EXHIBIT 10.1

 

SECURITIES PURCHASE AGREEMENT

 

This SECURITIES PURCHASE AGREEMENT (the “Agreement”), dated as of January 6,
2015, by and between EVENTURE INTERACTIVE, INC., a Nevada corporation, with
headquarters located at 3420 Bristol Street, 6th Floor, Costa Mesa, CA 92626
(the “Company”), and FIREROCK GLOBAL OPPORTUNITIES FUND L.P., a Delaware limited
partnership, with its address at 1040 First Avenue, Suite 190, New York, NY
10022 (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, two Convertible Promissory Notes of the Company, in the aggregate
principal amount of $275,000.00 (Face Amount of Purchase Price $575,000.00)
(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,
the “Notes”), 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 Notes;

 

C. The Buyer wishes to purchase, upon the terms and conditions stated in this
Agreement, such principal amount of Notes as is set forth immediately below its
name on the signature pages hereto;

 

D. The Buyer further wishes to purchase, upon the terms and conditions stated in
this Agreement, a warrant, in the form attached hereto as Exhibit B (the
“Warrant”), to purchase 500,000 shares of Common Stock (the “Warrant Shares”)
with an exercise price of $0.50 per share; and

 

E. The Company wishes to issue 250,000 restricted shares of Common Stock to the
Buyer as additional consideration for the purchase of the Notes by the Buyer
(the “Issuance Shares”).

 

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 Notes.

 

a. Purchase of Notes. On the Initial Closing Date (as defined below), the
Company shall issue and sell to the Buyer and the Buyer agrees to purchase a
Note, in the form attached hereto as Exhibit A (the “Initial Note”) from the
Company in the amount as is set forth immediately below the Buyer’s name on the
signature pages hereto. On the Second Closing Date (as defined below), the
Company shall issue and sell to the Buyer and the Buyer agrees to purchase a
Note, in the form attached hereto as Exhibit A-1 (the “Second Note”) from the
Company in the amount as is set forth immediately below the Buyer’s name on the
signature pages hereto. The Notes shall have an aggregate Face Amount of
Purchase Price of $575,000.00, as described herein and in the Notes.

 

b. Form of Payment. On the Initial Closing Date and Second Closing Date,
respectively: (i) the Buyer shall pay the purchase price for the Note to be
issued and sold to it at the applicable Closing (as defined below) (the
“Purchase Price”) by wire transfer of immediately available funds to the
Company, in accordance with the Company’s written wiring instructions, against
delivery of the Note in the principal amount equal to the Actual Amount of
Purchase Price of Initial Note or the Amount of Purchase Price of Second Note as
is set forth immediately below the Buyer’s name on the signature pages hereto,
and (ii) the Company shall deliver such duly executed Initial Note or Second
Note on behalf of the Company, to the Buyer, against delivery of such Purchase
Price.

 

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c. Initial 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 Initial Note pursuant to this Agreement (the
“Initial Closing Date”) shall be 4:00 PM, Eastern Standard Time on the date
first written above, or such other mutually agreed upon time.

 

d. Second 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 Second Note pursuant to this Agreement (the
“Second Closing Date”) shall be 4:00 PM, Eastern Standard Time on the third
business day following the declaration of effectiveness by the SEC of a
registration statement of the Company covering the public resale of the
Conversion Shares and the Warrant Shares pursuant to the Registration Rights
Agreement (as defined below).

 

e. The two closings of the transactions contemplated by this Agreement (each, a
“Closing”) shall occur on, respectively, the Initial Closing Date and the Second
Closing Date at such location as may be agreed to by the parties (including via
exchange of electronic signatures).

 

1A.        Warrant. On the Initial Closing Date, the Company shall issue and
sell to the Buyer and the Buyer agrees to purchase the Warrant from the Company.

 

1B.         Issuance Shares.  Within three business days of the Initial Closing
Date, the Company shall issue the Issuance Shares to the Buyer. 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.

 

2. Buyer’s Representations and Warranties. The Buyer represents and warrants to
the Company as of the Initial Closing Date and the Second Closing Date that:

 

a. Investment Purpose. As of the Initial Closing Date and the Second Closing
Date, the Buyer is purchasing the Notes, the Warrant, the Warrant Shares, the
Issuance Shares and the shares of Common Stock issuable upon conversion of or
otherwise pursuant to the Notes and such additional shares of Common Stock, if
any, as are issuable on account of interest on the Notes pursuant to this
Agreement, such shares of Common Stock being collectively referred to herein as
the “Conversion Shares” and, collectively with the Notes, the Warrant, the
Warrant Shares and the Issuance Shares, the “Securities”) for its own account
and not with a present view towards the public sale or distribution thereof,
except pursuant to sales registered or exempted from registration under the 1933
Act; provided, however, that by making the representations herein, the Buyer
does not agree to hold any of the Securities for any minimum or other specific
term and reserves the right to dispose of the Securities at any time in
accordance with or pursuant to a registration statement or an exemption under
the 1933 Act.

 

b. Accredited Investor Status. The Buyer is an “accredited investor” as that
term is defined in Rule 501(a) of Regulation D (an “Accredited Investor”).

 

c. Reliance on Exemptions. The Buyer understands that the Securities are being
offered and sold to it in reliance upon specific exemptions from the
registration requirements of United States federal and state securities laws and
that the Company is relying upon the truth and accuracy of, and the Buyer’s
compliance with, the representations, warranties, agreements, acknowledgments
and understandings of the Buyer set forth herein in order to determine the
availability of such exemptions and the eligibility of the Buyer to acquire the
Securities.

 

d. Information. The Buyer and its advisors, if any, have been, and for so long
as the Notes 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 Notes remain 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.

 

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e. Governmental Review. The Buyer understands that no United States federal or
state agency or any other government or governmental agency has passed upon or
made any recommendation or endorsement of the Securities.

 

f. Transfer or Re-sale. The Buyer understands that (i) the sale or resale of the
Securities has not been and is not being registered under the 1933 Act or any
applicable state securities laws, and the Securities may not be transferred
unless (a) the Securities are sold pursuant to an effective registration
statement under the 1933 Act, (b) the Buyer shall have delivered to the Company,
at the cost of the Company, an opinion of counsel (which may be the Legal
Counsel Opinion (as defined below)) that shall be in form, substance and scope
customary for opinions of counsel in comparable transactions to the effect that
the Securities to be sold or transferred may be sold or transferred pursuant to
an exemption from such registration, which opinion shall be accepted by the
Company, (c) the Securities are sold or transferred to an “affiliate” (as
defined in Rule 144 promulgated under the 1933 Act (or a successor rule) (“Rule
144”)) of the Buyer who agrees to sell or otherwise transfer the Securities only
in accordance with this Section 2(f) and who is an Accredited Investor, (d) the
Securities are sold pursuant to Rule 144, or (e) the Securities are sold
pursuant to Regulation S under the 1933 Act (or a successor rule) (“Regulation
S”), and the Buyer shall have delivered to the Company, at the cost of the
Company, an opinion of counsel that shall be in form, substance and scope
customary for opinions of counsel in corporate transactions, which opinion shall
be accepted by the Company; (ii) any sale of such Securities made in reliance on
Rule 144 may be made only in accordance with the terms of said Rule and further,
if said Rule is not applicable, any re-sale of such Securities under
circumstances in which the seller (or the person through whom the sale is made)
may be deemed to be an underwriter (as that term is defined in the 1933 Act) 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). Notwithstanding the foregoing or anything
else contained herein to the contrary, the Securities may be pledged in
connection with a bona fide margin account or other lending arrangement secured
by the Securities, and such pledge of Securities shall not be deemed to be a
transfer, sale or assignment of the Securities hereunder, and the Buyer in
effecting such pledge of Securities shall be not required to provide the Company
with any notice thereof or otherwise make any delivery to the Company pursuant
to this Agreement or otherwise.

 

g. Legends. The Buyer understands that until such time as the Issuance Shares,
the Notes and, upon conversion/exercise of the Notes and Warrants in accordance
with their respective terms, the Conversion Shares and the Warrant Shares, have
been registered under the 1933 Act or may be sold pursuant to Rule 144, Rule
144A under the 1933 Act or Regulation S without any restriction as to the number
of securities as of a particular date that can then be immediately sold, the
Securities may bear a restrictive legend in substantially the following form
(and a stop-transfer order may be placed against transfer of the certificates
for such Securities):

 

“NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE
NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLE/EXERCISABLE HAVE
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE
STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD,
TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION
STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
(B) AN OPINION OF COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER), IN A
GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR
(II) UNLESS SOLD PURSUANT TO RULE 144, RULE 144A OR REGULATION S UNDER SAID ACT.
NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH
A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE
SECURITIES.”

 

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The legend set forth above shall be removed and the Company shall issue a
certificate for the applicable shares of Common Stock without such legend to the
holder of any Security upon which it is stamped or (as requested by such holder)
issue the applicable shares of Common Stock to such holder by electronic
delivery by crediting the account of such holder’s broker with The Depository
Trust Company ("DTC"), if, unless otherwise required by applicable state
securities laws, (a) such Security is registered for sale under an effective
registration statement filed under the 1933 Act or otherwise may be sold
pursuant to Rule 144, Rule 144A or Regulation S without any restriction as to
the number of securities as of a particular date that can then be immediately
sold, or (b) the Company or the Holder provides the Legal Counsel Opinion (as
contemplated by and in accordance with Section 4(n) hereof) to the effect that a
public sale or transfer of such Security may be made without registration under
the 1933 Act, which opinion shall be accepted by the Company so that the sale or
transfer is effected. The Company shall be responsible for the fees of its
transfer agent and all DTC fees associated with any such issuance. The Buyer
agrees to sell all Securities, including those represented by a certificate(s)
from which the legend has been removed, in compliance with applicable
prospectus delivery requirements, if any. In the event that the Company does not
accept the opinion of counsel provided by the Buyer with respect to the transfer
of Securities pursuant to an exemption from registration, such as Rule 144, Rule
144A or Regulation S, at the Deadline (as defined in the Notes), under the
circumstances where all applicable conditions of Rule 144, 144A or Regulation S,
as applicable have been met, it will be considered an Event of Default pursuant
to Section 3.2 of the Notes.

 

h. Authorization; Enforcement. This Agreement has been duly and validly
authorized. This Agreement and the Registration Rights Agreement have been duly
executed and delivered on behalf of the Buyer, and this Agreement and the
Registration Rights Agreement each constitute a valid and binding agreement of
the Buyer enforceable in accordance with its terms.

 

i. Residency. The Buyer is a resident of the jurisdiction set forth immediately
below the Buyer’s name on the signature pages hereto.

 

3. Representations and Warranties of the Company. The Company represents and
warrants to the Buyer as of the Initial Closing Date and the Second 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 Notes, the Warrant
and the Registration Rights Agreement (as defined below) 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 Registration Rights Agreement, the Issuance Shares, the
Notes, the Warrant and (if applicable) the Conversion Shares and the Warrant
Shares by the Company and the consummation by it of the transactions
contemplated hereby and thereby (including without limitation, the issuance of
the Notes, the Warrant, the Issuance Shares, and the issuance and reservation
for issuance of the Conversion Shares and the Warrant Shares issuable upon
conversion or exercise of the Notes and the Warrant) have been duly authorized
by the Company’s Board of Directors and no further consent or authorization of
the Company, its Board of Directors, or its shareholders is required, (iii) this
Agreement and the Registration Rights Agreement 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 Registration Rights Agreement and the other instruments
documents executed in connection herewith and bind the Company accordingly, and
(iv) this Agreement and the Registration Rights Agreement each constitute, and
upon execution and delivery by the Company of the Notes and the Warrant, each of
such instruments will constitute, a legal, valid and binding obligation of the
Company enforceable against the Company in accordance with its terms.

 

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c. Capitalization; Governing Documents. As of September 30, 2014, the authorized
capital stock of the Company consists of: 300,000,000 authorized shares of
Common Stock, of which 24,332,098 shares were issued and outstanding. All of
such outstanding shares of capital stock are, or upon issuance will be, duly
authorized, validly issued, fully paid and non-assessable. Except as set forth
in the Company’s SEC Documents (as defined in Section 3(h)) 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, as set
forth on Schedule 3c hereto or reflected in the SEC Documents of the Company (i)
there are no outstanding options, warrants, scrip, rights to subscribe for,
puts, calls, rights of first refusal, agreements, understandings, claims or
other commitments or rights of any character whatsoever relating to, or
securities or rights convertible into or exchangeable for any shares of capital
stock of the Company or any of its Subsidiaries, or arrangements by which the
Company or any of its Subsidiaries is or may become bound to issue additional
shares of capital stock of the Company or any of its Subsidiaries, (ii) there
are no agreements or arrangements under which the Company or any of its
Subsidiaries is obligated to register the sale of any of its or their securities
under the 1933 Act and (iii) there are no anti-dilution or price adjustment
provisions contained in any security issued by the Company (or in any agreement
providing rights to security holders) that will be triggered by the issuance of
any of the Securities. The Company has furnished to the Buyer true and correct
copies of the Company’s Certificate of Incorporation as in effect on the date
hereof (“Certificate of Incorporation”), the Company’s By-laws, as in effect on
the date hereof (the “By-laws”), and the terms of all securities convertible
into or exercisable for Common Stock of the Company and the material rights of
the holders thereof in respect thereto.

 

d. Issuance of Conversion Shares and Warrant Shares. The Conversion Shares are
duly authorized and reserved for issuance and, upon conversion of the Notes in
accordance with their respective 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. The Warrant Shares are duly authorized and
reserved for issuance and, upon exercise of the Warrant 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. Issuance of Issuance Shares. The Issuance Shares are duly authorized and 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.

 

f. Acknowledgment of Dilution. The Company understands and acknowledges the
potentially dilutive effect to the Common Stock upon the issuance of the
Issuance Shares and, upon conversion of the Notes, the Conversion Shares, and
upon exercise of the Warrant, the Warrant Shares. The Company further
acknowledges that its obligation to issue Issuance Shares and, upon conversion
of the Notes or exercise of the Warrant, the Conversion Shares and the Warrant
Shares, respectively, in accordance with this Agreement, the Notes and the
Warrant is absolute and unconditional regardless of the dilutive effect that
such issuance may have on the ownership interests of other shareholders of the
Company.

 

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g. No Conflicts. The execution, delivery and performance of this Agreement, the
Registration Rights Agreement, the Notes and the Warrant by the Company and the
consummation by the Company of the transactions contemplated hereby and thereby
(including, without limitation, the issuance of the Issuance Shares and the
issuance and reservation for issuance of the Conversion Shares and the Warrant
Shares) will not (i) conflict with or result in a violation of any provision of
the Certificate of Incorporation or By-laws, or (ii) violate or conflict with,
or result in a breach of any provision of, or constitute a default (or an event
which with notice or lapse of time or both could become a default) under, or
give to others any rights of termination, amendment, acceleration or
cancellation of, any agreement, 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 are
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). 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, the Registration Rights Agreement, the Notes and the Warrant in
accordance with the terms hereof or thereof or to issue and sell the Notes and
the Warrant in accordance with the terms hereof and to issue Issuance Shares
and, upon conversion of the Notes, Conversion Shares and upon exercise of the
Warrant, the Warrant Shares. All consents, authorizations, orders, filings and
registrations which the Company is required to obtain pursuant to the preceding
sentence have been obtained or effected on or prior to the date hereof. If the
Company is listed on the Over-the-Counter Bulletin Board, the OTCQB Market
operated by OTC Markets Group, Inc. or any successor to such markets
(collectively, the “OTCBB”), the Company is not in violation of the listing
requirements of the OTCBB and does not reasonably anticipate that the Common
Stock will be delisted by the OTCBB in the foreseeable future. The Company and
its Subsidiaries are unaware of any facts or circumstances which might give rise
to any of the foregoing.

 

h. SEC Documents; Financial Statements. The Company has timely filed all reports
(with the possible exception of Current Reports on Form 8-K), 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, or set forth
in Schedule 3h, the Company has no liabilities, contingent or otherwise, other
than (i) liabilities incurred in the ordinary course of business subsequent to
September 30, 2014, and (ii) obligations under contracts and commitments
incurred in the ordinary course of business and not required under generally
accepted accounting principles to be reflected in such financial statements,
which, individually or in the aggregate, are not material to the financial
condition or operating results of the Company. The Company is subject to the
reporting requirements of the 1934 Act. The Company has never been a “shell
company” as described in Rule 144(i)(1)(i).

 

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i. Absence of Certain Changes. Except as set forth in Schedules 3c and 3h, since
September 30, 2014, there has been no material adverse change and no material
adverse development in the assets, liabilities, business, properties,
operations, financial condition, results of operations, prospects or 1934 Act
reporting status of the Company or any of its Subsidiaries.

 

j. Absence of Litigation. There is no action, suit, claim, proceeding, inquiry
or investigation before or by any court, public board, government agency,
self-regulatory organization or body pending or, to the knowledge of the Company
or any of its Subsidiaries, threatened against or affecting the Company or any
of its Subsidiaries, or their officers or directors in their capacity as such,
that could have a Material Adverse Effect. The SEC Documents contain a complete
list and summary description of any pending or, to the knowledge of the Company,
threatened proceeding against or affecting the Company or any of its
Subsidiaries, without regard to whether it would have a Material Adverse Effect.
The Company and its Subsidiaries are unaware of any facts or circumstances which
might give rise to any of the foregoing.

 

k. Intellectual Property. The Company and each of its Subsidiaries owns or
possesses the requisite licenses or rights to use all patents, patent
applications, patent rights, inventions, know-how, trade secrets, trademarks,
trademark applications, service marks, service names, trade names and copyrights
(“Intellectual Property”) necessary to enable it to conduct its business as now
operated (and, as presently contemplated to be operated in the future); there is
no claim or action by any person pertaining to, or proceeding pending, or to the
Company’s knowledge threatened, which challenges the right of the Company or of
a Subsidiary with respect to any Intellectual Property necessary to enable it to
conduct its business as now operated (and, as presently contemplated to be
operated in the future); to the best of the Company’s knowledge, the Company’s
or its Subsidiaries’ current and intended products, services and processes do
not infringe on any Intellectual Property or other rights held by any person;
and the Company is unaware of any facts or circumstances which might give rise
to any of the foregoing. The Company and each of its Subsidiaries have taken
reasonable security measures to protect the secrecy, confidentiality and value
of their Intellectual Property.

 

l. No Materially Adverse Contracts, Etc. Neither the Company nor any of its
Subsidiaries is subject to any charter, corporate or other legal restriction, or
any judgment, decree, order, rule or regulation which in the judgment of the
Company’s officers has or is expected in the future to have a Material Adverse
Effect. Neither the Company nor any of its Subsidiaries is a party to any
contract or agreement which in the judgment of the Company’s officers has or is
expected to have a Material Adverse Effect.

 

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.

 

7

 

 

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’ Purchase of Securities. The Company
acknowledges and agrees that the Buyer is acting solely in the capacity of arm’s
length purchasers 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’ purchase of the Securities. The Company further represents to the
Buyer that the Company’s decision to enter into this Agreement has been based
solely on the independent evaluation of the Company and its representatives.

 

q. No Integrated Offering. Neither the Company, nor any of its affiliates, nor
any person acting on its or their behalf, has directly or indirectly made any
offers or sales in any security or solicited any offers to buy any security
under circumstances that would require registration under the 1933 Act of the
issuance of the Securities to the Buyer. The issuance of the Securities to the
Buyer will not be integrated with any other issuance of the Company’s securities
(past, current or future) for purposes of any shareholder approval provisions
applicable to the Company or its securities.

 

r. No Brokers. The Company has taken no action which would give rise to any
claim by any person for brokerage commissions, transaction fees or similar
payments relating to this Agreement or the transactions contemplated hereby.

 

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 September 30, 2014, 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.

 

8

 

 

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. Except as otherwise provided in the Company’s
SEC Documents, 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.

 

9

 

 

y. Debt Repayment. The Company does not intend to take any actions that would
impair its ability to pay its debts as such debts mature. The Company’s
financial statements for its most recent fiscal year end and interim financial
statements have been prepared assuming the Company will continue as a going
concern, which contemplates the realization of assets and the satisfaction of
liabilities in the normal course of business.

 

z. No Investment Company. The Company is not, and upon the issuance and sale of
the Securities as contemplated by this Agreement will not be an “investment
company” required to be registered under the Investment Company Act of 1940 (an
“Investment Company”). The Company is not controlled by an Investment Company.

 

aa. No Off Balance Sheet Arrangements. There is no transaction, arrangement, or
other relationship between the Company or any of its Subsidiaries and an
unconsolidated or other off balance sheet entity that is required to be
disclosed by the Company in its 1934 Act filings and is not so disclosed or that
otherwise could be reasonably likely to have a Material Adverse Effect.

 

bb. No Disqualification Events. None of the Company, any of its predecessors,
any affiliated issuer, any director, executive officer, other officer of the
Company participating in the offering hereunder, any beneficial owner of 20% or
more of the Company's outstanding voting equity securities, calculated on the
basis of voting power, nor any promoter (as that term is defined in Rule 405
under the 1933 Act) 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. Breach of Representations and Warranties by the Company.  The Company agrees
that if the Company breaches any of the representations or warranties set forth
in this Section 3 and in addition to any other remedies available to the Buyer
pursuant to this Agreement, it will be considered an Event of Default under
Section 3.4 of the Notes.

 

4. COVENANTS.

 

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. Blue Sky Laws. The Company shall, on or before the Initial Closing Date, take
such action as the Company shall reasonably determine is necessary to qualify
the Securities for sale to the Buyer at the applicable closing pursuant to this
Agreement under applicable securities or “blue sky” laws of the states of the
United States (or to obtain an exemption from such qualification), and shall
provide evidence of any such action so taken to the Buyer on or prior to the
Initial Closing Date.

 

c. Use of Proceeds. The Company shall use the proceeds for general working
capital purposes.

 

d. Restriction on Activities. Commencing as of the date first above written, and
until the sooner of the six month anniversary of the date first written above or
payment of the Notes in full, or full conversion of the Notes, the Company shall
not, directly or indirectly, without the Buyer’s prior written consent, which
consent shall not be unreasonably withheld: (a) change the nature of its
business; or (b) sell, divest, acquire, change the structure of any material
assets other than in the ordinary course of business.

 

10

 

 

e. Listing. The Company will, so long as the Buyer owns any of the Securities,
maintain the listing and trading of its Common Stock on the OTCBB 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 OTCBB 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 OTCBB, 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. 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 Notes.

 

i. Compliance with 1934 Act; Public Information Failures. For so long as the
Buyer beneficially owns the Notes, the Company shall comply with the reporting
requirements of the 1934 Act; and the Company shall continue to be subject to
the reporting requirements of the 1934 Act. During the period that the Buyer
beneficially owns the Notes or the Warrant, 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 Registration Rights Agreement, the Notes, the Warrant, or at
law or in equity), the Company shall pay to the Buyer an amount in cash equal to
two percent (2%) 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 1%
per month (prorated for partial months) until paid in full.

 

j. No Shorting. Buyer will not execute any “short sales”, as defined in Rule 200
of Regulation SHO under the Exchange Act, of the Company’s common stock during
the period from the date hereof through the date on which the Notes have been
paid in full or converted in full. Except as otherwise provided in this Section
4(j), the Company acknowledges and agrees that the Buyer has not been asked to
agree, nor has the Buyer agreed, to desist from any trading activity in the
Company’s securities or any derivatives thereof, including without limitation,
any hedging activities, and that any such activities will not be deemed a breach
of this Agreement by the Buyer.

 

11

 

 

k. Disclosure of Transactions and Other Material Information. Within four (4)
business days after this Agreement has been executed, the Company shall file a
Current Report on Form 8-K describing the terms of the transactions contemplated
by this Agreement in the form required by the 1934 Act and attaching this
Agreement, the Registration Rights Agreement, the form of Note and the Warrant
(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.

 

l. Legal Counsel Opinion. When applicable, and upon the request of the Buyer,
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
Issuance Shares, the Warrant Shares and 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 Issuance Shares, the Warrant Shares and
the Conversion Shares are not then registered under the 1933 Act for resale
pursuant to an effective registration statement). Should the Company’s legal
counsel fail for any reason to issue the Legal Counsel Opinion, the Buyer may
(at the Company’s cost) secure another legal counsel to issue the Legal Counsel
Opinion, and the Company will instruct its transfer agent to accept such
opinion.

 

5. Transfer Agent Instructions. The Company shall issue irrevocable instructions
to its transfer agent to issue certificates, registered in the name of the Buyer
or its nominee, for the Issuance Shares and, upon conversion of the Notes, the
Conversion Shares and, upon exercise of the Warrant, the Warrant 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 reserve shares of Common Stock in the Reserved Amount (as defined in
the Notes)) signed by the successor transfer agent to the Company and the
Company. Prior to registration of the Issuance Shares, the Warrant Shares or
Conversion Shares under the 1933 Act or the date on which the Issuance Shares,
the Warrant Shares or Conversion Shares may be sold pursuant to Rule 144 without
any restriction as to the number of Securities as of a particular date that can
then be immediately sold, all such certificates shall bear the restrictive
legend specified in Section 2(g) of this Agreement. The Company warrants that:
(i) no instruction other than the Irrevocable Transfer Agent Instructions
referred to in this Section 5 will be given by the Company to its transfer agent
and that the Securities shall otherwise be freely transferable on the books and
records of the Company as and to the extent provided in this Agreement and the
Notes; (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 Notes
or upon exercise of or otherwise pursuant to the Warrant as and when required by
the Notes, the Warrant and this Agreement; and (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
Notes or upon exercise of or otherwise pursuant to the Warrant as and when
required by the Notes, the Warrant and this Agreement. Nothing in this Section
shall affect in any way the Buyer’s obligations and agreement set forth in
Section 2(g) hereof to comply with all applicable prospectus delivery
requirements, if any, upon re-sale of the Securities. If the Buyer provides the
Company, at the cost of the Company, with (i) an opinion of counsel in form,
substance and scope customary for opinions in comparable transactions, to the
effect that a public sale or transfer of such Securities may be made without
registration under the 1933 Act and such sale or transfer is effected or (ii)
the Buyer provides reasonable assurances that the Securities can be sold
pursuant to Rule 144, the Company shall permit the transfer, and, in the case of
the Securities, promptly instruct its transfer agent to issue one or more
certificates, free from restrictive legend, in such name and in such
denominations as specified by the Buyer. The Company acknowledges that a breach
by it of its obligations hereunder will cause irreparable harm to the Buyer, by
vitiating the intent and purpose of the transactions contemplated hereby.
Accordingly, the Company acknowledges that the remedy at law for a breach of its
obligations under this Section 5 may be inadequate and agrees, in the event of a
breach or threatened breach by the Company of the provisions of this Section,
that the Buyer shall be entitled, in addition to all other available remedies,
to an injunction restraining any breach and requiring immediate transfer,
without the necessity of showing economic loss and without any bond or other
security being required.

 

12

 

 

6. Conditions to the Company’s Obligation to Sell. The obligation of the Company
hereunder to issue and sell the Initial Note and the Second Note to the Buyer at
the applicable Closing is subject to the satisfaction, at or before the Initial
Closing Date or the Second Closing Date, as the case may be, 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 executed and delivered to the Company a Registration
Rights Agreement, in the form of Exhibit C attached hereto (the “Registration
Rights Agreement”), providing certain registration rights to the Buyer with
respect to the Conversion Shares and the Warrant Shares.

 

c. The Buyer shall have delivered the Purchase Price in accordance with Section
1(b) above.

 

d. 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 Initial Closing
Date or the Second Closing Date, as the case may be, 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 Initial Closing Date or the Second Closing Date, as the case may be,.

 

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.

 

7. Conditions to The Buyer’s Obligation to Purchase. The obligation of the Buyer
hereunder to purchase the Initial Note and the Second Note on, respectively, the
Initial Closing Date and the Second Closing Date, is subject to the
satisfaction, at or before the Initial Closing Date or the Second Closing Date,
as the case may be, 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 executed the Registration Rights Agreement and
delivered the same to the Buyer.

 

c. The Company shall have delivered to the Buyer the duly executed Initial Note
or Second Note, as the case may be, in such denominations as the Buyer shall
request and in accordance with Section 1(b) above.

 

d. The Irrevocable Transfer Agent Instructions, in form and substance
satisfactory to the Buyer, shall have been delivered to and acknowledged in
writing by the Company’s Transfer Agent.

 

e. The representations and warranties of the Company shall be true and correct
in all material respects as of the date when made and as of Initial Closing Date
or the Second Closing Date, as the case may be, 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 Initial Closing Date or the Second Closing Date, as the case may be.

 

13

 

 

f. No litigation, statute, rule, regulation, executive order, decree, ruling or
injunction shall have been enacted, entered, promulgated or endorsed by or in
any court or governmental authority of competent jurisdiction or any
self-regulatory organization having authority over the matters contemplated
hereby which prohibits the consummation of any of the transactions contemplated
by this Agreement.

 

g. No event shall have occurred which could reasonably be expected to have a
Material Adverse Effect on the Company including but not limited to a change in
the 1934 Act reporting status of the Company or the failure of the Company to be
timely in its 1934 Act reporting obligations.

 

h. Trading in the Common Stock on the OTCBB shall not have been suspended by the
SEC, FINRA or the OTCBB.

 

i. The Company shall have delivered to the Buyer 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 Initial Closing Date or the Second Closing Date, as the case may be.

 

j. With respect to the purchase of the Second Note only, a registration
statement of the Company covering the public resale of the Conversion Shares and
the Warrant Shares has been declared effective by the SEC and such registration
statement remains effective as of the Second Closing Date.

 

8. Governing Law; Miscellaneous.

 

a. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York 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 Registration
Rights Agreement, the Notes, the Warrant or any other agreement, certificate,
instrument or document contemplated hereby shall be brought only in the state
courts of New York or in the federal courts located in the state and county of
New York. The parties to this Agreement hereby irrevocably waive any objection
to jurisdiction and venue of any action instituted hereunder and shall not
assert any defense based on lack of jurisdiction or venue or based upon forum
non conveniens. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND
AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE
HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT OR ANY
TRANSACTIONS CONTEMPLATED HEREBY. The prevailing party shall be entitled to
recover from the other party its reasonable attorney's fees and costs. 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 this Agreement, the Registration Rights Agreement, the
Notes, the Warrant or any other agreement, certificate, instrument or document
contemplated hereby or thereby. 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 Registration Rights Agreement,
the Notes, the Warrant 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.

 

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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 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
provision hereof which may prove invalid or unenforceable under any law shall
not affect the validity or enforceability of any other provision hereof.

 

e. Entire Agreement; Amendments. This Agreement, the Registration Rights
Agreement, the Notes, the Warrant 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:

 

EVENTURE INTERACTIVE, INC.

3420 Bristol Street, 6th Floor

Costa Mesa, CA 92626

Attn: Gannon Giguiere, CEO

e-mail address: gannon.giguiere@eventure.com

 

With a copy by e-mail only to (which copy shall not constitute notice):

 

CRONE KLINE RINDE LLP

1330 Sixth Avenue, 35th Floor

New York, NY 10019

Attn: Scott E. Rapfogel

e-mail: srapfogel@ckrlaw.com

 

If to the Buyer:

 

FIREROCK GLOBAL OPPORTUNITIES FUND L.P.

1040 First Avenue, Suite 190

New York, NY 10022

Attn: Eli Fireman

e-mail: eli@firerockcap.com

 

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With a copy by e-mail only to (which copy shall not constitute notice):

 

ELLENOFF GROSSMAN & SCHOLE LLP

1345 Avenue of the Americas

New York, NY 10105

Attn: Lawrence A. Rosenbloom, Esq.

e-mail: lrosenbloom@egsllp.com

 

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, OTCBB 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, OTCBB
(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
Initial 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 in the amount of $2,500. 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.

 

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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, the Registration Rights
Agreement, the Notes or the Warrant, the Company shall defend, protect,
indemnify and hold harmless the Buyer and its stockholders, partners, members,
officers, directors, employees and direct or indirect investors and any of the
foregoing persons' agents or other representatives (including, without
limitation, those retained in connection with the transactions contemplated by
this Agreement) (collectively, the "Indemnitees") from and against any and all
actions, causes of action, suits, claims, losses, costs, penalties, fees,
liabilities and damages, and expenses in connection therewith (irrespective of
whether any such Indemnitee is a party to the action for which indemnification
hereunder is sought), and including reasonable attorneys' fees and disbursements
(the "Indemnified Liabilities"), incurred by any Indemnitee as a result of, or
arising out of, or relating to (a) any misrepresentation or breach of any
representation or warranty made by the Company in this Agreement, the
Registration Rights Agreement, or the Notes or the Warrant, 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 Registration Rights Agreement, the Notes or the Warrant,
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
Registration Rights Agreement, the Notes or the Warrant, 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 Registration Rights Agreement 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 Registration Rights Agreement, 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
Registration Rights Agreement 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 Notes or the Warrant, 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]

 

17

 

 

IN WITNESS WHEREOF, the undersigned Buyer and the Company have caused this
Agreement to be duly executed as of the date first above written.

 

EVENTURE INTERACTIVE, INC.         By:   /s/ Gannon Giguiere     Name: Gannon
Giguiere     Title: President, CEO  

 

FIREROCK GLOBAL OPPORTUNITIES FUND L.P.       By:   /s/ Seth Fireman    
Name: Seth Fireman     Title:   

 

AGGREGATE SUBSCRIPTION AMOUNT:

 

Principal Amount of Initial Note: $137,500.00

Actual Amount of Purchase Price of Initial Note: $125,000.00

 

Principal Amount of Second Note: $137,500.00

Actual Amount of Purchase Price of Second Note: $125,000.00

 

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Schedule 3c

 

On December 15, 2014 the Company entered into a Securities Purchase Agreement
with LG Capital Funding, LLC (“LG”) pursuant to which LG purchased an 8%
redeemable, convertible note from the Company in the principal amount of
$110,000 due December 15, 2015. The Note was subject to a 10% original issue
discount resulting in a purchase price of $100,000. The Note is convertible by
LG, at its option, any time after 180 days from the date of issuance at a
conversion price equal to 62% of the lowest closing bid price for the Company’s
common stock for the twenty trading days prior to the date upon which LG
provides the Company with a Notice of Conversion. The Note may be prepaid by the
Company any time within 180 days from the date of issuance at a premium ranging
from 115% for a prepayment within the initial 30 days to 145% for a prepayment
after 150 days from the date of issuance but on or prior to 180 days from the
date of issuance. The prepayment premium for the 31-60 day period is 121%, for
the 61-90 day period is 127%, for the 91-120 day period is 133%, and for the
121-150 day period is 139%. The Note becomes immediately due and payable upon
the occurrence of certain events of default, and subjects the Company to
significant default penalties

 

On December 15, 2014, JMJ Financial (“JMJ”), a Nevada sole proprietorship,
purchased a redeemable, convertible note (the “Note”) from the Company in the
principal amount of $55,555 due December 15, 2016. The Note was subject to a 10%
original issue discount resulting in a purchase price of $50,000. The Note,
including accrued interest due thereon, is convertible by JMJ, at its option,
any time after 180 days from the date of issuance at a conversion price equal to
the lesser of $0.16 or 60% of the average of the two lowest trading prices
during the twenty trading days prior to conversion. The Note may be prepaid by
the Company any time within 120 days from the date of issuance without payment
of interest. If the Company doesn’t prepay the Note within such 120 day period,
a one-time interest charge of 12% will be applied to the principal amount. If at
any time when the Note is outstanding, the Company issues securities on more
favorable terms than those contained in the Note, JMJ has the option to include
the more favorable terms in the Note. The Note becomes immediately due and
payable upon certain events of default and subjects the Company to significant
default penalties. JMJ may provide the Company with additional loans on the same
terms pursuant to which JMJ would receive notes which, together with the Note,
aggregate to $250,000.

 

On December 19, 2014, the Company entered into a Securities Purchase Agreement
with KBM Worldwide, Inc. (“KBM”) pursuant to which KBM purchased an 8%
redeemable convertible note from the Company in the principal amount of $64,000
due September 19, 2015 (the “Note”). The Note is convertible by KBM at its
option any time after 180 days from issuance at a conversion price equal to 58%
of the average of the lowest three trading prices for the Company’s common stock
during the ten trading day period prior to the date on which KBM provides the
Company with a conversion notice. The note may be prepaid by the Company any
time within 180 days from the date of issuance at a premium ranging from 115%
for a prepayment within the initial 30 days to 140% for prepayment after 150
days from the date of issuance but on or prior to 180 days from the date of
issuance. The prepayment premium for the 31-60 day period is 120%, for the 61-90
day period is 125%, for the 91-120 day period is 130% and for the 121-150 day
period is 135%. The Note becomes immediately due and payable upon the occurrence
of certain events of default and subjects the Company to significant default
penalties.

 

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Schedule 3g

 

As of December 26, 2014 the Company has loans outstanding in the aggregate
principal amount of $952,805 which includes $573,250 in loans from related
parties.

 

20