Exhibit 10.1

 

SECURITIES PURCHASE AGREEMENT

 

This SECURITIES PURCHASE AGREEMENT (the “Agreement”), dated as of November 18,
2019, is by and among Freedom Leaf Inc., a Nevada corporation with offices
located at 3571 E. Sunset Road, Suite 420, Las Vegas, NV 89120 (the “Company”),
and the investors listed on the Schedule of Buyers attached hereto
(individually, a “Buyer” and collectively, the “Buyers”).

 

RECITALS

 

A.       The Company and each Buyer is executing and delivering this Agreement
in reliance upon the exemption from securities registration afforded by Section
4(a)(2) of the Securities Act of 1933, as amended (the “1933 Act”), and Rule
506(b) of Regulation D (“Regulation D”) as promulgated by the U.S. Securities
and Exchange Commission (the “SEC”) under the 1933 Act.

 

B.       The Company has authorized senior convertible notes, in the form
attached hereto as Exhibit A (the “Notes”), which Notes shall be convertible
into shares of the Company’s common stock, $0.001 par value per share (the
“Common Stock”) (as converted, collectively, the “Conversion Shares”), in
accordance with the terms of the Notes.

 

C.       Each Buyer wishes to purchase, and the Company wishes to sell, upon the
terms and conditions stated in this Agreement, (i) the aggregate original
principal amount of the Notes set forth opposite such Buyer’s name in column (3)
on the Schedule of Buyers, and (ii) a warrant to acquire up to that number of
additional shares of Common Stock set forth opposite such Buyer’s name in column
(4) on the Schedule of Buyers, in the form attached hereto as Exhibit B (the
“Warrants”) (as exercised, collectively, the “Warrant Shares”). The Notes, the
Conversion Shares, the Warrants and the Warrant Shares are collectively referred
to herein as the “Securities.”

 

AGREEMENT

 

NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and each Buyer hereby
agree as follows:

 

1.            PURCHASE AND SALE OF Notes AND WARRANTS.

 

(a)                Notes and Warrants. Subject to the satisfaction (or waiver)
of the conditions set forth in Sections 6 and 7 below, the Company shall issue
and sell to each Buyer, and each Buyer severally, but not jointly, shall
purchase from the Company on the Closing Date (as defined below), a Note in the
principal amount as is set forth opposite such Buyer’s name in column (3) on the
Schedule of Buyers, along with the Warrants to acquire up to that number of
Warrant Shares as is set forth opposite such Buyer’s name in column (4) on the
Schedule of Buyers.

 

(b)                Closing. The closing (the “Closing”) of the purchase of the
Notes and the Warrants by the Buyers shall occur at the offices of Kleinberg,
Kaplan, Wolff & Cohen, P.C., 551 Fifth Avenue, New York, New York 10176. The
date and time of the Closing (the “Closing Date”) shall be 10:00 a.m., New York
time, on the first (1st) Business Day on which the conditions to the Closing set
forth in Sections 6 and 7 below are satisfied or waived (or such later date as
is mutually agreed to by the Company and each Buyer). As used herein, “Business
Day” means any day other than a Saturday, Sunday or other day on which
commercial banks in New York, New York are authorized or required by law to
remain closed.

 

 

 

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(c)                Purchase Price. The aggregate purchase price for the Notes
and the Warrants to be purchased by each Buyer (the “Purchase Price”) shall be
the amount set forth opposite such Buyer’s name in column (5) and/or the amount
set forth opposite such Buyer’s name in column (6), as applicable, on the
Schedule of Buyers. Each Buyer shall pay its respective Purchase Price for the
Note and related Warrants to be purchased by such Buyer at the Closing.

 

(d)                Form of Payment. On the Closing Date, (i) each Buyer shall
pay its respective Purchase Price to the Company for the Notes and the Warrants
to be issued and sold to such Buyer at the Closing, by (A) wire transfer of
immediately available funds in accordance with the Company’s written wire
instructions or (B) by cancellation of indebtedness of Company (or any of its
Subsidiaries) to Buyer; and (ii) the Company shall deliver to each Buyer (A) a
Note (in such amount as is set forth opposite such Buyer’s name in column (3) of
the Schedule of Buyers), and (B) a Warrant pursuant to which such Buyer shall
have the right to acquire up to such number of Warrant Shares as is set forth
opposite such Buyer’s name in column (4) of the Schedule of Buyers, in all
cases, duly executed on behalf of the Company and registered in the name of such
Buyer or its designee.

 

2.             BUYER’S REPRESENTATIONS AND WARRANTIES.

 

Each Buyer, severally and not jointly, represents and warrants to the Company
with respect to only itself that:

 

(a)                Organization; Authority. Such Buyer is an entity duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization with the requisite power and authority to enter
into and to consummate the transactions contemplated by the Transaction
Documents (as defined below) to which it is a party and otherwise to carry out
its obligations hereunder and thereunder.

 

(b)                No Public Sale or Distribution. Such Buyer is (i) acquiring
its Note and Warrants, (ii) upon conversion of its Note will acquire the
Conversion Shares issuable upon conversion thereof, and (iii) upon exercise of
its Warrants will acquire the Warrant Shares issuable upon exercise thereof, in
each case, for its own account and not with a view towards, or for resale in
connection with, the public sale or distribution thereof in violation of
applicable securities laws, except pursuant to sales registered or exempted
under the 1933 Act and any applicable state laws; provided, however, that by
making the representations herein, such Buyer does not agree, or make any
representation or warranty, to hold any of the Securities for any minimum or
other specific term and reserves the right to dispose of the Securities at any
time in accordance with or pursuant to a registration statement or an exemption
under the 1933 Act. Such Buyer is acquiring the Securities hereunder in the
ordinary course of its business. Such Buyer does not presently have any
agreement or understanding, directly or indirectly, with any Person to
distribute any of the Securities.

 

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

 

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

 

 

 

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(e)                Information. Such Buyer and its advisors, if any, have been
furnished with all materials relating to the business, finances and operations
of the Company and materials relating to the offer and sale of the Securities
which have been requested by such Buyer. Such Buyer and its advisors, if any,
have been afforded the opportunity to ask questions of the Company. Neither such
inquiries nor any other due diligence investigations conducted by such Buyer or
its advisors, if any, or its representatives shall modify, amend or affect such
Buyer’s right to rely on the Company’s representations and warranties contained
herein 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. Such Buyer understands that its investment in the
Securities involves a high degree of risk. Such Buyer has sought such
accounting, legal and tax advice as it has considered necessary to make an
informed investment decision with respect to its acquisition of the Securities.

 

(f)                 No Governmental Review. Such Buyer understands that no
United States federal or state agency or any other government or governmental
agency has passed on or made any recommendation or endorsement of the Securities
or the fairness or suitability of the investment in the Securities nor have such
authorities passed upon or endorsed the merits of the offering of the
Securities.

 

(g)                Transfer or Resale. Such Buyer understands that except as
provided in Sections 4(h) and 4(m) hereof: (i) the Securities have not been and
are not being registered under the 1933 Act or any state securities laws, and
may not be offered for sale, sold, assigned or transferred unless (A)
subsequently registered thereunder, (B) such Buyer shall have delivered to the
Company (if requested by the Company) an opinion of counsel to such Buyer, in a
form reasonably acceptable to the Company, to the effect that such Securities to
be sold, assigned or transferred may be sold, assigned or transferred pursuant
to an exemption from such registration, or (C) such Buyer provides the Company
with reasonable assurance that such Securities can be sold, assigned or
transferred pursuant to Rule 144 or Rule 144A promulgated under the 1933 Act (or
a successor rule thereto) (collectively, “Rule 144”); (ii) any sale of the
Securities made in reliance on Rule 144 may be made only in accordance with the
terms of Rule 144 and further, if Rule 144 is not applicable, any resale of the
Securities under circumstances in which the seller (or the Person (as defined in
Section 3(s)) through whom the sale is made) may be deemed to be an underwriter
(as that term is defined in the 1933 Act) may require compliance with some other
exemption under the 1933 Act or the rules and regulations of the SEC promulgated
thereunder; and (iii) neither the Company nor any other Person is under any
obligation to register the Securities under the 1933 Act or any state securities
laws or to comply with the terms and conditions of any exemption thereunder.

 

(h)                Validity; Enforcement. This Agreement has been duly and
validly authorized, executed and delivered on behalf of such Buyer and
constitutes the legal, valid and binding obligations of such Buyer enforceable
against such Buyer in accordance with their respective terms, except as such
enforceability may be limited by general principles of equity or to applicable
bankruptcy, insolvency, reorganization, moratorium, liquidation and other
similar laws relating to, or affecting generally, the enforcement of applicable
creditors’ rights and remedies.

 

(i)                 No Conflicts. The execution, delivery and performance by
such Buyer of this Agreement and the consummation by such Buyer of the
transactions contemplated hereby will not (i) result in a violation of the
organizational documents of such Buyer or (ii) conflict with, or constitute a
default (or an event which with notice or lapse of time or both would become a
default) under, or give to others any rights of termination, amendment,
acceleration or cancellation of, any agreement, indenture or instrument to which
such Buyer is a party, or (iii) result in a violation of any law, rule,
regulation, order, judgment or decree (including federal and state securities
laws) applicable to such Buyer, except in the case of clauses (ii) and (iii)
above, for such conflicts, defaults, rights or violations which would not,
individually or in the aggregate, reasonably be expected to have a material
adverse effect on the ability of such Buyer to perform its obligations
hereunder.

 

(j)                 Residency. Such Buyer is a resident of that jurisdiction
specified below its address on the Schedule of Buyers.

 

 

 

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(k)              Certain Trading Activities. Such Buyer has not directly or
indirectly, nor has any Person acting on behalf of or pursuant to any
understanding with such Buyer, engaged in any transactions in the securities of
the Company (including, without limitation, any Short Sales involving the
Company’s securities) since the time that such Buyer was first contacted by the
Company regarding the investment in the Company contemplated herein. “Short
Sales” include, without limitation, all “short sales” as defined in Rule 200
promulgated under Regulation SHO under the 1934 Act (“Regulation SHO”) and all
types of direct and indirect stock pledges, forward sale contracts, options,
puts, calls, swaps and similar arrangements (including on a total return basis),
and sales and other transactions through non-U.S. broker dealers or foreign
regulated brokers (but shall not be deemed to include the location and/or
reservation of borrowable shares of Common Stock). Such Buyer does not as of the
date hereof, and will not immediately following the Closing, own 10% or more of
the Company’s issued and outstanding shares of Common Stock (calculated based on
the assumption that all Common Stock, including without limitation, any debt,
preferred stock, rights, options, warrants or other instrument that is at any
time convertible into or exchangeable for, or otherwise entitles the holder
thereof to receive, Common Stock or other securities that entitle the holder to
receive, directly or indirectly, Common Stock owned by such Buyer, whether or
not presently exercisable or convertible, have been fully exercised or converted
(as the case may be) but taking into account any limitations on exercise or
conversion (including “blockers”) contained therein).

 

(l)                General Solicitation. Such Buyer is not purchasing the
Securities as a result of any advertisement, article, notice or other
communication regarding the Securities published in any newspaper, magazine or
similar media or broadcast over television or radio or presented at any seminar.

 

(m)              Rule 506(d) Representation. Such Buyer represents that it is
not a person of the type described in Section 506(d) of Regulation D that would
disqualify the Company from engaging in a transaction pursuant to Section 506 of
Regulation D.

 

3.             REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

 

The Company represents and warrants to each of the Buyers that:

 

(a)               Organization and Qualification. Each of the Company and each
of the Subsidiaries are entities duly organized and validly existing and in good
standing under the laws of the jurisdiction in which they are formed, and have
the requisite power and authorization to own their properties and to carry on
their business as now being conducted and as presently proposed to be conducted.
Each of the Company and each of the Subsidiaries is duly qualified as a foreign
entity to do business and is in good standing in every jurisdiction in which its
ownership of property or the nature of the business conducted by it makes such
qualification necessary, except to the extent that the failure to be so
qualified or be in good standing would not have a Material Adverse Effect. As
used in this Agreement, “Material Adverse Effect” means any material adverse
effect on (i) the business, properties, assets, liabilities, operations
(including results thereof), condition (financial or otherwise) or prospects of
the Company or any Subsidiary, individually or taken as a whole, (ii) the
transactions contemplated hereby or in the other Transaction Documents or (iii)
the authority or ability of the Company or any of the Subsidiaries to perform
their respective obligations under the Transaction Documents (as defined below).
Other than the Subsidiaries, there is no Person in which the Company, directly
or indirectly, owns capital stock or holds an equity or similar interest. For
purposes of this Agreement, Cannabis Business Solutions Inc., Leafceuticals
Inc., Freedom Leaf International Inc., Leafceuticals Europe, SL, FL–Accuvape,
LLC, Tierra Science Global, LLC, ECS Labs, LLC, B&B Labs, LLC, and Texas
Wellness Center, LLC are collectively referred to herein as the “Subsidiaries”
and each individually as a “Subsidiary.”

 

 

 

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(b)               Authorization; Enforcement; Validity. The Company has the
requisite power and authority to enter into and perform its obligations under
this Agreement, the Notes, the Warrants and the other Transaction Documents to
which it is a party and to issue the Securities in accordance with the terms
hereof and thereof. Each Subsidiary has the requisite power and authority to
enter into and perform its obligations under the Transaction Documents to which
it is a party. The execution and delivery of this Agreement and the other
Transaction Documents by the Company and the Subsidiaries and the consummation
by the Company and the Subsidiaries of the transactions contemplated hereby and
thereby (including, without limitation, the issuance of the Notes and the
reservation for issuance and issuance of the Conversion Shares issuable upon
conversion of the Notes, the issuance of the Warrants and the reservation for
issuance and issuance of the Warrant Shares issuable upon exercise of the
Warrants) have been duly authorized by the Company’s board of directors or other
governing body, as applicable, and (other than the filing with the SEC of a
Notice on Form D and one or more registration statements in accordance with
Section 4(f) hereof and any other filings as may be required by any state
securities agencies) no further filing, consent or authorization is required by
the Company, the Subsidiaries, their respective Boards of Directors or their
stockholders or other governing body. This Agreement and the other Transaction
Documents to which it is a party have been duly executed and delivered by the
Company and constitutes the legal, valid and binding obligations of the Company,
enforceable against the Company in accordance with their respective terms,
except as such enforceability may be limited by general principles of equity or
applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or
similar laws relating to, or affecting generally, the enforcement of applicable
creditors’ rights and remedies and except as rights to indemnification and to
contribution may be limited by federal or state securities law. The Transaction
Documents to which each Subsidiary is a party have been duly executed and
delivered by each such Subsidiary, and constitutes the legal, valid and binding
obligations of such Subsidiary, enforceable against such Subsidiary in
accordance with their respective terms, except as such enforceability may be
limited by general principles of equity or applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar laws relating to, or
affecting generally, the enforcement of applicable creditors’ rights and
remedies and except as rights to indemnification and to contribution may be
limited by federal or state securities law. “Transaction Documents” means,
collectively, this Agreement, the Notes, the Warrants, the Irrevocable Transfer
Agent Instructions (as defined in Section 5(b)) and each of the other agreements
and instruments entered into by the parties hereto in connection with the
transactions contemplated hereby and thereby.

 

(c)               Issuance of Securities. The issuance of the Notes and the
Warrants are duly authorized and upon issuance in accordance with the terms of
the Transaction Documents shall be validly issued, fully paid and non-assessable
and free from all taxes, liens, charges and other encumbrances with respect to
the issue thereof. As of the Closing, the Company shall have reserved from its
duly authorized capital stock not less than 120% of the sum of (i) the maximum
number of Conversion Shares issuable upon conversion of the Notes (without
taking into account any limitations on the conversion of the Notes set forth
therein) and (ii) the maximum number of Warrant Shares issuable upon exercise of
the Warrants (without regard to any limitations on the exercise of the Warrants
set forth therein). Upon conversion in accordance with the Notes or exercise in
accordance with the Warrants (as the case may be), the Conversion Shares and the
Warrant Shares, respectively, when issued, will be validly issued, fully paid
and nonassessable and free from all preemptive or similar rights, taxes, liens,
charges and other encumbrances with respect to the issue thereof, with the
holders being entitled to all rights accorded to a holder of Common Stock.
Subject to the accuracy of the representations and warranties of the Buyers in
this Agreement, the offer and issuance by the Company of the Securities is
exempt from registration under the 1933 Act.

 

(d)              No Conflicts. The execution, delivery and performance of the
Transaction Documents by the Company and the Subsidiaries and the consummation
by the Company and the Subsidiaries of the transactions contemplated hereby and
thereby (including, without limitation, the issuance of the Notes, the Warrants,
the Conversion Shares and Warrant Shares and the reservation for issuance of the
Conversion Shares and Warrant Shares) will not (i) result in a violation of the
Articles of Incorporation (as defined in Section 3(r)) or other organizational
documents of the Company or any of the Subsidiaries, any capital stock of the
Company or any of the Subsidiaries or Bylaws (as defined in Section 3(r)) of the
Company or any of the Subsidiaries, (ii) conflict with, or constitute a default
(or an event which with notice or lapse of time or both would become a default)
under, or give to others any rights of termination, amendment, acceleration or
cancellation of, any agreement, indenture or instrument to which the Company or
any of the Subsidiaries is a party, or (iii) result in a violation of any law,
rule, regulation, order, judgment or decree (including foreign, federal and
state securities laws and regulations and the rules and regulations of the OTCQB
(the “Principal Market”)) applicable to the Company or any of the Subsidiaries
or by which any property or asset of the Company or any of the Subsidiaries is
bound or affected except, in the case of clause (ii) or (iii) above, to the
extent such violations that could not reasonably be expected to have a Material
Adverse Effect.

 

 

 

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(e)              Consents. Neither the Company nor any Subsidiary is required to
obtain any consent, authorization or order of, or make any filing or
registration with, any court, governmental agency or any regulatory or
self-regulatory agency or any other Person in order for it to execute, deliver
or perform any of its respective obligations under or contemplated by the
Transaction Documents, in each case, in accordance with the terms hereof or
thereof. All consents, authorizations, orders, filings and registrations which
the Company or any Subsidiary is required to obtain pursuant to the preceding
sentence have been obtained or effected on or prior to the Closing Date, and
neither the Company nor any of the Subsidiaries are aware of any facts or
circumstances which might prevent the Company or any Subsidiary from obtaining
or effecting any of the registration, application or filings pursuant to the
preceding sentence. The Company is not in violation of the requirements of the
Principal Market and has no knowledge of any facts or circumstances which could
reasonably lead to delisting or suspension of the Common Stock in the
foreseeable future.

 

(f)                Acknowledgment Regarding Buyer’s Purchase of Securities. The
Company acknowledges and agrees that each Buyer is acting solely in the capacity
of an arm’s length purchaser with respect to the Transaction Documents and the
transactions contemplated hereby and thereby and that no Buyer is (i) an officer
or director of the Company or any of the Subsidiaries, (ii) an “affiliate” (as
defined in Rule 144) of the Company or any of the Subsidiaries or (iii) to its
knowledge, a “beneficial owner” of more than 10% of the shares of Common Stock
(as defined for purposes of Rule 13d-3 of the Securities Exchange Act of 1934,
as amended (the “1934 Act”)). The Company further acknowledges that no Buyer is
acting as a financial advisor or fiduciary of the Company or any of the
Subsidiaries (or in any similar capacity) with respect to the Transaction
Documents and the transactions contemplated hereby and thereby, and any advice
given by a Buyer or any of its representatives or agents in connection with the
Transaction Documents and the transactions contemplated hereby and thereby is
merely incidental to such Buyer’s purchase of the Securities. The Company
further represents to each Buyer that the Company’s and each Subsidiary’s
decision to enter into the Transaction Documents to which it is a party has been
based solely on the independent evaluation by the Company, each Subsidiary and
their respective representatives.

 

(g)               No General Solicitation; No Placement Agent’s Fees. Neither
the Company, nor any of the Subsidiaries or affiliates, nor any Person acting on
its or their behalf, has engaged in any form of general solicitation or general
advertising (within the meaning of Regulation D) in connection with the offer or
sale of the Securities. The Company shall be responsible for the payment of any
placement agent’s fees, financial advisory fees, or brokers’ commissions (other
than for persons engaged by any Buyer or its investment advisor) relating to or
arising out of the transactions contemplated hereby. Except as set forth on
Schedule 3(g), neither the Company nor any of the Subsidiaries has engaged any
placement agent or other agent in connection with the sale of the Securities.

 

(h)               No Integrated Offering. None of the Company, the Subsidiaries
or any of their affiliates, nor any Person acting on 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 require registration of the
issuance of any of the Securities under the 1933 Act, whether through
integration with prior offerings or otherwise, or cause this offering of the
Securities to require approval of stockholders of the Company under any
applicable stockholder approval provisions, including, without limitation, under
the rules and regulations of any exchange or automated quotation system on which
any of the securities of the Company are listed or designated. None of the
Company, the Subsidiaries, their affiliates nor any Person acting on their
behalf will take any action or steps referred to in the preceding sentence that
would require registration of the issuance of any of the Securities under the
1933 Act or cause the offering of any of the Securities to be integrated with
other offerings.

 

(i)                Dilutive Effect. The Company understands and acknowledges
that the number of Conversion Shares and Warrant Shares will increase in certain
circumstances. The Company further acknowledges that its obligation to issue the
Conversion Shares upon conversion of the Notes and Warrant Shares upon exercise
of the Warrants in accordance with this Agreement, the Notes and the Warrants
is, absolute and unconditional regardless of the dilutive effect that such
issuance may have on the ownership interests of other stockholders of the
Company.

 

 

 

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(j)                Application of Takeover Protections; Rights Agreement. The
Company and its board of directors have taken 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 Articles of Incorporation or
other organizational document or the laws of the jurisdiction of its
incorporation or otherwise which is or could become applicable to any Buyer as a
result of the transactions contemplated by this Agreement, including, without
limitation, the Company’s issuance of the Securities and any Buyer’s ownership
of the Securities. The Company and its board of directors have taken all
necessary action, if any, in order to render inapplicable any stockholder rights
plan or similar arrangement relating to accumulations of beneficial ownership of
shares of Common Stock or a change in control of the Company or any of the
Subsidiaries.

 

(k)               SEC Documents; Financial Statements. Except for the Company’s
Annual Report on Form 10-K for the fiscal year ended June 30, 2019, the
Company’s Quarterly Report on Form 10-Q for the three months ended December 31,
2018, the Company’s Quarterly Report on Form 10-Q for the three months ended
September 30, 2018, and the financial statements required by Regulation S-X
related to the Company’s acquisition of ECS Labs, LLC, during the one (1) year
prior to the date hereof, the Company has timely filed all reports, schedules,
forms, statements and other documents required to be filed by it with the SEC
pursuant to the reporting requirements of the 1934 Act (all of the foregoing
filed prior to the date hereof and all exhibits included therein and financial
statements, notes and schedules thereto and documents incorporated by reference
therein being hereinafter referred to as the “SEC Documents”). The Company has
delivered or made available to the Buyers or their respective representatives
true, correct and complete copies of each of the SEC Documents not available on
the EDGAR system. As of their respective dates, the SEC Documents complied in
all material respects with the requirements of the 1934 Act and the rules and
regulations of the SEC promulgated thereunder applicable to the SEC Documents,
and none of the SEC Documents, at the time they were filed with the SEC,
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading. As of their respective dates, the financial statements of the
Company included in the SEC Documents complied as to form in all material
respects with applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto as in effect as of the time of
filing. Such financial statements have been prepared in accordance with
generally accepted accounting principles, consistently applied, during the
periods involved (except (i) as may be otherwise indicated in such financial
statements or the notes thereto, or (ii) in the case of unaudited interim
statements, to the extent they may exclude footnotes or may be condensed or
summary statements) and fairly present in all material respects the financial
position of the Company as of the dates thereof and the results of its
operations and cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal year-end audit adjustments which will not be
material, either individually or in the aggregate). No other information
provided by or on behalf of the Company to the Buyers which is not included in
the SEC Documents, including, without limitation, information referred to in
Section 2(e) of this Agreement, contains any untrue statement of a material fact
or omits to state any material fact necessary in order to make the statements
therein not misleading, in the light of the circumstance under which they are or
were made.

 

(l)                Absence of Certain Changes. Since March 31, 2019, (i) there
has been no event, occurrence or development that would, to the Company’s
knowledge, reasonably be expected to result in a Material Adverse Effect, (ii)
neither the Company nor any of its Subsidiaries has incurred any liabilities
(contingent or otherwise) other than (A) trade payables and accrued expenses
incurred in the ordinary course of business consistent with past practice and
(B) liabilities not required to be reflected in the Company’s financial
statements pursuant to GAAP or disclosed in filings made with the SEC, (iii) the
Company has not altered its method of accounting, (iv) the Company has not (A)
declared or paid any dividends, (B) sold any assets, individually or in the
aggregate, in excess of $50,000 outside of the ordinary course of business or
(C) had capital expenditures, individually or in the aggregate, in excess of
$50,000 and (v) the Company has not issued any equity securities to any officer,
director or affiliate, except pursuant to existing Company stock option plans or
as set forth in the SEC Documents.

 

 

 

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(m)              No Undisclosed Events, Liabilities, Developments or
Circumstances. No event, liability, development or circumstance has occurred or
exists, or is reasonably expected to exist or occur with respect to the Company,
any of the Subsidiaries or their respective business, properties, liabilities,
prospects, operations (including results thereof) or condition (financial or
otherwise), that would be required to be disclosed by the Company under
applicable securities laws on a registration statement on Form S-1 filed with
the SEC relating to an issuance and sale by the Company of its Common Stock and
which has not been publicly announced or which would have a material adverse
effect on any Buyer’s investment hereunder.

 

(n)              Conduct of Business; Regulatory Permits. Neither the Company
nor any of the Subsidiaries is in violation of any material term of or in
default under its Articles of Incorporation, any certificate of designation,
preferences or rights of any other outstanding series of preferred stock of the
Company or any of the Subsidiaries or Bylaws or their organizational charter,
certificate of formation or articles or certificate of incorporation or bylaws,
respectively. Neither the Company nor any of the Subsidiaries is in violation of
any judgment, decree or order or any statute, ordinance, rule or regulation
applicable to the Company or any of the Subsidiaries, and neither the Company
nor any of the Subsidiaries will conduct its business in violation of any of the
foregoing, except in all cases for possible violations which could not,
individually or in the aggregate, have a Material Adverse Effect. Without
limiting the generality of the foregoing, the Company is not in violation of any
of the rules, regulations or requirements of the Principal Market and has no
knowledge of any facts or circumstances that could reasonably lead to delisting
or suspension of the Common Stock by the Principal Market in the foreseeable
future. Since July 2, 2018, (i) the Common Stock has been designated for
quotation on the Principal Market, (ii) trading in the Common Stock has not been
suspended by the SEC or the Principal Market and (iii) the Company has received
no communication, written or oral, from the SEC or the Principal Market
regarding the suspension or delisting of the Common Stock from the Principal
Market. The Company and each of the Subsidiaries possess all certificates,
authorizations and permits issued by the appropriate regulatory authorities
necessary to conduct their respective businesses, except where the failure to
possess such certificates, authorizations or permits would not have,
individually or in the aggregate, a Material Adverse Effect, and neither the
Company nor any such Subsidiary has received any notice of proceedings relating
to the revocation or modification of any such certificate, authorization or
permit.

 

(o)               Foreign Corrupt Practices. Neither the Company nor any of the
Subsidiaries, nor to the Company’s knowledge, any director, officer, agent,
employee or other Person acting on behalf of the Company or any of the
Subsidiaries has, in the course of its actions for, or on behalf of, the Company
or any of the Subsidiaries (i) used any corporate funds for any unlawful
contribution, gift, entertainment or other unlawful expenses relating to
political activity; (ii) made any direct or indirect unlawful payment to any
foreign or domestic government official or employee from corporate funds; (iii)
violated or is in violation of any provision of the U.S. Foreign Corrupt
Practices Act of 1977, as amended; or (iv) made any unlawful bribe, rebate,
payoff, influence payment, kickback or other unlawful payment to any foreign or
domestic government official or employee.

 

(p)              Sarbanes-Oxley Act. The Company and each Subsidiary is in
material compliance with all applicable requirements of the Sarbanes-Oxley Act
of 2002 that are effective as of the date hereof, and all applicable rules and
regulations promulgated by the SEC thereunder that are effective as of the date
hereof.

 

(q)              Transactions With Affiliates. Other than the grant of stock
options disclosed on Schedule 3(q) and except as disclosed in the SEC Documents,
none of the officers, directors or employees of the Company or any of the
Subsidiaries is presently a party to any transaction with the Company or any of
the Subsidiaries (other than for ordinary course services as employees, officers
or directors), including any contract, agreement or other arrangement providing
for the furnishing of services to or by, providing for rental of real or
personal property to or from, or otherwise requiring payments to or from any
such officer, director or employee or, to the knowledge of the Company or any of
the Subsidiaries, any corporation, partnership, trust or other entity in which
any such officer, director, or employee has a substantial interest or is an
officer, director, trustee or partner.

 

 

 

 8 

 

 

(r)                Equity Capitalization. As of the date hereof, the authorized
capital stock of the Company consists of (i) 10,000,000 shares of Preferred
Stock, of which, none are issued and outstanding on the Closing Date, and (ii)
1,000,000,000 shares of Common Stock, of which 585,983,209 shares are issued and
outstanding, and 45,437,477 shares are reserved for issuance pursuant to
securities (other than the Warrants) exercisable or exchangeable for, or
convertible into, shares of Common Stock. No shares of Common Stock or Preferred
Stock are held in treasury. All of such outstanding shares are duly authorized
and have been, or upon issuance will be, validly issued and are fully paid and
nonassessable.  Except as disclosed in Schedule 3(r): (i) none of the Company’s
or any Subsidiary’s capital stock is subject to preemptive rights or any other
similar rights or any liens or encumbrances suffered or permitted by the Company
or any Subsidiary; (ii) there are no outstanding options, warrants, scrip,
rights to subscribe to, calls or commitments of any character whatsoever
relating to, or securities or rights convertible into, or exercisable or
exchangeable for, any capital stock of the Company or any of its Subsidiaries,
or contracts, commitments, understandings or arrangements by which the Company
or any of its Subsidiaries is or may become bound to issue additional capital
stock of the Company or any of its Subsidiaries or options, warrants, scrip,
rights to subscribe to, calls or commitments of any character whatsoever
relating to, or securities or rights convertible into, or exercisable or
exchangeable for, any capital stock of the Company or any of its Subsidiaries;
(iii) there are no outstanding debt securities, notes, credit agreements, credit
facilities or other agreements, documents or instruments evidencing Indebtedness
of the Company or any of its Subsidiaries or by which the Company or any of its
Subsidiaries is or may become bound; (iv) there are no financing statements
securing obligations in any amounts filed in connection with the Company or any
of its Subsidiaries; (v) there are no agreements or arrangements under which the
Company or any of its Subsidiaries is obligated to register the sale of any of
their securities under the 1933 Act; (vi) there are no outstanding securities or
instruments of the Company or any of its Subsidiaries which contain any
redemption or similar provisions, and there are no contracts, commitments,
understandings or arrangements by which the Company or any of its Subsidiaries
is or may become bound to redeem a security of the Company or any of its
Subsidiaries; (vii) there are no securities or instruments containing
anti-dilution or similar provisions that will be triggered by the issuance of
the Securities; (viii) neither the Company nor any Subsidiary has any stock
appreciation rights or “phantom stock” plans or agreements or any similar plan
or agreement; and (ix) neither the Company nor any of its Subsidiaries have any
liabilities or obligations required to be disclosed in the SEC Documents which
are not so disclosed in the SEC Documents, other than those incurred in the
ordinary course of the Company’s or its Subsidiaries’ respective businesses and
which, individually or in the aggregate, do not or could not have a Material
Adverse Effect. The Company has furnished to the Buyers true, correct and
complete copies of the Company’s Articles of Incorporation, as amended and as in
effect on the date hereof (the “Articles of Incorporation”), and the Company’s
bylaws, as amended and as in effect on the date hereof (the “Bylaws”), and the
terms of all securities convertible into, or exercisable or exchangeable for,
shares of Common Stock and the material rights of the holders thereof in respect
thereto that have not been disclosed in the SEC Documents.

 

 

 

 

 

 

 

 

 

 

 

 9 

 

 

(s)              Indebtedness and Other Contracts. Except as disclosed on
Schedule 3(s), neither the Company nor any of the Subsidiaries (i) has any
outstanding Indebtedness (as defined below), (ii) is a party to any contract,
agreement or instrument, the violation of which, or default under which, by the
other party(ies) to such contract, agreement or instrument could reasonably be
expected to result in a Material Adverse Effect, (iii) is in violation of any
term of or in default under any contract, agreement or instrument relating to
any Indebtedness, except where such violations and defaults would not result,
individually or in the aggregate, in a Material Adverse Effect, or (iv) is a
party to any contract, agreement or instrument relating to any Indebtedness, the
performance of which, in the judgment of the Company’s officers, has or is
expected to have a Material Adverse Effect. For purposes of this Agreement: (x)
“Indebtedness” of any Person means, without duplication, (A) all indebtedness
for borrowed money, (B) all obligations issued, undertaken or assumed as the
deferred purchase price of property or services (including, without limitation,
“capital leases” in accordance with generally accepted accounting principles)
(other than trade payables entered into in the ordinary course of business), (C)
all reimbursement or payment obligations with respect to letters of credit,
surety bonds and other similar instruments, (D) all obligations evidenced by
notes, bonds, debentures or similar instruments, including obligations so
evidenced incurred in connection with the acquisition of property, assets or
businesses, (E) all indebtedness created or arising under any conditional sale
or other title retention agreement, or incurred as financing, in either case
with respect to any property or assets acquired with the proceeds of such
indebtedness (even though the rights and remedies of the seller or bank under
such agreement in the event of default are limited to repossession or sale of
such property), (F) all monetary obligations under any leasing or similar
arrangement which, in connection with generally accepted accounting principles,
consistently applied for the periods covered thereby, is classified as a capital
lease, (G) all indebtedness referred to in clauses (A) through (F) above secured
by (or for which the holder of such Indebtedness has an existing right,
contingent or otherwise, to be secured by) any mortgage, lien, pledge, charge,
security interest or other encumbrance upon or in any property or assets
(including accounts and contract rights) owned by any Person, even though the
Person which owns such assets or property has not assumed or become liable for
the payment of such indebtedness, and (H) all Contingent Obligations in respect
of indebtedness or obligations of others of the kinds referred to in clauses (A)
through (G) above; (y) “Contingent Obligation” means, as to any Person, any
direct or indirect liability, contingent or otherwise, of that Person with
respect to any indebtedness, lease, dividend or other obligation of another
Person if the primary purpose or intent of the Person incurring such liability,
or the primary effect thereof, is to provide assurance to the obligee of such
liability that such liability will be paid or discharged, or that any agreements
relating thereto will be complied with, or that the holders of such liability
will be protected (in whole or in part) against loss with respect thereto; and
(z) “Person” means an individual, a limited liability company, a partnership, a
joint venture, a corporation, a trust, an unincorporated organization, any other
entity and a government or any department or agency thereof.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 10 

 

 

(t)                Absence of Litigation. Except as set forth on Schedule 3(t),
there is no action, suit, proceeding, inquiry or investigation before or by the
Principal Market, any court, public board, government agency, self-regulatory
organization or body pending or, to the knowledge of the Company, threatened
against or affecting the Company or any of the Subsidiaries, the Common Stock or
any of the Company’s or the Subsidiaries’ officers or directors which is outside
of the ordinary course of business or individually or in the aggregate could
have a Material Adverse Effect.

 

(u)               Insurance. The Company and each of the Subsidiaries are
insured by insurers of recognized financial responsibility against such losses
and risks and in such amounts as management of the Company believes to be
prudent and customary in the businesses in which the Company and the
Subsidiaries are engaged. Neither the Company nor any such Subsidiary has been
refused any insurance coverage sought or applied for, and neither the Company
nor any such Subsidiary has any reason to believe that it will be unable to
renew its existing insurance coverage as and when such coverage expires or to
obtain similar coverage from similar insurers as may be necessary to continue
its business at a cost that would not have a Material Adverse Effect.

 

(v)              Employee Relations. Neither the Company nor any of the
Subsidiaries is a party to any collective bargaining agreement or employs any
member of a union. The Company believe that its and its Subsidiaries’ relations
with their respective employees are good. No executive officer (as defined in
Rule 501(f) promulgated under the 1933 Act) or other key employee of the Company
or any of the Subsidiaries has notified the Company or any such Subsidiary that
such officer intends to leave the Company or any such Subsidiary or otherwise
terminate such officer’s employment with the Company or any such Subsidiary. No
executive officer or other key employee of the Company or any of the
Subsidiaries is, to the Company’s knowledge, in violation of any material term
of any employment contract, confidentiality, disclosure or proprietary
information agreement, non-competition agreement, or any other contract or
agreement or any restrictive covenant, and the continued employment of each such
executive officer or other key employee (as the case may be) to the Company’s
knowledge does not subject the Company or any of the Subsidiaries to any
liability with respect to any of the foregoing matters. The Company and the
Subsidiaries are in compliance with all federal, state, local and foreign laws
and regulations respecting labor, employment and employment practices and
benefits, terms and conditions of employment and wages and hours, except where
failure to be in compliance would not, either individually or in the aggregate,
reasonably be expected to result in a Material Adverse Effect.

 

(w)              Title. Except as set forth on Schedule 3(w), the Company and
the Subsidiaries have good and marketable title in fee simple to all real
property and good and marketable title to all personal property owned by them
which is material to the business of the Company and the Subsidiaries, in each
case, free and clear of all liens, encumbrances and defects except such as do
not materially affect the value of such property and do not interfere with the
use made and proposed to be made of such property by the Company and any of the
Subsidiaries. Any real property and facilities held under lease by the Company
or any of the Subsidiaries are held by them under valid, subsisting and
enforceable leases with such exceptions as are not material and do not interfere
with the use made and proposed to be made of such property and buildings by the
Company or any of the Subsidiaries.

 

(x)               Intellectual Property Rights. The Company and the Subsidiaries
own or possess adequate rights or licenses to use all trademarks, trade names,
service marks, service mark registrations, service names, patents, patent
rights, copyrights, original works, inventions, licenses, approvals,
governmental authorizations, trade secrets and other intellectual property
rights and all applications and registrations therefor (“Intellectual Property
Rights”) necessary to conduct their respective businesses as now conducted and
as presently proposed to be conducted. None of the Company’s or the
Subsidiaries’ material Intellectual Property Rights have expired, terminated or
been abandoned, or are expected to expire, terminate or be abandoned, within
three years from the date of this Agreement. The Company has no knowledge of any
infringement by the Company or any of the Subsidiaries of Intellectual Property
Rights of others. There is no claim, action or proceeding being made or brought,
or to the knowledge of the Company or any of the Subsidiaries, being threatened,
against the Company or any of the Subsidiaries regarding their Intellectual
Property Rights, except as disclosed in the SEC Documents. The Company is not
aware of any facts or circumstances which might give rise to any of the
foregoing infringements or claims, actions or proceedings. The Company and each
of the Subsidiaries have taken reasonable security measures to protect the
secrecy, confidentiality and value of all of their Intellectual Property Rights.

 

 

 

 11 

 

 

(y)              Environmental Laws. The Company and the Subsidiaries (i) are in
compliance with all Environmental Laws (as defined herein), (ii) have received
all permits, licenses or other approvals required of them under applicable
Environmental Laws to conduct their respective businesses and (iii) are in
compliance with all terms and conditions of any such permit, license or approval
where, in each of the foregoing clauses (i), (ii) and (iii), the failure to so
comply could be reasonably expected to have, individually or in the aggregate, a
Material Adverse Effect. The term “Environmental Laws” means all federal, state,
local or foreign laws relating to pollution or protection of human health or the
environment (including, without limitation, ambient air, surface water,
groundwater, land surface or subsurface strata), including, without limitation,
laws relating to emissions, discharges, releases or threatened releases of
chemicals, pollutants, contaminants, or toxic or hazardous substances or wastes
(collectively, “Hazardous Materials”) into the environment, or otherwise
relating to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of Hazardous Materials, as well as all
authorizations, codes, decrees, demands or demand letters, injunctions,
judgments, licenses, notices or notice letters, orders, permits, plans or
regulations issued, entered, promulgated or approved thereunder.

 

(z)              Subsidiary Rights. The Company or one of the Subsidiaries has
the unrestricted right to vote, and (subject to limitations imposed by
applicable law) to receive dividends and distributions on, all capital
securities of the Subsidiaries as owned by the Company or such Subsidiary.

 

(aa)            Tax Status. The Company and each of the Subsidiaries (i) has
timely made or filed all foreign, federal and state income and all other tax
returns, reports and declarations required by any jurisdiction to which it is
subject, (ii) has timely paid all taxes and other governmental assessments and
charges that are material in amount, shown or determined to be due on such
returns, reports and declarations, except those being contested in good faith
and (iii) has set aside on its books provision reasonably adequate for the
payment of all taxes for periods subsequent to the periods to which such
returns, reports or declarations apply, except in each case where the failure to
file, pay or set aside would not have a Material Adverse Effect. There are no
unpaid taxes in any material amount claimed to be due by the taxing authority of
any jurisdiction, and the officers of the Company and the Subsidiaries know of
no basis for any such claim. The Company is not operated in such a manner as to
qualify as a passive foreign investment company, as defined in Section 1297 of
the U.S. Internal Revenue Code of 1986, as amended.

 

(bb)            Internal Accounting and Disclosure Controls. The Company and
each of the Subsidiaries maintains a system of internal accounting controls
sufficient to provide reasonable assurance that (i) transactions are executed in
accordance with management’s general or specific authorizations, (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain asset and liability accountability, (iii) access to assets or
incurrence of liabilities is permitted only in accordance with management’s
general or specific authorization and (iv) the recorded accountability for
assets and liabilities is compared with the existing assets and liabilities at
reasonable intervals and appropriate action is taken with respect to any
difference. The Company maintains disclosure controls and procedures (as such
term is defined in Rule 13a-14 under the 1934 Act) that are effective in
ensuring that information required to be disclosed by the Company in the reports
that it files or submits under the 1934 Act is recorded, processed, summarized
and reported, within the time periods specified in the rules and forms of the
SEC, including, without limitation, controls and procedures designed to ensure
that information required to be disclosed by the Company in the reports that it
files or submits under the 1934 Act is accumulated and communicated to the
Company’s management, including its principal executive officer or officers and
its principal financial officer or officers, as appropriate, to allow timely
decisions regarding required disclosure. Neither the Company nor any of the
Subsidiaries has received any notice or correspondence from any accountant
relating to any potential material weakness in any part of the system of
internal accounting controls of the Company or any of the Subsidiaries.

 

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

 

 

 

 12 

 

 

(dd)           Investment Company Status. The Company is not, and upon
consummation of the sale of the Securities will not be, an “investment company,”
an affiliate of an “investment company,” a company controlled by an “investment
company” or an “affiliated person” of, or “promoter” or “principal underwriter”
for, an “investment company” as such terms are defined in the Investment Company
Act of 1940, as amended.

 

(ee)             Acknowledgement Regarding Buyers’ Trading Activity. It is
understood and acknowledged by the Company (i) that following the public
disclosure of the transactions contemplated by the Transaction Documents, in
accordance with the terms thereof, none of the Buyers have been asked by the
Company or any of the Subsidiaries to agree, nor has any Buyer agreed with the
Company or any of the Subsidiaries, to desist from purchasing or selling, long
and/or short, securities of the Company, or “derivative” securities based on
securities issued by the Company or to hold the Securities for any specified
term; (ii) that any Buyer, and counter parties in “derivative” transactions to
which any such Buyer is a party, directly or indirectly, presently may have a
“short” position in the Common Stock which were established prior to such
Buyer’s knowledge of the transactions contemplated by the Transaction Documents,
and (iii) that each Buyer shall not be deemed to have any affiliation with or
control over any arm’s length counter party in any “derivative” transaction. The
Company further understands and acknowledges that following the public
disclosure of the transactions contemplated by the Transaction Documents
pursuant to the Press Release (as defined in Section 4(i), one or more Buyers
may engage in hedging and/or trading activities at various times during the
period that the Securities are outstanding, including, without limitation,
during the periods that the value of the Warrant Shares or Conversion Shares, as
applicable, deliverable with respect to the Securities are being determined and
(b) such hedging and/or trading activities, if any, can reduce the value of the
existing stockholders’ equity interest in the Company both at and after the time
the hedging and/or trading activities are being conducted. The Company
acknowledges that such aforementioned hedging and/or trading activities do not
constitute a breach of this Agreement or any other Transaction Document or any
of the documents executed in connection herewith or therewith.

 

(ff)               Manipulation of Price. Neither the Company nor any of the
Subsidiaries has, and, to the knowledge of the Company, no Person acting on
their behalf has, (i) taken, directly or indirectly, any action designed to
cause or to result in the stabilization or manipulation of the price of any
security of the Company or any of the Subsidiaries to facilitate the sale or
resale of any of the Securities, (ii) sold, bid for, purchased, or paid any
compensation for soliciting purchases of, any of the Securities, or (iii) paid
or agreed to pay to any person any compensation for soliciting another to
purchase any other securities of the Company or any of the Subsidiaries.

 

(gg)            Transfer Taxes. On the Closing Date, all stock transfer or other
taxes (other than income or similar taxes) which are required to be paid in
connection with the sale and transfer of the Securities to be sold to each Buyer
hereunder will be, or will have been, fully paid or provided for by the Company,
and all laws imposing such taxes will be or will have been complied with.

 

(hh)            Shell Company Status. The Company is not, and has not, since
November 20, 2013, been, an issuer identified in Rule 144(i)(1).

 

(ii)               U.S. Real Property Holding Corporation. Neither the Company
nor any of the Subsidiaries is, or has ever been, and so long as any of the
Securities are held by any of the Buyers, shall become, a U.S. real property
holding corporation within the meaning of Section 897 of the Internal Revenue
Code of 1986, as amended, and the Company and each Subsidiary shall so certify
upon any Buyer’s request.

 

(jj)              No Disqualification Event. No “bad actor” disqualifying event
described in Rule 506(d)(1)(i)-(viii) of the 1933 Act (a “Disqualification
Event”) is applicable to the Company or, to the Company’s knowledge, any Person,
with respect to the Company, listed in the first paragraph of Rule 506(d)(1) (a
“Covered Person”). The Company has exercised reasonable care to determine
whether any Covered Person is subject to a Disqualification Event.

 

 

 

 13 

 

 

(kk)             DTC Eligibility. The Company’s Transfer Agent is a participant
in and the Common Stock is eligible for transfer pursuant to the Depository
Trust Company Fast Automated Securities Transfer Program.

 

(ll)               Disclosure. The Company confirms that neither it nor any
other Person acting on its behalf has provided any of the Buyers or their agents
or counsel with any information that constitutes or could reasonably be expected
to constitute material, nonpublic information concerning the Company or any of
its Subsidiaries, other than the existence of the transactions contemplated by
this Agreement and the other Transaction Documents. The Company understands and
confirms that each of the Buyers will rely on the foregoing representations in
effecting transactions in securities of the Company. All disclosure provided to
the Buyers regarding the Company and the Subsidiaries, their businesses and the
transactions contemplated hereby, including the Schedules to this Agreement,
furnished by or on behalf of the Company or any of the Subsidiaries 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 the light of the circumstances under which they were made, not misleading.
Each press release issued by the Company or any of the Subsidiaries during the
twelve (12) months preceding the date of this Agreement did not at the time of
release 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 the light of the circumstances under which they are made,
not misleading. No event or circumstance has occurred or information exists with
respect to the Company or any of the Subsidiaries or its or their business,
properties, liabilities, prospects, operations (including results thereof) or
conditions (financial or otherwise), which, under applicable law, rule or
regulation, requires public disclosure at or before the date hereof or
announcement by the Company but which has not been so publicly announced or
disclosed. The Company acknowledges and agrees that no Buyer makes or has made
any representations or warranties with respect to the transactions contemplated
hereby other than those specifically set forth in Sections 2.

 

4.             COVENANTS.

 

(a)               Best Efforts. Each party shall use its best efforts to timely
satisfy each of the conditions to be satisfied by it as provided in Sections 6
and 7 of this Agreement.

 

(b)               Form D and Blue Sky. The Company agrees to file a Form D with
respect to the Securities as required under Regulation D and to provide a copy
thereof to each Buyer promptly after such filing (provided that this requirement
shall be deemed satisfied upon the filing of the Form D through the SEC’s EDGAR
system). The Company shall, on or before the Closing Date, 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 Buyers at the
Closing pursuant to this Agreement under applicable securities or “Blue Sky”
laws of the states of the United States (or to obtain an exemption from such
qualification), and shall provide evidence of any such action so taken to the
Buyers on or prior to the Closing Date. The Company shall make all filings and
reports relating to the offer and sale of the Securities required under
applicable securities or “Blue Sky” laws of the states of the United States
following the Closing Date.

 

(c)               Reporting Status. Until the date on which the Registrable
Securities (as defined in Section 4(l) below) become freely tradable on the
Principal Market (the “Reporting Period”), the Company shall timely file all
reports required to be filed with the SEC pursuant to the 1934 Act (provided
that any late report cured to the satisfaction of the SEC within 15 calendar
days of the date it was required to be filed shall not be deemed a breach of
this Section 4(c)), and the Company shall not terminate its status as an issuer
required to file reports under the 1934 Act even if the 1934 Act or the rules
and regulations thereunder would no longer require or otherwise permit such
termination.

 

(d)               Use of Proceeds. The Company shall use the net proceeds from
the sale of the Securities solely as follows: (i) approximately $1,651,800 for
general working capital purposes and (ii) approximately $250,000 for payments
required by certain employment agreements entered into in connection with the
Company’s acquisition of ECS Labs, LLC and expenses related thereto.

 

 

 

 14 

 

 

(e)               Financial Information. The Company agrees to send the
following to each Buyer during the Reporting Period (i) unless the following are
filed with the SEC through EDGAR and are available to the public through the
EDGAR system, within one (1) Business Day after the filing thereof with the SEC,
a copy of its Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q,
any interim reports or any consolidated balance sheets, income statements,
stockholders’ equity statements and/or cash flow statements for any period other
than annual, any Current Reports on Form 8-K and any registration statements
(other than on Form S-8) or amendments filed pursuant to the 1933 Act, (ii) on
the same day as the release thereof, facsimile copies of all press releases
issued by the Company or any of the Subsidiaries, unless such press release is
otherwise available to the public through the EDGAR system, and (iii) copies of
any notices and other information made available or given to the shareholders of
the Company generally, contemporaneously with the making available or giving
thereof to the shareholders, unless such notices or other information is
otherwise available to the public through the EDGAR system.

 

(f)               Listing. The Company shall promptly secure the listing of all
of the Registrable Securities upon each national securities exchange and
automated quotation system, if any, upon which the shares of Common Stock are
then listed (subject to official notice of issuance) and shall maintain such
listing of all Registrable Securities from time to time issuable under the terms
of the Transaction Documents on such national securities exchange or automated
quotation system. The Company shall maintain the Common Stock’s authorization
for quotation on the Principal Market, the New York or American Stock Exchange,
the Nasdaq Global Market, the Nasdaq Global Select Market or the Nasdaq Capital
Market (each, an “Eligible Market”). The Company shall not take any action which
could be reasonably expected to result in the delisting or suspension of the
Common Stock on an Eligible Market. The Company shall pay all fees and expenses
in connection with satisfying its obligations under this Section 4(f).

 

(g)               Fees. (i) The Company shall pay or reimburse Merida Capital
Partners III LP (“Merida”) or its designee(s) (in addition to any other expense
amounts paid to any Buyer prior to the date of this Agreement) for all
reasonable costs and expenses incurred by it or its affiliates in connection
with the transactions contemplated by the Transaction Documents for legal fees,
documentation and implementation of the transactions contemplated by the
Transaction Documents and due diligence in connection therewith. The Company
acknowledges that the balance of such legal fees and expenses may be withheld by
Merida from its Purchase Price at the Closing.

 

(ii)        The Company shall be responsible for the payment of any placement
agent’s fees, financial advisory fees, or broker’s commissions (other than for
Persons engaged by any Buyer or Persons claiming rights due to the acts of a
Buyer) relating to or arising out of the transactions contemplated hereby. The
Company shall pay, and hold each Buyer harmless against, any liability, loss or
expense (including, without limitation, reasonable attorneys’ fees and
out-of-pocket expenses) arising in connection with any claim relating to any
such payment. Except as otherwise set forth in the Transaction Documents, each
party to this Agreement shall bear its own expenses in connection with the sale
of the Securities to the Buyers.

 

(h)               Pledge of Securities. Notwithstanding anything to the contrary
contained in Section 2(g), the Company acknowledges and agrees that the
Securities may be pledged by a Buyer in connection with a bona fide margin
agreement or other bona fide loan or financing arrangement that is secured by
the Securities. The pledge of Securities shall not be deemed to be a transfer,
sale or assignment of the Securities hereunder, except as may otherwise be
required under applicable securities laws, and no Buyer effecting a pledge of
Securities shall be required to provide the Company with any notice thereof or
otherwise make any delivery to the Company pursuant to this Agreement or any
other Transaction Document. The Company hereby agrees to execute and deliver
such documentation as a pledgee of the Securities may reasonably request in
connection with a pledge of the Securities to such pledgee by a Buyer.

 

 

 

 

 15 

 

 

(i)                Disclosure of Transactions and Other Material Information. On
or before 8:30 a.m., New York time, on the second (2nd) Business Day following
the date of this Agreement, the Company shall file a Current Report on Form 8-K
describing all the material terms of the transactions contemplated by the
Transaction Documents in the form required by the 1934 Act and attaching all the
material Transaction Documents (including, without limitation, this Agreement
(and all schedules to this Agreement), the form of the Notes and the form of the
Warrants) (including all attachments, the “8-K Filing”). From and after the
issuance of the Press Release, the Company shall have disclosed all material,
nonpublic information delivered to any of the Buyers by the Company or any of
the Subsidiaries, or any of their respective officers, directors, employees or
agents (if any) in connection with the transactions contemplated by the
Transaction Documents. The Company shall not, and the Company shall cause each
of the Subsidiaries and each of its and their respective officers, directors,
employees and agents not to, provide any Buyer with any material, nonpublic
information regarding the Company or any of the Subsidiaries from and after the
issuance of the Press Release without the express prior written consent of such
Buyer. If a Buyer has, or believes it has, received any material, nonpublic
information regarding the Company or any of its Subsidiaries in breach of the
immediately preceding sentence, such Buyer shall provide the Company with
written notice thereof in which case the Company shall, within one (1) Trading
Day of the receipt of such notice, make a public disclosure of all such material
nonpublic information so provided. In the event of a breach of any of the
foregoing covenants by the Company, any of the Subsidiaries, or any of its or
their respective officers, directors, employees and agents (as determined in the
reasonable good faith judgment of such Buyer), in addition to any other remedy
provided herein or in the Transaction Documents, such Buyer shall have the right
to make a public disclosure, in the form of a press release, public
advertisement or otherwise, of such material, nonpublic information without the
prior approval by the Company, any of the Subsidiaries, or any of its or their
respective officers, directors, employees or agents. No Buyer shall have any
liability to the Company, any of the Subsidiaries, or any of its or their
respective officers, directors, employees, stockholders or agents, for any such
disclosure of such information. Subject to the foregoing, neither the Company
nor any Buyer shall issue any press releases or any other public statements with
respect to the transactions contemplated hereby; provided, however, that the
Company shall be entitled, without the prior approval of any Buyer, to make any
press release or other public disclosure with respect to such transactions (i)
in substantial conformity with the 8-K Filing and contemporaneously therewith
and (ii) as is required by applicable law and regulations (provided that, in the
case of clause (i), each Buyer shall be consulted by the Company in connection
with any such press release or other public disclosure prior to its release).
Without the prior written consent of any applicable Buyer, the Company shall not
(and shall cause each of the Subsidiaries and affiliates to not) disclose the
name of such Buyer in any filing (other than the 8-K Filing), announcement,
release or otherwise, except as otherwise required by any law, rule or
regulation applicable to the Company after consultation with the Buyer.

 

(j)                Reservation of Shares. So long as any Notes or Warrants
remain outstanding, the Company shall take all action necessary to at all times
have authorized, and reserved for the purpose of issuance, no less than 120% of
(i) the maximum number of shares of Common Stock issuable upon conversion of all
the Notes (without regard to any limitations on the exercise of the Notes set
forth therein) and (ii) the maximum number of shares of Common Stock issuable
upon exercise of all the Warrants (without regard to any limitations on the
exercise of the Warrants set forth therein).

 

(k)               Conduct of Business. The business of the Company and the
Subsidiaries shall not be conducted in violation of any law, ordinance or
regulation of any governmental entity, except where such violations would not
result, either individually or in the aggregate, in a Material Adverse Effect.

 

(l)                Piggyback Registrations. If, at any time during the three (3)
year period following the date hereof, there is not an existing and effective
registration statement covering all of the Registrable Securities and the
Company shall determine to prepare and file with the SEC a registration
statement relating to an offering for its own account or the account of others
under the 1933 Act of any of its equity securities (other than on Form S-4 or
Form S-8 (each as promulgated under the 1933 Act) or their then equivalents
relating to equity securities to be issued solely in connection with any
acquisition of any entity or business or equity securities issuable in
connection with the company’s stock option or other employee benefit plans),
then the Company shall deliver to each Buyer a written notice of such
determination and, if within fifteen (15) days after the date of the delivery of
such notice, any such Buyer shall so request in writing, the Company shall
include in such registration statement all or any part of such Registrable
Securities such Buyer requests to be registered; provided, however, that the
Company shall not be required to register any Registrable Securities pursuant to
this Section 4(l) that are eligible for resale pursuant to Rule 144 (without
volume restrictions). For purposes hereof, “Registrable Securities” means (i)
the Conversion Shares issued or issuable upon conversion of the Notes, (ii) the
Warrant Shares issued or issuable upon exercise of the Warrants and (iii) any
capital stock of the Company issued or issuable with respect to the Notes, the
Conversion Shares, the Warrant Shares or the Warrants, including, without
limitation, (1) as a result of any share split, share dividend,
recapitalization, exchange or similar event or otherwise and (2) shares of
capital stock of the Company into which the shares of Common Stock are converted
or exchanged and shares of capital stock of a Successor Entity (as defined in
the Warrants) into which the shares of Common Stock are converted or exchanged,
in each case, without regard to any limitations on exercise of the Warrants.

 

 

 

 16 

 

 

(m)              Passive Foreign Investment Company. The Company shall conduct
its business in such a manner as will ensure that the Company will not be deemed
to constitute a passive foreign investment company within the meaning of Section
1297 of the U.S. Internal Revenue Code of 1986, as amended.

 

(n)               Restriction on Redemption and Cash Dividends. So long as any
Notes are outstanding, the Company shall not, directly or indirectly, redeem, or
declare or pay any cash dividend or distribution on, the Common Stock without
the prior express written consent of the Required Holders (as defined in the
Notes).

 

(o)              Restriction on Certain Indebtedness. So long as any Notes are
outstanding, the Company shall not, directly or indirectly, (i) incur any
Indebtedness (as defined in the Notes) other than Permitted Indebtedness (as
defined in the Notes) or (ii) grant any Liens (as defined in the Notes) other
than Permitted Liens (as defined in the Notes), in each case, without the prior
express written consent of the Required Holders (as defined in the Notes).

 

(p)               Notice of Disqualification Events. The Company will notify the
in writing, prior to the Closing of (i) any Disqualification Event relating to
any Covered Person and (ii) any event that would, with the passage of time,
become a Disqualification Event relating to any Covered Person.

 

5.             REGISTER; TRANSFER AGENT INSTRUCTIONS; LEGEND.

 

(a)               Register. The Company shall maintain at its principal
executive offices (or such other office or agency of the Company as it may
designate by notice to each holder of Securities), a register for the Notes and
the Warrants in which the Company shall record the name and address of the
Person in whose name the Notes and the Warrants have been issued (including the
name and address of each transferee), the principal amount of the Notes held by
such Person, the number of Conversion Shares issuable upon conversion of the
Notes and the number of Warrant Shares issuable upon exercise of the Warrants
held by such Person. The Company shall keep the register open and available at
all times during business hours for inspection of any Buyer or its legal
representatives.

 

(b)              Transfer Agent Instructions. The Company shall issue
irrevocable instructions to its transfer agent and any subsequent transfer agent
in the form acceptable to the Buyers (the “Irrevocable Transfer Agent
Instructions”) to issue certificates or credit shares to the applicable balance
accounts at The Depository Trust Company (“DTC”), registered in the name of each
Buyer or its respective nominee(s), for the Conversion Shares and the Warrant
Shares in such amounts as specified from time to time by each Buyer to the
Company upon conversion of the Notes or the exercise of the Warrants (as the
case may be). The Company represents and warrants that no instruction other than
the Irrevocable Transfer Agent Instructions referred to in this Section 5(b),
and stop transfer instructions to give effect to Section 2(g) hereof, will be
given by the Company to its transfer agent with respect to the Securities, and
that the Securities shall otherwise be freely transferable on the books and
records of the Company to the extent provided in this Agreement and the other
Transaction Documents. If a Buyer effects a sale, assignment or transfer of the
Securities in accordance with Section 2(g), the Company shall permit the
transfer and shall promptly instruct its transfer agent to issue one or more
certificates or credit shares to the applicable balance accounts at DTC in such
name and in such denominations as specified by such Buyer to effect such sale,
transfer or assignment. In the event that such sale, assignment or transfer
involves Conversion Shares or Warrant Shares sold, assigned or transferred
pursuant to an effective registration statement or in compliance with Rule 144,
the transfer agent shall issue such shares to such Buyer, assignee or transferee
(as the case may be) without any restrictive legend in accordance with Section
5(d) below. The Company acknowledges that a breach by it of its obligations
hereunder will cause irreparable harm to a Buyer. Accordingly, the Company
acknowledges that the remedy at law for a breach of its obligations under this
Section 5(b) will be inadequate and agrees, in the event of a breach or
threatened breach by the Company of the provisions of this Section 5(b), that a
Buyer shall be entitled, in addition to all other available remedies, to an
order and/or injunction restraining any breach and requiring immediate issuance
and transfer, without the necessity of showing economic loss and without any
bond or other security being required. The Company shall cause its counsel to
issue the legal opinion referred to in the Irrevocable Transfer Agent
Instructions to the Company’s transfer agent on each Effective Date. Any fees
(with respect to the transfer agent, counsel to the Company or otherwise)
associated with the issuance of such opinion or the removal of any legends on
any of the Securities shall be borne by the Company.

 

 

 

 17 

 

 

(c)               Legends. Each Buyer understands that the certificates or other
instruments representing the Notes and the Warrants and, until such time as the
resale of the Conversion Shares and the Warrant Shares (as the case may be) have
been registered under the 1933 Act as contemplated by Section 4(l) hereof or are
eligible for sale pursuant to Rule 144, the stock certificates representing the
Conversion Shares and the Warrant Shares (as the case may be), except as set
forth below, shall bear any legend as required by the “blue sky” laws of any
state and a restrictive legend in substantially the following form (and a
stop-transfer order may be placed against transfer of such stock certificates):

 

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

 

(d)              Removal of Legends. Certificates evidencing Securities shall
not be required to contain the legend set forth in Section 5(c) above or any
other legend (i) while a registration statement (including the Registration
Statement) covering the resale of such Securities is effective under the
Securities Act, (ii) if such Securities are eligible to be sold, assigned or
transferred under Rule 144 (provided that a Buyer provides the Company with
reasonable assurances that such Securities are eligible for sale, assignment or
transfer under Rule 144 which shall not include an opinion of counsel), (iii) in
connection with a sale, assignment or other transfer (other than under Rule 144)
provided such Buyer provides the Company with an opinion of counsel to such
Buyer, in a generally acceptable form, to the effect that such sale, assignment
or transfer of the Securities may be made without registration under the
applicable requirements of the 1933 Act or (iv) if such legend is not required
under applicable requirements of the 1933 Act (including, without limitation,
controlling judicial interpretations and pronouncements issued by the SEC). If a
legend is not required pursuant to the foregoing, the Company shall no later
than two (2) Trading Days (as defined below) following the delivery by a Buyer
to the Company or the transfer agent (with notice to the Company) of a legended
certificate representing such Securities (endorsed or with stock powers
attached, signatures guaranteed, and otherwise in form necessary to affect the
reissuance and/or transfer, if applicable), together with any other deliveries
from such Buyer as may be required above in this Section 5(d), as directed by
such Buyer, either: (A) deliver (or cause to be delivered to) such Buyer a
certificate representing such Securities that is free from all restrictive and
other legends or (B) credit the balance account of such Buyer’s or such Buyer’s
nominee with DTC with a number of shares of Common Stock equal to the number of
Conversion Shares or Warrant Shares (as the case may be) represented by the
certificate, the conversion notice or exercise notice (as the case may be) so
delivered by such Buyer (the date by which such certificate is required to be
delivered to such Buyer or such credit is so required to be made to the balance
account of such Buyer’s or such Buyer’s nominee with DTC pursuant to the
foregoing is referred to herein as the “Required Delivery Date”).

 

(e)               Failure to Timely Deliver; Buy-In. If the Company fails to (i)
issue and deliver (or cause to be delivered) to a Buyer by the Required Delivery
Date a certificate representing the Securities so delivered to the Company by
such Buyer that is free from all restrictive and other legends in accordance
with Section 5(d) above, or (ii) credit the balance account of such Buyer’s or
such Buyer’s nominee with DTC for such number of shares of Conversion Shares or
Warrant Shares so delivered to the Company, then, in addition to all other
remedies available to such Buyer, the Company shall pay in cash to such Buyer on
each day after the Required Delivery Date that the issuance or credit of such
shares is not timely effected an amount equal to 2% of original principal amount
of such Buyer’s Note. In addition to the foregoing, if the Company fails to so
properly deliver such unlegended certificates or so properly credit the balance
account of such Buyer’s or such Buyer’s nominee with DTC by the Required
Delivery Date, and if on or after the Required Delivery Date such Buyer
purchases (in an open market transaction or otherwise) shares of Common Stock to
deliver in satisfaction of a sale by such Buyer of shares of Common Stock that
such Buyer anticipated receiving from the Company without any restrictive legend
(a “Buy-In”), then the Company shall, within two (2) Trading Days after such
Buyer’s request and in such Buyer’s sole discretion, either (i) pay cash to such
Buyer in an amount equal to such Buyer’s total purchase price (including
brokerage commissions, if any) for the shares of Common Stock so purchased (the
“Buy-In Price”), at which point the Company’s obligation to deliver such
certificate or credit such Buyer’s balance account shall terminate and such
shares shall be cancelled, or (ii) promptly honor its obligation to deliver to
such Buyer a certificate or certificates or credit such Buyer’s DTC account
representing such number of shares of Common Stock that would have been issued
if the Company timely complied with its obligations hereunder and pay cash to
such Buyer in an amount equal to the excess (if any) of the Buy-In Price over
the product of (A) such number of shares of Conversion Shares or Warrant Shares
(as the case may be) that the Company was required to deliver to such Buyer by
the Required Delivery Date times (B) the average VWAP of the Common Stock for
the five (5) Trading Day period immediately preceding the Required Delivery
Date.

 

 

 

 18 

 

 

For purposes of this Section 5(e), “VWAP” means, for any security as of any
date, the dollar volume-weighted average price for such security on the
Principal Market (or, if the Principal Market is not the principal trading
market for the Common Stock, then on the principal securities exchange or
securities market on which the Common Stock is then traded) during the period
beginning at 9:30:01 a.m., New York time, and ending at 4:00:00 p.m., New York
time, as reported by Bloomberg Financial Markets (“Bloomberg”) through its
“Volume at Price” function or, if the foregoing does not apply, the dollar
volume-weighted average price of such security in the over-the-counter market on
the electronic bulletin board for such security during the period beginning at
9:30:01 a.m., New York time, and ending at 4:00:00 p.m., New York time, as
reported by Bloomberg, or, if no dollar volume-weighted average price is
reported for such security by Bloomberg for such hours, the average of the
highest closing bid price and the lowest closing ask price of any of the market
makers for such security as reported in the “pink sheets” by Pink Sheets LLC
(formerly the National Quotation Bureau, Inc.). If VWAP cannot be calculated for
such security on such date on any of the foregoing bases, the VWAP of such
security on such date shall be the fair market value as mutually determined by
the Company and the Buyer. If the Company and the Buyer are unable to agree upon
the fair market value of such security, then they shall agree in good faith on a
reputable investment bank to make such determination of fair market value, whose
determination shall be final and binding and whose fees and expenses shall be
borne by the Company. All such determinations shall be appropriately adjusted
for any share dividend, share split or other similar transaction during such
period. “Trading Day” means any day on which the Common Stock is traded on the
Principal Market, or, if the Principal Market is not the principal trading
market for the Common Stock, then on the principal securities exchange or
securities market on which the Common Stock is then traded; provided that
“Trading Day” shall not include any day on which the Common Stock is scheduled
to trade on such exchange or market for less than 4.5 hours or any day that the
Common Stock is suspended from trading during the final hour of trading on such
exchange or market (or if such exchange or market does not designate in advance
the closing time of trading on such exchange or market, then during the hour
ending at 4:00:00 p.m., New York time).

 

6.                   CONDITIONS TO THE COMPANY’S OBLIGATION TO SELL.

 

(a)               The obligation of the Company hereunder to issue and sell the
Notes and the related Warrants to each Buyer at the Closing is subject to the
satisfaction, at or before the Closing Date, of each of the following
conditions, provided that these conditions are for the Company’s sole benefit
and may be waived by the Company at any time in their sole discretion by
providing each Buyer with prior written notice thereof:

 

(i)          Such Buyer shall have executed each of the Transaction Documents to
which it is a party and delivered the same to the Company.

 

(ii)         Such Buyer shall have delivered to the Company the Purchase Price
(less, in the case of MCP Wellness II LP, a Delaware limited partnership, the
amount withheld pursuant to Section 4(g) of this Agreement on behalf of Merida)
for the Note and the related Warrants being purchased by such Buyer at the
Closing by (A) wire transfer of immediately available funds pursuant to the wire
instructions provided by the Company or (B) by cancellation of indebtedness of
Company or its Subsidiaries to Buyer.

 

(iii)        The representations and warranties of such Buyer shall be true and
correct in all material respects as of the date when made and as of the Closing
Date as though originally made at that time (except for representations and
warranties that speak as of a specific date, which shall be true and correct as
of such date), and such Buyer shall have performed, satisfied and complied in
all material respects with the covenants, agreements and conditions required by
this Agreement to be performed, satisfied or complied with by such Buyer at or
prior to the Closing Date.

 

7.             CONDITIONS TO EACH BUYER’S OBLIGATION TO PURCHASE.

 

(a)               The obligation of each Buyer hereunder to purchase its Note
and the related Warrants at the Closing is subject to the satisfaction, at or
before the Closing Date, of each of the following conditions, provided that
these conditions are for each Buyer’s sole benefit and may be waived by such
Buyer at any time in its sole discretion by providing the Company with prior
written notice thereof:

 

 

 

 19 

 

 

(i)         The Company and each Subsidiary (as the case may be) shall have duly
executed and delivered to such Buyer (A) each of the Transaction Documents to
which it is a party and the Company shall have duly executed and delivered to
such Buyer a Note (in such amount as is set forth across from such Buyer’s name
in column (3) of the Schedule of Buyers and (B) the related Warrants (for such
number of shares of Common Stock as is set forth across from such Buyer’s name
in column (4) of the Schedule of Buyers) being purchased by such Buyer at the
Closing pursuant to this Agreement.

 

(ii)         The Company shall have delivered to such Buyer a copy of the
Irrevocable Transfer Agent Instructions, in form acceptable to such Buyer, which
instructions shall have been delivered to and acknowledged in writing by the
Company’s transfer agent.

 

(iii)        The Company shall have delivered to such Buyer a certificate
evidencing the incorporation and good standing of the Company in its state of
incorporation issued by the Secretary of State (or comparable office) of such
state within ten (10) days of the Closing Date.

 

(iv)        The Company shall have delivered to such Buyer a certificate,
executed by the Secretary of the Company and dated as of the Closing Date, as to
(i) the resolutions consistent with Section 3(b) as adopted by the Company’s
board of directors in a form reasonably acceptable to such Buyer, (ii) the
Articles of Incorporation of the Company and the organizational documents of
each Subsidiary and (iii) the Bylaws of the Company and the bylaws of each
Subsidiary, each as in effect at the Closing, in the form attached hereto as
Exhibit C.

 

(v)        Each and every representation and warranty of the Company shall be
true and correct in all material respects as of the date when made and as of the
Closing Date as though made at that time (except for representations and
warranties that speak as of a specific date, which shall be true and correct as
of such date) and the Company shall have performed, satisfied and complied in
all material respects with the covenants, agreements and conditions required to
be performed, satisfied or complied with by the Company at or prior to the
Closing Date. Such Buyer shall have received a certificate, executed by the
Chief Executive Officer of the Company, dated as of the Closing Date, to the
foregoing effect and as to such other matters as may be reasonably requested by
such Buyer in the form attached hereto as Exhibit D.

 

(vi)       The Company shall have delivered to such Buyer a letter from the
Company’s transfer agent certifying the number of shares of Common Stock
outstanding on the Closing Date immediately prior to the Closing.

 

(vii)       The Common Stock (I) shall be designated for quotation or listed on
the Principal Market and (II) shall not have been suspended, as of the Closing
Date, by the SEC or the Principal Market from trading on the Principal Market
nor shall suspension by the SEC or the Principal Market have been threatened, as
of the Closing Date, in writing by the SEC or the Principal Market.

 

(viii)      The Company shall have obtained all governmental, regulatory or
third-party consents and approvals, if any, necessary for the sale of the
Securities, including without limitation, those required by the Principal
Market.

 

(ix)        No statute, rule, regulation, executive order, decree, ruling or
injunction shall have been enacted, entered, promulgated or endorsed by any
court or governmental authority of competent jurisdiction that prohibits the
consummation of any of the transactions contemplated by the Transaction
Documents.

 

 

 

 20 

 

 

(x)         Since the date of execution of this Agreement, no event or series of
events shall have occurred that reasonably would have or result in a Material
Adverse Effect.

 

(xi)        The Company and the Subsidiaries shall have delivered to such Buyer
such other documents relating to the transactions contemplated by this Agreement
as such Buyer or its counsel may reasonably request.

 

8.             TERMINATION.

 

In the event that the Closing shall not have occurred with respect to a Buyer on
or before ten (10) days from the date hereof due to the Company’s or such
Buyer’s failure to satisfy the conditions set forth in Sections 6 and 7 above
(and a non-breaching party’s failure to waive such unsatisfied condition(s)),
any such non-breaching party at any time shall have the right to terminate its
obligations under this Agreement with respect to such breaching party on or
after the close of business on such date without liability of such non-breaching
party to any other party; provided, however, that the abandonment of the sale
and purchase of the Notes and the Warrants shall be applicable only to such
non-breaching party providing such written notice; provided further,
notwithstanding any such termination the Company shall remain obligated to
reimburse the non-breaching Buyers for the expenses described in Section 4(g)
above. Nothing contained in this Section 8 shall be deemed to release any party
from any liability for any breach by such party of the terms and provisions of
this Agreement or the other Transaction Documents or to impair the right of any
party to compel specific performance by any other party of its obligations under
this Agreement or the other Transaction Documents.

 

9.             MISCELLANEOUS.

 

(a)              Governing Law; Jurisdiction; Jury Trial. All questions
concerning the construction, validity, enforcement and interpretation of this
Agreement shall be governed by the internal laws of the State of New York,
without giving effect to any choice of law or conflict of law provision or rule
(whether of the State of New York or any other jurisdictions) that would cause
the application of the laws of any jurisdictions other than the State 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, and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of any such court, that
such suit, action or proceeding is brought in an inconvenient forum or that the
venue of such suit, action or proceeding is improper. 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 to such
party at the address for such 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 manner permitted by law. EACH PARTY HEREBY IRREVOCABLY
WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE
ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF
THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.

 

(b)              Counterparts. This Agreement may be executed in two or more
identical counterparts, all of which shall be considered one and the same
agreement and shall become effective when counterparts have been signed by each
party and delivered to the other party. In the event that any signature is
delivered by facsimile transmission or by an e-mail which contains a portable
document format (.pdf) file of an executed signature page, such signature page
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
signature page were an original thereof.

 

 

 

 21 

 

 

(c)               Headings; Gender. The headings of this Agreement are for
convenience of reference and shall not form part of, or affect the
interpretation of, this Agreement. Unless the context clearly indicates
otherwise, each pronoun herein shall be deemed to include the masculine,
feminine, neuter, singular and plural forms thereof. The terms “including,”
“includes,” “include” and words of like import shall be construed broadly as if
followed by the words “without limitation.” The terms “herein,” “hereunder,”
“hereof” and words of like import refer to this entire Agreement instead of just
the provision in which they are found.

 

(d)               Severability. If any provision of this Agreement shall be
invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall not affect the validity or enforceability of the
remainder of this Agreement in that jurisdiction or the validity or
enforceability of any provision of this Agreement in any other jurisdiction.

 

(e)               Entire Agreement; Amendments. This Agreement, the other
Transaction Documents and the schedules and exhibits attached hereto and thereto
and the instruments referenced herein and therein supersede all other prior oral
or written agreements between the Buyers, the Company, the Subsidiaries, their
affiliates and Persons acting on their behalf with respect to the matters
contained herein and therein (provided that the foregoing shall not have any
effect on any agreements any Buyer has entered into with the Company or any of
its Subsidiaries prior to the date hereof with respect to any prior investment
made by such Buyer in the Company), and this Agreement, the other Transaction
Documents, the schedules and exhibits attached hereto and thereto and the
instruments referenced herein and therein contain the entire understanding of
the parties with respect to the matters covered herein and therein and, except
as specifically set forth herein or therein, neither the Company nor any Buyer
makes any representation, warranty, covenant or undertaking with respect to such
matters. No provision of this Agreement may be amended or waived other than by
an instrument in writing signed by the Company and the holders of at least sixty
percent (60%) of the then outstanding principal amount of the Notes issued, and
any amendment or to, or waiver of any provision of, this Agreement made in
conformity with the provisions of this Section 9(e) shall be binding on all
Buyers and holders of Securities, as applicable, provided that any party may
give a waiver in writing as to itself. No such amendment or waiver (unless given
pursuant to the foregoing proviso) shall be effective to the extent that it
applies to less than all of the holders of the Notes then outstanding. No
consideration shall be offered or paid to any Person to amend or consent to a
waiver or modification of any provision of any of the Transaction Documents
unless the same consideration also is offered to all of the parties to the
Transaction Documents, holders of the Notes or holders of the Warrants (as the
case may be). The Company has not, directly or indirectly, made any agreements
with any Buyers relating to the terms or conditions of the transactions
contemplated by the Transaction Documents except as set forth in the Transaction
Documents. Without limiting the foregoing, the Company confirms that, except as
set forth in this Agreement, no Buyer has made any commitment or promise or has
any other obligation to provide any financing to the Company, any Subsidiary or
otherwise.

 

(f)                Notices. Any notices, consents, waivers or other
communications required or permitted to be given under the terms of this
Agreement must be in writing and will be deemed to have been delivered: (i) upon
receipt, when delivered personally; (ii) upon receipt, when sent by facsimile
(provided confirmation of transmission is mechanically or electronically
generated and kept on file by the sending party); or (iii) one (1) Business Day
after deposit with an overnight courier service with next day delivery
specified, in each case, properly addressed to the party to receive the same.
The addresses and facsimile numbers for such communications shall be:

 

If to the Company:

 

Freedom Leaf Inc.

3571 E. Sunset Road, Suite 420

Las Vegas, Nevada 89120

Telephone: 954-895-3316
Facsimile:
Attention: Chief Executive Officer

 

If to the Transfer Agent:

 

Globex Transfer, LLC

780 Deltona Blvd., Suite 202

Deltona, FL 32725

Telephone: 813-344-4464
Facsimile: 386-267-2124
Attention: Michael Turner

 

 

 

 22 

 

 

If to a Buyer, to its address and facsimile number set forth on the Schedule of
Buyers, with copies to such Buyer’s representatives as set forth on the Schedule
of Buyers,

 

with a copy (for informational purposes only) to:

 

Kleinberg, Kaplan, Wolff & Cohen, P.C.
551 Fifth Avenue
New York, New York 10176
Telephone: (212) 986-6000
Facsimile: (212) 986-8866
Attention: Jonathan Ain, Esq.

 

with a copy (for informational purposes only) to:

 

BRUNSON CHANDLER & JONES, PLLC

175 S. Main Street, 14th Floor

Salt Lake City, UT 84111

Telephone: 801.303.5730

Facsimile: 801.355.5005

Attention: Lance Brunson, Esq.

 

or to such other address and/or facsimile number and/or to the attention of such
other Person as the recipient party has specified by written notice given to
each other party five (5) days prior to the effectiveness of such change;
provided, that Kleinberg, Kaplan, Wolff & Cohen, P.C. shall only be provided
copies of notices sent to Merida. Written confirmation of receipt (A) given by
the recipient of such notice, consent, waiver or other communication, (B)
mechanically or electronically generated by the sender’s facsimile machine
containing the time, date, recipient facsimile number and an image of the first
page of such transmission or (C) provided by an overnight courier service shall
be rebuttable evidence of personal service, receipt by facsimile or receipt from
an overnight courier service in accordance with clause (i), (ii) or (iii) above,
respectively.

 

(g)               Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of the parties and their respective successors and
assigns, including any purchasers of any of the Securities. The Company shall
not assign this Agreement or any rights or obligations hereunder without the
prior written consent of the holders of at least eighty percent (80%) of the
aggregate number of Registrable Securities issued and issuable under the
Transaction Documents, including, without limitation, by way of a Fundamental
Transaction (as defined in the Warrants) (unless the Company is in compliance
with the applicable provisions governing Fundamental Transactions set forth in
the Warrants). A Buyer may assign some or all of its rights hereunder in
connection with transfer of any of its Securities without the consent of the
Company, in which event such assignee shall be deemed to be a Buyer hereunder
with respect to such assigned rights.

 

(h)               No Third-Party Beneficiaries. This Agreement is intended for
the benefit of the parties hereto and their respective permitted successors and
assigns, and is not for the benefit of, nor may any provision hereof be enforced
by, any other Person, other than the Indemnitees referred to in Section 9(k).

 

 

 

 23 

 

 

(i)                Survival. The representations, warranties, agreements and
covenants shall survive the Closing. Each Buyer shall be responsible only for
its own representations, warranties, agreements and covenants hereunder.

 

(j)                Further Assurances. Each party shall do and perform, or cause
to be done and performed, all such further acts and things, and shall execute
and deliver all such other agreements, certificates, instruments and documents,
as any other party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.

 

(k)              Indemnification. In consideration of each Buyer’s execution and
delivery of the Transaction Documents and acquiring the Securities thereunder
and in addition to all of the Company’s other obligations under the Transaction
Documents, the Company shall defend, protect, indemnify and hold harmless each
Buyer and each holder of any Securities and all of their stockholders, partners,
members, officers, directors, employees and direct or indirect investors and any
of the foregoing Persons’ agents or other representatives (including, without
limitation, those retained in connection with the transactions contemplated by
this Agreement) (collectively, the “Indemnitees”) from and against any and all
actions, causes of action, suits, claims, losses, costs, penalties, fees,
liabilities and damages, and expenses in connection therewith (irrespective of
whether any such Indemnitee is a party to the action for which indemnification
hereunder is sought), and including reasonable attorneys’ fees and disbursements
(the “Indemnified Liabilities”), incurred by any Indemnitee as a result of, or
arising out of, or relating to (a) any misrepresentation or breach of any
representation or warranty made by the Company or any Subsidiary in any of the
Transaction Documents, (b) any breach of any covenant, agreement or obligation
of the Company or any Subsidiary contained in any of the Transaction Documents
or (c) any cause of action, suit or claim brought or made against such
Indemnitee by a third party (including for these purposes a derivative action
brought on behalf of the Company or any Subsidiary) and arising out of or
resulting from (i) the execution, delivery, performance or enforcement of any of
the Transaction Documents, (ii) any transaction financed or to be financed in
whole or in part, directly or indirectly, with the proceeds of the issuance of
the Securities, (iii) any disclosure properly made by such Buyer pursuant to
Section 4(i), (iv) the status of such Buyer or holder of the Securities as an
investor in the Company pursuant to the transactions contemplated by the
Transaction Documents, (v) any untrue statement or alleged untrue statement of a
material fact in a registration statement or prospectus (as amended or
supplemented) covering all or any portion of the Registrable Securities or the
omission or alleged omission to state therein any material fact necessary to
make the statements made therein, in light of the circumstances under which the
statements therein were made, not misleading or (vi) any violation or alleged
violation by the Company of the 1933 Act, the 1934 Act, any other law, including
without limitation, any state securities law, or any rule or regulation
thereunder relating to the offer or sale of the Registrable Securities pursuant
to a registration statement, except, with respect to clause (c), to the extent
such Indemnified Liability arises from an Indemnitee’s gross negligence, bad
faith or willful misconduct. To the extent that the foregoing undertaking by the
Company may be unenforceable for any reason, the Company shall make the maximum
contribution to the payment and satisfaction of each of the Indemnified
Liabilities which is permissible under applicable law.

 

(l)               No Strict Construction. The language used in this Agreement
will be deemed to be the language chosen by the parties to express their mutual
intent, and no rules of strict construction will be applied against any party.

 

(m)              Remedies. Each Buyer and each holder of any Securities shall
have all rights and remedies set forth in the Transaction Documents and all
rights and remedies which such holders have been granted at any time under any
other agreement or contract and all of the rights which such holders have under
any law. Any Person having any rights under any provision of this Agreement
shall be entitled to enforce such rights specifically (without posting a bond or
other security), to recover damages by reason of any breach of any provision of
this Agreement and to exercise all other rights granted by law. Furthermore, the
Company recognizes that in the event that it or any Subsidiary fails to perform,
observe, or discharge any or all of its or such Subsidiary’s (as the case may
be) obligations under the Transaction Documents, any remedy at law may prove to
be inadequate relief to the Buyers. The Company therefore agrees that the Buyers
shall be entitled to seek specific performance and/or temporary, preliminary and
permanent injunctive or other equitable relief from any court of competent
jurisdiction in any such case without the necessity of proving actual damages
and without posting a bond or other security.

 

 

 

 24 

 

 

(n)              Withdrawal Right. Notwithstanding anything to the contrary
contained in (and without limiting any similar provisions of) the Transaction
Documents, whenever any Buyer exercises a right, election, demand or option
under a Transaction Document and the Company or any Subsidiary does not timely
perform its related obligations within the periods therein provided, then such
Buyer may rescind or withdraw, in its sole discretion from time to time upon
written notice to the Company or such Subsidiary (as the case may be), any
relevant notice, demand or election in whole or in part without prejudice to its
future actions and rights

 

(o)               Payment Set Aside. To the extent that the Company or any
Subsidiary makes a payment or payments to any Buyer hereunder or pursuant to any
of the other Transaction Documents or any of the Buyers enforce or exercise
their rights hereunder or thereunder, and such payment or payments or the
proceeds of such enforcement or exercise or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside, recovered
from, disgorged by or are required to be refunded, repaid or otherwise restored
to the Company or any Subsidiary, a trustee, receiver or any other Person under
any law (including, without limitation, any bankruptcy law, foreign, state or
federal law, common law or equitable cause of action), then to the extent of any
such restoration the obligation or part thereof originally intended to be
satisfied shall be revived and continued in full force and effect as if such
payment had not been made or such enforcement or setoff had not occurred. Unless
otherwise expressly indicated, all dollar amounts referred to in this Agreement
and the other Transaction Documents are in United States Dollars (“US Dollars”),
and all amounts owing under this Agreement and all other Transaction Documents
shall be paid in US Dollars. All amounts denominated in other currencies shall
be converted in the US Dollar equivalent amount in accordance with the Exchange
Rate on the date of calculation. “Exchange Rate” means, in relation to any
amount of currency to be converted into US Dollars pursuant to this Agreement,
the US Dollar exchange rate as published in the Wall Street Journal on the
relevant date of calculation.

 

(p)              Independent Nature of Buyers’ Obligations and Rights. The
obligations of each Buyer under the Transaction Documents are several and not
joint with the obligations of any other Buyer, and no Buyer shall be responsible
in any way for the performance of the obligations of any other Buyer under any
Transaction Document. Nothing contained herein or in any other Transaction
Document, and no action taken by any Buyer pursuant hereto or thereto, shall be
deemed to constitute the Buyers as, and the Company acknowledges that the Buyers
do not so constitute, a partnership, an association, a joint venture or any
other kind of group or entity, or create a presumption that the Buyers are in
any way acting in concert or as a group or entity with respect to such
obligations or the transactions contemplated by the Transaction Documents or any
matters, and the Company acknowledges that the Buyers are not acting in concert
or as a group, and the Company shall not assert any such claim, with respect to
such obligations or the transactions contemplated by the Transaction Documents.
The decision of each Buyer to purchase Securities pursuant to the Transaction
Documents has been made by such Buyer independently of any other Buyer. Each
Buyer acknowledges that no other Buyer has acted as agent for such Buyer in
connection with such Buyer making its investment hereunder and that no other
Buyer will be acting as agent of such Buyer in connection with monitoring such
Buyer’s investment in the Securities or enforcing its rights under the
Transaction Documents. The Company and each Buyer confirms that each Buyer has
independently participated with the Company in the negotiation of the
transaction contemplated hereby with the advice of its own counsel and advisors.
Each Buyer shall be entitled to independently protect and enforce its rights,
including, without limitation, the rights arising out of this Agreement or out
of any other Transaction Documents, and it shall not be necessary for any other
Buyer to be joined as an additional party in any proceeding for such purpose.
The use of a single agreement to effectuate the purchase and sale of the
Securities contemplated hereby was solely in the control of the Company, not the
action or decision of any Buyer, and was done solely for the convenience of the
Company and the Subsidiaries and not because it was required or requested to do
so by any Buyer. It is expressly understood and agreed that each provision
contained in this Agreement and in each other Transaction Document is between
the Company, each Subsidiary and a Buyer, solely, and not between the Company,
the Subsidiaries and the Buyers collectively and not between and among the
Buyers.

 

[signature pages follow]

 

 

 

 25 

 

 

IN WITNESS WHEREOF, each Buyer and the Company have caused their respective
signature page to this Agreement to be duly executed as of the date first
written above.

 

 

COMPANY:

      FREEDOM LEAF Inc.           By: /s/ Carlos Frias   Name: Carlos Frias  
Title: CEO

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 26 

 

 

IN WITNESS WHEREOF, each Buyer and the Company have caused their respective
signature page to this Agreement to be duly executed as of the date first
written above.

 

 

BUYERS:

 

 

 

MCP WELLNESS II LP

 

By: MCP Wellness II Manager LLC, its general partner

 

 

 

By: /s/ Kevin Gibbs

Name: Kevin Gibbs

Title: Authorized Signatory

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 27 

 

 

SCHEDULE OF BUYERS

 

 

(1)  (2)  (3)  (4)  (5)  (6)  (7)                     Buyer  Address  Principal
Amount of Note  

Number
of

Warrants

 Purchase Price (cash)  Purchase Price (Cancellation of indebtedness)  Legal
Representative’s
Address                    

MCP Wellness II LP

 

 

641 Lexington Avenue

18th Floor

New York, NY 10022

 

 

 

 $5,000,000  15,000,000  $1,901,800  

A total of $3,098,200, comprised of cancellation of the following securities, of
which all right, title and interest have been assigned to MCP Wellness II LP
prior to the Effective Date:

 

Promissory Note, dated as of April 15, 2019, issued by ECS Labs, LLC, in favor
of Merida Capital Partners II LP, for a principal sum of $200,000.

 

Promissory Note, dated as of May 21, 2019, issued by Freedom Leaf Inc., in favor
of Merida Capital Partners II LP, for a principal sum of $183,750.

 

Promissory Note, dated as of June 18, 2019, issued by Freedom Leaf Inc., in
favor of Merida Capital Partners III LP, for a principal sum of $630,000.

 

Promissory Note, dated as of July 24, 2019, issued by Freedom Leaf Inc., in
favor of Merida Capital Partners III LP, for a principal sum of $200,000.

 

Promissory Note, dated as of August 20, 2019, issued by Freedom Leaf Inc., in
favor of Merida Capital Partners III LP, for a principal sum of $400,000.

 

Promissory Note, dated as of September 13, 2019, issued by Freedom Leaf Inc., in
favor of Merida Capital Partners III LP, for a principal sum of $500,000.

 

Promissory Note, dated as of October 15, 2019, issued by Freedom Leaf Inc., in
favor of Merida Capital Partners III LP, for a principal sum of $900,000.

 

 

 

  Kleinberg, Kaplan, Wolff & Cohen, P.C.
551 Fifth Avenue
New York, NY 10176
Attn: Jonathan Ain

 

 

 

 

 28 

 

 

EXHIBITS

 

Exhibit AForm of Note

Exhibit BForm of Warrant

Exhibit CForm of Secretary’s Certificate

Exhibit DForm of Officer’s Certificate

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 29