon).
k. Expense Reimbursement; Further Assurances. At the Closing to occur as of the
Closing Date, the Company shall pay on behalf of the Buyer or reimburse the Buyer for its legal fees and expenses
incurred in connection with this Agreement, pursuant to the disbursement authorization signed by the Company of
even date. 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 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.
l. 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.
m. Indemnification. In consideration of the Buyer’s execution and delivery of this
Agreement and acquiring the Securities hereunder, and in addition to all of the Company’s other obligations under
this Agreement or the Note, the Company shall defend, protect, indemnify and hold harmless the Buyer and its
stockholders, partners, members, officers, directors, employees and direct or indirect investors and any of the
foregoing persons’ agents or other representatives (including, without limitation, those retained in connection with
the transactions contemplated by this Agreement) (collectively, the “Indemnitees”) from and against any and all
actions, causes of action, suits, claims, losses, costs, penalties, fees, liabilities and damages, and expenses in
connection therewith (irrespective of whether any such Indemnitee is a party to the action for which indemnification
hereunder is sought), and including reasonable attorneys’ fees and disbursements (the “Indemnified Liabilities”),
incurred by any Indemnitee as a result of, or arising out of, or relating to (a) any misrepresentation or breach of any
representation or warranty made by the Company in this Agreement, the Note or any other agreement, certificate,
instrument or document contemplated hereby or thereby, (b) any breach of any covenant, agreement or obligation of
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17
the Company contained in this Agreement, the Note or any other agreement, certificate, instrument or document
contemplated hereby or thereby or (c) any cause of action, suit or claim brought or made against such Indemnitee by
a third party (including for these purposes a derivative action brought on behalf of the Company) and arising out of
or resulting from (i) the execution, delivery, performance or enforcement of this Agreement, the Note or any other
agreement, certificate, instrument or document contemplated hereby or thereby, (ii) any transaction financed or to be
financed in whole or in part, directly or indirectly, with the proceeds of the issuance of the Securities, or (iii) the
status of the Buyer or holder of the Securities as an investor in the Company pursuant to the transactions
contemplated by this Agreement. To the extent that the foregoing undertaking by the Company may be
unenforceable for any reason, the Company shall make the maximum contribution to the payment and satisfaction of
each of the Indemnified Liabilities that is permissible under applicable law.
n. Remedies. The Company acknowledges that a breach by it of its obligations hereunder
will cause irreparable harm to the Buyer by vitiating the intent and purpose of the transaction contemplated hereby.
Accordingly, the Company acknowledges that the remedy at law for a breach of its obligations under this Agreement
or the Note will be inadequate and agrees, in the event of a breach or threatened breach by the Company of the
provisions of this Agreement or the Note, that the Buyer shall be entitled, in addition to all other available remedies
at law or in equity, and in addition to the penalties assessable herein, to an injunction or injunctions restraining,
preventing or curing any breach of this Agreement or the Note and to enforce specifically the terms and provisions
hereof, without the necessity of showing economic loss and without any bond or other security being required.
o. Payment Set Aside. To the extent that the Company makes a payment or payments to
the Buyer hereunder or pursuant to the Note, or the Buyer 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 or entity under any
law (including, without limitation, any bankruptcy law, foreign, 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.
p. Failure or Indulgence Not Waiver. No failure or delay on the part of the Buyer in the
exercise of any power, right or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise of any such power, right or privilege preclude other or further exercise thereof or of any other right, power
or privileges. All rights and remedies of the Buyer existing hereunder are cumulative to, and not exclusive of, any
rights or remedies otherwise available.
[Signature Page Follows]
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18
IN WITNESS WHEREOF, the undersigned Buyer and the Company have caused this Agreement to be
duly executed as of the date first above written.
ELITE PERFORMANCE HOLDINGS CORPORATION
By:
Name: XXX XXXXXXXX
Title: CHIEF EXECUTIVE OFFICER
FIRSTFIRE GLOBAL OPPORTUNITIES FUND, LLC
By: FirstFire Capital Management LLC, its manager
By:
XXX FIREMAN
SUBSCRIPTION AMOUNT:
Principal Amount of Note: $157,500.00
Actual Amount of Purchase Price of Note: $150,000.00*
*The purchase price of $150,000.00 shall be paid within a reasonable amount of time after the full
execution of the Note and all related transaction documents.
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19
![[spaex9991.jpg]](https://www.sec.gov/Archives/edgar/data/1753681/000175368119000016/spaex9991.jpg)
EXHIBIT A
FORM OF NOTE
[attached hereto]
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20
EXHIBIT B
REGISTRATION RIGHTS
All of the Conversion Shares will be deemed “Registrable Securities” subject to the provisions of this
Exhibit B. All capitalized terms used but not defined in this Exhibit B shall have the meanings ascribed to such
terms in the Securities Purchase Agreement to which this Exhibit is attached.
1.
Piggy-Back Registration.
1.1
Piggy-Back Rights. If at any time on or after the date of the Closing the Company
proposes to file any Registration Statement under the 1933 Act (a “Registration Statement”) (except with respect to
the Company’s registration statement filed prior to the date of this Agreement (and any amendment thereto)), with
respect to any offering of equity securities, or securities or other obligations exercisable or exchangeable for, or
convertible into, equity securities, by the Company for its own account or for shareholders of the Company for their
account (or by the Company and by shareholders of the Company), other than a Registration Statement (i) filed in
connection with any employee stock option or other benefit plan on Form S-8, (ii) for a dividend reinvestment plan
or (iii) in connection with a merger or acquisition, then the Company shall (x) give written notice of such proposed
filing to the holders of Registrable Securities appearing on the books and records of the Company as such a holder
as soon as practicable but in no event less than ten (10) days before the anticipated filing date of the Registration
Statement, which notice shall describe the amount and type of securities to be included in such Registration
Statement, the intended method(s) of distribution, and the name of the proposed managing underwriter or
underwriters, if any, of the offering, and (y) offer to the holders of Registrable Securities in such notice the
opportunity to register the sale of such number of Registrable Securities as such holders may request in writing
within three (3) days following receipt of such notice (a “Piggy-Back Registration”). The Company shall cause such
Registrable Securities to be included in such registration and shall cause the managing underwriter or underwriters
of a proposed underwritten offering to permit the Registrable Securities requested to be included in a Piggy-Back
Registration on the same terms and conditions as any similar securities of the Company and to permit the sale or
other disposition of such Registrable Securities in accordance with the intended method(s) of distribution thereof.
All holders of Registrable Securities proposing to distribute their securities through a Piggy-Back Registration that
involves an underwriter or underwriters shall enter into an underwriting agreement in customary form with the
underwriter or underwriters selected for such Piggy-Back Registration.
1.2
Withdrawal. Any holder of Registrable Securities may elect to withdraw such holder’s
request for inclusion of Registrable Securities in any Piggy-Back Registration by giving written notice to the
Company of such request to withdraw prior to the effectiveness of the Registration Statement. The Company
(whether on its own determination or as the result of a withdrawal by persons making a demand pursuant to written
contractual obligations) may withdraw a Registration Statement at any time prior to the effectiveness of such
Registration Statement. Notwithstanding any such withdrawal, the Company shall pay all expenses incurred by the
holders of Registrable Securities in connection with such Piggy-Back Registration as provided in Section 1.5 below.
1.3
The Company shall notify the holders of Registrable Securities at any time when a
prospectus relating to such holder’s Registrable Securities is required to be delivered under the 1933 Act, upon
discovery that, or upon the happening of any event as a result of which, the prospectus included in such Registration
Statement, as then in effect, includes an untrue statement of a material fact or omits to state any material fact
required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances
then existing. At the request of such holder, the Company shall also prepare, file and furnish to such holder a
reasonable number of copies of a supplement to or an amendment of such prospectus as may be necessary so that, as
thereafter delivered to the purchasers of the Registrable Securities, such prospectus shall not include an untrue
statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances then existing. The holders of Registrable Securities
shall not to offer or sell any Registrable Securities covered by the Registration Statement after receipt of such
notification until the receipt of such supplement or amendment.
1.4
The Company may request a holder of Registrable Securities to furnish the Company
such information with respect to such holder and such holder’s proposed distribution of the Registrable Securities
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21
pursuant to the Registration Statement as the Company may from time to time reasonably request in writing or as
shall be required by law or by the SEC in connection therewith, and such holders shall furnish the Company with
such information.
1.5
All fees and expenses incident to the performance of or compliance with this Exhibit B
by the Company shall be borne by the Company whether or not any Registrable Securities are sold pursuant to a
Registration Statement. The fees and expenses referred to in the foregoing sentence shall include, without limitation,
(i) all registration and filing fees (including, without limitation, fees and expenses of the Company’s counsel and
independent registered public accountants) (A) with respect to filings made with the SEC, (B) with respect to filings
required to be made with any trading market on which the Common Stock is then listed for trading, (C) in
compliance with applicable state securities or Blue Sky laws reasonably agreed to by the Company in writing
(including, without limitation, fees and disbursements of counsel for the Company in connection with Blue Sky
qualifications or exemptions of the Registrable Securities) and (D) with respect to any filing that may be required to
be made by any broker through which a holder of Registrable Securities intends to make sales of Registrable
Securities with the FINRA, (ii) printing expenses, (iii) messenger, telephone and delivery expenses, (iv) fees and
disbursements of counsel for the Company, (v) 1933 Act liability insurance, if the Company so desires such
insurance, (vi) fees and expenses of all other persons or entities retained by the Company in connection with the
consummation of the transactions contemplated by this Exhibit B and (vii) reasonable fees and disbursements of a
single special counsel for the holders of Registrable Securities (selected by holders of the majority of the Registrable
Securities requesting such registration). In addition, the Company shall be responsible for all of its internal expenses
incurred in connection with the consummation of the transactions contemplated by this Agreement (including,
without limitation, all salaries and expenses of its officers and employees performing legal or accounting duties), the
expense of any annual audit and the fees and expenses incurred in connection with the listing of the Registrable
Securities on any securities exchange as required hereunder. In no event shall the Company be responsible for any
broker or similar commissions of any holder of Registrable Securities.
1.6
The Company and its successors and assigns shall indemnify and hold harmless the
Buyer, each holder of Registrable Securities, the officers, directors, members, partners, agents and employees (and
any other individuals or entities with a functionally equivalent role of a person holding such titles, notwithstanding a
lack of such title or any other title) of each of them, each individual or entity who controls the Buyer or any such
holder of Registrable Securities (within the meaning of Section 15 of the 1933 Act or Section 20 of the 0000 Xxx)
and the officers, directors, members, stockholders, partners, agents and employees (and any other individuals or
entities with a functionally equivalent role of a person holding such titles, notwithstanding a lack of such title or any
other title) of each such controlling individual or entity (each, an “Indemnified Party”), to the fullest extent
permitted by applicable law, from and against any and all losses, claims, damages, liabilities, costs (including,
without limitation, reasonable attorneys’ fees) and expenses (collectively, “Losses”), as incurred, arising out of or
relating to (1) any untrue or alleged untrue statement of a material fact contained in a Registration Statement, any
related prospectus or any form of prospectus or in any amendment or supplement thereto or in any preliminary
prospectus, or arising out of or relating to any omission or alleged omission of a material fact required to be stated
therein or necessary to make the statements therein (in the case of any such prospectus or supplement thereto, in
light of the circumstances under which they were made) not misleading or (2) any violation or alleged violation by
the Company of the 1933 Act, the 1934 Act or any state securities law, or any rule or regulation thereunder, in
connection with the performance of its obligations under this Exhibit B, except to the extent, but only to the extent,
that (i) such untrue statements or omissions are based upon information regarding the Buyer or such holder of
Registrable Securities furnished to the Company by such party for use therein. The Company shall notify the Buyer
and each holder of Registrable Securities promptly of the institution, threat or assertion of any proceeding arising
from or in connection with the transactions contemplated by this Exhibit B of which the Company is aware.
1.7
If the indemnification under Section 1.6 is unavailable to an Indemnified Party or
insufficient to hold an Indemnified Party harmless for any Losses, then the Company shall contribute to the amount
paid or payable by such Indemnified Party, in such proportion as is appropriate to reflect the relative fault of the
Company and Indemnified Party in connection with the actions, statements or omissions that resulted in such Losses
as well as any other relevant equitable considerations. The relative fault of the Company and Indemnified Party shall
be determined by reference to, among other things, whether any action in question, including any untrue or alleged
untrue statement of a material fact or omission or alleged omission of a material fact, has been taken or made by, or
relates to information supplied by, the Company or the Indemnified Party, and the parties’ relative intent,
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22
knowledge, access to information and opportunity to correct or prevent such action, statement or omission. The
amount paid or payable by a party as a result of any Losses shall be deemed to include any reasonable attorneys’ or
other fees or expenses incurred by such party in connection with any proceeding to the extent such party would have
been indemnified for such fees or expenses if the indemnification provided for in Section 1.6 was available to such
party in accordance with its terms. It is agreed that it would not be just and equitable if contribution pursuant to this
Section 1.7 were determined by pro rata allocation or by any other method of allocation that does not take into
account the equitable considerations referred to in the immediately preceding sentence. Notwithstanding the
provisions of this Section 1.7, neither the Buyer nor any holder of Registrable Securities shall be required to
contribute, in the aggregate, any amount in excess of the amount by which the net proceeds actually received by
such party from the sale of all of their Registrable Securities pursuant to such Registration Statement or related
prospectus exceeds the amount of any damages that such party has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission.
[End of Exhibit B]
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23
