SECURITIES EXCHANGE AGREEMENT
Exhibit
10.2
This
Securities Exchange Agreement, dated as of April 26, 2019 (this
“Agreement”), is
made and entered into by and among Charlie’s Chalk Dust, LLC,
a Delaware limited liability company (“CCD” or the “Company”), the Class A Members,
Class B Members, and holders of existing warrants of CCD executing
this Agreement (each a “Member” and collectively,
“Members”), and
the Direct Investor signatories to this Agreement, on the one hand;
and True Drink Holdings, Inc., a Nevada corporation
(“Pubco”), on
the other hand.
RECITALS
WHEREAS, on April
19, 2019, the Board of Directors of Pubco adopted resolutions
approving Pubco’s acquisition of the equity interests of CCD
held by the Members by means of a share exchange with the Members
(the “Exchange”), and the direct offer,
sale and issuance of Pubco securities to the purchasers set forth
on the signature page hereto (“Direct Investors”), each
upon the terms and conditions hereinafter set forth in this
Agreement;
WHEREAS, the
Members own all of the outstanding equity interests of CCD as set
forth on Schedule A, consisting of Class A Membership Interests
(the “CAMI”),
Class B Membership Interests (the “CBMI”) and warrants to purchase
membership interests (the “CCD Warrants”; together with the
CAMI and CBMI, the “CCD
Equity Interests”);
WHEREAS, upon
consummation of the transactions contemplated by this Agreement and
subject to the terms hereof, (i) CCD will become a 100%
wholly-owned subsidiary of Pubco, (ii) the CCD Equity Interests
will be exchanged for Series A Preferred Stock, Series B Preferred
Stock, (iii) the CCD Warrants will be exchanged for Issuable
Warrants, as defined in Section 1.1(d) below, and (iv)
Pubco will sell, and the Direct Investors will purchase, shares of
Pubco Common Stock, Series A Preferred Stock and Issuable Warrants,
as set forth on Schedule B (the “Private Issuance”);
and
WHEREAS, it is intended that the
terms and conditions of this Agreement as it relates to the
Exchange comply in all respects with Section 368(a)(1)(B) and/or
Section 351 of the Internal Revenue Code of 1986, as amended (the
“Code”) and the
regulations corresponding thereto, so that the Exchange shall
qualify as a tax free reorganization under the Code, and it is
intended that this share exchange transaction and Private Issuance
shall qualify as a transaction in securities exempt from
registration or qualification under the Securities Act of 1933, as
amended and in effect on the date of this Agreement.
AGREEMENT
NOW,
THEREFORE, the parties hereto, intending to be legally bound, agree
as follows:
ARTICLE 1
THE EXCHANGE AND PRIVATE ISSUANCE
1.1 The
Exchange. Upon the terms and subject to the conditions
hereof, at the Closing (as hereinafter defined) the parties shall
do the following:
(a) The Members will
sell, convey, assign, transfer to Pubco certificates representing
the CCD Equity Interests held by the Members, which in the
aggregate shall constitute 100% of the issued and outstanding
equity interests of CCD.
(b) In exchange for the
CAMI, Pubco shall issue to the Members holding the CAMI shares of
Pubco Series A Preferred Stock, Pubco Common Stock and/or Series B
Preferred Stock, each as more particularly set forth on Schedule B
(the “CAMI
Shares”).
-1-
(c) In exchange for the
CBMI, Pubco shall issue to the Members holding the CBMI shares of
Pubco Series B Preferred Stock as set forth on Schedule B (the
“CBMI Shares”
and together with the CAMI Shares and, as applicable and unless the
context otherwise requires, the shares of Pubco Common Stock and
Series A Preferred Stock issuable to the Direct Investors as set
forth in Section
1.2 below, the “Issuable Shares”).
(d) The Members owning
CCD Warrants (the “Warrantholders”) will sell,
convey, assign and transfer to Pubco their respective CCD Warrants.
In exchange for the CCD Warrants, Pubco shall issue to the
Warrantholders on a pro rata basis warrants, substantially in the
form of Exhibit C
annexed hereto (the “Issuable
Warrants”), to purchase an aggregate number of shares
of Pubco Common Stock as set forth on Schedule B.
1.2 The
Private Issuance.
(a) Upon
the terms and subject to the conditions hereof, at the Closing,
Pubco shall sell and issue, as set forth in Section 1.3 below, and the
Direct Investors shall purchase, that number of shares of Pubco
Common Stock, Issuable Warrants and Series A Preferred as set forth
on Schedule B, for and in consideration for the payment to the
Escrow Agent, as defined in Section 1.2 below, by wire
transfer of immediately available funds, the amount set forth in
Schedule B (the “Direct
Funds”).
(b) The
Direct Funds shall be deposited with Delaware Trust Company, a Delaware
corporation, as escrow agent in connection with the investment
by the Members in the Company (the “Escrow
Agent”),
pursuant to an Escrow Agreement dated as of February 15, 2019, as
amended dated April __, 2019 (the “Escrow
Agreement”).
Pubco and the Direct Investors acknowledge and agree that the
Direct Funds shall be released by the Escrow Agent to Pubco
according to the terms of the Escrow Agreement, which release is
conditioned on the satisfaction of the conditions to Closing set
forth in Section
7.1 of this
Agreement.
1.2 Closing
Date. The closing of the Exchange and Private Issuance (the
“Closing”) shall
take place on April __, 2019 or as soon as practicable after the
satisfaction or waiver of the conditions to Closing set forth in
Article 7, or on such other date as may be mutually agreed upon by
the parties. Such date is referred to herein as the “Closing Date.”
1.3 Surrender,
Exchange and Issuance of Securities.
(a) At
the Closing, (i) Pubco shall deliver irrevocable instructions to
Corporate Stock Transfer, Pubco’s transfer agent (the
“Exchange
Agent”), or such other person as the parties shall
jointly designate in writing, to issue to each Member and Direct
Investor, as the case may be, certificates representing the
Issuable Shares and Issuable Warrants (collectively,
“Issuable
Securities”) registered in the names of the Members or
Direct Investors, as the case may be, and for the number and kind
of Issuable Securities set forth on Schedule B hereto and (ii) the
CCD Equity Interests owned by such Member as set forth on
Schedule A shall
terminate and be of no further force and effect.
(b) Within
two weeks after the Closing, the Exchange Agent shall deliver (i)
the Issuable Securities to the Members, or Direct Investors, as the
case may be (or their transferees, if any), and (ii) the CCD Equity
Interests to Pubco.
(c) Pending
release by the Exchange Agent of the Issuable Securities and CCD
Equity Interests in accordance with the terms of this Agreement,
(i) the registered owners of the Issuable Securities shall be
entitled to exercise all voting and other rights of ownership with
respect to the Issuable Securities and Pubco shall be entitled to
exercise all voting and other rights of ownership with respect to
the CCD Equity Interests, and (ii) the registered owners of the CCD
Warrants shall not be permitted to exercise, convert or enforce the
same.
1.4 Taking
of Necessary Action; Further Action. If, at any time after
the Closing, any further action is necessary or desirable to carry
out the purposes of this Agreement, the Members, CCD, Direct
Investors and/or Pubco (as applicable) shall take all such lawful
and necessary action.
-2-
1.5 Certain
Definitions. The following capitalized terms as used in this
Agreement shall have the respective definitions:
“Affiliate” means any
Person that, directly or indirectly through one or more
intermediaries, controls or is controlled by or is under common
control with a Person, as such terms are used in and construed
under Rule 405 under the Securities Act.
“Best Knowledge” means the
actual knowledge, after due investigation and inquiry, of the
officers, directors or advisors of the referenced
party.
“Common Stock Equivalents”
means any securities of Pubco or of any subsidiary of Pubco which
would entitle the holder thereof to acquire at any time Pubco
Common Stock, including, without limitation, any debt, preferred
stock, rights, options, warrants or other instrument that is at any
time convertible into or exercisable or exchangeable for, or
otherwise entitles the holder thereof to receive Pubco Common
Stock.
“Contract” means
any contract, lease, license,
indenture, note, bond, agreement, permit, concession, franchise or
other instrument.
“ERISA” means the Employee
Retirement Income Security Act of 1974 or any successor law and the
regulations and rules issued pursuant to that act or any successor
law.
“Exchange Act” means the
Securities Exchange Act of 1934, as amended.
“FINRA” means the
Financial Industry Regulatory Authority.
“GAAP” means generally
accepted accounting principles in the United States.
“Governmental
Authority” means: (a) the
government of the United States: (b) the government of any foreign
country; (c) the government of any state or political subdivision
of the government of the United States or the government of any
foreign country; or (d) any entity, body or authority exercising
executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government which shall include,
without limitation, the SEC and FINRA.
“Knowledge” means the
actual knowledge of the officers, directors or advisors of the
referenced party.
“Liabilities” means any
direct or indirect indebtedness, guaranty, endorsement, claim,
loss, damage, deficiency, cost, expense, obligation or
responsibility, fixed or unfixed, known or unknown, asserted xxxxxx
or inchoate, liquidated or unliquidated, secured or
unsecured.
“Liens” means a lien,
charge, security interest, encumbrance, right of first refusal,
preemptive right or other restriction.
“Material Adverse Effect”
means an adverse effect on either referenced party or the combined
entity resulting from the consummation of the transaction
contemplated by this Agreement, or on the financial condition,
results of operations or business, before or after the consummation
of the transaction contemplated in this Agreement, which as a whole
is or would be considered material to either referenced
party.
“Person” means any
individual, corporation, partnership, joint venture, trust,
business association, organization, governmental authority or other
entity.
“Preferred Stock” shall
mean all classes of preferred stock for which the Pubco has filed a
certificate of designation with the State of Nevada.
-3-
"Pubco Common Stock" shall mean
common stock, par value $0.001 of Pubco.
“Registrable Securities”
shall mean Underlying Shares.
“Securities Act” means the
Securities Act of 1933, as amended.
“SEC” means the United
States Securities & Exchange Commission.
“Series A Certificate of
Designation” shall mean Pubco’s Certificate of
Designation of Series A Convertible Preferred Stock, par value
$0.001, annexed as Exhibit
A hereto.
“Series A Preferred Stock”
shall mean Pubco’s Series A Convertible Preferred Stock
issued pursuant to the Series A Certificate of
Designation.
“Series B Certificate of
Designation” shall mean Pubco’s Certificate of
Designation of Series B Convertible Preferred Stock, par value
$0.001, annexed as Exhibit
B hereto.
“Series B Preferred Stock”
shall mean Pubco’s Series B Convertible Preferred Stock
issued pursuant to the Series B Certificate of
Designation.
“Tax Returns” means all
federal, state, local and foreign returns, estimates, information
statements and reports relating to Taxes.
“Tax” or
“Taxes”
means any and all applicable central, federal, provincial, state,
local, municipal and foreign taxes, including, without limitation,
gross receipts, income, profits, sales, use, occupation, value
added, ad valorem, transfer, franchise, withholding, payroll,
recapture, employment, excise and property taxes, assessments,
governmental charges and duties together with all interest,
penalties and additions imposed with respect to any such amounts
and any obligations under any agreements or arrangements with any
other person with respect to any such amounts and including any
liability of a predecessor entity for any such
amounts.
“Trading Day” means a day
on which the principal Trading Market is open for
trading.
“Trading Market” means the
following markets or exchanges on which Pubco Common Stock is
listed or quoted for trading on the date in question: the NYSE
American LLC, the Nasdaq Capital Market, the Nasdaq Global Market,
the Nasdaq Global Select Market, the New York Stock Exchange, the
OTCQB, OTCQX or OTC Pink Marketplace operated or maintained by the
OTC Markets Group, Inc. or the OTC Bulletin Board.
“Transaction” means the
transactions contemplated by this Agreement, including the Exchange
and Private Issuance.
“Underlying Shares” means
the Pubco Common Stock or other securities of Pubco issuable upon
conversion of the Series A Preferred and Series B Preferred, and
exercise of the Issuable Warrants.
“United States” means and
includes the United States of America, its territories and
possessions, any State of the United States, and the District of
Columbia.
1.6 Tax
Consequences. It is intended that the terms and conditions
of this Agreement as the same relate to the Exchange comply in all
respects with Section 368(a)(1)(B) and/or Section 351 of the Code
and the regulations corresponding thereto, so that the Exchange
shall qualify as a tax-free reorganization under the Code. Each
party hereto is required to obtain his or its own tax advice with
respect to the tax nature of the Transaction.
-4-
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF CCD
Except
as otherwise disclosed herein or in the CCD disclosure schedule
attached hereto, CCD hereby represents and warrants to Pubco as of
the date hereof and as of the Closing Date (unless otherwise
indicated), as follows:
2.1 Organization.
CCD has been duly formed, validly exists as a limited liability
company, and is in good standing under the laws of its jurisdiction
of formation and has the requisite power to carry on its business
as now conducted.
2.2 Capitalization.
The authorized equity interests of CCD are as set forth on
Schedule A. All of
the issued and outstanding shares of equity interests of CCD, as of
the Closing, are duly authorized, validly issued, fully paid,
non-assessable and were issued free of preemptive rights. There are
no voting trusts or any other agreements or understandings with
respect to the voting of CCD’s equity interests. Except for the CCD Warrants, there are no
authorized or outstanding options, warrants, calls, rights,
convertible securities, commitments or agreements of any character
by which CCD is obligated to issue, deliver or sell, or cause to be
issued, delivered or sold, any equity interests or other securities of CCD. There are no
outstanding contractual obligations (contingent or otherwise) of
CCD to retire, repurchase, redeem or otherwise acquire any
outstanding shares of capital stock of, or other ownership
interests in, CCD.
2.3 Certain
Matters. CCD is duly qualified to do business in each
jurisdiction in which the ownership of its property or the conduct
of its business requires it to be so qualified, except where the
failure to be so qualified would not have a Material Adverse Effect
on CCD’s financial condition, results of operations or
business. CCD has full power and authority and all authorizations,
licenses and permits necessary to carry on the business in which it
is engaged and to own and use the properties owned and used by
it.
2.4 Authority.
CCD has the requisite power and authority to enter into this
Agreement and to carry out its obligations hereunder. The
execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby by CCD have
been duly authorized by CCD’s Manager and no other actions on
the part of CCD are necessary to authorize this Agreement or the
transactions contemplated hereby. This Agreement has been duly and
validly executed and delivered by CCD and constitutes a valid and
binding agreement, enforceable against CCD in accordance with its
terms, except as such enforcement may be limited by bankruptcy,
insolvency or other similar laws affecting the enforcement of
creditors’ rights generally or by general principles of
equity.
2.5 Consents
and Approvals; No Violations. Except for applicable
requirements, if any, of federal securities laws and state
securities or blue-sky laws, no filing with, and no permit,
authorization, consent or approval of, any third party, public body
or authority is necessary for the consummation by CCD of the
transactions contemplated by this Agreement. Neither the execution
and delivery of this Agreement by CCD nor the consummation by CCD
of the transactions contemplated hereby, nor compliance by CCD with
any of the provisions hereof, will (a) conflict with or result in
any breach of any provisions of the charter or bylaws of CCD, (b)
result in a violation or breach of, or constitute (with or without
due notice or lapse of time or both) a default (or give rise to any
right of termination, cancellation or acceleration) under, any of
the terms, conditions or provisions of any note, bond, mortgage,
indenture, license, Contract, agreement or other instrument or
obligation to which CCD is a party or by which any of CCD’s
properties or assets may be bound, or (c) violate any order, writ,
injunction, decree, statute, rule or regulation applicable to CCD
or any of its properties or assets, except in the case of clauses
(b) and (c) for violations, breaches or defaults which are not in
the aggregate material to CCD taken as a whole.
2.6 Financial
Statements. CCD has delivered to Pubco audited balance sheet
of CCD, as of December 31, 2017 and 2018 (the “CCD Accounting Date”), and the
related audited statements of income or operations and cash flows
of CCD for the two years ending as of the CCD Accounting Date
(collectively, the “CCD
Financial Statements”). Except as set forth on
Schedule 2.6, the
CCD Financial Statements fairly present in all material respects
the financial condition and operating results of CCD as of the
dates, and for the periods, indicated therein, subject to normal
year-end audit adjustments. Except as set forth in the CCD
Financial Statements or in Schedule 2.6, CCD has no
material liabilities or obligations, contingent or otherwise, other
than (i) liabilities incurred in the ordinary course of business
subsequent to the CCD Accounting Date; (ii) obligations under
contracts and commitments incurred in the ordinary course of
business; which, in all such cases, individually and in the
aggregate would not reasonably be expected to have a Material
Adverse Effect.
-5-
2.7 Intellectual
Property. CCD owns, is licensed or otherwise possesses
legally enforceable rights to use, license and exploit all issued
patents, copyrights, trademarks, service marks, trade names, trade
secrets, and registered domain names and all applications for
registration therefor (collectively, the “Intellectual Property Rights”) and
all computer programs and other computer software, databases,
know-how, proprietary technology, formulae, and development tools,
together with all goodwill related to any of the foregoing
(collectively, the “Intellectual Property”), in each
case as is necessary to conduct its business as presently
conducted, the absence of which would be considered reasonably
likely to result in a Material Adverse Effect.
2.8 Litigation.
There are no actions, suits, arbitrations, regulatory proceedings
or other litigation, proceedings or governmental investigations
pending or, to the Knowledge of CCD, threatened against CCD or any
of its officers or directors in their capacity as such, or any of
its properties or businesses, and CCD has no Knowledge of any facts
or circumstances which may reasonably be likely to give rise to any
of the foregoing. CCD is not subject to any order, judgment,
decree, injunction, stipulation or consent order of or with any
court or other Governmental Authority. CCD has not entered into any
agreement to settle or compromise any proceeding pending or
threatened in writing against it which has involved any obligation
for which CCD has any continuing obligation. There are no claims,
actions, suits, proceedings, or investigations pending or, to the
Knowledge of CCD, threatened by or against CCD with respect to this
Agreement, or in connection with the transactions contemplated
hereby, and CCD has no reason to believe there is a valid basis for
any such claim, action, suit, proceeding or
investigation.
2.9 Legal
Compliance. To the Best Knowledge of CCD, no claim has been
filed against CCD alleging a violation of any applicable laws and
regulations of foreign, federal, state and local governments and
all agencies thereof. CCD holds all of the material permits,
licenses, certificates or other authorizations of foreign, federal,
state or local governmental agencies required for the conduct of
CCD’s business as presently conducted.
2.10 Material
Changes. Except as disclosed on Schedule 2.10, since the CCD
Accounting Date: (i) there has been no event, occurrence or
development that has had or that could reasonably be expected to
result in a Material Adverse Effect, (ii) CCD has not incurred any
Liabilities (contingent or otherwise) other than (A) trade payables
and accrued expenses incurred in the ordinary course of business
consistent with past practice, and (B) Liabilities not required to
be reflected in the CCD Financial Statements, (iii) CCD has not
altered its method of accounting, (iv) CCD has not declared or made
any dividend or distribution of cash or other property to its
stockholders or purchased, redeemed or made any agreements to
purchase or redeem any shares of its capital stock, and (v) CCD has
not issued any equity securities to any officer, director or
Affiliate.
2.11 Labor
Relations. No labor dispute exists or, to the Knowledge of
CCD, is imminent with respect to any of the employees of CCD which
could reasonably be expected to result in a Material Adverse
Effect. None of CCD’s employees is a member of a union that
relates to such employee’s relationship with CCD, and CCD is
not a party to a collective bargaining agreement, and CCD believes
that its relationships with its employees is good. No executive
officer, to the Knowledge of CCD, is, or is now expected to be, in
violation of any material term of any employment contract,
confidentiality, disclosure or proprietary information agreement or
non-competition agreement, or any other contract or agreement or
any restrictive covenant in favor of any third party, and the
continued employment of each such executive officer does not
subject CCD to any liability with respect to any of the foregoing
matters. CCD is in compliance with all U.S. federal, state, local
and foreign laws and regulations relating to employment and
employment practices, terms and conditions of employment and wages
and hours, except where the failure to be in compliance could not,
individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect.
2.12 Title
to Assets. CCD has good and marketable title in fee simple
to all real property owned by them and good and marketable title in
all personal property owned by them that is material to the
business of CCD, in each case free and clear of all Liens, except
for Liens that do not materially affect the value of such property
and do not materially interfere with the use made and proposed to
be made of such property by CCD and Liens for the payment of Taxes,
the payment of which is neither delinquent nor subject to
penalties. Any real property and facilities held under lease by CCD
is held by CCD under valid, subsisting and enforceable leases with
which CCD is in compliance.
-6-
2.13 Certain
Fees. No brokerage or finder’s fees or commissions are
or will be payable by CCD to any broker, financial advisor or
consultant, finder, placement agent, investment banker, bank or
other Person with respect to the transactions contemplated by this
Agreement.
2.14 Registration
Rights. No Person has any right to cause CCD (or any
successor) to effect the registration under the Securities Act of
any securities of CCD (or any successor).
2.15 Tax
Status. Except for matters that would not, individually or
in the aggregate, have or reasonably be expected to result in a
Material Adverse Effect, CCD has timely filed all necessary Tax
Returns and has paid or accrued all Taxes shown as due thereon, and
CCD has no Knowledge of a tax deficiency which has been asserted or
threatened against CCD.
2.16 No
General Solicitation. Neither CCD nor any person acting on
behalf of CCD has offered or sold securities in connection herewith
by any form of general solicitation or general
advertising.
2.17 Foreign
Corrupt Practices. Neither CCD, nor to the Knowledge of CCD,
any agent or other person acting on behalf of CCD, has: (i)
directly or indirectly, used any funds for unlawful contributions,
gifts, entertainment or other unlawful expenses related to foreign
or domestic political activity, (ii) made any unlawful payment to
foreign or domestic government officials or employees or to any
foreign or domestic political parties or campaigns from corporate
funds, (iii) failed to disclose fully any contribution made by CCD
(or made by any person acting on its behalf of which CCD is aware)
which is in violation of law or (iv) violated in any material
respect any provision of the Foreign Corrupt Practices Act of 1977,
as amended (“FCPA”).
2.18 Minute
Books. The minute books of CCD have, to the extent and for
the periods requested by Pubco, been made available to Pubco and
contain a complete summary of all meetings and written consents in
lieu of meetings of directors and stockholders of CCD for the
periods requested.
2.19 Employee
Benefits. CCD has no (and for the two years preceding the
date hereof has had no) plans which are subject to
ERISA.
2.20 Money
Laundering Laws. The operations of CCD are and have been
conducted at all times in compliance with applicable financial
record-keeping and reporting requirements of the money laundering
statutes of all U.S. and non-U.S. jurisdictions, the rules and
regulations thereunder and any related or similar rules,
regulations or guidelines, issued, administered or enforced by any
governmental body (collectively, the “Money Laundering Laws”) and no
action, suit or proceeding by or before any court or governmental
agency, authority or body or any arbitrator involving CCD with
respect to the Money Laundering Laws is pending or, to the
Knowledge of CCD, threatened.
2.21 Disclosure.
The representations and warranties and statements of fact made by
CCD in this Agreement, and all statements set forth in the
certificates delivered by CCD at the Closing pursuant to this
Agreement, are, as applicable, accurate, correct and complete and
do not contain any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements
and information contained herein not false or misleading. The
copies of all documents furnished by CCD pursuant to the terms of
this Agreement are complete and accurate copies of the original
documents. The schedules, certificates, and any and all other
statements and information, whether furnished in written or
electronic form, to Pubco or its representatives by or on behalf of
CCD in connection with this Agreement and the transactions
contemplated hereby do not contain any material misstatement of
fact or omit to state a material fact or any fact necessary to make
the statements contained therein not misleading.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE MEMBERS AND DIRECT
INVESTORS
Except
as otherwise disclosed herein or in the Member and Direct Investor
disclosure schedules attached hereto, each Member and Direct
Investor, as the case may be as set forth below, severally
represents and warrants to Pubco as of the date hereof and as of
the Closing Date (unless otherwise indicated), as
follows:
3.1 Ownership
of the CCD Equity Interests. The Member owns, beneficially
and of record, good and marketable title to the CCD Equity
Interests set forth opposite such Member’s name in
Schedule 3.1
hereto, free and clear of all security interests, liens, adverse
claims, encumbrances, equities, proxies, options or voting
agreements. The Member represents that, except for such CCD Equity
Interests, he has no right or claim whatsoever to any equity
interests of CCD and owns no options, warrants or other instruments
entitling him to exercise or purchase or convert into equity
interests of CCD. At the Closing, the Member will convey to Pubco
good and marketable title to the CCD Equity Interests, free and
clear of any and all security interests, liens, adverse claims,
encumbrances, equities, proxies, options, members’ agreements
or restrictions. Other than the CCD Equity Interests set forth in
Schedule 3.1 hereto, no other equity interests in CCD are issued
and outstanding, and there are no additional members of
CCD.
-7-
3.2 Authority
Relative to this Agreement. This Agreement has been duly and
validly executed and delivered by such Member or Direct Investor
and constitutes a valid and binding agreement of such person,
enforceable against such Member or Direct Investor in accordance
with its terms, except as such enforcement may be limited by
bankruptcy, insolvency or other similar laws affecting the
enforcement of creditors’ rights generally or by general
principles of equity.
3.3 Acquisition
of Restricted Securities for Investment. Such Member or
Direct Investor acknowledges that the Issuable Securities and
Underlying Shares will not be registered pursuant to the Securities
Act or any applicable state securities laws, that the Issuable
Securities and Underlying Shares will be characterized as
“restricted securities” under federal securities laws,
and that under such laws and applicable regulations the Issuable
Securities and Underlying Shares cannot be sold or otherwise
disposed of without registration under the Securities Act or an
exemption therefrom. In this regard, such Member or Direct Investor
is familiar with Rule 144 promulgated under the Securities Act, as
currently in effect, and understands the resale limitations imposed
thereby and by the Securities Act. Further, such Member or Direct
Investor acknowledges and agrees that:
(a) Such
Member or Direct Investor will be acquiring the Issuable Securities
and Underlying Shares for investment, for such person’s own
account and not as a nominee or agent, and not with a view to the
resale or distribution of any part thereof, and such person has no
present intention of selling, granting any participation in, or
otherwise distributing the same. The foregoing shall not be deemed
to preclude an intention to transfer Issuable Securities or
Underlying Shares to family members for no consideration. Such
Member or Direct Investor further represents that he, she or it
does not have any Contract, undertaking, agreement or arrangement
with any person to sell, transfer or grant participation to such
person or to any third person, with respect to any of the Issuable
Securities or Underlying Shares.
(b) Such
Member or Direct Investor understands that the Issuable Securities
and Underlying Shares are not registered under the Securities Act
on the ground that the sale and the issuance of securities
hereunder is exempt from registration under the Securities Act
pursuant to Section 4(a)(2) thereof and or Regulation D promulgated
under the Securities Act, and that Pubco’s reliance on such
exemption is predicated on such Member’s or Direct
Investor’s representations set forth herein.
3.4 Status
of Member and Direct Investor. Such Member or Direct
Investor is an “Accredited Investor” as that term is
defined in Rule 501 of Regulation D promulgated under the
Securities Act, an excerpt of which is included in the attached
Annex A, and such
person is not acquiring the Issuable Securities or Underlying
Shares as a result of any advertisement, article, notice or other
communication regarding the Issuable Securities and Underlying
Shares published in any newspaper, magazine or similar media or
broadcast over television or radio or presented at any seminar or
any other general advertisement or, to such Member's or Direct
Investor's knowledge, general solicitation.
3.5 Investment
Risk. Such Member or Direct Investor is able to bear the
economic risk of acquiring the Issuable Securities and Underlying
Shares pursuant to the terms of this Agreement, including a
complete loss of such person’s investment in the Issuable
Securities and Underlying Shares.
3.6 Restrictive
Legends.
(a) Such
Member or Direct Investor acknowledges that the certificate(s)
representing the Issuable Securities and Underlying Shares shall
each conspicuously set forth on the face or back thereof a legend
in substantially the following form:
“[NEITHER]
THIS SECURITY [NOR THE SECURITIES INTO WHICH THIS SECURITY IS
[EXERCISABLE] [CONVERTIBLE]] HAS [NOT] BEEN REGISTERED WITH THE
SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF
ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A
TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES
LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR
TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY
ACCEPTABLE TO THE COMPANY. THIS SECURITY [AND THE SECURITIES
ISSUABLE UPON [EXERCISE] [CONVERSION] OF THIS SECURITY] MAY BE
PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT WITH A
REGISTERED BROKER-DEALER OR OTHER LOAN WITH A FINANCIAL INSTITUTION
THAT IS AN “ACCREDITED INVESTOR” AS DEFINED IN RULE
501(a) UNDER THE SECURITIES ACT OR OTHER LOAN SECURED BY SUCH
SECURITIES.”
-8-
(b) Notwithstanding
Section 3.6(a),
upon the written request of a Direct Investor, any legend
(including the legend set forth in Section 3.6(a) hereof) on the
Issuable Shares held by such Direct Investor may be removed (i)
while a registration statement (including the Registration
Statement) covering the resale of such security is effective under
the Securities Act, (ii) following any sale of such Issuable Shares
pursuant to Rule 144, (iii) if such Issuable Shares are eligible
for sale under Rule 144 without the requirement to be in compliance
with Rule 144(c)(1), or (iv) if such legend is not required under
applicable requirements of the Securities Act (including judicial
interpretations and pronouncements issued by the staff of the
Commission), subject in the case of clauses (ii), (iii) and (iv) to
receipt from the Direct Investor by Pubco of customary
representations reasonably acceptable to Pubco in connection with
such request. Upon such request, the Pubco shall (A) deliver to its
transfer agent irrevocable instructions to remove the legend, and
(B) cause its counsel to deliver to is transfer agent one or more
legal opinions to the effect that the removal of such legend in
such circumstances may be effected under the Securities Act if
required by its transfer agent, or requested by a Direct Investor,
to effect the removal of the legend in accordance with the
provisions of this Agreement. Pubco agrees that following the
effective date of a registration statement covering the resale of
the Issuable Shares or at such time as such legend is no longer
required under this Section 3.6(b), it will, no
later than two Trading Days following the delivery by a Direct
Investor to Pubco or its transfer agent of a request for legend
removal and in the case of Issuable Shares evidenced by a physical
certificate, the delivery of the physical certificate, and if
relying on Rule 144, receipt from the Direct Investor of customary
representations reasonably acceptable to the Pubco in connection
therewith (such second Trading Day, the “Legend Removal Date”), deliver or
cause to be delivered to such Investor, as may be requested by the
Direct Investor, a certificate or book-entry position evidencing
such Issuable Shares that is free from all restrictive and other
legends or by crediting the account of the Direct Investor’s
or its designee’s account with The Depository Trust Company
through its Deposit or Withdrawal at Custodian system if Pubco or
Pubco's transfer agent is then a participant in such system. Pubco
may not make any notation on its records or give instructions to
the Transfer Agent that enlarge the restrictions on transfer set
forth in Section
3.6(a).
(c) If
Pubco fails to deliver any such Issuable Shares free from all
restrictive legends on or before the applicable Legend Removal Date
and if after the Legend Removal Date, due to Pubco's continuing
failure to deliver such Issuable Shares, such Direct Investor
purchases (in an open market transaction or otherwise) shares of
Pubco Common Stock to deliver in satisfaction of a sale by such
Investor of all or any portion of the Issuable Shares anticipated
receiving from Pubco without any restrictive legend, then Pubco
shall pay in cash to the Direct Investor in an amount equal to the
excess of such Direct Investor’s total purchase price
(including brokerage commissions, if any) for the shares of Pubco
Common Stock so purchased (the “Buy-In Price”) over the product of
(A) such number of shares of Pubco Common Stock that Pubco was
required to deliver to such Direct Investor by the Legend Removal
Date multiplied by (B) any closing sale price of the Pubco Common
Stock selected by the Direct Investor on any Trading Day during the
period commencing on the date of the delivery by such Direct
Investor to Pubco such shares of Pubco Common Stock and ending on
the date of such delivery and payment under this Section 3.6(c).
(d) Each
Direct Investor, severally and not jointly with the other Direct
Investors, agrees with Pubco (i) that such Direct Investor will
sell any Issuable Shares pursuant to either the registration
requirements of the Securities Act, including any applicable
prospectus delivery requirements, or an exemption therefrom, (ii)
that if Issuable Shares are sold pursuant to a registration
statement, they will be sold in compliance with the plan of
distribution set forth therein, (iii) that if, after the effective
date of the registration statement covering the resale of the
Issuable Shares, such registration statement ceases to be effective
and Pubco has provided notice to such Direct Investor to that
effect, such Direct Investor will sell Issuable Shares only in
compliance with an exemption from the registration requirements of
the Securities Act; and acknowledges that the removal of the
restrictive legend from the Issuable Shares due to the
effectiveness of a registration statement as set forth in
Section 3.6(b) is
predicated upon Pubco's reliance upon this Agreement.
(e) At
any time during the period commencing on the six (6) month
anniversary of the Closing Date and ending at such time that all of
the Issuable Shares and Underlying Shares, if a registration
statement is not available for the resale of all of the Underlying
Shares, may be sold without restriction or limitation pursuant to
Rule 144 and without the requirement to be in compliance with Rule
144(c)(1), if Pubco 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 Pubco has ever been an issuer
described in Rule 144(i)(1)(i) or becomes such an issuer in the
future, and Pubco 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 any Direct Investor by reason of any such delay in or
reduction of its ability to sell the Issuable Shares and Underlying
Shares (which remedy shall not be exclusive of any other remedies
available at law or in equity), Pubco shall pay to each such Direct
Investor an amount in cash equal to two percent (2.0%) of the
aggregate Direct Funds of such Direct Investor on the day of a
Public Information Failure and on every thirtieth day (pro-rated
for periods totaling less than thirty days) thereafter until the
earlier of (i) the date such Public Information Failure is cured
and (ii) such time that such Public Information Failure no longer
prevents a Direct Investor from selling such Issuable Securities
and Underlying Shares pursuant to Rule 144 without any restrictions
or limitations. The payments to which a holder shall be entitled
pursuant to this Section
3.6(e) 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 (II) the third
Business Day after the event or failure giving rise to the Public
Information Failure Payments is cured. In the event Pubco fails to
make Public Information Failure Payments in a timely manner, such
Public Information Failure Payments shall bear interest at the rate
of 1.5% per month (prorated for partial months) until paid in
full.
-9-
3.7 Disclosure.
The representations and warranties and statements of fact made by
such Member or Direct Investor in this Agreement, and all
statements set forth in the certificates delivered by such person
at the Closing pursuant to this Agreement, are, as applicable,
accurate, correct and complete and do not contain any untrue
statement of a material fact or omit to state any material fact
necessary in order to make the statements and information contained
herein not false or misleading. The copies of all documents, if
any, furnished by such Member or Direct Investor pursuant to the
terms of this Agreement are complete and accurate copies of the
original documents. The schedules, certificates, and any and all
other statements and information, whether furnished in written or
electronic form in connection with this Agreement and the
transactions contemplated hereby do not contain any material
misstatement of fact or omit to state a material fact or any fact
necessary to make the statements contained therein not
misleading.
3.8 No
Disqualification Events. Such Member or Direct Investor is
not subject to any of the “Bad Actor” disqualifications
described in Rule 506(d)(1)(i) to (viii) under the Securities Act
(a “Disqualification
Event”), except for a Disqualification Event covered
by Rule 506(d)(2) or (d)(3). CCD has exercised reasonable care to
determine whether such person is subject to a Disqualification
Event.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF PUBCO
Pubco
hereby represents and warrants to CCD and each Member and Direct
Investor as of the date hereof and as of the Closing Date (unless
otherwise indicated, or in the Pubco disclosure schedule attached
hereto), as follows:
4.1 Organization
and Qualification. Pubco is an entity duly incorporated or
otherwise organized, validly existing and in good standing under
the laws of State of Nevada, with the requisite power and authority
to own and use its properties and assets and to carry on its
business as currently conducted. Pubco is not in violation or
default of any of the provisions of its articles of incorporation,
bylaws or other organizational or charter documents (collectively
the “Charter
Documents”). Pubco is duly qualified to conduct
business and is in good standing as a foreign corporation or other
entity in each jurisdiction in which the nature of the business
conducted or property owned by it makes such qualification
necessary, except where the failure to be so qualified or in good
standing, as the case may be, could not have or reasonably be
expected to result in a Material Adverse Effect, and no proceeding
has been instituted in any such jurisdiction revoking, limiting or
curtailing or seeking to revoke, limit or curtail such power and
authority or qualification.
4.2 Authorization;
Enforcement. Pubco has the requisite corporate power and
authority to enter into and to consummate this Agreement and the
transactions contemplated hereby and otherwise to carry out its
obligations hereunder. The execution and delivery of this Agreement
and each of the other Transaction Documents by Pubco and the
consummation by it of the transactions contemplated hereby and
thereby have been duly authorized by all necessary action on the
part of Pubco and no further action is required by Pubco, the Board
of Directors or Pubco’s stockholders in connection therewith
other than in connection with the Required Approvals, as defined in
Section 4.4. The
Transaction Documents have been (or upon delivery will have been)
duly executed by Pubco and, when delivered in accordance with the
terms thereof, will constitute the valid and binding obligation of
Pubco enforceable against Pubco in accordance with their respective
terms, except: (i) as limited by general equitable principles and
applicable bankruptcy, insolvency, reorganization, moratorium and
other laws of general application affecting enforcement of
creditors’ rights generally, (ii) as limited by laws relating
to the availability of specific performance, injunctive relief or
other equitable remedies and (iii) insofar as indemnification and
contribution provisions may be limited by applicable law (the
exceptions referenced in the preceding clauses “(i)”
through “(iii)”, the “Enforceability
Exceptions”).
4.3 No
Conflicts. The execution, delivery and performance by Pubco
of the Transaction Documents and the consummation by Pubco of the
transactions contemplated thereby do not and will not: (i) conflict
with or violate any provision of Pubco’s certificate or
articles of incorporation, bylaws or other organizational or
charter documents (including the certificates of designation for
the Preferred Stock), (ii) conflict with, or constitute a default
(or an event that with notice or lapse of time or both would become
a default) under, result in the creation of any Lien upon any of
the properties or assets of Pubco, or give to others any rights of
termination, amendment, acceleration or cancellation (with or
without notice, lapse of time or both) of, any agreement, credit
facility, debt or other instrument (evidencing a Pubco debt or
otherwise) or other understanding to which Pubco is a party or by
which any property or asset of Pubco is bound or affected, or (iii)
subject to the Required Approvals, as defined by Section 4.4, conflict with or
result in a violation of any law, rule, regulation, order,
judgment, injunction, decree or other restriction of any court or
governmental authority to which Pubco is subject (including federal
and state securities laws and regulations), or by which any
property or asset of Pubco is bound or affected; except in the case
of each of clauses (ii) and (iii), such as could not have or
reasonably be expected to result in a Material Adverse
Effect.
-10-
4.4 Filings,
Consents and Approvals. Pubco is not required to obtain any
consent, waiver, authorization or order of, give any notice to, or
make any filing or registration with, any court or other federal,
state, local or other governmental authority or other Person in
connection with the execution, delivery and performance by Pubco of
this Agreement and the other Transaction Documents, other than the
filing of Current Report(s) on Form 8-K with the SEC and such
filings as are required to be made under applicable federal and
state securities laws relating to the offer and sale of securities
(collectively, the “Required
Approvals”).
4.5
The Issuable Securities
and Underlying Shares. The Issuable Shares are duly
authorized and, when issued and acquired in accordance with this
Agreement, will be duly and validly issued, fully paid and
non-assessable, free and clear of all Liens imposed on or by Pubco
other than restrictions on transfer provided for in this Agreement.
The Issuable Warrants are duly authorized and, when issued and
acquired in accordance with this Agreement, will constitute the
valid and binding obligations of Pubco enforceable against Pubco in
accordance with their respective terms subject, in the case of
enforceability, to the Enforceability Exceptions. Except as set
forth on Schedule
4.5, the Underlying Shares are duly authorized and reserved
and, when issued and acquired in accordance with the terms of the
Issuable Securities, will be duly and validly issued, fully paid
and non-assessable, free and clear of all Liens imposed on or by
Pubco other than restrictions on transfer provided for in this
Agreement or the Issuable Securities.
4.6 Capitalization.
The capitalization of Pubco is as set forth on Schedule 4.6, which
Schedule 4.6 shall
also include the number of shares of Pubco Common Stock owned
beneficially, and of record, by Affiliates of Pubco as of the date
hereof, if any. Other than as set forth in Schedule 4.6, Pubco has no
authorized or issued shares of any class of capital
stock. No Person has any right
of first refusal, preemptive right, right of participation, or any
similar right to participate in the transactions contemplated by
this Agreement. Except as set forth on Schedule 4.6, there are no
outstanding options, warrants, scrip rights to subscribe to, calls
or commitments of any character whatsoever relating to, or
securities, rights or obligations convertible into or exercisable
or exchangeable for, or giving any Person any right to subscribe
for or acquire any shares of Pubco Common Stock, or Contracts,
commitments, understandings or arrangements by which Pubco or any
subsidiary of Pubco is or may become bound to issue additional
shares of Pubco Common Stock or Common Stock Equivalents.
Schedule 4.6
contains the terms of any Common Stock Equivalents, including
conversion and exercise prices, maturity or termination dates,
anti-dilution and reset provisions. The issuance of the Issuable
Securities will not obligate Pubco to issue shares of Pubco Common
Stock or other securities to any Person and will not result in a
right of any holder of Pubco securities to adjust the exercise,
conversion, exchange or reset price under any of such securities.
Except as set forth on Schedule 4.6, all of the
outstanding shares of capital stock of Pubco are validly issued,
fully paid and nonassessable, have been issued in compliance with
all federal and state securities laws, and none of such outstanding
shares was issued in violation of any preemptive rights or similar
rights to subscribe for or purchase securities. No further approval
or authorization of any stockholder or Pubco’s board of
directors is required for the issuance of the Issuable Securities
or Underlying Shares. There are no stockholders agreements, voting
agreements or other similar agreements with respect to
Pubco’s capital stock to which Pubco is a party or, to the
Knowledge of Pubco, between or among any of Pubco’s
stockholders.
4.7 SEC
Reports; Financial Statements; No Shell.
(a) Except as set forth
on Schedule 4.7
hereto, Pubco has filed all reports, schedules, forms, statements
and other documents required to be filed by Pubco under the
Securities Act and the Exchange Act, including pursuant to Section
13(a) or 15(d) thereof, since December 31, 2017 (the foregoing
materials, including the exhibits thereto and documents
incorporated by reference therein, being collectively referred to
herein as the “SEC
Reports”, and the SEC Reports set forth on Schedule
4.7 hereto being collectively referred to herein as the
“Delinquent SEC
Reports”). As of their respective dates, the SEC
Reports complied in all material respects with the requirements of
the Securities Act and the Exchange Act, as applicable, and none of
the SEC Reports, when filed, 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 the light of the circumstances under which they were
made, not misleading. The financial statements of Pubco included in
the SEC Reports (“SEC
Financial Statements”)
comply in all material respects with applicable accounting
requirements and the rules and regulations of the SEC with respect
thereto as in effect at the time of filing. Such financial
statements have been prepared in accordance with GAAP, except as
may be otherwise specified in such financial statements or the
notes thereto and except that unaudited financial statements may
not contain all footnotes required by GAAP, and fairly present in
all material respects the financial position of Pubco as of and for
the dates thereof and the results of operations and cash flows for
the periods then ended, subject, in the case of unaudited
statements, to normal, immaterial, year-end audit
adjustments.
-11-
(b) The SEC Financial
Statements fairly present in all material respects the financial
condition and operating results of Pubco as of the dates, and for
the periods, indicated therein, subject to normal year-end audit
adjustments.
(c) Pubco is not, and
at all times since June 2003, Pubco has not been, a
“shell” company within the meaning of applicable SEC
rules. Pubco makes no representations as to its “shell
company” status prior to such date.
(d) To Pubco’s
knowledge, it will be able to comply with the registration
requirements of a registration rights agreement to be entered into
as of the Closing among Pubco and the Members and Direct Investors
(the “Registration Rights
Agreement”).
4.8 Material
Changes. Since the date of the latest audited financial
statements included within the SEC Reports, except as specifically
disclosed in a subsequent SEC Report filed five days prior to the
date hereof: (i) there has been no event, occurrence or development
that has had or that could reasonably be expected to result in a
Material Adverse Effect, (ii) Pubco has not incurred any
Liabilities (contingent or otherwise) other than (A) trade payables
and accrued expenses incurred in the ordinary course of business
consistent with past practice and (B) liabilities not required to
be reflected in Pubco’s financial statements pursuant to GAAP
or disclosed in filings made with the SEC, (iii) Pubco has not
altered its method of accounting, (iv) Pubco has not declared or
made any dividend or distribution of cash or other property to its
stockholders or purchased, redeemed or made any agreements to
purchase or redeem any shares of its capital stock, and (v) Pubco
has not issued any equity securities to any officer, director or
Affiliate. Pubco does not have pending before the SEC any request
for confidential treatment of information. Except for the issuance
of the Issuable Securities contemplated by this Agreement or as set
forth on Schedule
4.8, no event, liability or development has occurred or
exists with respect to Pubco or any subsidiary of Pubco or their
respective business, properties, operations or financial condition,
that would be required to be disclosed by Pubco under applicable
securities laws at the time this representation is made or deemed
made that has not been publicly disclosed at least one (1) Trading
Day prior to the date that this representation is
made.
4.9 Litigation.
There are no actions, suits, arbitrations, regulatory proceedings
or other litigation, proceedings or governmental investigations
pending or, to the Best Knowledge of Pubco, threatened against
Pubco or any of its officers or directors in their capacity as
such, or any of its properties or businesses, and Pubco has no
Knowledge of any facts or circumstances which may reasonably be
likely to give rise to any of the foregoing. Pubco is not subject
to any order, judgment, decree, injunction, stipulation or consent
order of or with any court or other Governmental Authority. Pubco
has not entered into any agreement to settle or compromise any
proceeding pending or threatened in writing against it which has
involved any obligation for which Pubco has any continuing
obligation. There are no claims, actions, suits, proceedings, or
investigations pending or, to the Best Knowledge of Pubco,
threatened by or against Pubco with respect to this Agreement, or
in connection with the transactions contemplated hereby, and Pubco
has no reason to believe there is a valid basis for any such claim,
action, suit, proceeding or investigation.
4.10 Labor
Relations. No labor dispute exists or, to the Knowledge of
Pubco, is imminent with respect to any of the employees of Pubco
which could reasonably be expected to result in a Material Adverse
Effect. None of Pubco’s employees is a member of a union that
relates to such employee’s relationship with Pubco, and Pubco
is not a party to a collective bargaining agreement, and Pubco
believes that its relationships with their employees are good. No
executive officer, to the Knowledge of Pubco, is, or is now
expected to be, in violation of any material term of any employment
contract, confidentiality, disclosure or proprietary information
agreement or non-competition agreement, or any other Contract or
agreement or any restrictive covenant in favor of any third party,
and the continued employment of each such executive officer does
not subject Pubco to any liability with respect to any of the
foregoing matters. Pubco is in compliance with all U.S. federal,
state, local and foreign laws and regulations relating to
employment and employment practices, terms and conditions of
employment and wages and hours, except where the failure to be in
compliance could not, individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect.
-12-
4.11 Compliance.
To the Knowledge of Pubco, Pubco: (i) is not in default under or in
violation of (and no event has occurred that has not been waived
that, with notice or lapse of time or both, would result in a
default by Pubco under), nor has Pubco received notice of a claim
that it is in default under or that it is in violation of, any
indenture, loan or credit agreement or any other agreement or
instrument to which it is a party or by which it or any of its
properties is bound (whether or not such default or violation has
been waived), (ii) is not in violation of any order of any court,
arbitrator or governmental body, or (iii) except for the failure to
file the Delinquent SEC Reports, is not and has not been in
violation of any statute, rule or regulation of any governmental
authority, including without limitation all foreign, federal, state
and local laws applicable to its business and all such laws that
affect the environment, except in each case as could not have or
reasonably be expected to result in a Material Adverse
Effect.
4.12 Regulatory
Permits. Pubco possesses all certificates, authorizations
and permits issued by the appropriate federal, state, local or
foreign regulatory authorities necessary to conduct its business,
except where the failure to possess such permits could not
reasonably be expected to result in a Material Adverse Effect
(“Material
Permits”), and Pubco has not received any notice of
proceedings relating to the revocation or modification of any
Material Permit.
4.13 Title
to Assets. Pubco has good and marketable title in all
personal property owned by it that is material to the business of
Pubco, free and clear of all Liens, except for Liens disclosed on
Schedule 4.13 or
that do not materially affect the value of such property and do not
materially interfere with the use made and proposed to be made of
such property by Pubco and Liens for the payment of Taxes, the
payment of which is neither delinquent nor subject to penalties.
Pubco does not own any real property. Any real property and
facilities held under lease by Pubco are held by Pubco under valid,
subsisting and enforceable leases with which Pubco is in
compliance.
4.14 Patents
and Trademarks. Pubco has, or has rights to use, all
patents, patent applications, trademarks, trademark applications,
service marks, trade names, trade secrets, inventions, copyrights,
licenses and other intellectual property rights and similar rights
described on Schedule
4.14 (collectively, the “Pubco Intellectual Property
Rights”). Other than the Pubco Intellectual Property
Rights, there are no intellectual property or similar rights
necessary or material for use in connection with Pubco’s
business and which the failure to so have could have a Material
Adverse Effect. Pubco has not received a notice (written or
otherwise) that any of the Pubco Intellectual Property Rights used
by Pubco violates or infringes upon the rights of any Person. To
the Knowledge of Pubco, all such Pubco Intellectual Property Rights
are enforceable and there is no existing infringement by another
Person of any of the Intellectual Property Rights. Pubco has taken
reasonable security measures to protect the secrecy,
confidentiality and value of all of their intellectual properties,
except where failure to do so could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse
Effect.
4.15 Transactions
with Affiliates and Employees. Except as set forth on
Schedule 4.15, none
of the officers or directors of Pubco and, to the Knowledge of
Pubco, none of the employees of Pubco is presently a party to any
transaction with Pubco (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 Pubco, any entity in which
any officer, director, or any such employee has a substantial
interest or is an officer, director, trustee or partner, in each
case in excess of $10,000 individually or $25,000 in the aggregate,
other than for: (i) payment of salary or consulting fees for
services rendered, (ii) reimbursement for expenses incurred on
behalf of Pubco and (iii) other employee benefits.
4.16 Xxxxxxxx-Xxxxx;
Internal Accounting Controls. Pubco is in material
compliance with all provisions of the Xxxxxxxx-Xxxxx Act of 2002
which are applicable to it as of the Closing Date. Pubco maintains a system of internal accounting
controls sufficient to provide reasonable assurance that: (i)
transactions are executed in accordance with management’s
general or specific authorizations, (ii) transactions are recorded
as necessary to permit preparation of financial statements in
conformity with GAAP 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. Pubco has established disclosure
controls and procedures (as defined in Exchange Act Rules 13a-15(e)
and 15d-15(e)) for Pubco and designed such disclosure controls and
procedures to ensure that information required to be disclosed by
Pubco in the reports it files or submits under the Exchange Act is
recorded, processed, summarized and reported, within the time
periods specified in the SEC’s rules and forms. Pubco’s
certifying officers have evaluated the effectiveness of
Pubco’s disclosure controls and procedures as of the end of
the period covered by Pubco’s most recently filed periodic
report under the Exchange Act (such date, the
“Evaluation
Date”). Pubco presented
in its most recently filed periodic report under the Exchange Act
the conclusions of the certifying officer about the effectiveness
of the disclosure controls and procedures based on their
evaluations as of the Evaluation Date. Since the Evaluation Date,
there have been no changes in Pubco’s internal control over
financial reporting (as such term is defined in the Exchange Act)
that has materially affected, or is reasonably likely to materially
affect, Pubco’s internal control over financial
reporting.
-13-
4.17 Certain
Fees. No brokerage or finder’s fees or commissions are
or will be payable by Pubco to any broker, financial advisor or
consultant, finder, placement agent, investment banker, bank or
other Person with respect to the transactions contemplated by this
Agreement.
4.18 Issuance
of Issuable Securities and Underlying Shares. Assuming the
accuracy of the Members’ and Direct Investors’
representations and warranties set forth in Article 3, no registration
under the Securities Act is required for the offer and issuance of
the Issuable Securities and Underlying Shares by Pubco as
contemplated hereby. The issuance of the Issuable Securities and
Underlying Shares hereunder does not contravene the rules and
regulations of the applicable Trading Market.
4.19 Investment
Company. Pubco is not, and is not an Affiliate of, an
“investment company” within the meaning of the
Investment Company Act of 1940, as amended.
4.20 Listing
and Maintenance Requirements. Pubco Common Stock is
currently quoted on the OTC Pink Marketplace under the symbol
“TRUU”. Except as set forth on Schedule 4.20, Pubco is
presently in compliance with all such quoting, listing and
maintenance requirements of the OTC Pink Marketplace.
4.21 Application
of Takeover Protections. Pubco has taken all necessary
action, if any, in order to render inapplicable any control share
acquisition, business combination, poison pill (including any
distribution under a rights agreement) or other similar
anti-takeover provision under Pubco’s articles of
incorporation or the laws of Nevada that is or could become
applicable to a Member as a result of a Member and Pubco fulfilling
their obligations or exercising their rights under this Agreement,
including without limitation as a result of Pubco’s issuance
of the Issuable Securities and Underlying Shares and the
Members’ and Direct Investors’ ownership of the
Issuable Securities and Underlying Shares.
4.22 No
Integrated Offering. To the Knowledge of Pubco, and assuming
the accuracy of the Members’ and Direct Investors’
representations and warranties set forth in Article 3, neither Pubco, nor
any of its Affiliates, nor any Person acting on its or their behalf
has, directly or indirectly, made any offers or sales of any
security or solicited any offers to buy any security, under
circumstances that would cause this offering of the Issuable
Securities or Underlying Shares to be integrated with prior
offerings by Pubco for purposes of (i) the Securities Act which
would require the registration of any such securities under the
Securities Act, or (ii) any applicable member approval provisions
of any Trading Market on which any of the securities of Pubco are
listed or designated.
4.23 Tax
Status. Except for matters that would not, individually or
in the aggregate, have or reasonably be expected to result in a
Material Adverse Effect, Pubco has filed all necessary Tax Returns
and has paid or accrued all Taxes shown as due thereon, and Pubco
has no knowledge of a tax deficiency which has been asserted or
threatened against Pubco.
4.24 No
General Solicitation. Neither Pubco nor any person acting on
behalf of Pubco has offered or sold any of the Issuable Securities
by any form of general solicitation or general
advertising.
4.25 Foreign
Corrupt Practices. Neither Pubco, nor to the Knowledge of
Pubco, any agent or other person acting on behalf of Pubco, has:
(i) directly or indirectly, used any funds for unlawful
contributions, gifts, entertainment or other unlawful expenses
related to foreign or domestic political activity, (ii) made any
unlawful payment to foreign or domestic government officials or
employees or to any foreign or domestic political parties or
campaigns from corporate funds, (iii) failed to disclose fully any
contribution made by Pubco (or made by any person acting on its
behalf of which Pubco is aware) which is in violation of law or
(iv) violated in any material respect any provision of the
FCPA.
4.26 Transfer
Agent. Pubco’s transfer agent is Corporate Stock
Transfer. Such transfer agent is eligible to transfer securities
via Depository Trust Company (“DTC”) and Deposit Withdrawal Agent
Commission (“DWAC”).
4.27 No
Disagreements with Accountants and Lawyers. To the Knowledge
of Pubco, there are no disagreements of any kind, including but not
limited to any disagreements regarding fees owed for services
rendered, presently existing, or reasonably anticipated by Pubco to
arise, between Pubco and the accountants and lawyers formerly or
presently employed by Pubco which could affect Pubco’s
ability to perform any of its obligations under this Agreement, and
Pubco is current with respect to any fees owed to its accountants
and lawyers.
-14-
4.28 Regulation
M Compliance. Pubco has not, and to the Knowledge of Pubco,
no one acting on behalf of Pubco has, (i) taken, directly or
indirectly, any action designed to cause or to result in the
stabilization or manipulation of the price of any security of Pubco
to facilitate the sale or resale of any of the Issuable Shares,
(ii) sold, bid for, purchased, or paid any compensation for
soliciting purchases of, any of the securities of Pubco, or (iii)
paid or agreed to pay to any Person any compensation for soliciting
another to purchase any other securities of Pubco.
4.29 Money
Laundering Laws. The operations of Pubco are and have been
conducted at all times in compliance with the Money Laundering Laws
and no action, suit or proceeding by or before any court or
governmental agency, authority or body or any arbitrator involving
Pubco with respect to the Money Laundering Laws is pending or, to
the Best Knowledge of Pubco, threatened.
4.30 Minute
Books. The minute books of Pubco have, to the extent and for
the periods requested by CCD, the Members and Direct Investors,
been made available to CCD, the Members and Direct Investors
contain a complete summary of all meetings and written consents in
lieu of meetings of directors and stockholders for the periods
requested.
4.31 Employee
Benefits. Pubco has not (nor for the two years preceding the
date hereof has) had any plans which are subject to ERISA. All
existing Employment Agreements of Pubco will be terminated at the
Closing Date.
4.32 Business
Records and Due Diligence. Prior to the Closing, Pubco shall
have delivered to CCD all records and documents relating to Pubco,
which Pubco possesses, including, without limitation, books,
records, government filings, Tax Returns, Charter Documents,
corporate records, stock records, consent decrees, orders, and
correspondence, director and stockholder minutes, resolutions and
written consents, stock ownership records, financial information
and records, and other documents used in or associated with Pubco
which have been requested in writing by CCD.
4.33 Contracts.
Except as set forth in Schedule 4.33, there are no
Contracts (i) that are material to the business, properties,
assets, condition (financial or otherwise), results of operations
or prospects of Pubco taken as a whole or (ii) that involve the
payment to or by Pubco of money in excess of $10,000 for any
individual Contract or $25,000 in the aggregate. Except as set
forth in Schedule
4.33, Pubco is not in violation of or in default under (nor
does there exist any condition which upon the passage of time or
the giving of notice would cause such a violation of or default
under) any Contract to which it is a party or by which it or any of
its properties or assets is bound, except for violations or
defaults that would not, individually or in the aggregate,
reasonably be expected to result in a Material Adverse
Effect.
4.34 No
Undisclosed Liabilities. Except as disclosed in Schedule 4.34 or the latest
balance sheet included in the Pubco Financial Statements, Pubco has
no Liabilities whatsoever, either direct or indirect, matured or
unmatured, accrued, absolute, contingent or otherwise. Pubco
represents that at the date of Closing, Pubco shall have no
Liabilities or obligations whatsoever, either direct or indirect,
matured or un-matured, accrued, absolute, contingent or
otherwise.
4.35 No
SEC or FINRA Inquiries. To the Knowledge of Pubco, neither
Pubco nor any of its present officers or directors is, or has ever
been, the subject of any formal or informal inquiry or
investigation by the SEC or FINRA.
4.36 Disclosure.
The representations and warranties and statements of fact made by
Pubco in this Agreement, and all statements set forth in the
certificates delivered by Pubco at the Closing pursuant to this
Agreement, are, as applicable, accurate, correct and complete and
do not contain any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements
and information contained herein not false or misleading. The
copies of all documents furnished by Pubco pursuant to the terms of
this Agreement are complete and accurate copies of the original
documents. The schedules, certificates, and any and all other
statements and information, whether furnished in written or
electronic form, to CCD or its representatives by or on behalf of
Pubco in connection with this Agreement and the transactions
contemplated hereby do not contain any material misstatement of
fact or omit to state a material fact or any fact necessary to make
the statements contained therein not misleading.
-15-
ARTICLE 5
INDEMNIFICATION; SURVIVAL OF REPRESENTATIONS
5.1 Indemnification.
(a) Subject
to the provisions of this Article 5, and irrespective of any due diligence
investigation conducted by CCD, the Members or Direct Investors
with regard to the transactions contemplated hereby, Pubco
agrees to indemnify fully in respect of, hold harmless and defend
CCD, the Members and Direct Investors, and each of the officers,
agents and directors of CCD and/or the Members and Direct Investors
against any damages, liabilities, costs, claims, proceedings,
investigations, penalties, judgments, deficiencies, including
taxes, expenses (including, but not limited to, any and all
interest, penalties and expenses whatsoever reasonably incurred in
investigating, preparing or defending against any litigation,
commenced or threatened, or any claim whatsoever) and losses (each,
a “Claim” and
collectively “Claims”) to which it or they may
become subject arising out of or based on any breach of or
inaccuracy in any of the representations and warranties or
covenants or conditions made by Pubco in this
Agreement.
(b) Subject
to the provisions of this Article 5, CCD and each Member
agrees to indemnify fully in respect of, hold harmless and defend
Pubco and each of its officers, agents and directors against any
Claims to which they may become subject arising out of or based on
any breach of or inaccuracy in any of the representations and
warranties or covenants or conditions made by CCD and/or any Member
and in this Agreement; provided that CCD shall have no
responsibility hereunder except for representations, warranties,
covenants or conditions made by it and no Member have any
responsibility hereunder except for representations, warranties,
covenants or conditions made by it; and further provided that the
liability of any Member shall not exceed the value on the Closing
Date of the consideration received by it hereunder.
5.2 Survival
of Representations and Warranties. Notwithstanding any
provision in this Agreement to the contrary, the representations
and warranties given or made by Pubco, CCD and the Members and
Direct Investors under this Agreement shall survive the date hereof
for a period of forty-eight (48) months from and after the Closing
Date (the last day of such period is herein referred to as the
“Expiration
Date”), except that any written claim for breach
thereof made and delivered prior to the Expiration Date to the
party against whom such indemnification is sought shall survive
thereafter and, as to any such claim, such applicable expiration
will not effect the rights to indemnification of the party making
such claim; provided, however, that any representations and
warranties that were fraudulently made shall not expire on the
Expiration Date and shall survive indefinitely and claims with
respect to fraud by Pubco, CCD, the Members or Direct Investors
must be made at any time, as long as such claim is made within a
reasonable period of time after discovery by the claiming
party.
-16-
5.3 Method
of Asserting Claims, Etc. The party claiming indemnification
is hereinafter referred to as the “Indemnified Party” and the party
against whom such claims are asserted hereunder is hereinafter
referred to as the “Indemnifying Party.” All Claims
for indemnification by any Indemnified Party under this
Article 5 shall be
asserted as follows:
(a) In
the event that any Claim or demand for which an Indemnifying Party
would be liable to an Indemnified Party hereunder is asserted
against or sought to be collected from such Indemnified Party by a
third party, said Indemnified Party shall, within ten (10) business
days from the date upon which the Indemnified Party has Knowledge
of such Claim, notify the Indemnifying Party of such claim or
demand, specifying the nature of and specific basis for such claim
or demand and the amount or the estimated amount thereof to the
extent then feasible (which estimate shall not be conclusive of the
final amount of such Claim or demand) (the “Claim Notice”). The Indemnified
Party’s failure to so notify the Indemnifying Party in
accordance with the provisions of this Agreement shall not relieve
the Indemnifying Party of liability hereunder unless such failure
materially prejudices the Indemnifying Party’s ability to
defend against the claim or demand. The Indemnifying Party shall
have 30 days from the giving of the Claim Notice (the
“Notice Period”)
to notify the Indemnified Party: (i) whether or not the
Indemnifying Party disputes the liability of the Indemnifying Party
to the Indemnified Party hereunder with respect to such Claim or
demand, and (ii) whether or not the Indemnifying Party desires, at
the sole cost and expense of the Indemnifying Party, to defend the
Indemnified Party against such Claims or demand; provided, however,
that any Indemnified Party is hereby authorized prior to and during
the Notice Period to file any motion, answer or other pleading
which he shall deem necessary or appropriate to protect his
interests or those of the Indemnifying Party and not prejudicial to
the Indemnifying Party. In the event that the Indemnifying Party
notifies the Indemnified Party within the Notice Period that he,
she or it does not dispute liability for indemnification under this
Article 5 and that
such person desires to defend the Indemnified Party against such
claim or demand and except as hereinafter provided, the
Indemnifying Party shall have the right to defend by all
appropriate proceedings, which proceedings shall be promptly
settled or prosecuted by him to a final conclusion. The Indemnified
Party shall have the right to employ separate counsel in any such
action and participate in the defense thereof, but the fees and
expenses of such counsel shall be at the expense of such
Indemnified Party except to the extent that the employment thereof
has been specifically authorized by the Indemnifying Party in
writing, the Indemnifying Party has failed after a reasonable
period of time to assume such defense and to employ counsel or in
such action there is, in the reasonable opinion of such separate
counsel, a material conflict on any material issue between the
position of the Indemnifying Party and the position of such
Indemnified Party (a “Material Conflict”). If requested
by the Indemnifying Party and there is no Material Conflict, the
Indemnified Party agrees to cooperate with the Indemnifying Party
and his, her or its counsel in contesting any Claim or demand which
the Indemnifying Party elects to contest or, if appropriate and
related to the Claim in question, in making any Counterclaim
against the person asserting the third party Claim or demand, or
any cross-complaint against any person. No Claim for which
indemnity is sought hereunder and for which the Indemnifying Party
has acknowledged liability for indemnification under this
Article 5 may be
settled without the consent of the Indemnifying Party, which
consent shall not be unreasonably withheld or delayed.
(b) In
the event any Indemnified Party should have a Claim against any
Indemnifying Party hereunder which does not involve a Claim or
demand being asserted against or sought to be collected from him by
a third party, the Indemnified Party shall give a Claim Notice with
respect to such Claim to the Indemnifying Party. If, after receipt
of a Claim Notice, the Indemnifying Party does not notify the
Indemnified Party within the Notice Period that he, she or it
disputes such Claim, then the Indemnifying Party shall be deemed to
have admitted liability for such Claim in the amount set forth in
the Claim Notice.
(c) The
Indemnifying Party shall be given the opportunity to defend the
respective Claim.
ARTICLE 6
COVENANTS OF THE PARTIES
6.1 Corporate
Examinations and Investigations. Prior to the Closing, each
party shall be entitled, through its employees and representatives,
to make such investigations and examinations of the books, records
and financial condition of CCD and Pubco as each party may request.
In order that each party may have the full opportunity to do so,
the Member and/or Direct Investor shall furnish each party and its
representatives during such period with all such information
concerning the affairs of CCD or Pubco as each party or its
representatives may reasonably request and cause CCD or Pubco and
their respective officers, employees, consultants, agents,
accountants and attorneys to cooperate fully with each
party’s representatives in connection with such review and
examination and to make full disclosure of all information and
documents requested by each party and/or its representatives. Any
such investigations and examinations shall be conducted at
reasonable times and under reasonable circumstances, it being
agreed that any examination of original documents will be at each
party’s premises, with copies thereof to be provided to each
party and/or its representatives upon request.
-17-
6.2 Cooperation;
Consents. Prior to the Closing, each party shall cooperate
with the other parties to the end that the parties shall (i) in a
timely manner make all necessary filings with, and conduct
negotiations with, all authorities and other persons the consent or
approval of which, or the license or permit from which is required
for the consummation of the Exchange and Private Issuance, and (ii)
provide to each other party such information as the other party may
reasonably request in order to enable it to prepare such filings
and to conduct such negotiations.
6.3 Conduct
of Business. Subject to the provisions hereof, from the date
hereof through the Closing, each party hereto shall (i) conduct its
business in the ordinary course and in such a manner so that the
representations and warranties contained herein shall continue to
be true and correct in all material respects as of the Closing as
if made at and as of the Closing and (ii) not enter into any
material transactions or incur any material liability not required
or specifically contemplated hereby, without first obtaining the
written consent of CCD and the Members or Direct Investors on the
one hand and Pubco on the other hand. Without the prior written
consent of CCD, the Members, Direct Investors or Pubco, except as
required or specifically contemplated hereby, each party shall not
undertake or fail to undertake any action if such action or failure
would render any of said warranties and representations untrue in
any material respect as of the Closing.
6.4 Litigation.
From the date hereof through the Closing, each party hereto shall
promptly notify the representative of the other parties of any
lawsuits, claims, proceedings or investigations which after the
date hereof are threatened or commenced against such party or any
of its affiliates or any officer, director, employee, consultant,
agent or member thereof, in their capacities as such, which, if
decided adversely, could reasonably be expected to have a Material
Adverse Effect.
6.5 Notice
of Default. From the date hereof through the Closing, each
party hereto shall give to the representative of the other parties
prompt written notice of the occurrence or existence of any event,
condition or circumstance occurring which would constitute a
violation or breach of this Agreement by such party or which would
render inaccurate in any material respect any of such party’s
representations or warranties herein.
6.6 Officers
and Directors. Effective on the Closing, Pubco shall cause
(i) the Board of Directors of Pubco and the officers of Pubco to be
the individuals identified on Schedule 6.6
hereto.
6.7 Confidentiality;
Access to Information.
(a) Confidentiality.
Any confidentiality agreement or letter of intent previously
executed by the parties shall be superseded in its entirety by the
provisions of this Agreement. Each party agrees to maintain in
confidence any non-public information received from the other
party, and to use such non-public information only for purposes of
consummating the transactions contemplated by this Agreement. Such
confidentiality obligations will not apply to (i) information which
was known to the one party or their respective agents prior to
receipt from the other party; (ii) information which is or becomes
generally known; (iii) information acquired by a party or their
respective agents from a third party who was not bound to an
obligation of confidentiality; and (iv) disclosure required by law.
In the event this Agreement is terminated as provided in
Article 8 hereof,
each party will return or cause to be returned to the other all
documents and other material obtained from the other in connection
with the Transaction contemplated hereby.
(b) Access
to Information.
(i) CCD will afford
Pubco and its financial advisors, accountants, counsel and other
representatives reasonable access during normal business hours,
upon reasonable notice, to the properties, books, records and
personnel of CCD during the period prior to the Closing to obtain
all information concerning the business, including the status of
product development efforts, properties, results of operations and
personnel of CCD, as Pubco may reasonably request. No information
or Knowledge obtained by Pubco in any investigation pursuant to
this Section 6.7(b)
will affect or be deemed to modify any representation or warranty
contained herein or the conditions to the obligations of the
parties to consummate the Transaction.
-18-
(ii) Pubco
will afford CCD and its financial advisors, underwriters,
accountants, counsel and other representatives reasonable access
during normal business hours, upon reasonable notice, to the
properties, books, records and personnel of Pubco during the period
prior to the Closing to obtain all information concerning the
business, including the status of product development efforts,
properties, results of operations and personnel of Pubco, as CCD
may reasonably request. No information or knowledge obtained by CCD
in any investigation pursuant to this Section 6.7(b) will affect or
be deemed to modify any representation or warranty contained herein
or the conditions to the obligations of the parties to consummate
the Transaction.
6.8 Public
Disclosure. Except to the extent previously disclosed or to
the extent the parties believe that they are required by applicable
law or regulation to make disclosure, prior to Closing, no party
shall issue any statement or communication to the public regarding
the transaction contemplated herein without the consent of the
other party, which consent shall not be unreasonably withheld. To
the extent a party hereto believes it is required by law or
regulation to make disclosure regarding the Transaction, it shall,
if possible, immediately notify the other party prior to such
disclosure. Notwithstanding the foregoing, the parties hereto agree
that Pubco will prepare and file a Current Report or Reports on
Form 8-K pursuant to the Exchange Act to report the execution and
consummation of this Agreement, which shall be reviewed and subject
to reasonable input by CCD or its counsel prior to the filing
thereof.
6.9 Concerning
the Exchange Agent.
(a) The
Exchange Agent may act in reliance upon any signature believed by
it to be genuine, and may assume that any person who purports to
have been authorized on behalf of a party to give any written
instructions, notice or receipt, or make any statements in
connection with the provisions hereof has been duly authorized to
do so. The Exchange Agent shall have no duty to make inquiry as to
the genuineness, accuracy or validity of any statements or
instructions or any signatures on statements or
instructions.
(b) The
Exchange Agent may act relative hereto in reliance upon advice of
counsel in reference to any matter connected herewith. The Exchange
Agent shall not be liable for any mistake of fact or error of
judgment or law, or for any acts or omissions of any kind, unless
caused by its willful misconduct or gross negligence.
(c) Each
of the other parties hereto, jointly and severally, agree to
indemnify, release, and hold the Exchange Agent harmless from and
against any and all claims, losses, costs, liabilities, damages,
suits, demands, judgments or expenses, including, but not limited
to, attorney's fees, costs and disbursements, (collectively
“Claims”)
claimed against or incurred by Exchange Agent arising out of or
related, directly or indirectly, to this Agreement and the Exchange
Agent’s performance hereunder or in connection herewith,
except to the extent such Claims arise from Exchange Agent’s
willful misconduct or gross negligence as adjudicated by a court of
competent jurisdiction.
(d) In
the event of any disagreement between or among the other parties
hereto, or between any of them and any other person, resulting in
adverse claims or demands being made to Exchange Agent in
connection with the instruments or property held by the Exchange
Agent hereunder (the “Deposited Property”), or in the
event that the Exchange Agent, in good faith, be in doubt as to
what action it should take hereunder, the Exchange Agent may, at
its option, refuse to comply with any claims or demands on it, or
refuse to take any other action hereunder, so long as such
disagreement continues or such doubt exists, and in any such event,
the Exchange Agent shall not become liable in any way or to any
person for its failure or refusal to act, and the Exchange Agent
shall be entitled to continue so to refrain from acting until (i)
the rights of all parties shall have been fully and finally
adjudicated by a court of competent jurisdiction, or (ii) all
differences shall have been adjusted and all doubt resolved by
agreement among all of the interested persons, and the Exchange
Agent shall have been notified thereof in writing signed by all
such persons. The Exchange Agent shall have the option, after
thirty (30) days’ notice to the Members, CCD and Pubco of its
intention to do so, to file an action in interpleader requiring the
parties to answer and litigate any claims and rights among
themselves. The rights of the Exchange Agent under this Section are
cumulative of all other rights which it may have by law or
otherwise.
-19-
(e) In
the event that the Exchange Agent shall be uncertain as to its
duties or rights hereunder, the Exchange Agent shall be entitled to
(i) refrain from taking any action other than to keep safely the
Deposited Property until it shall be directed otherwise by a court
of competent jurisdiction, or (ii) deliver the Deposited Property
to a court of competent jurisdiction.
(f) The
Exchange Agent shall have no duty, responsibility or obligation to
interpret or enforce the terms of any agreement other than Exchange
Agent's obligations hereunder.
(g) The
Exchange Agent may resign at any time by giving thirty (30) days'
prior written notice of such resignation to the other parties
hereto. Upon providing such notice, the Exchange Agent shall have
no further obligation hereunder except to hold the Deposited
Property that it has received as of the date on which it provided
the notice of resignation. In such event, the Exchange Agent shall
not take any action until CCD and Pubco jointly designate an
attorney or other person as successor escrow agent. Upon receipt of
such written instructions signed by CCD and Pubco, the Exchange
Agent shall promptly deliver the Deposited Property, to such
successor escrow agent and shall thereafter have no further
obligations hereunder. If such instructions are not received within
thirty (30) days following the effective date of such resignation,
then the Exchange Agent may deposit the Deposited Property and any
other amounts held by it pursuant to this Agreement with a clerk of
a court of competent jurisdiction pending the appointment of a
successor escrow agent. In either case provided for in this
Section, the Exchange Agent shall be relieved of all further
obligations and released from all liability thereafter arising with
respect to the Deposited Property.
ARTICLE 7
CONDITIONS TO CLOSING
7.1 Conditions
to Obligations of CCD, the Members and Direct Investors. The
obligations of CCD, the Members and Direct Investors under this
Agreement shall be subject to each of the following
conditions:
(a) Closing Deliveries. At the
Closing, Pubco shall have delivered or caused to be delivered to
CCD, the Members and Direct Investors (or, counsel to CCD, the
Members and Direct Investors, as applicable), as more particularly
set forth below, the following:
(i) this Agreement duly
executed by Pubco;
(ii) a
certificate of good standing for Pubco from the State of Nevada,
dated not earlier than five (5) days prior to the Closing
Date;
(iii) A
true and complete list, prepared as of the most recent practicable
date by Pubco’s transfer agent and registrar of the names and
addresses of the record owners of all of the outstanding shares of
Pubco Common Stock, together with the number of shares of Pubco
Common Stock held by each record owner;
(iv) a
certificate of the Secretary of Pubco, dated as of the Closing
Date, certifying as to (i) the incumbency of officers of Pubco
executing this Agreement and all exhibits and schedules hereto and
all other documents, instruments and writings required pursuant to
this Agreement (the “Transaction Documents”), (ii) a
copy of the Articles of Incorporation (including all certificates
of designation, as amended) and By-Laws of Pubco, as in effect on
and as of the Closing Date, (iii) a copy of the resolutions of the
Board of Directors of Pubco authorizing and approving Pubco’s
execution, delivery and performance of the Transaction Documents,
all matters in connection with the Transaction Documents, and the
transactions contemplated thereby and (iv) confirmation that Pubco has no outstanding shares
of Preferred Stock;
(v) all corporate records, board minutes and
resolutions, tax and financial records, agreements, seals and any
other information or documents reasonably requested by CCD’s
representatives with respect to Pubco;
-20-
(vi) the
Company Counsel shall deliver an opinion to CCD, dated as of the
Closing, in form and substance reasonably acceptable to
CCD;
(vii) lock
up agreements with those individuals set forth in Schedule C to this Agreement,
which lock-up agreements shall prohibit the sale of Pubco
securities for a period of six months from the Closing
Date;
(viii) a
Registration Rights Agreement to be entered into among Pubco, the
Members and Direct Investors;
(ix) such
other documents as CCD and/or the Members or Direct Investors may
reasonably request in connection with the transactions contemplated
hereby; and
(x) a certificate,
dated the Closing Date, of an officer of Pubco, certifying as to
the compliance by Pubco with the conditions of Section 7.1(b)
below.
(b) Representations
and Warranties to be True. The representations and
warranties of Pubco herein contained shall be true in all material
respects at the Closing with the same effect as though made at such
time. Pubco shall have performed in all material respects all
obligations and complied in all material respects with all
covenants and conditions required by this Agreement to be performed
or complied with by it at or prior to the Closing.
(c) No
Liabilities. At the Closing, Pubco shall have no liabilities
(contingent or otherwise) other than as set forth on Schedule 7.1(c).
(e) Outstanding Capital Stock.
Effective at Closing, Pubco’s issued and outstanding capital
shall be as set forth on Schedule 7.1(e), it being understood that
the conversion of certain issued and outstanding shares of
preferred stock into Pubco Common Stock, and the resulting
elimination of such preferred stock as authorized capital of Pubco,
shall be effective contemporaneous with, and is contingent upon,
Closing.
(f) Employment Agreements. Pubco
shall have entered into employment agreements with the individuals
set forth on Schedule 7.1(e), which employment agreements shall be
effective immediately following Closing.
(g) No Adverse Effect. The business
and operations of Pubco will not have suffered any Material Adverse
Effect.
7.2 Conditions
to Obligations of Pubco. The obligations of Pubco under this
Agreement shall be subject to each of the following
conditions:
(a) Closing
Deliveries. On the Closing Date, CCD and/or the Members or
Direct Investors shall have delivered to Pubco the
following:
(i) this
Agreement duly executed by CCD, the Member and the Direct
Investor;
(ii) resolutions
duly adopted by the Managers of CCD authorizing and approving the
execution, delivery and performance of this Agreement;
(iii) a
certificate of the Manager of CCD, dated as of the Closing Date,
certifying as to (i) the incumbency of officers of CCD the
Transaction Documents, (ii) a copy of the formation documents and
operating agreement of CCD, as in effect on and as of the Closing
Date, and (iii) a copy of the resolutions of the Managers of CCD
authorizing and approving CCD’s execution, delivery and
performance of the Transaction Documents to which it is a party,
all matters in connection with the Transaction Documents, and the
Transaction contemplated thereby;
-21-
(iv) a
certificate, dated the Closing Date, of a Manager of CCD,
certifying as to the compliance by CCD with the conditions of
Section 7.2(b)
below applicable to it; and
(v) all
corporate records, board minutes and resolutions, tax and financial
records, agreements, seals and such other documents as Pubco may
reasonably request in connection with the transactions contemplated
hereby.
(b) Representations
and Warranties True and Correct. The representations and
warranties of CCD, the Members and Direct Investors herein
contained shall be true in all material respects at the Closing
with the same effect as though made at such time. CCD, the Members
and Direct Investors shall have performed in all material respects
all obligations and complied in all material respects with all
covenants and conditions required by this Agreement to be performed
or complied with by them at or prior to the Closing.
(c) No
Adverse Effect. The business, financial condition and
operations of CCD will not have suffered any Material Adverse
Effect.
ARTICLE 8
TERMINATION; SEC FILING
8.1 This
Agreement may be terminated at any time prior to the
Closing:
(a) by
mutual written agreement of Pubco and CCD;
(b) by
either Pubco or CCD if the Transaction shall not have been
consummated for any reason by April 30, 2019; provided, however, that the right to
terminate this Agreement under this Section 8.1(b) shall not be
available to any party whose action or failure to act has been a
principal cause of or resulted in the failure of the Transaction to
occur on or before such date and such action or failure to act
constitutes a breach of this Agreement;
(c) by
Pubco if a Governmental Entity shall have issued an order, decree
or ruling or taken any other action, in any case having the effect
of permanently restraining, enjoining or otherwise prohibiting the
Transaction, which order, decree, ruling or other action is final
and non-appealable; or
(d) by
CCD, upon a material breach of any representation, warranty,
covenant or agreement on the part of Pubco set forth in this
Agreement, or if any representation or warranty of Pubco shall have
become materially untrue, in either case such that the conditions
set forth in Section
7.1 would not be satisfied as of the time of such breach or
as of the time such representation or warranty shall have become
untrue.
8.2 Notice
of Termination; Effect of Termination. Any termination of
this Agreement under Section 8.1 above will be
effective immediately upon (or, if the termination is pursuant to
Section 8.1(d) or
Section 8.1(e) and
the proviso therein is applicable, thirty (30) days after) the
delivery of written notice of the terminating party to the other
parties hereto. In the event of the termination of this Agreement
as provided in Section
8.1, this Agreement shall be of no further force or effect
and the Transaction shall be abandoned, except as set forth in
Section 8.1,
Section 8.2 and
Article 9 (General
Provisions), each of which shall survive the termination of this
Agreement.
8.3 Filing
of Form 8-K. Pubco shall, in a timely and expeditious
manner, but in no event later than four Business Days following
Closing, prepare, with the cooperation of CCD, and file with the
SEC a current report on Form 8-K (which shall be in a form
satisfactory to CCD and Pubco, acting reasonably), together with
any other documents required by applicable Laws in accordance with
all applicable Laws on the date of filing thereof, in the form and
containing the information required by all applicable Laws and not
containing any misrepresentation (as defined under applicable
securities Laws and requirements) with respect thereto, and Pubco
shall, with the cooperation of CCD, promptly prepare and file with
the SEC such amendments or supplements to the Form 8-K, if any, as
may be required by the SEC or under applicable Laws. The parties
acknowledge that from and after the filing of the Form 8-K, no
Direct Investor shall be in possession of any material, nonpublic
information received from Pubco, CCD or any of their respective
officers, directors, employees or agents, with respect to the
transactions contemplated hereby that is not disclosed in the Form
8-K. Neither Pubco nor CCD shall, and shall cause each of its
officers, directors, employees and agents, not to, provide any
Direct Investor with any such material, nonpublic information
regarding Pubco, CCD or any of their direct or indirect
subsidiaries from and after the filing of the Form 8-K without the
express prior written consent of such Direct Investor.
-22-
ARTICLE 9
GENERAL PROVISIONS
9.1 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, email 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 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),
(b) upon delivery by email so long as an automated notice of
delivery failure is not receive by the sender, or (c) 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:
(a) if
to CCD,
to:
Charlie’s Chalk Dust LLC
0000
Xxxxxx Xxxxx
Xxxxx
Xxxx, XX 00000
Attention:
Xxxxxxx Xxxxx
Email: xxxxxxx@xxxxxxxxxxxxxxxxx.xxx
With a
copy by email only
to:
Grushko & Xxxxxxx, P.C.
000
Xxxxxxxx Xxxxxx
Xxxxxx
Xxxxxx, XX 00000
Attention: Xxxxxxx
Xxxx, Esq.
Facsimile: (000)
000-0000
Email:
xxx@xxxxxxxxxxxxxx.xxx
(b) if to
Members or Direct
Investors,
to: to the address set forth on Schedule A or Schedule B, as
the case may be.
(c) if
to Pubco,
to:
True Drink Holdings,
Inc.
0 Xxxx
Xxxxx, Xxxxx 0000
Xxxxxx,
XX 00000
Attention: Xxxxxx
Xxx Xxxxxx
Email:
xxxxxx.xxxxxxxxx@xxxxxxxxxx.xxx
With a copy by email only
to:
Disclosure Law Group,
APC
000
Xxxx Xxxxxxxx, Xxxxx 000
Xxx
Xxxxx, XX, 00000
Attention:
Xxxxxx X. Xxxxxx, Esq.
Email:
xxxxxxx@xxxxxxxxxxxxxxxxxx.xxx
9.2 Interpretation.
The headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation
of this Agreement. References to Sections and Articles refer to
sections and articles of this Agreement unless otherwise
stated.
9.3 Entire
Agreement. The Transaction Documents, together with the
exhibits and schedules thereto, contain the entire understanding of
the parties with respect to the subject matter hereof and thereof
and supersede all prior agreements and understandings, oral or
written, with respect to such matters, which the parties
acknowledge have been merged into such documents, exhibits and
schedules.
-23-
9.4 Amendments;
Waivers. No provision of this Agreement may be waived,
modified, supplemented or amended except in a written instrument
signed, in the case of an amendment, by all parties. No waiver of
any default with respect to any provision, condition or requirement
of this Agreement shall be deemed to be a continuing waiver in the
future or a waiver of any subsequent default or a waiver of any
other provision, condition or requirement hereof, nor shall any
delay or omission of any party to exercise any right hereunder in
any manner impair the exercise of any such right.
9.5 Successors
and Assigns. This Agreement shall be binding upon and inure
to the benefit of the parties and their successors and permitted
assigns. The parties may not assign this Agreement or any rights or
obligations hereunder.
9.6 No
Third-Party Beneficiaries. This Agreement is intended for
the benefit of the parties hereto and their respective successors
and permitted assigns and is not for the benefit of, nor may any
provision hereof be enforced by, any other Person, except as
provided for the Exchange Agent as set out in this
Agreement.
9.7 Governing
Law. All questions concerning the construction, validity,
enforcement and interpretation of the Transaction Documents shall
be governed by and construed and enforced in accordance with the
internal laws of the State of New York, without regard to the
principles of conflicts of law thereof. Each party agrees that all
legal proceedings concerning the interpretations, enforcement and
defense of the transactions contemplated by this Agreement and any
other Transaction Documents (whether brought against a party hereto
or its respective affiliates, directors, officers, members,
partners, members, employees or agents) shall be commenced
exclusively in the state and federal courts sitting in the City of
New York. Each party hereby irrevocably submits to the exclusive
jurisdiction of the state and federal courts sitting in the City of
New York, Borough of Manhattan for the adjudication of any dispute
hereunder or in connection herewith or with any transaction
contemplated hereby or discussed herein (including with respect to
the enforcement of any of the Transaction Documents), and hereby
irrevocably waives, and agrees not to assert in any action, suit or
proceeding, any claim that it is not personally subject to the
jurisdiction of any such court, that such suit, action or
proceeding is improper or is an inconvenient venue for such
proceeding. Each party hereby irrevocably waives personal service
of process and consents to process being served in any such suit,
action or proceeding 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. If any party shall
commence an action or proceeding to enforce any provisions of the
Transaction Documents, the prevailing party in such action, suit or
proceeding shall be reimbursed by the other party for its
reasonable attorneys’ fees and other costs and expenses
incurred with the investigation, preparation and prosecution of
such action or proceeding.
9.8 Execution;
Manner of Delivery. This Agreement may be executed in two or
more counterparts, all of which when taken together shall be
considered one and the same agreement and shall become effective
when counterparts have been signed by each party and delivered to
each other party, it being understood that the parties need not
sign the same counterpart. In the event that any signature to this
Agreement or other Transaction Document is delivered by facsimile
transmission or by e-mail delivery of a “.pdf” format
data file, such signature shall create a valid and binding
obligation of the party executing (or on whose behalf such
signature is executed) with the same force and effect as if such
facsimile or “.pdf” signature page were an original
thereof.
9.9 Severability.
If any term, provision, covenant or restriction of this Agreement
is held by a court of competent jurisdiction to be invalid,
illegal, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions set forth herein shall
remain in full force and effect and shall in no way be affected,
impaired or invalidated, and the parties hereto shall use their
commercially reasonable efforts to find and employ an alternative
means to achieve the same or substantially the same result as that
contemplated by such term, provision, covenant or restriction. It
is hereby stipulated and declared to be the intention of the
parties that they would have executed the remaining terms,
provisions, covenants and restrictions without including any of
such that may be hereafter declared invalid, illegal, void or
unenforceable.
-24-
9.10 Saturdays,
Sundays, Holidays, etc. If the last or appointed day for the
taking of any action or the expiration of any right required or
granted herein shall not be a Business Day, then such action may be
taken or such right may be exercised on the next succeeding
Business Day.
9.11 Construction.
The parties agree that each of them and/or their respective counsel
have reviewed and had an opportunity to revise the Transaction
Documents and, therefore, the normal rule of construction to the
effect that any ambiguities are to be resolved against the drafting
party shall not be employed in the interpretation of the
Transaction Documents or any amendments thereto.
9.12 WAIVER
OF JURY TRIAL. IN ANY
ACTION, SUIT, OR PROCEEDING IN ANY JURISDICTION BROUGHT BY ANY
PARTY AGAINST ANY OTHER PARTY, THE PARTIES EACH KNOWINGLY AND
INTENTIONALLY, TO THE GREATEST EXTENT PERMITTED BY APPLICABLE LAW,
HEREBY ABSOLUTELY, UNCONDITIONALLY, IRREVOCABLY AND EXPRESSLY
WAIVES FOREVER TRIAL BY JURY.
9.13 Further
Assurances. Each party shall do and perform, or cause to be
done and performed, all such further acts and things, and shall
execute and deliver all such other agreements, certificates,
instruments and documents, as 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.
(Signature Pages Follow)
-25-
IN
WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
PUBCO:
TRUE
DRINK HOLDINGS, INC.
a
Nevada corporation
|
By:
|
|
|
|
|
Name:
Xxxxxx Xxx Xxxxxx
|
|
|
|
Title:
Chief Executive Officer
|
|
CCD:
CHARLIE’S
CHALK DUST, LLC,
a
Delaware limited liability company
|
By:
|
|
|
|
|
Name:
Xxxxxxx Xxxxx
Title:
CEO
|
|
CLASS B MEMBERS:
By
executing this Agreement below, each of the Class B Members, in
addition to each of the agreements of such Class B Members as set
forth in this Agreement, jointly and severally, make, to the Best
Knowledge of the undersigned, each of the representations and
warranties of CCD as set forth in Article 2 of this Agreement as if
the same were set forth hereunder. The representations of each of
the Class B Members as set forth herein shall terminate and be of
no further force and effect one year from the Closing
Date.
Buckeye Tree
Collective
LLC
Spire Consulting LLC
By:
_________________________
By: ______________________
Name: Xxxxxxx
Xxxxx
Name: Xxxx
Xxxxx
Title:
Manager
Title: Manager
[Signature Pages Continue]
-26-
In Witness
Whereof, the
undersigned Class A Member of the Company has executed this
Agreement on the date first written above.
___________________________
Signature
___________________________
Print
Name
___________________________
Print
Title
-27-
In Witness
Whereof, each
Direct Investor have caused their respective signature page to this
Agreement to be duly executed as of the date first written
above.
Name of
Direct Investor:
Signature of Authorized Signatory of
Purchaser:
Joint Signature of Authorized Signatory of
Direct Investor, if applicable:
Name(s)
of Authorized Signatory:
Title of Authorized
Signatory: _____________________________________
Email
Address of Authorized Signatory:
Address
for Notice to Direct Investor:
Social
Security/EIN Number(s):
Election for
book-entry Issuable Securities: ______ [check for book-entry
shares]
Election for
physical delivery of a Issuable Securities certificates: ______
[check for physical stock certificate]
Subscription
Amount: $ ______________________
No. of
Shares of Common Stock: ______________________
No. of
Shares Series A Preferred: ______________________
No. of Warrant
Shares: ______________________
-28-
ANNEX A
Definition of Accredited Investor
The
securities will only be sold to investors who represent in writing
in the Securities Purchase Agreement that they are accredited
investors, as defined in Regulation D, Rule 501 under the Act which
definition is set forth below:
1. A natural person
whose net worth, or joint net worth with spouse, at the time of
purchase exceeds $1 million (excluding principal residence);
or
2. A natural person
whose individual gross income exceeded $200,000 or whose joint
income with that person’s spouse exceeded $300,000 in each of
the last two years, and who reasonably expects to exceed such
income level in the current year; or
3. A trust with total
assets in excess of $5 million, not formed for the specific purpose
of acquiring the securities offered, whose purchase is directed by
a sophisticated person described in Regulation D; or
4. A director or
executive officer of the Company; or
5. The investor is an
entity, all of the owners of which are accredited investors;
or
6. (a) bank as defined
in Section 3(a)(2) of the Act, or any savings and loan association
or other institution as defined in Section 3(a)(5)(A) of the Act,
(b) any broker or dealer registered pursuant to Section 15 of the
Securities Exchange Act of 1934, (c) an insurance Company as
defined in Section 2(13) of the Act, (d) an investment Company
registered under the Investment Company Act of 1940 or a business
development Company as defined in Section 2(a)(48) of such Act, (e)
a Small Business Investment Company licensed by the United States
Small Business Administration under Section 301(c) or (d) of the
Small Business Investment Act of 1958, (f) an employee benefit plan
established and maintained by a state, its political subdivisions,
or any agency or instrumentality of a state or its political
subdivisions, if such plan has total assets in excess of $5
million, (g) an employee benefit plan within the meaning of Title I
of the Employee Retirement Income Securities Act of 1974, and the
employee benefit plan has assets in excess of $5 million, or the
investment decision is made by a plan fiduciary, as defined in
Section 3(21) of such act, that is either a bank, savings and loan
institution, insurance Company, or registered investment advisor,
or, if a self-directed plan, with an investment decisions made
solely by persons that are accredited investors, (h) a private
business development company as defined in Section 202(a)(22) of
the Investment Advisers Act of 1940, or (i) an organization
described in Section 501(c)(3) of the Internal Revenue code,
corporation, Massachusetts or similar business trust, or
partnership, not formed for the specific purpose of acquiring the
securities offered, with assets in excess of $5
million.
-29-
