Exhibit 10.2

 

CONSENT, WAIVER AND MODIFICATION AGREEMENT

 

This Consent, Waiver and Modification Agreement (“Agreement”) is made and
entered into as of October 13, 2016, by and among Reign Sapphire Corporation, a
Delaware corporation (the “Company”), and the parties identified on the
signature page hereto (each a “Purchaser” and collectively, “Purchasers”).
Capitalized terms used but not defined herein will have the meanings assigned to
them in the Securities Purchase Agreements and Transaction Documents (all as
defined below).

 

WHEREAS, as of December 23, 2015, the Company and Purchasers identified on
Schedule A entered into Securities Purchase Agreements (collectively, the
“Securities Purchase Agreements” and each a “Securities Purchase Agreement”) and
related agreements with respect to the securities identified on Schedule A
(“Transaction Documents”); and

 

WHEREAS, pursuant to the terms of the Securities Purchase Agreements, the
Company issued to the Purchasers Secured Convertible Notes (“Notes”), Incentive
Shares and Warrants (the “Warrants”); and

 

WHEREAS, the Company proposes to: (i) designate and issue one share of Series A
Preferred Stock to its Chief Executive Officer, Joseph Segelman, pursuant to the
terms of the Certificate of Amendment of Certificate of Incorporation in the
form annexed hereto, (ii) to amend the Stock Option Plan for the issuance of up
to an additional 10,000,000 shares of its Common Stock to its employees, and
(iii) to issue up to 20,000,000 shares as part of a private or public offering
at a price of $0.30 per share ((i), (ii) and (iii), collectively “Proposed
Issuances”); and

 

WHEREAS, pursuant to Section 4.13 and Section 4.17 of the Securities Purchase
Agreements, Sections 5(b) and 7(c) respectively of the Notes, the Company is
prohibited, without the prior approval of Purchasers, from issuing any Common
Stock as part of a new offering,, issuing any Common Stock or Common Stock
Equivalents to officers, directors and employees of the Company unless such
issuance is an Exempt Issuance pursuant to items (a) and (d) of the definition
of Exempt Issuance or in the amounts and on the terms described on Schedule 4.13
to the Securities Purchase Agreements and to amend any of its charter documents;
and

 

WHEREAS, in connection with the Proposed Issuances, each Purchaser possesses a
right of participation (“Right of Participation”) and certain other rights (“MFN
Rights”) pursuant to Sections 4.17 and 4.23 respectively of the Securities
Purchase Agreements; and

 

WHEREAS, pursuant to Section 5(e) of the Notes and Section 3(c) of the Warrants,
upon a Dilutive Issuance, the Purchasers are entitled to an adjustment to the
Conversion Price and Exercise Price, respectively; and

 

WHEREAS, solely in connection with the Proposed Issuances, Purchasers will (i)
waive the Right of Participation, (ii) waive their MFN Rights, and (iii) release
the Company from the restrictions described in the fourth recital above.

 

NOW THEREFORE, in consideration of promises and mutual covenants contained
herein, for good and valuable consideration, and for the aggregate sum of One
Hundred Dollars ($100) (Fifty Dollars ($50) from each Purchaser), the receipt
and sufficiency of which are hereby acknowledged, the parties hereto hereby
consent and agree as follows:

 

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1.          With respect only to the Proposed Issuances, the Purchasers waive
(i) the Right of Participation and their MFN Rights; (ii) release the Company
from the restrictions described in the fourth recital above only to the extent
required to effectuate the waivers and amendments agreed to in this Agreement
and for no other purpose, and (iii) allow the issuance of up to 20,000,000
shares of Common Stock as part of a private or public offering at a price of not
less than $0.30 per share of Common Stock, subject to adjustment for stock
splits, stock dividends, similar events and equitable adjustment.

 

2.          Schedule 3.1(g) to the Securities Purchase Agreements is amended to
reflect 14,000,000 shares of Common Stock currently available for issuance under
the Stock Option Plan, and which Stock Option Plan may be amended to increase
such Stock Option Plan by 6,000,000 shares of Common Stock.

 

3.          With respect only to the Proposed Issuances, the Company may amend
the Stock Option Plan to allow for the issuance by the Company of up to an
additional 10,000,000 shares (20,000,000 shares total) of Common Stock for its
employees, which issuances will be reflected on an amended Schedule 4.13 to the
Securities Purchase Agreements annexed hereto.

 

4.          Reserved.

 

5.          Each of the Purchasers hereby represents the truth and accuracy of
each Purchaser’s representations and warranties contained in the Transaction
Documents when made and also as if such representations and warranties were made
as of the date hereof. The Company hereby represents the truth and accuracy of
all of the Company’s representations and warranties contained in the Transaction
Documents when made and also as if such representations and warranties were made
as of the date hereof, except as same have been modified or updated in the SEC
Reports.

 

6.          The Company agrees to issue to each of the Purchasers not later than
fifteen (15) calendar days following the date hereof, 500,000 shares of Common
Stock (the “Shares”) for a purchase price of $0.0001 per Share which is the cash
consideration stated in the recital above. The Shares will be imprinted with a
restrictive legend as set forth in Section 4 of the Securities Purchase
Agreements. This Agreement will be deemed null and void ab initio if the Company
fails to timely deliver the Shares to Purchasers.

 

7.          Each of the Purchasers executing this Agreement represents to the
Company that it has the authority to enter into and deliver this Agreement.

 

8.          The Company represents to the Purchasers that the books and records
of the Company accurately reflect the information described on Schedule A.

 

9.          Except as specifically described herein, there is no other waiver
expressed or implied.

 

10.         In this Agreement words importing the singular number include the
plural and vice versa; words importing the masculine gender include the feminine
and neutral genders. The word “person” includes an individual, body corporate,
partnership, trustee or trust or unincorporated association executor,
administrator or legal representative.

 

11.         This Agreement will be subject to amendment and/or waiver in the
same manner and subject to the same requirements as described in the Transaction
Documents.

 

12.         The invalidity or unenforceability of any provision hereof will in
no way affect the validity or enforceability of any other provision.

 

13.         All notices, demands, requests, consents, approvals, and other
communications required or permitted in connection with this Agreement shall be
made and given in the same manner set forth in Section 5.4 of the Securities
Purchase Agreements.

 

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14.         This Agreement shall be governed by and construed in accordance with
the laws of the State of New York without regard to conflicts of laws and
principles that would result in the application of the substantive laws of
another jurisdiction. Any action brought by either party against the other
concerning the transactions contemplated by this Agreement shall be brought only
in the state courts of New York in the federal courts located in the state of
New York. Both parties and the individuals executing this Agreement and other
agreements on behalf of the parties agree to submit to the jurisdiction of such
courts and waive trial by jury. The prevailing party (which shall be the party
which receives an award most closely resembling the remedy or action sought)
shall be entitled to recover from the other party its reasonable attorney’s fees
and costs. In the event that any provision of this Agreement or any other
agreement 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 any agreement.

 

15.         The division of this Agreement into articles, sections, subsections
and paragraphs and the insertion of headings are for convenience of reference
only and shall not affect the construction or interpretation of this agreement.

 

16.         This Agreement may be executed in counterparts, all of which when
taken together shall be considered one and the same Agreement and shall become
effective when the counterparts have been signed by each party and delivered to
the other party, it is being understood that all parties need not sign the same
counterpart. In the event that any signature is delivered by facsimile or PDF
transmission, such signature shall create a valid and binding obligation of the
party executing (or on whose behalf such signature is executed) the same with
the same force and effect as if such facsimile signature were an original
thereof.

 

(Signatures to follow)

 

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IN WITNESS WHEREOF, the Company, Guarantor, Collateral Agent and the undersigned
Purchasers have caused this Agreement to be executed as of the date first
written above.

 

  REIGN SAPPHIRE CORPORATION the “Company”       By:  [pg4img1_ex10-2.jpg]      
  AUSTRALIAN SAPPHIRE CORPORATION the “Guarantor”       By:
[pg4img2_ex10-2.jpg]          COLLATERAL AGENT       /s/ Konrad Ackermann  
ALPHA CAPITAL ANSTALT

 

“PURCHASER”

 

ALPHA CAPITAL ANSTALT   BRIO CAPITAL MASTER FUND LTD.           By: /s/ Konrad
Ackermann   By: /s/ Shaye Hirsch   Name: Konrad Ackermann     Name:Shaye Hirsch
  Title: Director     Title Director

 

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SCHEDULE A CONSENT WAIVER AND MODIFICATION AGREEMENT

 

DECEMBER 2015 PURCHASERS

 

PURCHASERS  SUBSCRIPTION
AMOUNT  ALPHA CAPITAL ANSTALT
Lettstrasse 32
P.O. Box 1212
9490 Vaduz, Lichtenstein
Fax: 212-586-8244
Taxpayer ID# None  $375,000.00  BRIO CAPITAL MASTER FUND LTD.
100 Merrick Road, Suite 401W
Rockville Center, NY 11570
Tel.: 516-536-0500
Taxpayer ID# 98-1072321  $375,000.00  TOTAL  $750,000.00 

 

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