SECURITIES PURCHASE AGREEMENT
Exhibit 10.1
This
SECURITIES PURCHASE
AGREEMENT (the “Agreement”), dated as of April
28, 2021, by and between TEGO CYBER
INC., a Nevada corporation, with headquarters located at
0000 Xxxxx Xxxxxxx Xxxxxx, Xxxxx 000, Xxx Xxxxx, Xxxxxx, XXX, 00000
(the “Company”), and XXXXXXX XXXXXXXXX and XXXXXXXXX XXXXX (together jointly and/or
separately) with an address at 0000 Xxx xx Xxxx xx Xxxxxx,
Xxxxx-Xxxxxxx, Xxxxxx, Xxxxxx, X0X 0X0 (the
“Buyer”).
WHEREAS:
A. The Company and the
Buyer are executing and delivering this Agreement in reliance upon
the exemption from securities registration afforded by Section
4(a)(2) of the Securities Act of 1933, as amended (the “1933
Act”) and Rule 506(b) promulgated by the United States
Securities and Exchange Commission (the “SEC”) under
the 1933 Act;
B. Buyer desires to
purchase from the Company, and the Company desires to issue and
sell to the Buyer, upon the terms and conditions set forth in this
Agreement, a Convertible Promissory Note of the Company, in the
aggregate principal amount of $33,507.50 (as the principal amount
thereof may be increased pursuant to the terms thereof, and
together with any note(s) issued in replacement thereof or as a
dividend thereon or otherwise with respect thereto in accordance
with the terms thereof, in the form attached hereto as Exhibit A (the
“Note”), convertible into shares of common stock,
$0.001 par value per share, of the Company (the “Common
Stock”), upon the terms and subject to the limitations and
conditions set forth in such Note;
C. Buyer desires to
purchase from the Company, and the Company desires to issue and
sell to the Buyer, upon the terms and conditions set forth in this
Agreement, a Warrant in accordance with the terms thereof, in the
form attached hereto as Exhibit B (the
“Warrant”), exercisable into shares of Common Stock,
upon the terms and subject to the limitations and conditions set
forth in such Warrant; and
NOW THEREFORE, in consideration of the
foregoing and of the agreements and covenants herein contained, and
for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Company and the
Buyer hereby agree as follows:
1.
Purchase and Sale of Note and Warrant.
a. Purchase of Note and Warrant.
On the Closing Date (as defined below), the Company shall issue and
sell to the Buyer and the Buyer agrees to purchase from the Company
the Note and the Warrant, subject to the express terms of the Note,
the Warrant, and this Agreement as the case may be.
b. Form of Payment. On the Closing
Date, the Buyer shall pay the purchase price of $10,000.00 cash and
agree to surrender the Convertible Note previously issued by the
Company plus accrued interest (the “Purchase Price”)
for the Note, against delivery of the Note, and the Warrant, and
the Company shall deliver such duly executed Note, and Warrant on
behalf of the Company, to the Buyer.
c. Closing Date. Subject to the
satisfaction (or written waiver) of the conditions thereto set
forth in Section 6 and Section 7 below, the date and time of the
issuance and sale of the Note and Warrant pursuant to this
Agreement (the “Closing Date”) shall be 4:00 PM,
Eastern Time on the date first written above, or such other
mutually agreed upon time.
d. Closing. The closing of the
transactions contemplated by this Agreement (the
“Closing”) shall occur on the Closing Date at such
location as may be agreed to by the parties (including via exchange
of electronic signatures).
2. Buyer’s Representations and
Warranties. The Buyer represents and warrants to the Company
as of the Closing Date that:
a. Investment Purpose. As of the
Closing Date, the Buyer is purchasing the Note and Warrant and the
shares of Common Stock issuable upon conversion or exercise of or
otherwise pursuant to the Note or Warrant and such additional
shares of Common Stock, if any, as are issuable on account of
interest on the Note and Warrant pursuant to this Agreement, such
shares of Common Stock being collectively referred to herein as the
“Conversion Shares” and, collectively with the Note,
and Warrant, the “Securities”) for its own account and
not with a present view towards the public sale or distribution
thereof, except pursuant to sales registered or exempted from
registration under the 1933 Act; provided, however, that by making the
representations herein, the Buyer does not agree to hold any of the
Securities for any minimum or other specific term and reserves the
right to dispose of the Securities at any time in accordance with
or pursuant to a registration statement or an exemption under the
1933 Act.
b. Accredited Investor Status. The
Buyer is an “accredited investor” as that term is
defined in Rule 501(a) of Regulation D (an “Accredited
Investor”).
c. Reliance on Exemptions. The
Buyer understands that the Securities are being offered and sold to
it in reliance upon specific exemptions from the registration
requirements of United States federal and state securities laws and
that the Company is relying upon the truth and accuracy of, and the
Buyer’s compliance with, the representations, warranties,
agreements, acknowledgments and understandings of the Buyer set
forth herein in order to determine the availability of such
exemptions and the eligibility of the Buyer to acquire the
Securities.
d. Information. The Buyer and its
advisors, if any, have been, and for so long as any of the
Securities remain outstanding will continue to be, furnished with
all materials relating to the business, finances and operations of
the Company and materials relating to the offer and sale of the
Securities which have been requested by the Buyer or its advisors.
The Buyer and its advisors, if any, have been, and for so long as
the Note or Warrant remains outstanding will continue to be,
afforded the opportunity to ask questions of the Company regarding
its business and affairs. Notwithstanding the foregoing, the
Company has not disclosed to the Buyer any material nonpublic
information regarding the Company or otherwise and will not
disclose such information unless such information is disclosed to
the public prior to or promptly following such disclosure to the
Buyer. Neither such inquiries nor any other due diligence
investigation conducted by Buyer or any of its advisors or
representatives shall modify, amend or affect Buyer’s right
to rely on the Company’s representations and warranties
contained in Section 3 below.
e. Governmental Review. The Buyer
understands that no United States federal or state agency or any
other government or governmental agency has passed upon or made any
recommendation or endorsement of the Securities.
f. Transfer or Re-sale. The Buyer
understands that (i) the sale or resale of the Securities has not
been and is not being registered under the 1933 Act or any
applicable state securities laws, and the Securities may not be
transferred unless (a) the Securities are sold pursuant to an
effective registration statement under the 1933 Act, (b) the Buyer
shall have delivered to the Company, at the cost of the Company, an
opinion of counsel (which may be the Legal Counsel Opinion (as
defined below)) that shall be in form, substance and scope
customary for opinions of counsel in comparable transactions to the
effect that the Securities to be sold or transferred may be sold or
transferred pursuant to an exemption from such registration, which
opinion shall be accepted by the Company, (c) the Securities are
sold or transferred to an “affiliate” (as defined in
Rule 144 promulgated under the 1933 Act (or a successor rule)
(“Rule 144”)) of the Buyer who agrees to sell or
otherwise transfer the Securities only in accordance with this
Section 2(f) and who is an Accredited Investor, (d) the Securities
are sold pursuant to Rule 144 or other applicable exemption, or (e)
the Securities are sold pursuant to Regulation S under the 1933 Act
(or a successor rule) (“Regulation S”), and the Buyer
shall have delivered to the Company, at the cost of the Company, an
opinion of counsel that shall be in form, substance and scope
customary for opinions of counsel in corporate transactions, which
opinion shall be accepted by the Company; (ii) any sale of such
Securities made in reliance on Rule 144 may be made only in
accordance with the terms of said Rule and further, if said Rule is
not applicable, any re-sale of such Securities under circumstances
in which the seller (or the person through whom the sale is made)
may be deemed to be an underwriter (as that term is defined in the
0000 Xxx) may require compliance with some other exemption under
the 1933 Act or the rules and regulations of the SEC thereunder;
and (iii) neither the Company nor any other person is under any
obligation to register such Securities under the 1933 Act or any
state securities laws or to comply with the terms and conditions of
any exemption thereunder (in each case).
g. Legends. The Buyer understands
that until such time as the Note, and, upon conversion of the Note
in accordance with its respective terms, the Conversion Shares,
have been registered under the 1933 Act or may be sold pursuant to
Rule 144, Rule 144A under the 1933 Act, Regulation S, or other
applicable exemption without any restriction as to the number of
securities as of a particular date that can then be immediately
sold, the Securities may bear a restrictive legend in substantially
the following form (and a stop-transfer order may be placed against
transfer of the certificates for such Securities):
“NEITHER
THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS
CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE
[CONVERTIBLE/EXERCISABLE] HAVE BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE
SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR
ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION
STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR (B) AN OPINION OF COUNSEL (WHICH COUNSEL SHALL BE
SELECTED BY THE HOLDER), IN A GENERALLY ACCEPTABLE FORM, THAT
REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD
PURSUANT TO RULE 144, RULE 144A, REGULATION S, OR OTHER APPLICABLE
EXEMPTION UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE
SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN
ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE
SECURITIES.”
The
legend set forth above shall be removed and the Company shall issue
a certificate for the applicable shares of Common Stock without
such legend to the holder of any Security upon which it is stamped
or (as requested by such holder) issue the applicable shares of
Common Stock to such holder by electronic delivery by crediting the
account of such holder’s broker with The Depository Trust
Company (“DTC”),
if, unless otherwise required by applicable state securities laws,
(a) such Security is registered for sale under an effective
registration statement filed under the 1933 Act or otherwise may be
sold pursuant to Rule 144, Rule 144A, Regulation S, or other
applicable exemption without any restriction as to the number of
securities as of a particular date that can then be immediately
sold, or (b) the Company or the Buyer provides the Legal Counsel
Opinion (as contemplated by and in accordance with Section 4(m)
hereof) to the effect that a public sale or transfer of such
Security may be made without registration under the 1933 Act, which
opinion shall be accepted by the Company so that the sale or
transfer is effected. The Company shall be responsible for the fees
of its transfer agent and all DTC fees associated with any such
issuance, up to a maximum of $500 per issuance. The Buyer agrees to
sell all Securities, including those represented by a
certificate(s) from which the legend has been removed, in
compliance with applicable prospectus delivery requirements, if
any. In the event that the Company does not accept the opinion of
counsel provided by the Buyer with respect to the transfer of
Securities pursuant to an exemption from registration, such as Rule
144, Rule 144A, Regulation S, or other applicable exemption at the
Deadline (as defined in the Note), it will be considered an Event
of Default pursuant to Section 3.2 of the Note.
h. Authorization; Enforcement.
This Agreement has been duly and validly authorized by the Buyer
and has been duly executed and delivered on behalf of the Buyer,
and this Agreement constitutes a valid and binding agreement of the
Buyer enforceable in accordance with its terms, except as
enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting
creditors’ rights generally and except as may be limited by
the exercise of judicial discretion in applying principles of
equity.
i. Manipulation of Price. The
Buyer has not, and to its knowledge no one acting on its behalf
has: (i) taken, directly or indirectly, any action designed to
cause or to result, or that could reasonably be expected to cause
or result, in the stabilization or manipulation of the price of any
security of the Company, (ii) sold, bid for, purchased, or paid any
compensation for soliciting purchases of, any Stock in the open
market, or (iii) paid or agreed to pay to any person any
compensation for soliciting another to purchase any other
securities of the Company.
j. No Shorting. Buyer and its
affiliates shall be prohibited from engaging directly or indirectly
in any short selling or hedging transactions with respect to any
securities of the Company while this Note is
outstanding.
3. Representations and Warranties of the
Company. The Company represents and warrants to the Buyer as
of the Closing Date that:
a. Organization and Qualification.
The Company and each of its Subsidiaries (as defined below), if
any, is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction in which it is
incorporated, with full power and authority (corporate and other)
to own, lease, use and operate its properties and to carry on its
business as and where now owned, leased, used, operated and
conducted. Schedule 3(a), if attached hereto, sets forth a list of
all of the Subsidiaries of the Company and the jurisdiction in
which each is incorporated. The Company and each of its
Subsidiaries is duly qualified as a foreign corporation to do
business and is in good standing in every jurisdiction in which its
ownership or use of property or the nature of the business
conducted by it makes such qualification necessary except where the
failure to be so qualified or in good standing would not have a
Material Adverse Effect. “Material Adverse Effect”
means any material adverse effect on the business, operations,
assets, financial condition or prospects of the Company or its
Subsidiaries, if any, taken as a whole, or on the transactions
contemplated hereby or by the agreements or instruments to be
entered into in connection herewith. “Subsidiaries”
means any corporation or other organization, whether incorporated
or unincorporated, in which the Company owns, directly or
indirectly, any equity or other ownership interest.
b. Authorization; Enforcement. (i)
The Company has all requisite corporate power and authority to
enter into and perform this Agreement, the Note, and to consummate
the transactions contemplated hereby and thereby and to issue the
Securities, in accordance with the terms hereof and thereof, (ii)
the execution and delivery of this Agreement, the Note, and the
Conversion Shares by the Company and the consummation by it of the
transactions contemplated hereby and thereby (including without
limitation, the issuance of the Note, as well as the issuance and
reservation for issuance of the Conversion Shares issuable upon
conversion of the Note) have been duly authorized by the
Company’s Board of Directors and no further consent or
authorization of the Company, its Board of Directors, its
shareholders, or its debt holders is required, (iii) this Agreement
and the Note (together with any other instruments executed in
connection herewith or therewith) have been duly executed and
delivered by the Company by its authorized representative, and such
authorized representative is the true and official representative
with authority to sign this Agreement, the Note and the other
instruments documents executed in connection herewith or therewith
and bind the Company accordingly, and (iv) this Agreement
constitutes, and upon execution and delivery by the Company of the
Note, each of such instruments will constitute, a legal, valid and
binding obligation of the Company, enforceable against the Company
in accordance with their terms.
c. Capitalization; Governing
Documents. As of April 15, 2021 the authorized capital stock
of the Company consists of: 50,000,000 authorized shares of Common
Stock, of which 13,800,236 shares were issued and outstanding. All
of such outstanding shares of capital stock of the Company and the
Conversion Shares, are, or upon issuance will be, duly authorized,
validly issued, fully paid and non-assessable. No shares of capital
stock of the Company are subject to preemptive rights or any other
similar rights of the shareholders of the Company or any liens or
encumbrances imposed through the actions or failure to act of the
Company. As of the effective date of this Agreement, other than as
publicly announced prior to such date and reflected in the SEC
Documents (as defined in this Agreement) of the Company (i) there
are no outstanding options, warrants, scrip, rights to subscribe
for, puts, calls, rights of first refusal, agreements,
understandings, claims or other commitments or rights of any
character whatsoever relating to, or securities or rights
convertible into or exchangeable for any shares of capital stock of
the Company or any of its Subsidiaries, or arrangements by which
the Company or any of its Subsidiaries is or may become bound to
issue additional shares of capital stock of the Company or any of
its Subsidiaries, (ii) there are no agreements or arrangements
under which the Company or any of its Subsidiaries is obligated to
register the sale of any of its or their securities under the 1933
Act and (iii) there are no anti-dilution or price adjustment
provisions contained in any security issued by the Company (or in
any agreement providing rights to security holders) that will be
triggered by the issuance of any of the Securities. The Company has
furnished to the Buyer true and correct copies of the
Company’s Certificate of Incorporation as in effect on the
date hereof (“Certificate of Incorporation”), the
Company’s Bylaws, as in effect on the date hereof (the
“By-laws”), and the terms of all securities convertible
into or exercisable for Common Stock of the Company and the
material rights of the holders thereof in respect
thereto.
d. Issuance of Conversion Shares.
The Conversion Shares are duly authorized and reserved for issuance
and, upon conversion of the Note in accordance with its terms, will
be validly issued, fully paid and non- assessable, and free from
all taxes, liens, claims and encumbrances with respect to the issue
thereof and shall not be subject to preemptive rights or other
similar rights of shareholders of the Company and will not impose
personal liability upon the holder thereof.
e. No Broker-Dealer
Acknowledgement. Absent a final adjudication from a court of
competent jurisdiction stating otherwise, so long as any amount on
this Note remains outstanding, the Company shall not to any person,
institution, governmental or other entity, state, claim, allege, or
in any way assert, that Holder is currently, or ever has been a
broker-dealer under the Securities Exchange Act of
1934.
f. Acknowledgment of Dilution. The
Company understands and acknowledges the potentially dilutive
effect of the Conversion Shares to the Common Stock upon the
conversion of the Note or exercise of the Warrant. The Company
further acknowledges that its obligation to issue, upon conversion
of the Note or exercise of the Warrant, the Conversion Shares, in
accordance with this Agreement, the Note, and the Warrant are
absolute and unconditional regardless of the dilutive effect that
such issuance may have on the ownership interests of other
shareholders of the Company.
g. Ranking; No Conflicts. The Note
shall be a subordinate debt obligation of the Company. The
execution, delivery and performance of this Agreement and the Note
by the Company and the consummation by the Company of the
transactions contemplated hereby and thereby (including, without
limitation, the issuance and reservation for issuance of the
Conversion Shares) will not (i) conflict with or result in a
violation of any provision of the Certificate of Incorporation or
Bylaws, or (ii) violate or conflict with, or result in a breach of
any provision of, or constitute a default (or an event which with
notice or lapse of time or both could become a default) under, or
give to others any rights of termination, amendment, acceleration
or cancellation of, any agreement, note, evidence of indebtedness,
indenture, patent, patent license or instrument to which the
Company or any of its Subsidiaries is a party, or (iii) result in a
violation of any law, rule, regulation, order, judgment or decree
(including federal and state securities laws and regulations and
regulations of any self-regulatory organizations to which the
Company or its securities is subject) applicable to the Company or
any of its Subsidiaries or by which any property or asset of the
Company or any of its Subsidiaries is bound or affected (except for
such conflicts, defaults, terminations, amendments, accelerations,
cancellations and violations as would not, individually or in the
aggregate, have a Material Adverse Effect), or (iv) trigger any
anti-dilution and/or ratchet provision contained in any other
contract in which the Company is a party thereto or any security
issued by the Company. Neither the Company nor any of its
Subsidiaries is in violation of its Certificate of Incorporation,
By-laws or other organizational documents and neither the Company
nor any of its Subsidiaries is in default (and no event has
occurred which with notice or lapse of time or both could put the
Company or any of its Subsidiaries in default) under, and neither
the Company nor any of its Subsidiaries has taken any action or
failed to take any action that would give to others any rights of
termination, amendment, acceleration or cancellation of, any
agreement, indenture or instrument to which the Company or any of
its Subsidiaries is a party or by which any property or assets of
the Company or any of its Subsidiaries is bound or affected, except
for possible defaults as would not, individually or in the
aggregate, have a Material Adverse Effect. The businesses of the
Company and its Subsidiaries, if any, are not being conducted, and
shall not be conducted so long as the Buyer owns any of the
Securities, in violation of any law, ordinance or regulation of any
governmental entity. Except as specifically contemplated by this
Agreement and as required under the 1933 Act and any applicable
state securities laws, the Company is not required to obtain any
consent, authorization or order of, or make any filing or
registration with, any court, governmental agency, regulatory
agency, self-regulatory organization or stock market or any third
party in order for it to execute, deliver or perform any of its
obligations under this Agreement and the Note in accordance with
the terms hereof or thereof or to issue and sell the Note in
accordance with the terms hereof and, upon conversion of the Note,
issue Conversion Shares. All consents, authorizations, orders,
filings and registrations which the Company is required to obtain
pursuant to the preceding sentence have been obtained or effected
on or prior to the date hereof. The Company and its Subsidiaries
are unaware of any facts or circumstances which might give rise to
any of the foregoing.
h. SEC Documents; Financial
Statements. The Company has timely filed all reports,
schedules, forms, statements and other documents required to be
filed by it with the SEC pursuant to the reporting requirements of
the Securities Exchange Act of 1934, as amended (the “1934
Act”) (all of the foregoing filed prior to the date hereof
and all exhibits included therein and financial statements and
schedules thereto and documents (other than exhibits to such
documents) incorporated by reference therein, being hereinafter
referred to herein as the “SEC Documents”). As of their
respective dates, the SEC Documents complied in all material
respects with the requirements of the 1934 Act and the rules and
regulations of the SEC promulgated thereunder applicable to the SEC
Documents, and none of the SEC Documents, at the time they were
filed with the SEC, contained any untrue statement of a material
fact or omitted to state a material fact required to be stated
therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not
misleading. None of the statements made in any such SEC Documents
is, or has been, required to be amended or updated under applicable
law (except for such statements as have been amended or updated in
subsequent filings prior the date hereof). As of their respective
dates, the financial statements of the Company included in the SEC
Documents complied as to form in all material respects with
applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto. Such financial
statements have been prepared in accordance with United States
generally accepted accounting principles, consistently applied,
during the periods involved and fairly present in all material
respects the consolidated financial position of the Company and its
consolidated Subsidiaries as of the dates thereof and the
consolidated results of their operations and cash flows for the
periods then ended (subject, in the case of unaudited statements,
to normal year-end audit adjustments). Except as set forth in the
financial statements of the Company included in the SEC Documents,
the Company has no liabilities, contingent or otherwise, other than
(i) liabilities incurred in the ordinary course of business
subsequent to December 31, 2020, and (ii) obligations under
contracts and commitments incurred in the ordinary course of
business and not required under generally accepted accounting
principles to be reflected in such financial statements, which,
individually or in the aggregate, are not material to the financial
condition or operating results of the Company. The Company is not
subject to the reporting requirements of the 1934 Act as of the
date of this Agreement. The Company has never been a “shell
company” as described in Rule 144(i)(1)(i).
i. Absence of Certain Changes.
Since December 31, 2020, there has been no material adverse change
and no material adverse development in the assets, liabilities,
business, properties, operations, financial condition, results of
operations, prospects or 1934 Act reporting status of the Company
or any of its Subsidiaries.
j. Absence of Litigation. There is
no action, suit, claim, proceeding, inquiry or investigation before
or by any court, public board, government agency, self-regulatory
organization or body pending or, to the knowledge of the Company or
any of its Subsidiaries, threatened against or affecting the
Company or any of its Subsidiaries, or their officers or directors
in their capacity as such, that could have a Material Adverse
Effect. The SEC Documents contain a complete list and summary
description of any pending or, to the knowledge of the Company,
threatened proceeding against or affecting the Company or any of
its Subsidiaries, without regard to whether it would have a
Material Adverse Effect. The Company and its Subsidiaries are
unaware of any facts or circumstances which might give rise to any
of the foregoing. Notwithstanding the foregoing, the Buyer
acknowledges the existence of all litigations disclosed and
outstanding the SEC Documents.
k. Intellectual Property. The
Company and each of its Subsidiaries owns or possesses the
requisite licenses or rights to use all patents, patent
applications, patent rights, inventions, know-how, trade secrets,
trademarks, trademark applications, service marks, service names,
trade names and copyrights (“Intellectual Property”)
necessary to enable it to conduct its business as now operated
(and, as presently contemplated to be operated in the future);
there is no claim or action by any person pertaining to, or
proceeding pending, or to the Company’s knowledge threatened,
which challenges the right of the Company or of a Subsidiary with
respect to any Intellectual Property necessary to enable it to
conduct its business as now operated (and, as presently
contemplated to be operated in the future); to the best of the
Company’s knowledge, the Company’s or its
Subsidiaries’ current and intended products, services and
processes do not infringe on any Intellectual Property or other
rights held by any person; and the Company is unaware of any facts
or circumstances which might give rise to any of the foregoing. The
Company and each of its Subsidiaries have taken reasonable security
measures to protect the secrecy, confidentiality and value of their
Intellectual Property.
l. No Materially Adverse Contracts,
Etc. Neither the Company nor any of its Subsidiaries is
subject to any charter, corporate or other legal restriction, or
any judgment, decree, order, rule or regulation which in the
judgment of the Company’s officers has or is expected in the
future to have a Material Adverse Effect. Neither the Company nor
any of its Subsidiaries is a party to any contract or agreement
which in the judgment of the Company’s officers has or is
expected to have a Material Adverse Effect.
m. Tax Status. The Company and
each of its Subsidiaries has made or filed all federal, state and
foreign income and all other tax returns, reports and declarations
required by any jurisdiction to which it is subject (unless and
only to the extent that the Company and each of its Subsidiaries
has set aside on its books provisions reasonably adequate for the
payment of all unpaid and unreported taxes) and has paid all taxes
and other governmental assessments and charges that are material in
amount, shown or determined to be due on such returns, reports and
declarations, except those being contested in good faith and has
set aside on its books provisions reasonably adequate for the
payment of all taxes for periods subsequent to the periods to which
such returns, reports or declarations apply. There are no unpaid
taxes in any material amount claimed to be due by the taxing
authority of any jurisdiction, and the officers of the Company know
of no basis for any such claim. The Company has not executed a
waiver with respect to the statute of limitations relating to the
assessment or collection of any foreign, federal, state or local
tax. None of the Company’s tax returns is presently being
audited by any taxing authority.
n. Transactions with Affiliates.
Except for arm’s length transactions pursuant to which the
Company or any of its Subsidiaries makes payments in the ordinary
course of business upon terms no less favorable than the Company or
any of its Subsidiaries could obtain from third parties and other
than the grant of stock options described in the SEC Documents,
none of the officers, directors, or employees of the Company is
presently a party to any transaction with the Company or any of its
Subsidiaries (other than for services as employees, officers and
directors), including any contract, agreement or other arrangement
providing for the furnishing of services to or by, providing for
rental of real or personal property to or from, or otherwise
requiring payments to or from any officer, director or such
employee or, to the knowledge of the Company, any corporation,
partnership, trust or other entity in which any officer, director,
or any such employee has a substantial interest or is an officer,
director, trustee or partner.
o. Disclosure. All information
relating to or concerning the Company or any of its Subsidiaries
set forth in this Agreement and provided to the Buyer pursuant to
Section 2(d) hereof and otherwise in connection with the
transactions contemplated hereby is true and correct in all
material respects and the Company has not omitted to state any
material fact necessary in order to make the statements made herein
or therein, in light of the circumstances under which they were
made, not misleading. No event or circumstance has occurred or
exists with respect to the Company or any of its Subsidiaries or
its or their business, properties, prospects, operations or
financial conditions, which, under applicable law, rule or
regulation, requires public disclosure or announcement by the
Company but which has not been so publicly announced or disclosed
(assuming for this purpose that the Company’s reports filed
under the 1934 Act are being incorporated into an effective
registration statement filed by the Company under the 1933
Act).
p. Acknowledgment Regarding Buyer’s
Purchase of Securities. The Company acknowledges and agrees
that the Buyer is acting solely in the capacity of arm’s
length purchaser with respect to this Agreement and the
transactions contemplated hereby. The Company further acknowledges
that the Buyer is not acting as a financial advisor or fiduciary of
the Company (or in any similar capacity) with respect to this
Agreement and the transactions contemplated hereby and any
statement made by the Buyer or any of its respective
representatives or agents in connection with this Agreement and the
transactions contemplated hereby is not advice or a recommendation
and is merely incidental to the Buyer’s purchase of the
Securities. The Company further represents to the Buyer that the
Company’s decision to enter into this Agreement has been
based solely on the independent evaluation of the Company and its
representatives.
q. No Integrated Offering. Neither
the Company, nor any of its affiliates, nor any person acting on
its or their behalf, has directly or indirectly made any offers or
sales in any security or solicited any offers to buy any security
under circumstances that would require registration under the 1933
Act of the issuance of the Securities to the Buyer. The issuance of
the Securities to the Buyer will not be integrated with any other
issuance of the Company’s securities (past, current or
future) for purposes of any shareholder approval provisions
applicable to the Company or its securities.
r. No Brokers. Other than the use
of Xxxxxx, Xxxxx & Company, Inc., the Company has taken no
action which would give rise to any claim by any person for
brokerage commissions, transaction fees or similar payments
relating to this Agreement or the transactions contemplated
hereby.
s. Permits; Compliance. The
Company and each of its Subsidiaries is in possession of all
franchises, grants, authorizations, licenses, permits, easements,
variances, exemptions, consents, certificates, approvals and orders
necessary to own, lease and operate its properties and to carry on
its business as it is now being conducted (collectively, the
“Company Permits”), and there is no action pending or,
to the knowledge of the Company, threatened regarding suspension or
cancellation of any of the Company Permits. Neither the Company nor
any of its Subsidiaries is in conflict with, or in default or
violation of, any of the Company Permits, except for any such
conflicts, defaults or violations which, individually or in the
aggregate, would not reasonably be expected to have a Material
Adverse Effect. Since December 31, 2020, neither the Company nor
any of its Subsidiaries has received any notification with respect
to possible conflicts, defaults or violations of applicable laws,
except for notices relating to possible conflicts, defaults or
violations, which conflicts, defaults or violations would not have
a Material Adverse Effect.
t.
Environmental Matters.
(i) There are, to the
Company’s knowledge, with respect to the Company or any of
its Subsidiaries or any predecessor of the Company, no past or
present violations of Environmental Laws (as defined below),
releases of any material into the environment, actions, activities,
circumstances, conditions, events, incidents, or contractual
obligations which may give rise to any common law environmental
liability or any liability under the Comprehensive Environmental
Response, Compensation and Liability Act of 1980 or similar
federal, state, local or foreign laws and neither the Company nor
any of its Subsidiaries has received any notice with respect to any
of the foregoing, nor is any action pending or, to the
Company’s knowledge, threatened in connection with any of the
foregoing. The term ”Environmental Laws” means all
federal, state, local or foreign laws relating to pollution or
protection of human health or the environment (including, without
limitation, ambient air, surface water, groundwater, land surface
or subsurface strata), including, without limitation, laws relating
to emissions, discharges, releases or threatened releases of
chemicals, pollutants contaminants, or toxic or hazardous
substances or wastes (collectively, “Hazardous
Materials”) into the environment, or otherwise relating to
the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of Hazardous Materials, as well as
all authorizations, codes, decrees, demands or demand letters,
injunctions, judgments, licenses, notices or notice letters,
orders, permits, plans or regulations issued, entered, promulgated
or approved thereunder.
(ii) Other
than those that are or were stored, used or disposed of in
compliance with applicable law, no Hazardous Materials are
contained on or about any real property currently owned, leased or
used by the Company or any of its Subsidiaries, and no Hazardous
Materials were released on or about any real property previously
owned, leased or used by the Company or any of its Subsidiaries
during the period the property was owned, leased or used by the
Company or any of its Subsidiaries, except in the normal course of
the Company’s or any of its Subsidiaries’
business.
(iii) There
are no underground storage tanks on or under any real property
owned, leased or used by the Company or any of its Subsidiaries
that are not in compliance with applicable law.
u. Title to Property. The Company
and its Subsidiaries have good and marketable title in fee simple
to all real property and good and marketable title to all personal
property owned by them which is material to the business of the
Company and its Subsidiaries, in each case free and clear of all
liens, encumbrances and defects except such as are described in
Schedule 3(u), if attached hereto, or such as would not have a
Material Adverse Effect. Any real property and facilities held
under lease by the Company and its Subsidiaries are held by them
under valid, subsisting and enforceable leases with such exceptions
as would not have a Material Adverse Effect.
v. Insurance. The Company and each
of its Subsidiaries are insured by insurers of recognized financial
responsibility against such losses and risks and in such amounts as
management of the Company believes to be prudent and customary in
the businesses in which the Company and its Subsidiaries are
engaged. Neither the Company nor any such Subsidiary has any reason
to believe that it will not be able to renew its existing insurance
coverage as and when such coverage expires or to obtain similar
coverage from similar insurers as may be necessary to continue its
business at a cost that would not have a Material Adverse Effect.
Upon written request the Company will provide to the Buyer true and
correct copies of all policies relating to directors’ and
officers’ liability coverage, errors and omissions coverage,
and commercial general liability coverage.
w. Internal Accounting Controls.
The Company and each of its Subsidiaries maintain a system of
internal accounting controls sufficient, in the judgment of the
Company’s board of directors, to provide reasonable assurance
that (i) transactions are executed in accordance with
management’s general or specific authorizations, (ii)
transactions are recorded as necessary to permit preparation of
financial statements in conformity with generally accepted
accounting principles and to maintain asset accountability, (iii)
access to assets is permitted only in accordance with
management’s general or specific authorization and (iv) the
recorded accountability for assets is compared with the existing
assets at reasonable intervals and appropriate action is taken with
respect to any differences.
x. Foreign Corrupt Practices.
Neither the Company, nor any of its Subsidiaries, nor any director,
officer, agent, employee or other person acting on behalf of the
Company or any Subsidiary has, in the course of his actions for, or
on behalf of, the Company, used any corporate funds for any
unlawful contribution, gift, entertainment or other unlawful
expenses relating to political activity; made any direct or
indirect unlawful payment to any foreign or domestic government
official or employee from corporate funds; violated or is in
violation of any provision of the U.S. Foreign Corrupt Practices
Act of 1977, as amended, or made any bribe, rebate, payoff,
influence payment, kickback or other unlawful payment to any
foreign or domestic government official or employee.
y. Solvency. The Company (after
giving effect to the transactions contemplated by this Agreement)
is solvent (i.e.,
its assets have a fair market value in excess of the amount
required to pay its probable liabilities on its existing debts as
they become absolute and matured) and currently the Company has no
information that would lead it to reasonably conclude that the
Company would not, after giving effect to the transaction
contemplated by this Agreement, have the ability to, nor does it
intend to take any action that would impair its ability to, pay its
debts from time to time incurred in connection therewith as such
debts mature. The Company’s financial statements for its most
recent fiscal year end and interim financial statements have been
prepared assuming the Company will continue as a going concern,
which contemplates the realization of assets and the satisfaction
of liabilities in the normal course of business.
z. No Investment Company. The
Company is not, and upon the issuance and sale of the Securities as
contemplated by this Agreement will not be an “investment
company” required to be registered under the Investment
Company Act of 1940 (an “Investment Company”). The
Company is not controlled by an Investment Company.
aa. No
Off-Balance Sheet Arrangements. There is no transaction,
arrangement, or other relationship between the Company or any of
its Subsidiaries and an unconsolidated or other off-balance sheet
entity that is required to be disclosed by the Company in its 1934
Act filings and is not so disclosed or that otherwise could be
reasonably likely to have a Material Adverse Effect.
bb. No
Disqualification Events. None of the Company, any of its
predecessors, any affiliated issuer, any director, executive
officer, other officer of the Company participating in the offering
hereunder, any beneficial owner of twenty percent (20%) or more of
the Company’s outstanding voting equity securities,
calculated on the basis of voting power, nor any promoter (as that
term is defined in Rule 405 under the 0000 Xxx) connected with the
Company in any capacity at the time of sale (each, an “Issuer
Covered Person”) is subject to any of the “Bad
Actor” disqualifications described in Rule 506(d)(1)(i) to
(viii) under the 1933 Act (a “Disqualification Event”),
except for a Disqualification Event covered by Rule 506(d)(2) or
(d)(3). The Company has exercised reasonable care to determine
whether any Issuer Covered Person is subject to a Disqualification
Event.
cc. Manipulation
of Price. The Company has not, and to its knowledge no one
acting on its behalf has: (i) taken, directly or indirectly, any
action designed to cause or to result, or that could reasonably be
expected to cause or result, in the stabilization or manipulation
of the price of any security of the Company to facilitate the sale
or resale of any of the Securities, (ii) sold, bid for, purchased,
or paid any compensation for soliciting purchases of, any of the
Securities, or (iii) paid or agreed to pay to any person any
compensation for soliciting another to purchase any other
securities of the Company.
dd. Bank
Holding Company Act. Neither the Company nor any of its
Subsidiaries is subject to the Bank Holding Company Act of 1956, as
amended (the “BHCA”) and to regulation by the Board of
Governors of the Federal Reserve System (the “Federal
Reserve”). Neither the Company nor any of its Subsidiaries or
affiliates owns or controls, directly or indirectly, five percent
(5%) or more of the outstanding shares of any class of voting
securities or twenty-five percent (25%) or more of the total equity
of a bank or any entity that is subject to the BHCA and to
regulation by the Federal Reserve. Neither the Company nor any of
its Subsidiaries or affiliates exercises a controlling influence
over the management or policies of a bank or any entity that is
subject to the BHCA and to regulation by the Federal
Reserve.
ee. Illegal
or Unauthorized Payments; Political Contributions. Neither
the Company nor any of its Subsidiaries nor, to the Company’s
knowledge, any of the officers, directors, employees, agents or
other representatives of the Company or any of its Subsidiaries or
any other business entity or enterprise with which the Company or
any Subsidiary is or has been affiliated or associated, has,
directly or indirectly, made or authorized any payment,
contribution or gift of money, property, or services, whether or
not in contravention of applicable law, (i) as a kickback or bribe
to any person or (ii) to any political organization, or the holder
of or any aspirant to any elective or appointive public office
except for personal political contributions not involving the
direct or indirect use of funds of the Company or any of its
Subsidiaries.
ff. Breach
of Representations and Warranties by the Company. The
Company agrees that if the Company breaches any of the
representations or warranties set forth in this Section 3 and in
addition to any other remedies available to the Buyer pursuant to
this Agreement, it will be considered an Event of Default under
Section 3 of the Note.
4. ADDITIONAL COVENANTS, AGREEMENTS AND
ACKNOWLEDGEMENTS.
a. Best Efforts. The parties shall
use their best efforts to satisfy timely each of the conditions
described in Section 6 and 7 of this Agreement.
b. Use of Proceeds. The Company
shall use the proceeds for business development and working
capital, and not for the repayment of any indebtedness owed to
officers, directors or employees of the Company or their affiliates
or in violation or contravention of any applicable law, rule or
regulation.
c. Usury. To the extent it may
lawfully do so, the Company hereby agrees not to insist upon or
plead or in any manner whatsoever claim, and will resist any and
all efforts to be compelled to take the benefit or advantage of,
usury laws wherever enacted, now or at any time hereafter in force,
in connection with any action or proceeding that may be brought by
the Buyer in order to enforce any right or remedy under this
Agreement, the Note and any document, agreement or instrument
contemplated thereby. Notwithstanding any provision to the contrary
contained in this Agreement, the Note and any document, agreement
or instrument contemplated thereby, it is expressly agreed and
provided that the total liability of the Company under this
Agreement, the Note or any document, agreement or instrument
contemplated thereby for payments which under applicable law are in
the nature of interest shall not exceed the maximum lawful rate
authorized under applicable law (the “Maximum Rate”),
and, without limiting the foregoing, in no event shall any rate of
interest or default interest, or both of them, when aggregated with
any other sums which under applicable law in the nature of interest
that the Company may be obligated to pay under this Agreement, the
Note and any document, agreement or instrument contemplated thereby
exceed such Maximum Rate. It is agreed that if the maximum contract
rate of interest allowed by law applicable to this Agreement, the
Note and any document, agreement or instrument contemplated thereby
is increased or decreased by statute or any official governmental
action subsequent to the date hereof, the new maximum contract rate
of interest allowed by law will be the Maximum Rate applicable to
this Agreement, the Note and any document, agreement or instrument
contemplated thereby from the effective date thereof forward,
unless such application is precluded by applicable law. If under
any circumstances whatsoever, interest in excess of the Maximum
Rate is paid by the Company to the Buyer with respect to
indebtedness evidenced by this Agreement, the Note and any
document, agreement or instrument contemplated thereby, such excess
shall be applied by the Buyer to the unpaid principal balance of
any such indebtedness or be refunded to the Company, the manner of
handling such excess to be at the Buyer’s
election.
d. Restriction on Activities.
Commencing as of the date first above written, and until the
earlier of payment of the Note in full or full conversion of the
Note, the Company shall not, directly or indirectly, without the
Buyer’s prior written consent, which consent shall not be
unreasonably withheld: (a) change the nature of its business in any
material respect; (b) sell, divest, acquire, change the structure
of any material assets other than in the ordinary course of
business.
e. Listing. The Company will
within one hundred and eighty (180) of the Effective Date hereof
and thereafter for so long as the Buyer owns any of the Securities,
maintain the listing and trading of its Common Stock on the
Principal Market or any equivalent replacement exchange or
electronic quotation system (including but not limited to the Pink
Sheets electronic quotation system) and will comply in all respects
with the Company’s reporting, filing and other obligations
under the bylaws or rules of the Financial Industry Regulatory
Authority (“FINRA”) and such exchanges, as applicable.
The Company shall promptly provide to the Buyer copies of any
notices it receives from the Principal Market and any other
exchanges or electronic quotation systems on which the Common Stock
is then traded regarding the continued eligibility of the Common
Stock for listing on such exchanges and quotation
systems.
f. Corporate Existence. The
Company will, so long as the Buyer beneficially owns any of the
Securities, maintain its corporate existence and shall not sell all
or substantially all of the Company’s assets, except in the
event of a merger or consolidation or sale of all or substantially
all of the Company’s assets, where the surviving or successor
entity in such transaction (i) assumes the Company’s
obligations hereunder and under the agreements and instruments
entered into in connection herewith and (ii) is a publicly traded
corporation whose Common Stock is listed for trading or quotation
on the Principal Market, any tier of the NASDAQ Stock Market, the
New York Stock Exchange or the NYSE MKT.
g. No Integration. The Company
shall not make any offers or sales of any security (other than the
Securities) under circumstances that would require registration of
the Securities being offered or sold hereunder under the 1933 Act
or cause the offering of the Securities to be integrated with any
other offering of securities by the Company for the purpose of any
stockholder approval provision applicable to the Company or its
securities.
h. Breach of Covenants. The
Company acknowledges and agrees that if the Company breaches any of
the covenants set forth in this Section 4, in addition to any other
remedies available to the Buyer pursuant to this Agreement, it will
be considered an Event of Default under Section 3.4 of the
Note.
i. Compliance with 1934 Act; Public
Information Failures. Company shall remain current its
quarterly, annual and current reports with the Securities and
Exchange Commission and shall become subject to the 1934 Act within
180 days. For so long as the Buyer beneficially owns the Note, or
any Conversion Shares, the Company shall comply with the reporting
requirements of the 1934 Act; and the Company shall continue to be
subject to the reporting requirements of the 1934 Act, once subject
thereto. During the period that the Buyer beneficially owns the
Note, if the Company shall (i) fail for any reason to satisfy the
requirements of Rule 144(c)(1), including, without limitation, the
failure to satisfy the current public information requirements
under Rule 144(c) or (ii) if the Company has ever been an issuer
described in Rule 144(i)(1)(i) or becomes such an issuer in the
future, and the Company shall fail to satisfy any condition set
forth in Rule 144(i)(2) (each, a “Public Information
Failure”) then, as partial relief for the damages to the
Buyer by reason of any such delay in or reduction of its ability to
sell the Securities (which remedy shall not be exclusive of any
other remedies available pursuant to this Agreement, the Note, or
at law or in equity), the Company shall pay to the Buyer an amount
in cash equal to three percent (3%) of the Purchase Price on each
of the day of a Public Information Failure and on every thirtieth
day (pro-rated for periods totaling less than thirty days)
thereafter until the date such Public Information Failure is cured.
The payments to which a holder shall be entitled pursuant to this
Section 4(k) are referred to herein as “Public Information
Failure Payments.” Public Information Failure Payments shall
be paid on the earlier of (i) the last day of the calendar month
during which such Public Information Failure Payments are incurred
and (iii) the third business day after the event or failure giving
rise to the Public Information Failure Payments is cured. In the
event the Company fails to make Public Information Failure Payments
in a timely manner, such Public Information Failure Payments shall
bear interest at the rate of 2% per month (prorated for partial
months) until paid in full. As used in this Agreement, the term
“business day” shall mean any day other than a
Saturday, Sunday or a day on which commercial banks in the city of
New York, New York are authorized or required by law or executive
order to remain closed.
j. Disclosure of Transactions and Other
Material Information. By 9:00 a.m., New York time, four (4)
Business Days following the date this Agreement has been fully
executed and funded, the Company shall file a Current Report on
Form 8-K describing the terms of the transactions contemplated by
this Agreement in the form required by the 1934 Act and attaching
this Agreement, the form of Note (the “8-K Filing”).
From and after the filing of the 8-K Filing with the SEC, the Buyer
shall not be in possession of any material, nonpublic information
received from the Company, any of its Subsidiaries or any of their
respective officers, directors, employees or agents that is not
disclosed in the 8-K Filing. In addition, effective upon the filing
of the 8-K Filing, the Company acknowledges and agrees that any and
all confidentiality or similar obligations under any agreement,
whether written or oral, between the Company, any of its
Subsidiaries or any of their respective officers, directors,
affiliates, employees or agents, on the one hand, and the Buyer or
any of its affiliates, on the other hand, shall
terminate.
k. Legal Counsel Opinions. Upon
the request of the Buyer from to time to time, the Company shall be
responsible, at its cost, for promptly supplying to the
Company’s transfer agent and the Buyer a customary legal
opinion letter of its counsel (the “Legal Counsel
Opinion”) to the effect that the resale of the Conversion
Shares by the Buyer or its affiliates, successors and assigns is
exempt from the registration requirements of the 1933 Act pursuant
to Rule 144, provided the requirements of Rule 144 are satisfied
and provided the Conversion Shares are not then registered under
the 1933 Act for resale pursuant to an effective registration
statement, or other applicable exemption, provided the requirements
of such other applicable exemption are satisfied. Buyer will take
no action or inaction that would invalidate the proposed opinion.
Buyer will provide the customary representations to counsel in
order to provide such an opinion. Should the Company’s legal
counsel fail for any reason other than that the requirements of
said exemption are unavailable in the reasonable opinion of counsel
to issue the Legal Counsel Opinion, the Buyer may, at the
Company’s cost, secure another legal counsel to issue the
Legal Counsel Opinion, and the Company will instruct its transfer
agent to accept such opinion. The Company hereby agrees that it may
never take the position that it is a “shell company” in
connection with its obligations under this Agreement or
otherwise.
l. Most-Favored Nation. While the
Note or any principal amount, interest or fees or expenses due
thereunder remain outstanding and unpaid, the Company shall not
enter into any subsequent public or private offering of its
securities (including securities convertible into shares of Common
Stock) with any individual or entity (an “Other
Investor”) that has the effect of establishing rights or
otherwise benefiting such Other Investor in a manner more favorable
in any material respect to such Other Investor than the rights and
benefits established in favor of the Buyer by this Agreement. In
the event the Company enters into such an agreement with said more
favorable terms, this Agreement shall automatically, without
further action of the parties, be amended to include those more
favorable terms into this Agreement.
m. Non-Public Information. The
Company covenants and agrees that neither it, nor any other person
acting on its behalf will provide the Buyer or its agents or
counsel with any information that constitutes, or the Company
reasonably believes constitutes, material non-public information,
unless prior thereto the Buyer shall have consented to the receipt
of such information and agreed with the Company to keep such
information confidential. The Company understands and confirms that
the Buyer shall be relying on the foregoing covenant in effecting
transactions in securities of the Company. To the extent that the
Company delivers any material, non-public information to the Buyer
without such Buyer’s consent, the Company hereby covenants
and agrees that such Buyer shall not have any duty of
confidentiality to the Company, any of its Subsidiaries, or any of
their respective officers, directors, agents, employees or
affiliates, not to trade on the basis of, such material, non-public
information, provided that the Buyer shall remain subject to
applicable law. To the extent that any notice provided, information
provided, or any other communications made by the Company, to the
Buyer, constitutes or contains material non-public information
regarding the Company or any Subsidiaries, the Company shall
simultaneously file such notice or other material information with
the SEC pursuant to a Current Report on Form 8-K. In addition to
any other remedies provided by this Agreement or the related
transaction documents, if the Company provides any material
non-public information to the Buyer without their prior written
consent, and it fails to immediately (no later than that business
day) file a Form 8-K disclosing this material non-public
information, it shall pay the Buyer as partial liquidated damages
and not as a penalty a sum equal to $1,000 per day beginning with
the day the information is disclosed to the Buyer and ending and
including the day the Form 8-K disclosing this information is
filed.
5. Transfer Agent Instructions.
The Company shall issue irrevocable instructions to the
Company’s transfer agent to issue certificates, registered in
the name of the Buyer or its nominee, upon conversion of the Note,
the Conversion Shares, in such amounts as specified from time to
time by the Buyer to the Company in accordance with the terms
thereof (the “Irrevocable Transfer Agent
Instructions”). In the event that the Company proposes to
replace its transfer agent, the Company shall provide, prior to the
effective date of such replacement, a fully executed Irrevocable
Transfer Agent Instructions in a form as initially delivered
pursuant to this Agreement (including but not limited to the
provision to irrevocably reserved shares of Common Stock in the
Reserved Amount (as defined in the Note)) signed by the successor
transfer agent to the Company and the Company. Prior to
registration of the Conversion Shares under the 1933 Act or the
date on which the Conversion Shares may be sold pursuant to Rule
144, Rule 144A, Regulation S, or other applicable exemption without
any restriction as to the number of Securities as of a particular
date that can then be immediately sold, all such certificates shall
bear the restrictive legend specified in Section 2(g) of this
Agreement. The Company warrants that: (i) no instruction other than
the Irrevocable Transfer Agent Instructions referred to in this
Section 5 will be given by the Company to its transfer agent and
that the Securities shall otherwise be freely transferable on the
books and records of the Company as and to the extent provided in
this Agreement and the Note; (ii) it will not direct its transfer
agent not to transfer or delay, impair, and/or hinder its transfer
agent in transferring (or issuing)(electronically or in
certificated form) any certificate for Securities to be issued to
the Buyer upon conversion of or otherwise pursuant to the Note as
and when required by the Note and this Agreement; (iii) it will not
fail to remove (or directs its transfer agent not to remove or
impairs, delays, and/or hinders its transfer agent from removing)
any restrictive legend (or to withdraw any stop transfer
instructions in respect thereof) on any certificate for any
Securities issued to the Buyer upon conversion of or otherwise
pursuant to the Note as and when required by the Note and this
Agreement and (iv) it will provide any required corporate
resolutions and issuance approvals to its transfer agent within 6
hours of each conversion of the Note. Nothing in this Section shall
affect in any way the Buyer’s obligations and agreement set
forth in Section 2(g) hereof to comply with all applicable
prospectus delivery requirements, if any, upon re-sale of the
Securities. If the Buyer provides the Company, at the cost of the
Company, with (i) an opinion of counsel in form, substance and
scope customary for opinions in comparable transactions, to the
effect that a public sale or transfer of such Securities may be
made without registration under the 1933 Act and such sale or
transfer is effected or (ii) the Buyer provides reasonable
assurances that the Securities can be sold pursuant to Rule 144,
Rule 144A, Regulation S, or other applicable exemption, the Company
shall permit the transfer, and, in the case of the Securities,
promptly instruct its transfer agent to issue one or more
certificates, free from restrictive legend, in such name and in
such denominations as specified by the Buyer. The Company
acknowledges that a breach by it of its obligations hereunder will
cause irreparable harm to the Buyer, by vitiating the intent and
purpose of the transactions contemplated hereby. Accordingly, the
Company acknowledges that the remedy at law for a breach of its
obligations under this Section 5 may be inadequate and agrees, in
the event of a breach or threatened breach by the Company of the
provisions of this Section, that the Buyer shall be entitled, in
addition to all other available remedies, to an injunction
restraining any breach and requiring immediate transfer, without
the necessity of showing economic loss and without any bond or
other security being required.
6. Conditions to the Company’s
Obligation to Sell. The obligation of the Company hereunder
to issue and sell the Note to the Buyer at the Closing is subject
to the satisfaction, at or before the Closing Date, of each of the
following conditions thereto, provided that these conditions are
for the Company’s sole benefit and may be waived by the
Company at any time in its sole discretion:
a. The Buyer shall
have executed this Agreement and delivered the same to the
Company.
b. The Buyer shall
have delivered the Purchase Price in accordance with Section 1(b)
above.
c. The representations
and warranties of the Buyer shall be true and correct in all
material respects as of the date when made and as of the Closing
Date, as though made at that time (except for representations and
warranties that speak as of a specific date), and the Buyer shall
have performed, satisfied and complied in all material respects
with the covenants, agreements and conditions required by this
Agreement to be performed, satisfied or complied with by the Buyer
at or prior to the Closing Date.
d. No litigation,
statute, rule, regulation, executive order, decree, ruling or
injunction shall have been enacted, entered, promulgated or
endorsed by or in any court or governmental authority of competent
jurisdiction or any self-regulatory organization having authority
over the matters contemplated hereby which prohibits the
consummation of any of the transactions contemplated by this
Agreement.
7. Conditions to The Buyer’s
Obligation to Purchase. The obligation of the Buyer
hereunder to purchase the Note, on the Closing Date, is subject to
the satisfaction, at or before the Closing Date, of each of the
following conditions, provided that these conditions are for the
Buyer’s sole benefit and may be waived by the Buyer at any
time in its sole discretion:
a. The Company shall
have executed this Agreement and delivered the same to the
Buyer.
b. The Company shall
have delivered to the Buyer the duly executed Note in such
denominations as the Buyer shall request and in accordance with
Section 1(b) above.
c. The Irrevocable
Transfer Agent Instructions, in form and substance satisfactory to
the Buyer, shall have been delivered to and acknowledged in writing
by the Company’s Transfer Agent.
d. The representations
and warranties of the Company shall be true and correct in all
material respects as of the date when made and as of Closing Date,
as though made at such time (except for representations and
warranties that speak as of a specific date) and the Company shall
have performed, satisfied and complied in all material respects
with the covenants, agreements and conditions required by this
Agreement to be performed, satisfied or complied with by the
Company at or prior to the Closing Date.
e. No litigation,
statute, rule, regulation, executive order, decree, ruling or
injunction shall have been enacted, entered, promulgated or
endorsed by or in any court or governmental authority of competent
jurisdiction or any self-regulatory organization having authority
over the matters contemplated hereby which prohibits the
consummation of any of the transactions contemplated by this
Agreement.
f. No event shall have
occurred which could reasonably be expected to have a Material
Adverse Effect on the Company including but not limited to a change
in the 1934 Act reporting status of the Company or the failure of
the Company to be timely in its 1934 Act reporting
obligations.
g. The Company shall
have delivered to the Buyer (i) a certificate evidencing the
formation and good standing of the Company and each of its
Subsidiaries in such entity’s jurisdiction of formation
issued by the Secretary of State (or comparable office) of such
jurisdiction, as of a date within ten (10) days of the Closing Date
and (ii) resolutions adopted by the Company’s Board of
Directors at a duly called meeting or by unanimous written consent
authorizing this Agreement and all other documents, instruments and
transactions contemplated hereby.
8.
Governing Law; Miscellaneous.
a. Governing Law; Venue. This
Agreement shall be governed by and construed in accordance with the
laws of the State of Nevada without regard to principles of
conflicts of laws. Any action brought by either party against the
other concerning the transactions contemplated by this Agreement,
the Note, or any other agreement, certificate, instrument or
document contemplated hereby shall be brought only in the state
courts of Nevada or in the federal courts located in the state of
Nevada. The parties to this Agreement hereby irrevocably waive any
objection to jurisdiction and venue of any action instituted
hereunder and shall not assert any defense based on lack of
jurisdiction or venue or based upon forum non conveniens. The prevailing party shall be entitled
to recover from the other party its reasonable attorney’s
fees and costs. Each party hereby irrevocably waives personal
service of process and consents to process being served in any
suit, action or proceeding in connection with this Agreement, the
Note, or any other agreement, certificate, instrument or document
contemplated hereby or thereby by mailing a copy thereof via
registered or certified mail or overnight delivery (with evidence
of delivery) to such party at the address in effect for notices to
it under this Agreement and agrees that such service shall
constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any
way any right to serve process in any other manner permitted by
law.
b. Counterparts. This Agreement
may be executed in one or more counterparts, each of which shall be
deemed an original but all of which shall constitute one and the
same agreement and shall become effective when counterparts have
been signed by each party and delivered to the other party. A
facsimile or .pdf signature shall be considered due execution and
shall be binding upon the signatory thereto with the same force and
effect as if the signature were an original, not a facsimile or
..pdf signature. Delivery of a counterpart signature hereto by
facsimile or email/.pdf transmission shall be deemed validly
delivery thereof.
c. Construction; Headings. This
Agreement shall be deemed to be jointly drafted by the Company and
the Buyer and shall not be construed against any person as the
drafter hereof. The headings of this Agreement are for convenience
of reference only and shall not form part of, or affect the
interpretation of, this Agreement.
d. Severability. In the event that
any provision of this Agreement, the Note, or any other agreement
or instrument delivered in connection herewith is invalid or
unenforceable under any applicable statute or rule of law, then
such provision shall be deemed inoperative to the extent that it
may conflict therewith and shall be deemed modified to conform with
such statute or rule of law. Any such provision which may prove
invalid or unenforceable under any law shall not affect the
validity or enforceability of any other provision of this
Agreement, the Note, or any other agreement, certificate,
instrument or document contemplated hereby or thereby.
e. Entire Agreement; Amendments.
This Agreement, the Note, and the instruments referenced herein
contain the entire understanding of the parties with respect to the
matters covered herein and therein and, except as specifically set
forth herein or therein, neither the Company nor the Buyer makes
any representation, warranty, covenant or undertaking with respect
to such matters. No provision of this Agreement or any agreement or
instrument contemplated hereby may be waived or amended other than
by an instrument in writing signed by the Buyer.
f. Notices. All notices, demands,
requests, consents, approvals, and other communications required or
permitted hereunder shall be in writing and, unless otherwise
specified herein, shall be (i) personally served, (ii) deposited in
the mail, registered or certified, return receipt requested,
postage prepaid, (iii) delivered by reputable air courier service
with charges prepaid, or (iv) transmitted by hand delivery,
telegram, e-mail or facsimile, addressed as set forth below or to
such other address as such party shall have specified most recently
by written notice. Any notice or other communication required or
permitted to be given hereunder shall be deemed effective (a) upon
hand delivery or delivery by e-mail or facsimile, with accurate
confirmation generated by the transmitting facsimile machine, at
the address or number designated below (if delivered on a business
day during normal business hours where such notice is to be
received), or the first business day following such delivery (if
delivered other than on a business day during normal business hours
where such notice is to be received) or (b) on the second business
day following the date of mailing by express courier service, fully
prepaid, addressed to such address, or upon actual receipt of such
mailing, whichever shall first occur. The addresses for such
communications shall be:
If to
the Company, to:
TEGO
CYBER INC.
0000
Xxxxx Xxxxxxx Xxxxxx, Xxxxx 000
Xxx
Xxxxx, Xxxxxx
XXX
00000
Attn:
Xxxxxxx Xxxxxxxxx
With a
copy by e-mail only to (which copy shall not constitute
notice):
XXXXXXX
+ XXXXXXX
00
Xxxxxxx Xxxxx 000
Xxxx
Xxxxxx, XX 00000
Attn:
Xxxxxxx X. Xxxxxxx
xxxxxxxx@xxxxxxx.xxx
If to
the Buyer:
XXXXXXX
XXXXXXXXX & XXXXXXXXX XXXXX
0000
Xxx xx Xxxx xx Xxxxxx
Xxxxx-Xxxxxxxx,
Xxxxxx X0X 0X0
g. Successors and Assigns. This
Agreement shall be binding upon and inure to the benefit of the
parties and their successors and assigns. Neither the Company nor
the Buyer shall assign this Agreement or any rights or obligations
hereunder without the prior written consent of the other.
Notwithstanding the foregoing, subject to Section 2(f), the Buyer
may assign its rights hereunder to any person that purchases
Securities in a private transaction from the Buyer or to any of its
“affiliates,” as that term is defined under the 1934
Act, without the consent of the Company.
h. Third Party Beneficiaries. This
Agreement is intended for the benefit of the parties hereto and
their respective permitted successors and assigns, and is not for
the benefit of, nor may any provision hereof be enforced by, any
other person.
i. Survival. The representations
and warranties of the Company and the agreements and covenants set
forth in this Agreement shall survive the closing hereunder
notwithstanding any due diligence investigation conducted by or on
behalf of the Buyer. The Company agrees to indemnify and hold
harmless the Buyer and all their officers, directors, employees and
agents for loss or damage arising as a result of or related to any
breach or alleged breach by the Company of any of its
representations, warranties and covenants set forth in this
Agreement or any of its covenants and obligations under this
Agreement, including advancement of expenses as they are
incurred.
j. Publicity. The Company, and the
Buyer shall have the right to review a reasonable period of time
before issuance of any press releases, SEC, Principal Market or
FINRA filings, or any other public statements with respect to the
transactions contemplated hereby; provided, however, that the Company shall
be entitled, without the prior approval of the Buyer, to make any
press release or SEC, Principal Market (or other applicable trading
market) or FINRA filings with respect to such transactions as is
required by applicable law and regulations (although the Buyer
shall be consulted by the Company in connection with any such press
release prior to its release and shall be provided with a copy
thereof and be given an opportunity to comment
thereon).
k. Expense Reimbursement; Further
Assurances. At the Closing to occur as of the Closing Date,
the Company shall pay on behalf of the Buyer or reimburse the Buyer
for its legal fees and expenses incurred in connection with this
Agreement, pursuant to the disbursement authorization signed by the
Company of even date. Each party shall do and perform, or cause to
be done and performed, all such further acts and things, and shall
execute and deliver all such other agreements, certificates,
instruments and documents, as the other party may reasonably
request in order to carry out the intent and accomplish the
purposes of this Agreement and the consummation of the transactions
contemplated hereby.
l. No Strict Construction. The
language used in this Agreement will be deemed to be the language
chosen by the parties to express their mutual intent, and no rules
of strict construction will be applied against any
party.
m. Indemnification. In
consideration of the Buyer’s execution and delivery of this
Agreement and acquiring the Securities hereunder, and in addition
to all of the Company’s other obligations under this
Agreement or the Note, the Company shall defend, protect, indemnify
and hold harmless the Buyer and its stockholders, partners,
members, officers, directors, employees and direct or indirect
investors and any of the foregoing persons’ agents or other
representatives (including, without limitation, those retained in
connection with the transactions contemplated by this Agreement)
(collectively, the “Indemnitees”) from and against any
and all third party actions, causes of action, suits, claims,
losses, costs, penalties, fees, liabilities and damages, and
expenses in connection therewith (irrespective of whether any such
Indemnitee is a party to the action for which indemnification
hereunder is sought), and including reasonable attorneys’
fees and disbursements (the “Indemnified Liabilities”),
incurred by any Indemnitee as a result of, or arising out of, or
relating to (a) any misrepresentation or breach of any
representation or warranty made by the Company in this Agreement,
the Note or any other agreement, certificate, instrument or
document contemplated hereby or thereby, (b) any breach of any
covenant, agreement or obligation of the Company contained in this
Agreement, the Note or any other agreement, certificate, instrument
or document contemplated hereby or thereby or (c) any cause of
action, suit or claim brought or made against such Indemnitee by a
third party (including for these purposes a derivative action
brought on behalf of the Company) and arising out of or resulting
from (i) the execution, delivery, performance or enforcement of
this Agreement, the Note or any other agreement, certificate,
instrument or document contemplated hereby or thereby, (ii) any
transaction financed or to be financed in whole or in part,
directly or indirectly, with the proceeds of the issuance of the
Securities, or (iii) the status of the Buyer or holder of the
Securities as an investor in the Company pursuant to the
transactions contemplated by this Agreement. To the extent that the
foregoing undertaking by the Company may be unenforceable for any
reason, the Company shall make the maximum contribution to the
payment and satisfaction of each of the Indemnified Liabilities
that is permissible under applicable law.
n. Remedies. The Company
acknowledges that a breach by it of its obligations hereunder will
cause irreparable harm to the Buyer by vitiating the intent and
purpose of the transaction contemplated hereby. Accordingly, the
Company acknowledges that the remedy at law for a breach of its
obligations under this Agreement or the Note will be inadequate and
agrees, in the event of a breach or threatened breach by the
Company of the provisions of this Agreement or the Note, that the
Buyer shall be entitled, in addition to all other available
remedies at law or in equity, and in addition to the penalties
assessable herein, to an injunction or injunctions restraining,
preventing or curing any breach of this Agreement or the Note and
to enforce specifically the terms and provisions hereof, without
the necessity of showing economic loss and without any bond or
other security being required.
o. Payment Set Aside. To the
extent that the Company makes a payment or payments to the Buyer
hereunder or pursuant to the Note, or the Buyer enforces or
exercises its rights hereunder or thereunder, and such payment or
payments or the proceeds of such enforcement or exercise or any
part thereof are subsequently invalidated, declared to be
fraudulent or preferential, set aside, recovered from, disgorged by
or are required to be refunded, repaid or otherwise restored to the
Company, a trustee, receiver or any other person or entity under
any law (including, without limitation, any bankruptcy law,
foreign, state or federal law, common law or equitable cause of
action), then to the extent of any such restoration the obligation
or part thereof originally intended to be satisfied shall be
revived and continued in full force and effect as if such payment
had not been made or such enforcement or setoff had not
occurred.
p. Failure or Indulgence Not
Waiver. No failure or delay on the part of the Buyer in the
exercise of any power, right or privilege hereunder shall operate
as a waiver thereof, nor shall any single or partial exercise of
any such power, right or privilege preclude other or further
exercise thereof or of any other right, power or privileges. All
rights and remedies of the Buyer existing hereunder are cumulative
to, and not exclusive of, any rights or remedies otherwise
available.
[SIGNATURE PAGE
FOLLOWS]
IN
WITNESS WHEREOF, the undersigned Buyer and the Company have caused
this Agreement to be duly executed as of the date first above
written.
TEGO
CYBER INC.
|
By:/s/
Xxxxxxx Xxxxxxxxx
|
|
Name:
XXXXXXX XXXXXXXXX
|
|
Title:
CHIEF EXECUTIVE OFFICER
|
XXXXXXX
XXXXXXXXX
|
By:/s/
Xxxxxxx Xxxxxxxxx
|
|
Name: XXXXXXX THAUVETTEDOMINIQUE JOYALBy:/s/ Dominique JoyalName:
XXXXXXXXX XXXXX
|
SUBSCRIPTION
AMOUNT:
|
Principal
Amount of Note: $33,507.50
|
|
Actual
Amount of Purchase Price of Note: $30,740.82
|
EXHIBIT
A
FORM
OF NOTE
[attached
hereto]
EXHIBIT
B
FORM
OF WARRANT
[attached
hereto]
