Exhibit 10.1

 

ASSET PURCHASE AGREEMENT

 

This ASSET PURCHASE AGREEMENT (this “Agreement”) is entered into as of April 21,
2015, by and among Harrison Vickers and Waterman Inc., a Nevada corporation (the
“Purchaser” or “Company”), and the sellers listed on Schedule A hereto (each a
“Seller” and collectively the “Sellers”).

 

WHEREAS, the Sellers are the original shareholders of Attitude Beer Holding Co,
a Delaware corporation (the “ABH”);

 

WHEREAS, the Sellers are the holder of all the outstanding shares of ABH, as set
forth on Schedule A (the “ABH Shares”);

 

WHEREAS, the Seller desire to purchase all the ABH Shares from the Sellers.

 

WHEREAS, subject to the terms and conditions set forth in this Agreement and
pursuant to Section 4(2) of the Securities Act of 1933, as amended (the
“Securities Act”), and Rule 506 promulgated thereunder, the Company desires to
purchase from each Seller, and each Seller, severally and not jointly, desires
to Sell to the Company, their respective portion of the ABH Shares for the
Purchase Price described below, as more fully described in this Agreement.

 

NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this
Agreement, and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the Company and each Seller agree as
follows:

 

ARTICLE I.

DEFINITIONS

 

1.1          Definitions. In addition to the terms defined elsewhere in this
Agreement: (a) capitalized terms that are not otherwise defined herein have the
meanings given to such terms in the Notes (as defined herein), and (b) the
following terms have the meanings set forth in this Section 1.1:

 

“Acquiring Person” shall have the meaning ascribed to such term in Section 4.7.

 

“Affiliate” means any Person that, directly or indirectly through one or more
intermediaries, controls or is controlled by or is under common control with a
Person, as such terms are used in and construed under Rule 405 under the
Securities Act.

 

“AIRs” means additional investment right, in the form of Exhibit H hereto.

 

“Board of Directors” means the board of directors of the Company.

 

“Business Day” means any day except any Saturday, any Sunday, any day which is a
federal legal holiday in the United States or any day on which banking
institutions in the State of New York are authorized or required by law or other
governmental action to close.

 

“Closing” means the closing of the purchase and sale of the ABH Shares pursuant
to Section 2.1.

 

“Closing Date” means the Trading Day on which all of the Transaction Documents
have been executed and delivered by the applicable parties thereto, and all
conditions precedent to (i) the Sellers’ obligations to Sell the ABH Shares at
such Closing and (ii) the Company’s obligations to deliver the Securities to be
issued at such Closing, in each case, have been satisfied or waived.

 

 

 

  

“Closing Form 8-K” shall have the meaning ascribed to such term in Section 4.6.

 

“Commission” means the United States Securities and Exchange Commission.

 

“Common Stock” means the common stock of the Company, par value $0.0001 per
share, and any other class of securities into which such securities may
hereafter be reclassified or changed.

 

“Common Stock Equivalents” means any securities of the Company or the
Subsidiaries which would entitle the holder thereof to acquire at any time
Common Stock, including, without limitation, any debt, preferred stock, right,
option, warrant or other instrument that is at any time convertible into or
exercisable or exchangeable for, or otherwise entitles the holder thereof to
receive, Common Stock.

 

“Conversion Price” shall have the meaning ascribed to such term in the Notes and
Preferred Shares.

 

“Disclosure Schedules” means the Disclosure Schedules of the Company delivered
concurrently herewith.

 

“Effective Date” means the earliest of the date that (a) a registration
statement has been declared effective by the Commission including therein all of
the Underlying Shares for public unrestricted resale, or (b) all of the
Underlying Shares have been sold pursuant to Rule 144 or may be sold pursuant to
Rule 144 without the requirement for the Company to be in compliance with the
current public information requirement under Rule 144 and without volume or
manner-of-sale restrictions; and Company counsel has delivered to such holders a
standing written unqualified opinion that resales may then be made by such
holders of the Underlying Shares pursuant to such registration statement or
exemption which opinion shall be in form and substance reasonably acceptable to
such holders.

 

“Escrow Agreement” means the escrow agreement to be employed in connection with
the sale of the Securities, a copy of which is annexed hereto as Exhibit C.

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the
rules and regulations promulgated thereunder.

 

“Exchange Agreement” means the exchange agreement substantially in the form
annexed hereto as Exhibit E.

 

“G&M” shall mean Grushko & Mittman, P.C., with offices located at 515 Rockaway
Avenue, Valley Stream, New York 11581, Fax: 212-697-3575.

 

“Legend Removal Date” shall have the meaning ascribed to such term in Section
4.1(c).

 

“Liens” means a lien, charge, pledge, security interest, encumbrance, right of
first refusal, preemptive right or other restriction.

 

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“Material Adverse Effect” shall have the meaning assigned to such term in
Section 3.1(a).

 

“Maximum Rate” shall have the meaning ascribed to such term in Section 5.17.

 

“Notes” means the convertible notes due twenty-four (24) months after their
respective issue dates, in the form of Exhibit A hereto.

 

“Person” means an individual or corporation, partnership, trust, incorporated or
unincorporated association, joint venture, limited liability company, joint
stock company, government (or an agency or subdivision thereof) or other entity
of any kind.

 

“Preferred Stock” means the shares of the Company’s Series A Convertible
Preferred Stock issued or issuable hereunder or in connection herewith and the
shares of the Company’s Series B Convertible Preferred Stock issued or issuable
hereunder or in connection herewith.

 

“Proceeding” means an action, claim, suit, investigation or proceeding
(including, without limitation, an informal investigation or partial proceeding,
such as a deposition), whether commenced or threatened.

 

“Public Information Failure” shall have the meaning ascribed to such term in
Section 4.3(b).

 

“Public Information Failure Payments” shall have the meaning ascribed to such
term in Section 4.3(b).

 

“Security Agreement” means the agreement to memorialize and perfect the security
interest to be granted to some of the Sellers, form of which are annexed hereto
as Exhibit G, together with such other documents, forms, certificates, and
payments necessary to effectuate the memorialization and perfection of such
security interest.

 

“Seller Party” shall have the meaning ascribed to such term in Section 4.9.

 

“Required Approvals” shall have the meaning ascribed to such term in Section
3.1(d).

 

“Required Minimum” means, as of any date, the maximum aggregate number of shares
of Common Stock then issued or potentially issuable in the future pursuant to
the Transaction Documents, including any Underlying Shares issuable upon
exercise in full of all Warrants or conversion in full of all Notes, ignoring
any conversion or exercise limits set forth therein, and assuming that any
previously unconverted Notes will be held until the third anniversary of the
Final Closing Date.

 

“Rule 144” means Rule 144 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended or interpreted from time to time, or
any similar rule or regulation hereafter adopted by the Commission having
substantially the same purpose and effect as such Rule.

 

“SEC Reports” shall mean all reports, schedules, forms, statements and other
documents required to be filed by the Company under the Securities Act and the
Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, for the two
years preceding the date hereof (or such shorter period as the Company was
required by law or regulation to file such material) (the foregoing materials,
including the exhibits thereto and documents incorporated by reference therein.

 

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“Securities” means the Notes, AIRs Preferred Shares, the Warrants, Series B
Shares and the Underlying Shares.

 

“Securities Act” means the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder.

 

“Series B Shares” means shares of the company Series B Convertible Preferred
Stock.

 

“Subsidiary” means with respect to any entity at any date, any direct or
indirect corporation, limited or general partnership, limited liability company,
trust, estate, association, joint venture or other business entity of which (A)
more than 30% of (i) the outstanding capital stock having (in the absence of
contingencies) ordinary voting power to elect a majority of the board of
directors or other managing body of such entity, (ii) in the case of a
partnership or limited liability company, the interest in the capital or profits
of such partnership or limited liability company or (iii) in the case of a
trust, estate, association, joint venture or other entity, the beneficial
interest in such trust, estate, association or other entity business is, at the
time of determination, owned or controlled directly or indirectly through one or
more intermediaries, by such entity, or (B) is under the actual control of the
Company.

 

“Trading Day” means a day on which the principal Trading Market is open for
trading.

 

“Trading Market” means any of the following markets or exchanges on which the
Common Stock is listed or quoted for trading on the date in question: the NYSE
MKT, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global
Select Market, the New York Stock Exchange, the OTC Bulletin Board, the OTCQB or
the OTCQX (or any successors to any of the foregoing).

 

“Transaction Documents” means this Agreement, the Notes, the AIRS, the Warrants,
Series B Shares, Security Agreement, the Escrow Agreement, all exhibits and
schedules thereto and hereto and any other documents or agreements executed in
connection with the transactions contemplated hereunder.

 

“Transfer Agent” means Island Stock Transfer Inc, and any successor transfer
agent of the Company.

 

“Underlying Shares” means the shares of Common Stock issued and issuable upon
conversion of the Notes or Series B Shares and upon exercise of the Warrants and
issued and issuable in lieu of the cash payment of interest on the Notes in
accordance with the terms of the Notes and any other shares of Common Stock
issued or issuable to a Seller in connection with or pursuant to the Securities
or Transaction Documents.

 

“VWAP” means, for any date, the price determined by the first of the following
clauses that applies: (a) if the Common Stock is then listed or quoted on a
Trading Market, the daily volume weighted average price of the Common Stock for
such date (or the nearest preceding date) on the Trading Market on which the
Common Stock is then listed or quoted as reported by Bloomberg L.P. (based on a
Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City
time)), (b)  if the OTC Bulletin Board is not a Trading Market, the volume
weighted average price of the Common Stock for such date (or the nearest
preceding date) on the OTC Bulletin Board, (c) if the Common Stock is not then
listed or quoted for trading on the OTC Bulletin Board and if prices for the
Common Stock are then reported on the OTCQX, OTCQB or OTC Pink Marketplace
maintained by the OTC Markets Group, Inc. (or a similar organization or agency
succeeding to its functions of reporting prices), the volume weighted average
price of the Common Stock on the first such facility (or a similar organization
or agency succeeding to its functions of reporting prices), or (d) in all other
cases, the fair market value of a share of Common Stock as determined by an
independent appraiser selected in good faith by the Purchasers of a majority in
interest of the Securities then outstanding and reasonably acceptable to
Borrower, the fees and expenses of which shall be paid by Borrower.

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“Warrants” means, collectively, the Common Stock purchase warrants delivered to
the Sellers at the Closing in accordance with Section 2.2(a) hereof, which
Warrants shall be exercisable immediately and have a term of exercise equal to 6
years, in the form of Exhibit B1 (A Warrants) and Exhibit B2 (B Warrants)
attached hereto.

 

“Warrant Shares” means the shares of Common Stock issuable upon exercise of the
Warrants.

 

ARTICLE II.

PURCHASE AND SALE

 

2.1         Closing. On the Closing Date, upon the terms and subject to the
conditions set forth herein, substantially concurrent with the execution and
delivery of this Agreement by the parties hereto, the Company agrees to
purchase, and the Sellers, severally and not jointly, agree to sell, the ABH
Shares, for issuance of the securities described on Schedule A as the Purchase
Price.

 

2.2         Deliveries.

 

(a)          On or prior to the Closing Date, the Company shall deliver or cause
to be delivered to each Seller the following:

 

(i)          this Agreement duly executed by the Company;

 

(ii)         Notes with a principal amount as set forth on Schedule A;

 

(iii)        Warrants registered in the name of such Sellers as set forth on
Schedule A;

 

(iv)        AIRs registered in the name of such Sellers as set forth on Schedule
A;

 

(v)          the Security Agreement, duly executed by the Company and its
Subsidiaries;

 

(vi)        the fully executed Exchange Agreement and

 

(vii)       the Escrow Agreement duly executed by the Company.

 

(b)          On or prior to the Closing Date, each Seller shall deliver or cause
to be delivered to the Company the following:

 

(i)          this Agreement duly executed by such Seller;

 

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(ii)         such Seller’s portion of the ABH shares together with an executed
stock power; and

 

(iii)        the Escrow Agreement duly executed by such Seller.

 

2.3          Closing Conditions.

 

(a)          The obligations of the Company hereunder to effect the Closing are
subject to the following conditions being met:

 

(i)          the accuracy in all material respects on the Closing Date of the
representations and warranties of the Sellers contained herein (unless as of a
specific date therein in which case they shall be accurate as of such date);

 

(ii)         all obligations, covenants and agreements of each Seller required
to be performed at or prior to the Closing Date shall have been performed; and

 

(iii)        the delivery by each Seller of the items set forth in Section
2.2(b) of this Agreement.

 

(b)          The respective obligations of a Seller hereunder to effect the
Closing, unless waived by such Seller, are subject to the following conditions
being met:

 

(i)          the accuracy in all material respects (determined without regard to
any materiality, Material Adverse Effect or other similar qualifiers therein) on
the Closing Date of the representations and warranties of the Company contained
herein (unless as of a specific date therein in which case they shall be
accurate as of such date);

 

(ii)         all obligations, covenants and agreements of the Company required
to be performed at or prior to the Closing Date shall have been performed;

 

(iii)        the delivery by the Company of the items set forth in Section
2.2(a) of this Agreement;

 

(iv)        there shall have been no Material Adverse Effect with respect to the
Company since the date hereof; and

 

(v)         from the date hereof to the Closing Date, trading in the Common
Stock shall not have been suspended by the Commission or the Company’s principal
Trading Market, and, at any time prior to the Closing Date, trading in
securities generally as reported by Bloomberg L.P. shall not have been suspended
or limited, or minimum prices shall not have been established on securities
whose trades are reported by such service, or on any Trading Market, nor shall a
banking moratorium have been declared either by the United States or New York
State authorities nor shall there have occurred any material outbreak or
escalation of hostilities or other national or international calamity of such
magnitude in its effect on, or any material adverse change in, any financial
market which, in each case, in the reasonable judgment of such Seller, makes it
impracticable or inadvisable to purchase the Securities at the Closing.

 

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ARTICLE III.

REPRESENTATIONS AND WARRANTIES

 

3.1          Representations and Warranties of the Company. Except as set forth
in the SEC Reports or the Disclosure Schedules, which Disclosure Schedules shall
be deemed a part hereof and shall qualify any representation made herein only to
the extent of the disclosure contained in the corresponding section of the
Disclosure Schedules, the Company hereby makes the following representations and
warranties to each Seller:

 

(a)          Organization and Qualification. The Company and each of the
Subsidiaries is an entity duly incorporated or otherwise organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation or organization, with the requisite power and authority to own and
use its properties and assets and to carry on its business as currently
conducted. Neither the Company nor any Subsidiary is in violation nor default of
any of the provisions of its respective certificate or articles of
incorporation, bylaws or other organizational or charter documents. Each of the
Company and the Subsidiaries is duly qualified to conduct business and is in
good standing as a foreign corporation or other entity in each jurisdiction in
which the nature of the business conducted or property owned by it makes such
qualification necessary, except where the failure to be so qualified or in good
standing, as the case may be, could not have or reasonably be expected to result
in: (i) a material adverse effect on the legality, validity or enforceability of
any Transaction Document, (ii) a material adverse effect on the results of
operations, assets, business, prospects or condition (financial or otherwise) of
the Company and the Subsidiaries, taken as a whole, or (iii) a material adverse
effect on the Company’s ability to perform in any material respect on a timely
basis its obligations under any Transaction Document (any of (i), (ii) or (iii),
a “Material Adverse Effect”) and, no Proceeding has been instituted in any such
jurisdiction revoking, limiting or curtailing or seeking to revoke, limit or
curtail such power and authority or qualification.

 

(b)          Authorization; Enforcement. The Company has the requisite corporate
power and authority to enter into and to consummate the transactions
contemplated by this Agreement and each of the other Transaction Documents and
otherwise to carry out its obligations hereunder and thereunder. The execution
and delivery of this Agreement and each of the other Transaction Documents by
the Company and the consummation by it of the transactions contemplated hereby
and thereby have been duly authorized by all necessary action on the part of the
Company and no further action is required by the Company, the Board of Directors
or the Company’s stockholders in connection herewith or therewith other than in
connection with the Required Approvals. This Agreement and each other
Transaction Document to which it is a party has been (or upon delivery will have
been) duly executed by the Company and, when delivered in accordance with the
terms hereof and thereof, will constitute the valid and binding obligation of
the Company enforceable against the Company in accordance with its terms,
except: (i) as limited by general equitable principles and applicable
bankruptcy, insolvency, reorganization, moratorium and other laws of general
application affecting enforcement of creditors’ rights generally, (ii) as
limited by laws relating to the availability of specific performance, injunctive
relief or other equitable remedies and (iii) insofar as indemnification and
contribution provisions may be limited by applicable law.

 

(c)          No Conflicts. The execution, delivery and performance by the
Company of this Agreement and the other Transaction Documents, the issuance and
sale of the Securities and the consummation by it of the transactions
contemplated hereby and thereby to which it is a party do not and will not: (i)
conflict with or violate any provision of the Company’s or any Subsidiary’s
certificate or articles of incorporation, bylaws or other organizational or
charter documents, (ii) subject to Required Approvals, conflict with, or
constitute a default (or an event that with notice or lapse of time or both
would become a default) under, result in the creation of any Lien upon any of
the properties or assets of the Company or any Subsidiary, or give to others any
rights of termination, amendment, acceleration or cancellation (with or without
notice, lapse of time or both) of, any agreement, credit facility, debt or other
instrument (evidencing a Company or Subsidiary debt or otherwise) or other
understanding to which the Company or any Subsidiary is a party or by which any
property or asset of the Company or any Subsidiary is bound or affected, or
(iii) subject to the Required Approvals, conflict with or result in a violation
of any law, rule, regulation, order, judgment, injunction, decree or other
restriction of any court or governmental authority to which the Company or a
Subsidiary is subject (including federal and state securities laws and
regulations), or by which any property or asset of the Company or a Subsidiary
is bound or affected; except in the case of each of clauses (ii) and (iii), such
as could not have or reasonably be expected to result in a Material Adverse
Effect.

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(d)          Filings, Consents and Approvals. The Company is not required to
obtain any consent, waiver, authorization or order of, give any notice to, or
make any filing or registration with, any court or other federal, state, local
or other governmental authority or other Person in connection with the
execution, delivery and performance by the Company of the Transaction Documents,
other than: (i) the filings required pursuant to Section 4.6 of this Agreement,
(ii) the filing of the Security Agreement and the payment of all sums in
connection therewith, (iii) the notice and/or application(s) to each applicable
Trading Market for the issuance and sale of the Notes and Warrant Shares and the
listing of the Underlying Shares for trading thereon in the time and manner
required thereby, and (iv) the filing of Form D with the Commission and such
filings as are required to be made under applicable state securities laws
(collectively, the “Required Approvals”).

 

(e)          Issuance of the Securities. The Securities are duly authorized and,
when issued and paid for in accordance with the applicable Transaction
Documents, will be duly and validly issued, fully paid and non-assessable, free
and clear of all Liens imposed by the Company. The Company has reserved from its
duly authorized capital stock a number of shares of Common Stock for issuance of
the Underlying Shares at least equal to the Required Minimum on the date hereof.

 

(f)          Investment Company. The Company is not, and is not an Affiliate of,
and immediately after receipt of payment for the Securities, will not be or be
an Affiliate of, an “investment company” within the meaning of the Investment
Company Act of 1940, as amended. The Company shall conduct its business in a
manner so that it will not become an “investment company” subject to
registration under the Investment Company Act of 1940, as amended.

 

(g)          Reporting Company/Shell Company. The Company is a publicly-held
company subject to reporting obligations pursuant to Sections 12(g) and 13 of
the Exchange Act. Pursuant to the provisions of the Exchange Act, except as set
forth on Schedule 3.1(g), the Company has timely filed all reports and other
materials required to be filed by the Company thereunder with the SEC during the
preceding twelve months. As of the Closing Date, the Company is not a “shell
company” nor a former “shell company” as those terms are employed in Rule 144
under the Securities Act. The Company is, and has no reason to believe that it
will not in the foreseeable future continue to be in compliance with all such
listing and maintenance requirements.

 

(h)          Application of Takeover Protections. The Company and the Board of
Directors will have taken as of the Closing Date all necessary action, if any,
in order to render inapplicable any control share acquisition, business
combination, poison pill (including any distribution under a rights agreement)
or other similar anti-takeover provision under the Company’s certificate of
incorporation (or similar charter documents) or the laws of its state of
incorporation that is or could become applicable to the Sellers as a result of
the Sellers and the Company fulfilling their obligations or exercising their
rights under the Transaction Documents, including without limitation as a result
of the Company’s issuance of the Securities and the Sellers’ ownership of the
Securities.

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(i)          Disclosure. Except with respect to the material terms and
conditions of the transactions contemplated by the Transaction Documents, the
Company confirms that neither it nor any other Person acting on its behalf has
provided any of the Sellers or their agents or counsel with any information that
it believes constitutes or might constitute material, non-public information.
The Company understands and confirms that the Sellers will rely on the foregoing
representation in effecting transactions in securities of the Company. All of
the disclosure furnished by or on behalf of the Company to the Sellers regarding
the Company and its Subsidiaries, their respective businesses and the
transactions contemplated hereby, including the Disclosure Schedules to this
Agreement, when taken together as a whole, is true and correct and does not
contain any untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements made therein, in light of the
circumstances under which they were made, not misleading. The press releases
disseminated by the Company during the twelve months preceding the date of this
Agreement taken as a whole do not contain any untrue statement of a material
fact or omit 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 and when made, not misleading. The Company acknowledges and
agrees that no Seller makes or has made any representations or warranties with
respect to the transactions contemplated hereby other than those specifically
set forth in Section 3.2 hereof.

 

(j)          No Integrated Offering. Assuming the accuracy of the Sellers’
representations and warranties set forth in Section 3.2, 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 of any security or solicited
any offers to buy any security, under circumstances that would cause this
offering of the Securities to be integrated with prior offerings by the Company
for purposes of: (i) the Securities Act which would require the registration of
any such securities under the Securities Act, or (ii) any applicable shareholder
approval provisions of any Trading Market on which any of the securities of the
Company are listed or designated.

 

(k)          Acknowledgment Regarding Sellers’ Purchase of Securities. The
Company acknowledges and agrees that each of the Sellers is acting solely in the
capacity of an arm’s length Seller with respect to the Transaction Documents and
the transactions contemplated thereby. The Company further acknowledges that no
Seller is acting as a financial advisor or fiduciary of the Company (or in any
similar capacity) with respect to the Transaction Documents and the transactions
contemplated thereby and any advice given by any Seller or any of their
respective representatives or agents in connection with the Transaction
Documents and the transactions contemplated thereby is merely incidental to the
Sellers’ purchase of the Securities. The Company further represents to each
Seller that the Company’s decision to enter into this Agreement and the other
Transaction Documents has been based solely on the independent evaluation of the
transactions contemplated hereby by the Company and its representatives.

 

(l)          Private Placement. Assuming the accuracy of the Sellers’
representations and warranties set forth in Section 3.2, no registration under
the Securities Act is required for the offer and sale of the Securities by the
Company to the Sellers as contemplated hereby. The issuance and sale of the
Securities hereunder does not contravene the rules and regulations of the
Trading Market.

 

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(m)          No General Solicitation. Neither the Company nor any person acting
on behalf of the Company has offered or sold any of the Securities by any form
of general solicitation or general advertising. The Company has offered the
Securities for sale only to the Sellers and certain other “accredited investors”
within the meaning of Rule 501 under the Securities Act.

 

(n)          Listing and Maintenance Requirements.  The Common Stock is quoted
on the OTC Bulletin Board under the symbol HVCW. The Company has not, in the
twenty-four (24) months preceding the date hereof, received notice from any
Trading Market on which the Common Stock is or has been listed or quoted to the
effect that the Company is not in compliance with the listing or maintenance
requirements of such Trading Market.

 

(o)          Survival. The foregoing representations and warranties shall
survive the Closing Date.

 

3.2         Representations and Warranties of the Sellers. Each Seller, for
itself and for no other Seller, hereby represents and warrants as of the date
hereof and as of the Closing Date to the Company as follows (unless as of a
specific date therein):

 

(a)          Organization; Authority. Such Seller is either an individual or an
entity duly incorporated or formed, validly existing and in good standing under
the laws of the jurisdiction of its incorporation or formation with full right,
corporate, partnership, limited liability company or similar power and authority
to enter into and to consummate the transactions contemplated by the Transaction
Documents and otherwise to carry out its obligations hereunder and thereunder.
The execution and delivery of the Transaction Documents and performance by such
Seller of the transactions contemplated by the Transaction Documents have been
duly authorized by all necessary corporate, partnership, limited liability
company or similar action, as applicable, on the part of such Seller. Each
Transaction Document to which it is a party has been duly executed by such
Seller, and when delivered by such Seller in accordance with the terms hereof,
will constitute the valid and legally binding obligation of such Seller,
enforceable against it in accordance with its terms, except: (i) as limited by
general equitable principles and applicable bankruptcy, insolvency,
reorganization, moratorium and other laws of general application affecting
enforcement of creditors’ rights generally, (ii) as limited by laws relating to
the availability of specific performance, injunctive relief or other equitable
remedies and (iii) insofar as indemnification and contribution provisions may be
limited by applicable law.

 

(b)          Understandings or Arrangements. Such Seller understands that the
Securities are “restricted securities” and have not been registered under the
Securities Act or any applicable state securities law and is acquiring the
Securities as principal for its own account and not with a view to or for
distributing or reselling such Securities or any part thereof in violation of
the Securities Act or any applicable state securities law, has no present
intention of distributing any of such Securities in violation of the Securities
Act or any applicable state securities law and has no direct or indirect
arrangement or understandings with any other persons to distribute or regarding
the distribution of such Securities in violation of the Securities Act or any
applicable state securities law (this representation and warranty not limiting
such Seller’s right to sell the Securities pursuant to a registration statement
or otherwise in compliance with applicable federal and state securities laws).
Such Seller is acquiring the Securities hereunder in the ordinary course of its
business.

 

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(c)          Seller Status. At the time such Seller was offered the Securities,
it was, and as of the date hereof it is, and on each date on which it exercises
any Warrants or converts any Notes it will be either: (i) an “accredited
investor” as defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7) or (a)(8) under
the Securities Act or (ii) a “qualified institutional buyer” as defined in Rule
144A(a) under the Securities Act. Such Seller is not required to be registered
as a broker-dealer under Section 15 of the Exchange Act. Such Seller has the
authority and is duly and legally qualified to purchase and own the Securities.
Such Seller is able to bear the risk of such investment for an indefinite period
and to afford a complete loss thereof. Such Seller has provided the information
in the Accredited Investor Questionnaire attached hereto as Exhibit D (the
“Investor Questionnaire”). The information set forth on the signature pages
hereto and the Investor Questionnaire regarding such Seller is true and complete
in all respects. Except as disclosed in the Investor Questionnaire, such Seller
has had no position, office or other material relationship within the past three
years with the Company or Persons (as defined below) known to such Seller to be
affiliates of the Company, and is not a member of the Financial Industry
Regulatory Authority or an “associated person” (as such term is defined under
the FINRA Membership and Registration Rules Section 1011).

 

(d)          Experience of Such Seller. Such Seller, either alone or together
with its representatives, has such knowledge, sophistication and experience in
business and financial matters so as to be capable of evaluating the merits and
risks of the prospective investment in the Securities, and has so evaluated the
merits and risks of such investment. Such Seller is able to bear the economic
risk of an investment in the Securities and, at the present time, is able to
afford a complete loss of such investment.

 

The Company acknowledges and agrees that the representations contained in
Section 3.2 shall not modify, amend or affect such Seller’s right to rely on the
Company’s representations and warranties contained in this Agreement or any
representations and warranties contained in any other Transaction Document or
any other document or instrument executed and/or delivered in connection with
this Agreement or the consummation of the transaction contemplated hereby.

 

ARTICLE IV.

OTHER AGREEMENTS OF THE PARTIES

 

4.1         The Securities.

 

a.           Transfer Restrictions. The Securities may only be disposed of in
compliance with state and federal securities laws. In connection with any
transfer of Securities other than pursuant to an effective registration
statement or Rule 144, to the Company or to an Affiliate of a Seller or in
connection with a pledge as contemplated in Section 4.1(b), the Company may
require the transferor thereof to provide to the Company, at the Company’s
expense, an opinion of counsel selected by the transferor and reasonably
acceptable to the Company, the form and substance of which opinion shall be
reasonably satisfactory to the Company, to the effect that such transfer does
not require registration of such transferred Securities under the Securities
Act. As a condition of transfer, any such transferee shall agree in writing to
be bound by the terms of this Agreement and shall have the rights and
obligations of a Seller under this Agreement.

 

b.           The Sellers agree to the imprinting, so long as is required by this
Section 4.1, of a legend on any of the Securities in the following form:

 

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[NEITHER] THIS SECURITY [NOR THE SECURITIES INTO WHICH THIS SECURITY IS
[EXERCISABLE] [CONVERTIBLE]] HAS [NOT] BEEN REGISTERED WITH THE SECURITIES AND
EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON
AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO
AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH
APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO
THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY
ACCEPTABLE TO THE COMPANY. THIS SECURITY [AND THE SECURITIES ISSUABLE UPON
[EXERCISE] [CONVERSION] OF THIS SECURITY] MAY BE PLEDGED IN CONNECTION WITH A
BONA FIDE MARGIN ACCOUNT WITH A REGISTERED BROKER-DEALER OR OTHER LOAN WITH A
FINANCIAL INSTITUTION THAT IS AN “ACCREDITED INVESTOR” AS DEFINED IN RULE 501(a)
UNDER THE SECURITIES ACT OR OTHER LOAN SECURED BY SUCH SECURITIES.

 

The Company acknowledges and agrees that a Seller may from time to time pledge
pursuant to a bona fide margin agreement with a registered broker-dealer or
grant a security interest in some or all of the Securities to a financial
institution that is an “accredited investor” as defined in Rule 501(a) under the
Securities Act and who agrees to be bound by the provisions of this Agreement
and, if required under the terms of such arrangement, such Seller may transfer
pledge or secure Securities to the pledgees or secured parties. Such a pledge or
transfer would not be subject to approval of the Company and no legal opinion of
legal counsel of the pledgee, secured party or pledgor shall be required in
connection therewith. Further, no notice shall be required of such pledge. At
the appropriate Seller’s expense, the Company will execute and deliver such
reasonable documentation as a pledgee or secured party of Securities may
reasonably request in connection with a pledge or transfer of the Securities,
including, if the Securities are subject to registration pursuant to a
registration statement, the preparation and filing of any required prospectus
supplement under Rule 424(b)(3) under the Securities Act or other applicable
provision of the Securities Act to appropriately amend the list of selling
stockholders thereunder.

 

c.           Certificates evidencing the Underlying Shares shall not contain any
legend (including the legend set forth in Section 4.1(b) hereof): (i) while a
registration statement covering the resale of such security is effective under
the Securities Act, (ii) following any sale of such Underlying Shares pursuant
to Rule 144, (iii) if such Underlying Shares are eligible for sale under Rule
144, without the requirement for the Company to be in compliance with the
current public information required under Rule 144 as to such Underlying Shares
and without volume or manner-of-sale restrictions or (iv) if such legend is not
required under applicable requirements of the Securities Act (including judicial
interpretations and pronouncements issued by the staff of the Commission). The
Company shall cause its counsel to issue a legal opinion to the Transfer Agent
promptly after the Effective Date if required by the Transfer Agent to effect
the removal of the legend hereunder. If all or any Notes are converted or any
portion of a Warrant is exercised at a time when there is an effective
registration statement to cover the resale of the Underlying Shares, or if such
Underlying Shares may be sold under Rule 144 or if such legend is not otherwise
required under applicable requirements of the Securities Act (including judicial
interpretations and pronouncements issued by the staff of the Commission) then
such Underlying Shares shall be issued free of all legends. The Company agrees
that following such time as such legend is no longer required under this Section
4.1(c), it will, no later than five Trading Days following the delivery by a
Seller to the Company or the Transfer Agent of a certificate representing
Underlying Shares, as applicable, issued with a restrictive legend (such fifth
Trading Day, the “Legend Removal Date”), deliver or cause to be delivered to
such Seller a certificate representing such shares that is free from all
restrictive and other legends (however, the Corporation shall use reasonable
best efforts to deliver such shares within three (3) Trading Days). The Company
may not make any notation on its records or give instructions to the Transfer
Agent that enlarge the restrictions on transfer set forth in this Section 4.
Certificates for Underlying Shares subject to legend removal hereunder shall be
transmitted by the Transfer Agent to the Seller by crediting the account of the
Seller’s prime broker with the Depository Trust Company System as directed by
such Seller. In addition to such Seller’s other available remedies, the Company
shall pay to a Seller, in cash, as partial liquidated damages and not as a
penalty, for each $1,000 of Underlying Shares (based on the higher of the actual
purchase price or VWAP of the Common Stock on the date such Securities are
submitted to the Transfer Agent) delivered for removal of the restrictive legend
and subject to Section 4.1(c), $10 per Trading Day for each Trading Day after
the Legend Removal Date (increasing to $20 per Trading Day after the fifth
Trading Day) until such certificate is delivered without a legend. Nothing
herein shall limit such Seller’s right to pursue actual damages for the
Company’s failure to deliver certificates representing any Securities as
required by the Transaction Documents, and such Seller shall have the right to
pursue all remedies available to it at law or in equity including, without
limitation, a decree of specific performance and/or injunctive relief.

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d.           DWAC. In lieu of delivering physical certificates representing the
Unlegended Shares, upon request of a Seller, so long as the certificates
therefor do not bear a legend and the Seller is not obligated to return such
certificate for the placement of a legend thereon, the Company shall cause its
transfer agent to electronically transmit the Unlegended Shares by crediting the
account of Seller’s prime broker with the Depository Trust Company through its
Deposit Withdrawal At Custodian system, provided that the Company’s Common Stock
is DTC eligible and the Company’s transfer agent participates in the Deposit
Withdrawal at Custodian system. Such delivery must be made on or before the
Legend Removal Date.

 

e.           Injunction. In the event a Seller shall request delivery of
Unlegended Shares as described in this Section 4.1 and the Company is required
to deliver such Unlegended Shares, the Company may not refuse to deliver
Unlegended Shares based on any claim that such Seller or anyone associated or
affiliated with such Seller has not complied with Seller’s obligations under the
Transaction Documents, or for any other reason, unless, an injunction or
temporary restraining order from a court, on notice, restraining and or
enjoining delivery of such Unlegended Shares shall have been sought and obtained
by the Company and the Company has posted a surety bond for the benefit of such
Seller in the amount of the greater of (i) 120% of the amount of the aggregate
purchase price of the Underlying Shares to be subject to the injunction or
temporary restraining order, or (ii) the VWAP of the Common Stock on the trading
day before the issue date of the injunction multiplied by the number of
Unlegended Shares to be subject to the injunction, which bond shall remain in
effect until the completion of arbitration/litigation of the dispute and the
proceeds of which shall be payable to such Seller to the extent Seller obtains
judgment in Seller’s favor.

 

f.            Buy-In. In addition to any other rights available to Seller, if
the Company fails to deliver to a Seller Unlegended Shares as required pursuant
to this Agreement and after the Legend Removal Date the Seller, or a broker on
the Seller’s behalf, purchases (in an open market transaction or otherwise)
shares of Common Stock to deliver in satisfaction of a sale by such Seller of
the shares of Common Stock which the Seller was entitled to receive in
unlegended form from the Company (a “Buy-In”), then the Company shall promptly
pay in cash to the Seller (in addition to any remedies available to or elected
by the Seller) the amount, if any, by which (A) the Seller’s total purchase
price (including brokerage commissions, if any) for the shares of Common Stock
so purchased exceeds (B) the aggregate purchase price of the shares of Common
Stock delivered to the Company for reissuance as Unlegended Shares together with
interest thereon at a rate of 15% per annum accruing until such amount and any
accrued interest thereon is paid in full (which amount shall be paid as
liquidated damages and not as a penalty). For example, if a Seller purchases
shares of Common Stock having a total purchase price of $11,000 to cover a
Buy-In with respect to $10,000 of purchase price of Shares delivered to the
Company for reissuance as Unlegended Shares, the Company shall be required to
pay the Seller $1,000, plus interest, if any. The Seller shall provide the
Company written notice indicating the amounts payable to the Seller in respect
of the Buy-In.

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g.           Each Seller, severally and not jointly with the other Sellers,
agrees with the Company that such Seller will sell any Securities pursuant to
either the registration requirements of the Securities Act, including any
applicable prospectus delivery requirements, or an exemption therefrom, and that
if Securities are sold pursuant to a Registration Statement, they will be sold
in compliance with the plan of distribution set forth therein, and acknowledges
that the removal of the restrictive legend from certificates representing
Securities as set forth in this Section 4.1 is predicated upon the Company’s
reliance upon this understanding.

 

4.2           Acknowledgment of Dilution. The Company acknowledges that the
issuance of the Securities may result in dilution of the outstanding shares of
Common Stock, which dilution may be substantial under certain market conditions.
The Company further acknowledges that its obligations under the Transaction
Documents, including, without limitation, its obligation to issue the Underlying
Shares pursuant to the Transaction Documents, are unconditional and absolute and
not subject to any right of set off, counterclaim, delay or reduction,
regardless of the effect of any such dilution or any claim the Company may have
against any Seller and regardless of the dilutive effect that such issuance may
have on the ownership of the other stockholders of the Company.

 

4.3          Furnishing of Information; Public Information.

 

(a)          Until the earliest of the time that (i) no Seller owns Securities
or (ii) the Warrants have expired, the Company covenants to file all periodic
reports with the Commission pursuant to Section 15(d) of the Exchange Act or
alternatively, if registered under Section 12(b) or 12(g) of the 1934 Act,
maintain the registration of the Common Stock under Section 12(b) or 12(g) of
the Exchange Act and to timely file (or obtain extensions in respect thereof and
file within the applicable grace period) all reports required to be filed by the
Company after the date hereof pursuant to the Exchange Act even if the Company
is not then subject to the reporting requirements of the Exchange Act.

 

(b)          At any time commencing on the Closing Date and ending at such time
that all of the Securities may be sold without the requirement for the Company
to be in compliance with Rule 144(c)(1) and otherwise without restriction or
limitation pursuant to Rule 144, if the Company shall fail for any reason to
satisfy the current public information requirement under Rule 144(c) (a “Public
Information Failure”) then, in addition to such Seller’s other available
remedies, the Company shall pay to a Seller, in cash, as partial liquidated
damages and not as a penalty, by reason of any such delay in or reduction of its
ability to sell the Securities, an amount in cash equal to two percent (2.0%) of
the aggregate principal amount of Notes and accrued interest held by such Seller
on the day of a Public Information Failure and on every thirtieth (30th) day
(pro-rated for periods totaling less than thirty days) thereafter until the
earlier of (a) the date such Public Information Failure is cured and (b) such
time that such public information is no longer required for the Sellers to
transfer the Underlying Shares pursuant to Rule 144. The payments to which a
Seller shall be entitled pursuant to this Section 4.3(b) are referred to herein
as “Public Information Failure Payments.” Public Information Failure Payments
shall be paid on the earlier of (i) the last day of the calendar month during
which such Public Information Failure Payments are incurred and (ii) the third
(3rd) 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 1.5% per month (prorated for
partial months) until paid in full. Nothing herein shall limit such Seller’s
right to pursue actual damages for the Public Information Failure, and such
Seller shall have the right to pursue all remedies available to it at law or in
equity including, without limitation, a decree of specific performance and/or
injunctive relief.

 

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4.4          Integration. The Company shall not sell, offer for sale or solicit
offers to buy or otherwise negotiate in respect of any security (as defined in
Section 2 of the Securities Act) that would be integrated with the offer or sale
of the Securities in a manner that would require the registration under the
Securities Act of the sale of the Securities or that would be integrated with
the offer or sale of the Securities for purposes of the rules and regulations of
any Trading Market such that it would require shareholder approval prior to the
closing of such other transaction unless shareholder approval is obtained before
the closing of such subsequent transaction.

 

4.5          Conversion and Exercise Procedures. Each of the form of Notice of
Exercise included in the Warrants and the form of Notice of Conversion included
in the Notes set forth the totality of the procedures required of the Sellers in
order to exercise the Warrants or convert the Notes. No additional legal
opinion, other information or instructions shall be required of the Sellers to
exercise their Warrants or convert their Notes. The Company shall honor
exercises of the Warrants and conversions of the Notes and shall deliver
Underlying Shares in accordance with the terms, conditions and time periods set
forth in the Transaction Documents.

 

4.6          Securities Laws Disclosure; Publicity. The Company shall, by 9:00
a.m. (New York City time) on the fourth (4th) Trading Day immediately following
each Closing Date, issue a press release disclosing the material terms of the
transactions contemplated hereby, and shall file a Current Report on Form 8-K
including the Transaction Documents as exhibits thereto (the “Closing Form 8-K”
mutatis mutandem) within one Business Day of the date hereof. A form of the
Closing Form 8-K is annexed hereto as Exhibit F. Such Exhibit F will be
identical to the Closing Form 8-K which will be filed with the Commission except
for the omission of signatures thereto by the Company and auditors providing the
financial statements. From and after the issuance of such press release and
filing of the Closing Form 8-K, the Company represents to the Sellers that it
shall have publicly disclosed all material, non-public information delivered to
any of the Sellers by the Company or any of its Subsidiaries, or any of their
respective officers, directors, employees or agents in connection with the
transactions contemplated by the Transaction Documents. The Company and each
Seller shall consult with each other in issuing any other press releases with
respect to the transactions contemplated hereby, and neither the Company nor any
Seller shall issue any such press release nor otherwise make any such public
statement without the prior consent of the Company, with respect to any press
release of any Seller, or without the prior consent of each Seller, with respect
to any press release of the Company, which consent shall not unreasonably be
withheld or delayed, except if such disclosure is required by law, in which case
the disclosing party shall promptly provide the other party with prior notice of
such public statement or communication. Notwithstanding the foregoing, the
Company shall not publicly disclose the name of any Seller, or include the name
of any Seller in any filing with the Commission or any regulatory agency or
Trading Market unless the name of such Seller is already included in the body of
the Transaction Documents, without the prior written consent of such Seller,
except: (a) as required by federal securities law in connection with the filing
of final Transaction Documents with the Commission and (b) to the extent such
disclosure is required by law or Trading Market regulations, in which case the
Company shall provide the Sellers with prior notice of such disclosure permitted
under this clause (b).

 

4.7          Shareholder Rights Plan. No claim will be made or enforced by the
Company or, with the consent of the Company, any other Person, that any Seller
is an “Acquiring Person” under any control share acquisition, business
combination, poison pill (including any distribution under a rights agreement)
or similar anti-takeover plan or arrangement in effect or hereafter adopted by
the Company, or that any Seller could be deemed to trigger the provisions of any
such plan or arrangement, by virtue of receiving Securities under the
Transaction Documents or under any other agreement between the Company and the
Sellers.

 

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4.8          Non-Public Information. Except with respect to the material terms
and conditions of the transactions contemplated by the Transaction Documents,
the Company covenants and agrees that neither it, nor any other Person acting on
its behalf, will provide any Seller or its agents or counsel with any
information that the Company believes constitutes material non-public
information, unless prior thereto such Seller shall have entered into a written
agreement with the Company regarding the confidentiality and use of such
information. The Company understands and confirms that each Seller shall be
relying on the foregoing covenant in effecting transactions in securities of the
Company.

 

4.9          Indemnification of Sellers. Subject to the provisions of this
Section, the Company will indemnify and hold each Seller and its directors,
officers, shareholders, members, partners, employees and agents (and any other
Persons with a functionally equivalent role of a Person holding such titles
notwithstanding a lack of such title or any other title), each Person who
controls such Seller (within the meaning of Section 15 of the Securities Act and
Section 20 of the Exchange Act), and the directors, officers, shareholders,
agents, members, partners or employees (and any other Persons with a
functionally equivalent role of a Person holding such titles notwithstanding a
lack of such title or any other title) of such controlling persons (each, a
“Seller Party”) harmless from any and all losses, liabilities, obligations,
claims, contingencies, damages, costs and expenses, including all judgments,
amounts paid in settlements, court costs and reasonable attorneys’ fees and
costs of investigation that any such Seller Party may suffer or incur as a
result of or relating to (a) any breach of any of the representations,
warranties, covenants or agreements made by the Company in this Agreement or in
the other Transaction Documents or (b) any action instituted against Seller
Parties in any capacity, or any of them or their respective Affiliates, by any
stockholder of the Company who is not an Affiliate of such Seller Party, with
respect to any of the transactions contemplated by the Transaction Documents
(unless such action is based upon a breach of such Seller Party’s
representations, warranties or covenants under the Transaction Documents or any
agreements or understandings such Seller Party may have with any such
stockholder or any violations by such Seller Party of state or federal
securities laws or any conduct by such Seller Party which constitutes fraud,
gross negligence, willful misconduct or malfeasance). If any action shall be
brought against any Seller Party in respect of which indemnity may be sought
pursuant to this Agreement, such Seller Party shall promptly notify the Company
in writing, and the Company shall have the right to assume the defense thereof
with counsel of its own choosing reasonably acceptable to the Seller Party. Any
Seller Party shall have the right to employ separate counsel in any such action
and participate in the defense thereof, but the fees and expenses of such
counsel shall be at the expense of such Seller Party except to the extent that
(i) the employment thereof has been specifically authorized by the Company in
writing, (ii) the Company has failed after a reasonable period of time to assume
such defense and to employ counsel or (iii) in such action there is, in the
reasonable opinion of counsel, a material conflict on any material issue between
the position of the Company and the position of such Seller Party, in which case
the Company shall be responsible for the reasonable fees and expenses of no more
than one such separate counsel. The Company will not be liable to any Seller
Party under this Agreement (y) for any settlement by a Seller Party effected
without the Company’s prior written consent, which shall not be unreasonably
withheld or delayed; or (z) to the extent, but only to the extent that a loss,
claim, damage or liability is attributable to any Seller Party’s breach of its
representations, warranties or covenants under the Transaction Documents. The
indemnification required by this Section 4.9 shall be made by periodic payments
of the amount thereof during the course of the investigation or defense, as and
when bills are received or are incurred. The indemnity agreements contained
herein shall be in addition to any cause of action or similar right of any
Seller Party against the Company or others and any liabilities the Company may
be subject to pursuant to law.

 

4.10       Reservation and Listing of Securities.

 

(a)          The Company shall maintain a reserve from its duly authorized
shares of Common Stock for issuance pursuant to the Transaction Documents in
such amount as may then be required to fulfill its obligations in full under the
Transaction Documents, but not less than the Required Minimum.

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(b)          If, on any date, the number of authorized but unissued (and
otherwise unreserved) shares of Common Stock is less than the Required Minimum
on such date, then the Board of Directors shall amend the Company’s certificate
or articles of incorporation to increase the number of authorized but unissued
shares of Common Stock to at least the Required Minimum at such time, as soon as
possible and in any event not later than the 60th day after such date.

 

(c)          The Company shall, if applicable: (i) in the time and manner
required by the principal Trading Market, prepare and file with such Trading
Market an additional shares listing application covering a number of shares of
Common Stock at least equal to the Required Minimum on the date of such
application, (ii) take all steps necessary to cause such shares of Common Stock
to be approved for listing or quotation on such Trading Market as soon as
possible thereafter, (iii) provide to the Sellers evidence of such listing or
quotation and (iv) maintain the listing or quotation of such Common Stock on any
date at least equal to the Required Minimum on such date on such Trading Market
or another Trading Market.

 

4.11       Form D; Blue Sky Filings. The Company agrees to timely file a Form D
with respect to the Securities as required under Regulation D and to provide a
copy thereof, promptly upon request of any Seller. The Company shall take such
action as the Company shall reasonably determine is necessary in order to obtain
an exemption for, or to qualify the Securities for, sale to the Sellers at the
Closing under applicable securities or “Blue Sky” laws of the states of the
United States, and shall provide evidence of such actions promptly upon request
of any Seller.

 

4.12       Reimbursement. If any Seller becomes involved in any capacity in any
Proceeding by or against any Person who is a stockholder of the Company (except
as a result of sales, pledges, margin sales and similar transactions by such
Seller to or with any current stockholder), solely as a result of such Seller’s
acquisition of the Securities under this Agreement, the Company will reimburse
such Seller for its reasonable legal and other expenses (including the cost of
any investigation preparation and travel in connection therewith) incurred in
connection therewith, as such expenses are incurred. The reimbursement
obligations of the Company under this paragraph shall be in addition to any
liability which the Company may otherwise have, shall extend upon the same terms
and conditions to any Affiliates of the Sellers who are actually named in such
action, proceeding or investigation, and partners, directors, agents, employees
and controlling persons (if any), as the case may be, of the Sellers and any
such Affiliate, and shall be binding upon and inure to the benefit of any
successors, assigns, heirs and personal representatives of the Company, the
Sellers and any such Affiliate and any such Person. The Company also agrees that
neither the Sellers nor any such Affiliates, partners, directors, agents,
employees or controlling persons shall have any liability to the Company or any
Person asserting claims on behalf of or in right of the Company solely as a
result of acquiring the Securities under this Agreement.

 

4.13       Maintenance of Property. The Company shall keep all of its property,
which is necessary or useful to the conduct of its business, in good working
order and condition, ordinary wear and tear excepted.         

 

4.14       Preservation of Corporate Existence. The Company shall preserve and
maintain its corporate existence, rights, privileges and franchises in the
jurisdiction of its incorporation, and qualify and remain qualified, as a
foreign corporation in each jurisdiction in which such qualification is
necessary in view of its business or operations and where the failure to qualify
or remain qualified might reasonably have a Material Adverse Effect upon the
financial condition, business or operations of the Company taken as a whole.

 

17

 

 

4.15       Negative Covenants. The Company agrees that for so long as any of the
Securities are outstanding it shall not:

 

a.           Pay any cash dividend on its preferred or common stock;

 

b.           Enter into any material agreements with any of its affiliates;

 

c.           Make any loan or series of loans to any subsidiary or parent
company in excess of an aggregate of $10,000.

 

ARTICLE V.

MISCELLANEOUS

 

5.1         Termination.  This Agreement may be terminated by any Seller, as to
such Seller’s obligations hereunder only and without any effect whatsoever on
the obligations between the Company and the other Sellers, by written notice to
the other parties, if the Closing has not been consummated on or before May 17,
2015; provided, however, that such termination will not affect the right of any
party to sue for any breach by any other party (or parties).

 

5.2         Fees and Expenses. At the Closing, the Company has agreed to pay G&M
for the legal fees in connection with the Closing of some, but not all, of the
Sellers’ legal fees in the amount of $35,000.00. Except as expressly set forth
in the Transaction Documents and on Schedule 5.2, each party shall pay the fees
and expenses of its advisers, counsel, accountants and other experts, if any,
and all other expenses incurred by such party incident to the negotiation,
preparation, execution, delivery and performance of this Agreement. The Company
shall pay all Transfer Agent fees (including, without limitation, any fees
required for same-day processing of any instruction letter delivered by the
Company and any conversion or exercise notice delivered by a Seller), stamp
taxes and other taxes and duties levied in connection with the delivery of any
Securities to the Sellers.

 

5.3         Entire Agreement. The Transaction Documents, together with the
exhibits and schedules thereto, contain the entire understanding of the parties
with respect to the subject matter hereof and thereof and supersede all prior
agreements and understandings, oral or written, with respect to such matters,
which the parties acknowledge have been merged into such documents, exhibits and
schedules.

 

5.4         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, or facsimile, addressed
as set forth below or to such other address as such party shall have specified
most recently by written notice. Any notice or other communication required or
permitted to be given hereunder shall be deemed effective (a) upon hand delivery
or delivery by facsimile, with accurate confirmation generated by the
transmitting facsimile machine, at the address or number designated below (if
delivered on a business day during normal business hours where such notice is to
be received), or the first business day following such delivery (if delivered
other than on a business day during normal business hours where such notice is
to be received) 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: (i) if to the Company, to: Harrison Vickers and
Waterman Inc., 4224 White Plains Road, 3rd Floor, Bronx, NY 10467, Attn: Roy
Warren, Chief Executive Officer, and (ii) if to the Sellers, to: the addresses
and fax numbers indicated on the signature pages hereto, with an additional copy
by fax only to (which shall not constitute notice): Grushko & Mittman, P.C., 515
Rockaway Avenue, Valley Stream, New York 11581, facsimile: (212) 697-3575.

 

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5.5         Amendments; Waivers. No provision of this Agreement may be waived,
modified, supplemented or amended except in a written instrument signed, in the
case of an amendment, by the Company and the Sellers holding at least a majority
in interest of the component of the affected Securities then outstanding or, in
the case of a waiver, by the party against whom enforcement of any such waived
provision is sought. No waiver of any default with respect to any provision,
condition or requirement of this Agreement shall be deemed to be a continuing
waiver in the future or a waiver of any subsequent default or a waiver of any
other provision, condition or requirement hereof, nor shall any delay or
omission of any party to exercise any right hereunder in any manner impair the
exercise of any such right.

 

5.6         Headings. The headings herein are for convenience only, do not
constitute a part of this Agreement and shall not be deemed to limit or affect
any of the provisions hereof.

 

5.7         Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties and their successors and permitted assigns.
The Company may not assign this Agreement or any rights or obligations hereunder
without the prior written consent of each Seller (other than by merger).
Following the Closing, any Seller may assign any or all of its rights under this
Agreement to any Person to whom such Seller assigns or transfers any Securities,
provided that such transferee agrees in writing to be bound, with respect to the
transferred Securities, by the provisions of the Transaction Documents that
apply to the “Sellers.”

 

5.8         No Third-Party Beneficiaries. This Agreement is intended for the
benefit of the parties hereto and their respective successors and permitted
assigns and is not for the benefit of, nor may any provision hereof be enforced
by, any other Person, except as otherwise set forth in Section 4.9.

 

5.9         Governing Law. All questions concerning the construction, validity,
enforcement and interpretation of the Transaction Documents shall be governed by
and construed and enforced in accordance with the internal laws of the State of
New York, without regard to the principles of conflicts of law thereof. Each
party agrees that all legal proceedings concerning the interpretations,
enforcement and defense of the transactions contemplated by this Agreement and
any other Transaction Documents (whether brought against a party hereto or its
respective affiliates, directors, officers, shareholders, partners, members,
employees or agents) shall be commenced exclusively in the state and federal
courts sitting in the City of New York. Each party hereby irrevocably submits to
the exclusive jurisdiction of the state and federal courts sitting in the City
of New York, Borough of Manhattan for the adjudication of any dispute hereunder
or in connection herewith or with any transaction contemplated hereby or
discussed herein (including with respect to the enforcement of any of the
Transaction Documents), and hereby irrevocably waives, and agrees not to assert
in any action, suit or proceeding, any claim that it is not personally subject
to the jurisdiction of any such court, that such suit, action or proceeding is
improper or is an inconvenient venue for such proceeding. Each party hereby
irrevocably waives personal service of process and consents to process being
served in any such suit, action or proceeding by mailing a copy thereof via
registered or certified mail or overnight delivery (with evidence of delivery)
to such party at the address in effect for notices to it under this Agreement
and agrees that such service shall constitute good and sufficient service of
process and notice thereof. Nothing contained herein shall be deemed to limit in
any way any right to serve process in any other manner permitted by law. If
either party shall commence an action or proceeding to enforce any provisions of
the Transaction Documents, then, in addition to the obligations of the Company
under Section 4.9, the prevailing party in such action, suit or proceeding shall
be reimbursed by the other party for its reasonable attorneys’ fees and other
costs and expenses incurred with the investigation, preparation and prosecution
of such action or proceeding.

 

19

 

 

5.10       Survival. The representations and warranties contained herein shall
survive the Closing and the delivery of the Securities.

 

5.11       Execution. This Agreement may be executed in two or more
counterparts, all of which when taken together shall be considered one and the
same agreement and shall become effective when counterparts have been signed by
each party and delivered to each other party, it being understood that the
parties need not sign the same counterpart. In the event that any signature is
delivered by facsimile transmission or by e-mail delivery of a “.pdf” format
data file, such signature shall create a valid and binding obligation of the
party executing (or on whose behalf such signature is executed) with the same
force and effect as if such facsimile or “.pdf” signature page were an original
thereof.

 

5.12       Severability. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction to be invalid, illegal,
void or unenforceable, the remainder of the terms, provisions, covenants and
restrictions set forth herein shall remain in full force and effect and shall in
no way be affected, impaired or invalidated, and the parties hereto shall use
their commercially reasonable efforts to find and employ an alternative means to
achieve the same or substantially the same result as that contemplated by such
term, provision, covenant or restriction. It is hereby stipulated and declared
to be the intention of the parties that they would have executed the remaining
terms, provisions, covenants and restrictions without including any of such that
may be hereafter declared invalid, illegal, void or unenforceable.

 

5.13       Rescission and Withdrawal Right. Notwithstanding anything to the
contrary contained in (and without limiting any similar provisions of) any of
the other Transaction Documents, whenever any Seller exercises a right,
election, demand or option under a Transaction Document and the Company does not
timely perform its related obligations within the periods therein provided, then
such Seller may, at any time prior to the Company’s performance of such
obligations, rescind or withdraw, in its sole discretion from time to time upon
written notice to the Company, any relevant notice, demand or election in whole
or in part without prejudice to its future actions and rights; provided,
however, that in the case of a rescission of a conversion of a Note or exercise
of a Warrant, the applicable Seller shall be required to return any shares of
Common Stock subject to any such rescinded conversion or exercise notice
concurrently with the return to such Seller of the aggregate exercise price paid
to the Company for such shares and the restoration of such Seller’s right to
acquire such shares pursuant to such Seller’s Warrant (including, issuance of a
replacement warrant certificate evidencing such restored right).

 

5.14       Replacement of Securities. If any certificate or instrument
evidencing any Securities is mutilated, lost, stolen or destroyed, the Company
shall issue or cause to be issued in exchange and substitution for and upon
cancellation thereof (in the case of mutilation), or in lieu of and substitution
therefor, a new certificate or instrument, but only upon receipt of evidence
reasonably satisfactory to the Company of such loss, theft or destruction. The
applicant for a new certificate or instrument under such circumstances shall
also pay any reasonable third-party costs (including customary indemnity)
associated with the issuance of such replacement Securities.

 

5.15       Remedies. In addition to being entitled to exercise all rights
provided herein or granted by law, including recovery of damages, each of the
Sellers and the Company will be entitled to specific performance under the
Transaction Documents. The parties agree that monetary damages may not be
adequate compensation for any loss incurred by reason of any breach of
obligations contained in the Transaction Documents and hereby agree to waive and
not to assert in any action for specific performance of any such obligation the
defense that a remedy at law would be adequate.

 

20

 

 

5.16       Payment Set Aside. To the extent that the Company makes a payment or
payments to any Seller pursuant to any Transaction Document or a Seller enforces
or exercises its rights 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 under any law
(including, without limitation, any bankruptcy law, 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.

 

5.17       Usury. To the extent it may lawfully do so, the Company hereby agrees
not to insist upon or plead or in any manner whatsoever claim, and will resist
any and all efforts to be compelled to take the benefit or advantage of, usury
laws wherever enacted, now or at any time hereafter in force, in connection with
any claim, action or proceeding that may be brought by any Seller in order to
enforce any right or remedy under any Transaction Document. Notwithstanding any
provision to the contrary contained in any Transaction Document, it is expressly
agreed and provided that the total liability of the Company under the
Transaction Documents for payments in the nature of interest shall not exceed
the maximum lawful rate authorized under applicable law (the “Maximum Rate”),
and, without limiting the foregoing, in no event shall any rate of interest or
default interest, or both of them, when aggregated with any other sums in the
nature of interest that the Company may be obligated to pay under the
Transaction Documents exceed such Maximum Rate. It is agreed that if the maximum
contract rate of interest allowed by law and applicable to the Transaction
Documents is increased or decreased by statute or any official governmental
action subsequent to the date hereof, the new maximum contract rate of interest
allowed by law will be the Maximum Rate applicable to the Transaction Documents
from the Closing Date thereof forward, unless such application is precluded by
applicable law. If under any circumstances whatsoever, interest in excess of the
Maximum Rate is paid by the Company to any Seller with respect to indebtedness
evidenced by the Transaction Documents, such excess shall be applied by such
Seller to the unpaid principal balance of any such indebtedness or be refunded
to the Company, the manner of handling such excess to be at such Seller’s
election.

 

5.18       Independent Nature of Sellers’ Obligations and Rights. The
obligations of each Seller under any Transaction Document are several and not
joint with the obligations of any other Seller, and no Seller shall be
responsible in any way for the performance or non-performance of the obligations
of any other Seller under any Transaction Document. Nothing contained herein or
in any other Transaction Document, and no action taken by any Seller pursuant
hereto or thereto, shall be deemed to constitute the Sellers as a partnership,
an association, a joint venture or any other kind of entity, or create a
presumption that the Sellers are in any way acting in concert or as a group with
respect to such obligations or the transactions contemplated by the Transaction
Documents. Each Seller shall be entitled to independently protect and enforce
its rights, including, without limitation, the rights arising out of this
Agreement or out of the other Transaction Documents, and it shall not be
necessary for any other Seller to be joined as an additional party in any
proceeding for such purpose. Each Seller has been represented by its own
separate legal counsel in its review and negotiation of the Transaction
Documents. For reasons of administrative convenience only, each Seller and its
respective counsel have chosen to communicate with the Company through G&M. The
Company has elected to provide all Sellers with the same terms and Transaction
Documents for the convenience of the Company and not because it was required or
requested to do so by any of the Sellers. It is expressly understood and agreed
that each provision contained in this Agreement and in each other Transaction
Document is between the Company and a Seller, solely, and not between the
Company and the Sellers collectively and not between and among the Sellers.

 

5.19       Liquidated Damages. The Company’s obligations to pay any partial
liquidated damages or other amounts owing under the Transaction Documents is a
continuing obligation of the Company and shall not terminate until all unpaid
partial liquidated damages and other amounts have been paid notwithstanding the
fact that the instrument or security pursuant to which such partial liquidated
damages or other amounts are due and payable shall have been canceled.

21

 

  

5.20       Saturdays, Sundays, Holidays, etc. If the last or appointed day for
the taking of any action or the expiration of any right required or granted
herein shall not be a Business Day, then such action may be taken or such right
may be exercised on the next succeeding Business Day.

 

5.21       Construction. The parties agree that each of them and/or their
respective counsel have reviewed and had an opportunity to revise the
Transaction Documents and, therefore, the normal rule of construction to the
effect that any ambiguities are to be resolved against the drafting party shall
not be employed in the interpretation of the Transaction Documents or any
amendments thereto. In addition, each and every reference to share prices and
shares of Common Stock in any Transaction Document shall be subject to
adjustment for reverse and forward stock splits, stock dividends, stock
combinations and other similar transactions of the Common Stock that occur after
the date of this Agreement.

 

5.22       WAIVER OF JURY TRIAL. IN ANY ACTION, SUIT, OR PROCEEDING IN ANY
JURISDICTION BROUGHT BY ANY PARTY AGAINST ANY OTHER PARTY, THE PARTIES EACH
KNOWINGLY AND INTENTIONALLY, TO THE GREATEST EXTENT PERMITTED BY APPLICABLE LAW,
HEREBY ABSOLUTELY, UNCONDITIONALLY, IRREVOCABLY AND EXPRESSLY WAIVES FOREVER
TRIAL BY JURY.

 

(Signature Pages Follow)

 

22

 

 

IN WITNESS WHEREOF, the parties hereto have caused this Securities Purchase
Agreement to be duly executed by their respective authorized signatories as of
the date first indicated above.

 

Harrison Vickers and Waterman Inc.   Address for Notice:     4224 White Plains
Road, 3rd Floor     Bronx, NY 10467         By: /s/ Roy Warren       Name: Roy
Warren       Title: Chief Executive Officer    

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK

SIGNATURE PAGE FOR SELLER FOLLOWS]

 

23

 

 

[SELLER SIGNATURE PAGE TO Harrison Vickers and Waterman Inc.

SECURITIES PURCHASE AGREEMENT]

 

IN WITNESS WHEREOF, the undersigned have caused this Securities Purchase
Agreement to be duly executed by their respective authorized signatories as of
the date first indicated above.

 

Name of Seller: ________________________________________________________

 

Signature of Authorized Signatory of Seller: __________________________________

 

Name of Authorized Signatory:
____________________________________________________

 

Title of Authorized Signatory:
_____________________________________________________

 

Email Address of Authorized Signatory:
_____________________________________________

 

Facsimile Number of Authorized Signatory:
__________________________________________

 

Address for Notice to Seller:

 

Address for Delivery of Securities to Seller (if not same as address for
notice):

 

Preferred Stock: ___________________

 

Note principal amount: ___________________

 

Warrants: ___________________

 

EIN Number, if applicable, will be provided under separate cover:
________________________

 

Date: ___________________________

 

[SIGNATURE PAGES CONTINUE]

 

24

 

 

 

EXHIBITS

AND

SCHEDULES

Exhibit A Form of Note Exhibit B1 Form of A Warrant Exhibit B2 Form of B Warrant
Exhibit C Form of Escrow Agreement Exhibit D Form of Investor Questionnaire
Exhibit E Form of Exchange Agreement Exhibit F Form 8K Exhibit G Form of
Security Agreement Exhibit H Form of AIR

 

Schedule A

 

Seller   ABH Shares   Purchase Price

Attitude Drinks, Inc.

712 US Highway 1, Suite 200

North Palm Beach, FL 33408,

Attn: Roy Warren, CEO

Fax: (800) 799–5053

  875,000  

51 Series B Shares

5,000,000 B W warrants.

         

Alpha Capital Anstalt

Lettstrasse 32

LI-9490 Vaduz

Liechtenstein

Fax: 011-42-32323196

  99,000  

1.    A note in the principal amount of $1,619,375.00

2.    A Warrants to purchase 1,295,500,000 shares

3.    An AIR to purchase up to $3,750,000 in additional notes and corresponding
warrants

4.    5,000 Series A Preferred Shares

         

Tarpon Bay Partners LLC

90 Grove Street, Ste 206

Ridgefield CT 06877

Fax: (203) 431-8301

  26,000  

1.    A note in the principal amount of $554,791.67

2.    A Warrants to purchase 443,833,333 shares

3.    An AIR to purchase up to $1,250,000 in additional notes and corresponding
warrants

          Total   1,000,000    

  

25

 

 

Schedule 3.1(g)

SEC Filings

None

 

Schedule 5.2

Fees

None

 

26