EXHIBIT 10.2

 

SECURITIES EXCHANGE AND COMMON STOCK

PURCHASE AGREEMENT

 

This Securities Exchange and Common Stock Purchase Agreement (this “Agreement”)
is made and entered into effective as of the 25th day of July, 2017 (the
“Effective Date”) by and between Freeze Tag, Inc., a Delaware corporation (the
“Company”), and [Holder], an individual (the “Holder”). The Company and Holder
shall each be referred to as a “Party” and collectively as the “Parties.”

 

RECITALS

 

WHEREAS, the Company currently owes the Holder $[Principal Amount] in principal
(the “Note Principal”) and $[Interest Amount] in interest (the “Note Interest”)
under promissory notes dated December 31, 2013 (the “Notes”);

 

WHEREAS, the Holder desires to tender the Notes for cancellation, including
having (i) the Note Principal owed to Holder by the Company exchanged for shares
of the Company’s Common Stock, and (ii) the Note Interest waived and deemed
fully satisfied, pursuant to the terms of this Agreement;

 

WHEREAS, the Company desires to issue the Holder shares of the Company’s Common
Stock in exchange for the Holder tendering the Notes for cancellation;

 

WHEREAS, even though the Conversion Price of the Notes is currently at $0.00005
per share, the Holder agrees to accept the higher effective conversion price
stated herein of $0.0002 per share, to help reduce dilution to the Company; and

 

WHEREAS, the Common Stock, or common stock, as referenced in this Agreement
shall mean the common stock, $0.00001 par value per share, of the Company after
giving effect to an estimated 1-for-100 reverse stock split scheduled to be
effective on or around September 1, 2017.

 

NOW, THEREFORE, the Parties hereby agree as follows:

 

AGREEMENT

 

1. EXCHANGE OF SECURITIES:

 

a) On the Closing Date (as hereinafter defined), subject to the terms and
conditions set forth in this Agreement, the Company agrees to issue [Share
amount] shares of its common stock (post-reverse stock split referenced in
Section 2 below) (the “Shares”) at a per-share purchase price of $0.02 per
share, in exchange for the Holder agreeing to cancel the Notes, including the
Note Principal being considered fully satisfied and the Note Interest being
waived in its entirety. The Purchase Price will be paid by the Holder to the
Company through a Notice of Debt Satisfaction in the form attached hereto as
Exhibit A, evidencing the satisfaction of the Note Principal in exchange for the
Shares and stating that the Holder is forever waiving the Note Interest.

 

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2. CLOSING AND DELIVERY:

 

a) Upon the terms and subject to the conditions set forth herein, the
consummation of the exchange of the Principal Amount under the Notes for the
Shares (the “Closing”) shall occur automatically upon the Company completing an
estimated 1-for-100 reverse stock split of the Company’s common stock (the
“Closing Date”).

 

b) In advance of the Closing:

 

(i) The Company and the Holder shall execute this Agreement. Subsequent to the
Closing, at a time chosen by the Company in its sole discretion, the Company
will issue a stock certificate to the Holder to evidence the Shares.

 

(ii) The Holder shall deliver to the Company the signed Notice of Debt
Satisfaction.

 

(iii) The exchange of the Shares for the cancellation of the Notes will be
effective automatically upon the effectiveness of the above-referenced reverse
stock split.

 

3. REPRESENTATIONS, WARRANTIES AND AGREEMENTS BY HOLDER: The Holder hereby
represents, warrants and agrees as follows:

 

a) Purchase for Own Account. Holder represents that he is acquiring the Shares
solely for his own account and beneficial interest for investment and not for
sale or with a view to distribution of the Shares or any part thereof, has no
present intention of selling (in connection with a distribution or otherwise),
granting any participation in, or otherwise distributing the same, and does not
presently have reason to anticipate a change in such intention.

 

b) Ability to Bear Economic Risk. Holder acknowledges that an investment in the
Shares involves a high degree of risk, and represents that he is able, without
materially impairing his financial condition, to hold the Shares for an
indefinite period of time and to suffer a complete loss of his investment.

 

c) Access to Information. The Holder acknowledges that the Holder has been
furnished with such financial and other information concerning the Company, the
directors and officers of the Company, and the business and proposed business of
the Company as the Holder considers necessary in connection with the Holder’s
investment in the Shares. As a result, the Holder is thoroughly familiar with
the proposed business, operations, properties and financial condition of the
Company and has discussed with officers of the Company any questions the Holder
may have had with respect thereto. The Holder understands:

 

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(i) The risks involved in this investment, including the speculative nature of
the investment;

 

(ii) The financial hazards involved in this investment, including the risk of
losing the Holder’s entire investment;

 

(iii) The lack of liquidity and restrictions on transfers of the Shares; and

 

(iv) The tax consequences of this investment.

 

The Holder has consulted with the Holder’s own legal, accounting, tax,
investment and other advisers with respect to the tax treatment of an investment
by the Holder in the Shares and the merits and risks of an investment in the
Shares.

 

d) Shares Part of Private Placement. The Holder has been advised that the Shares
have not been registered under the Securities Act of 1933, as amended (the
“Act”), or qualified under the securities law of any state, on the ground, among
others, that no distribution or public offering of the Shares is to be effected
and the Shares will be issued by the Company in connection with a transaction
that does not involve any public offering within the meaning of section 4(a)(2)
of the Act and/or Regulation D as promulgated by the Securities and Exchange
Commission under the Act, and under any applicable state blue sky authority. The
Holder understands that the Company is relying in part on the Holder’s
representations as set forth herein for purposes of claiming such exemptions and
that the basis for such exemptions may not be present if, notwithstanding the
Holder’s representations, the Holder has in mind merely acquiring the Shares for
resale on the occurrence or nonoccurrence of some predetermined event. The
Holder has no such intention.

 

e) Further Limitations on Disposition. Holder further acknowledges that the
Shares are restricted securities under Rule 144 of the Act, and, therefore, if
the Company, in its sole discretion, chooses to issue any certificates
reflecting the ownership interest in the Shares, those certificates will contain
a restrictive legend substantially similar to the following:

 

THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE “ACT”). THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR
HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THE
SECURITIES UNDER THE ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY
THAT SUCH REGISTRATION IS NOT REQUIRED.

 

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THESE SECURITIES ARE SUBJECT TO THE TERMS OF A LOCK-UP PROVISION IN THAT CERTAIN
SECURITIES EXCHANGE AND COMMON STOCK PURCHASE AGREEMENT AND MAY NOT BE
TRANSFERRED, SOLD OR ASSIGNED OTHER THAN AS PERMITTED THEREIN, A COPY OF WHICH
IS ON FILE WITH THE SECRETARY OF THE COMPANY.

 

Without in any way limiting the representations set forth above, Holder further
agrees not to make any disposition of all or any portion of the Shares, unless
and until:

 

(i) There is then in effect a Registration Statement under the Act covering such
proposed disposition and such disposition is made in accordance with such
Registration Statement; or

 

(ii) Holder shall have obtained the consent of the Company and notified the
Company of the proposed disposition and shall have furnished the Company with a
detailed statement of the circumstances surrounding the proposed disposition,
and if reasonably requested by the Company, Holder shall have furnished the
Company with an opinion of counsel, reasonably satisfactory to the Company, that
such disposition will not require registration under the Act or any applicable
state securities laws.

 

Notwithstanding the provisions of subparagraphs (i) and (ii) above, no such
registration statement or opinion of counsel shall be necessary for a transfer
by such Holder to a partner (or retired partner) of Holder, or transfers by
gift, will or intestate succession to any spouse or lineal descendants or
ancestors, if all transferees agree in writing to be subject to the terms hereof
to the same extent as if they were Holders hereunder as long as the consent of
the Company is obtained.

 

f) Accredited Investor Status. The Holder is an accredited investor.

 

g) Holder Authorization. The Holder, if not an individual, is empowered and duly
authorized to enter into this Agreement under any governing document,
partnership agreement, trust instrument, pension plan, charter, certificate of
incorporation, bylaw provision or the like; this Agreement constitutes a valid
and binding agreement of the Holder enforceable against the Holder in accordance
with its terms; and the person signing this Agreement on behalf of the Holder is
empowered and duly authorized to do so by the governing document or trust
instrument, pension plan, charter, certificate of incorporation, bylaw
provision, board of directors or stockholder resolution, or the like.

 

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h) No Backup Withholding. The Social Security Number or taxpayer identification
shown in this Agreement is correct, and the Holder is not subject to backup
withholding because (i) the Holder has not been notified that he or she is
subject to backup withholding as a result of a failure to report all interest
and dividends or (ii) the Internal Revenue Service has notified the Holder that
he or she is no longer subject to backup withholding.

 

i) Lockup of Shares. For good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, during the period beginning on the
Closing Date and ending on the twenty four (24) month anniversary thereof (the
“Lockup Period”), Holder will not directly or indirectly, (i) offer, sell, offer
to sell, contract to sell, hedge, pledge, sell any option or contract to
purchase, purchase any option or contract to sell, grant any option, right or
warrant to purchase or sell (or announce any offer, sale, offer of sale,
contract of sale, hedge, pledge, sale of any option or contract to purchase,
purchase of any option or contract of sale, grant of any option, right or
warrant to purchase or other sale or disposition), or otherwise transfer or
dispose of (or enter into any transaction or device that is designed to, or
could be expected to, result in the disposition by any person at any time in the
future), any portion of the Shares (collectively the “Lock-Up Securities”),
beneficially owned, within the meaning of Rule 13d-3 under the Exchange Act, by
such holder on the date hereof or hereafter acquired or (ii) enter into any swap
or other agreement or any transaction that transfers, in whole or in part,
directly or indirectly, the economic consequence of ownership of any portion of
the Lock-Up Securities, whether or not any such swap or transaction described in
clause (i) or (ii) above is to be settled by delivery of any of the Lock-Up
Securities”.

 

4. REPRESENTATIONS, WARRANTIES AND AGREEMENTS BY COMPANY: The Company hereby
represents, warrants and agrees as follows:

 

a) Authority of Company. The Company has all requisite authority to execute and
deliver this Agreement and to carry out and perform its obligations under the
terms of this Agreement.

 

b) Authorization. All actions on the part of the Company necessary for the
authorization, execution, delivery and performance of this Agreement by the
Company and the performance of the Company’s obligations hereunder has been
taken or will be taken prior to the issuance of the Shares. This Agreement, when
executed and delivered by the Company, shall constitute valid and binding
obligations of the Company enforceable in accordance with their terms, subject
to laws of general application relating to bankruptcy, insolvency, the relief of
debtors and, with respect to rights to indemnity, subject to federal and state
securities laws. The issuance of the Shares will be validly issued, fully paid
and nonassessable, will not violate any preemptive rights, rights of first
refusal, or any other rights granted by the Company, and will be issued in
compliance with all applicable federal and state securities laws, and will be
free of any liens or encumbrances, other than any liens or encumbrances created
by or imposed upon the Holder through no action of the Company; provided,
however, that the Shares may be subject to restrictions on transfer under state
and/or federal securities laws as set forth herein or as otherwise required by
such laws at the time the transfer is proposed.

 

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c) Governmental Consents. All consents, approvals, orders, or authorizations of,
or registrations, qualifications, designations, declarations, or filings with,
any governmental authority required on the part of the Company in connection
with the valid execution and delivery of this Agreement, the offer, sale or
issuance of the Shares, or the consummation of any other transaction
contemplated hereby shall have been obtained, except for notices required or
permitted to be filed with certain state and federal securities commissions,
which notices will be filed on a timely basis.

 

5. INDEMNIFICATION: The Holder hereby agrees to indemnify and defend the Company
and its officers and directors and hold them harmless from and against any and
all liability, damage, cost or expense incurred on account of or arising out of:

 

(a) Any breach of or inaccuracy in the Holder’s representations, warranties or
agreements herein;

 

(b) Any disposition of any Shares contrary to any of the Holder’s
representations, warranties or agreements herein;

 

(c) Any action, suit or proceeding based on (i) a claim that any of said
representations, warranties or agreements were inaccurate or misleading or
otherwise cause for obtaining damages or redress from the Company or any
director or officer of the Company under the Act, or (ii) any disposition of any
Shares.

 

6. MISCELLANEOUS:

 

a) Binding Agreement. The terms and conditions of this Agreement shall inure to
the benefit of and be binding upon the respective successors and assigns of the
Parties. Nothing in this Agreement, expressed or implied, is intended to confer
upon any third party any rights, remedies, obligations, or liabilities under or
by reason of this Agreement, except as expressly provided in this Agreement.

 

b) Governing Law; Venue. This Agreement shall be governed by and construed under
the laws of the State of California as applied to agreements among California
residents, made and to be performed entirely within the State of California. The
Parties agree that any action brought to enforce the terms of this Agreement
will be brought in the appropriate federal or state court having jurisdiction
over Orange County, California, United States of America.

 

c) Counterparts. This Agreement may be executed in one or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.

 

d) Titles and Subtitles. The titles and subtitles used in this Agreement are
used for convenience only and are not to be considered in construing or
interpreting this Agreement.

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e) Notices. All notices required or permitted hereunder shall be in writing and
shall be deemed effectively given: (a) upon personal delivery to the Party to be
notified, (b) when sent by confirmed facsimile if sent during normal business
hours of the recipient, if not, then on the next business day, or (c) one (1)
day after deposit with a nationally recognized overnight courier, specifying
next day delivery, with written verification of receipt. All communications
shall be sent as follows:

 

If to the Company:

Freeze Tag, Inc.

18062 Irvine Blvd., Suite 103

Tustin, CA 92780

Attn. President

Facsimile (714) 210-3851

 

  

with a copy to:

Law Offices of Craig V. Butler

300 Spectrum Center Drive, Suite 300

Irvine, CA 92618

Attn: Craig V. Butler, Esq.

Facsimile (949) 209-2545

 

   

If to Holder:

[Holder Address]

 

or at such other address as the Company or Holder may designate by ten (10) days
advance written notice to the other Party hereto.

 

f) Modification; Waiver. No modification or waiver of any provision of this
Agreement or consent to departure therefrom shall be effective unless in writing
and approved by the Company and the Holder.

 

g) Entire Agreement; Successors. This Agreement and the Exhibits hereto
constitute the full and entire understanding and agreement between the Parties
with regard to the subjects hereof and no Party shall be liable or bound to the
other Party in any manner by any representations, warranties, covenants and
agreements except as specifically set forth herein. The representations,
warranties and agreements contained in this Agreement shall be binding on the
Holder’s successors, assigns, heirs and legal representatives and shall inure to
the benefit of the respective successors and assigns of the Company and its
directors and officers.

 

h) Expenses. Each Party shall pay their own expenses in connection with this
Agreement. In addition, should either Party commence any action, suit or
proceeding to enforce this Agreement or any term or provision hereof, then in
addition to any other damages or awards that may be granted to the prevailing
Party, the prevailing Party shall be entitled to have and recover from the other
Party such prevailing Party’s reasonable attorneys’ fees and costs incurred in
connection therewith.

 

i) Currency. All currency is expressed in U.S. dollars.

 

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IN WITNESS WHEREOF, the Parties have executed this Securities Exchange and
Common Stock Purchase Agreement as of the date first written above.

 

“Company”

 

 

“Holder”

 

 

 

 

 

Freeze Tag, Inc.,

 

 

[Holder],

 

a Delaware corporation

 

 

an individual

 

 

    

 

 

 

 

 

 

 

By:

Craig Holland

 

 

[Holder]

 

Its:

Chief Executive Officer

 

 

 

 

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Exhibit A

 

Notice of Debt Satisfaction

 

 

 

 

 

 

 

 

 

 

 

Exhibit A

   

 

Notice of Debt Satisfaction

 

Pursuant to the terms of that certain Securities Exchange and Common Stock
Purchase Agreement (the “Agreement”) by and between [Holder] (the “Holder”) and
Freeze Tag, Inc., a Delaware corporation (the “Company”) dated July [__], 2017,
the Holder is irrevocably canceling and forfeiting the Notes (as defined in the
Agreement), and exchange $[Principal Amount], which is the aggregate principal
amount due to the Holder under the Notes, into [Share Amount] shares of common
stock of the Company (the “Shares”) according to the conditions set forth in the
Agreement. By signing below, the undersigned agrees to forever waive any
interest due under the Notes.

 

If shares are to be issued in the name of a person other than the Holder, the
Holder will pay all transfer and other taxes and charges payable with respect
thereto.

 

The Holder acknowledges and agrees that upon receipt of the Shares the total
principal under the Notes, and any all interest, will no longer be due and owing
to the undersigned under the Notes.

 

Date of Conversion: _____________________________________________________

 

Applicable Conversion Price:
$0.02/share                                                                           

 

[Holder Name]

 

Signature: _______________________________________________________

[Print Name of Holder and Title of Signer]

 

Address: _____________________________________________

 

SSN or EIN: ___________________________________________

 

  ___________________________________________

 

Shares are to be registered in the following name:

 

Name: _____________________________________

Address: ___________________________________

Tel: _______________________________________

Fax: _______________________________________

SSN or EIN: _________________________________

 

 

 

Exhibit A