Exhibit 10.2

 

SECURITIES PURCHASE AGREEMENT

 

THIS SECURITIES PURCHASE AGREEMENT (this “Agreement”), dated as of February 21,
2019, by and among SEEDO CORP., a Delaware corporation (the “Company”), and VAII
PN, LTD., a Cayman Islands exempt company (“Investor”).

 

WITNESSETH

 

WHEREAS, the Company and the Investor are executing and delivering this
Agreement in reliance upon an exemption from securities registration pursuant to
Section 4(2) and/or Rule 506 of Regulation D (“Regulation D”) as promulgated by
the U.S. Securities and Exchange Commission (the “SEC”) under the Securities Act
of 1933. as amended (the “Securities Act”);

 

WHEREAS, the parties desire that, upon the terms and subject to the conditions
contained herein, the Company shall issue and sell to the Investor, as provided
herein, and the Investor shall purchase (i) a convertible debenture
substantially in the form attached hereto as “Exhibit A” in the principal amount
of USD$550,000 (the “Convertible Debenture”), which shall be convertible into
shares of the Company’s common stock, par value $0.0001 (the “Common Stock”) (as
converted, the “Conversion Shares”), within 1 business day following the date
hereof (the “Closing”) for a total purchase price of USD$550,000 (the “Purchase
Price”) and in the event that the a registration statement is not filed as
required pursuant to the Registration Rights Agreement the Company shall issue
to the Investor, a warrant to purchase 137,500 shares of the Company’s Common
Stock (the “Warrant Shares”) in the form attached hereto as Exhibit B (the
“Warrant”);

 

WHEREAS, contemporaneously with the execution and delivery of this Agreement,
the parties hereto are executing and delivering a Registration Rights Agreement
(the “Registration Rights Agreement”) pursuant to which the Company has agreed
to provide certain registration rights under the Securities Act and the rules
and regulations promulgated there under, and applicable state securities laws;

 

WHEREAS, contemporaneously with the execution and delivery of this Agreement,
the parties hereto are executing and delivering Irrevocable Transfer Agent
Instructions (the “Irrevocable Transfer Agent Instructions”); and

 

WHEREAS, the Convertible Debenture, the Conversion Shares, and in the event that
the Warrant is issued hereunder, the Warrant and the Warrant Shares,
collectively are referred to herein as the “Securities”).

 

NOW, THEREFORE, in consideration of the mutual covenants and other agreements
contained in this Agreement the Company and the Investor hereby agree as
follows:

 

1. CERTAIN DEFINITIONS.

 

(a)           “Anti-Bribery Laws” shall mean of any provision of any applicable
law or regulation implementing the OECD Convention on Combating Bribery of
Foreign Public Officials in International Business Transactions or any
applicable provision of the U.S. Foreign Corrupt Practices Act of 1977, as
amended (the “FCPA”), the U.K. Bribery Act 2010, or any other similar law of any
other jurisdiction in which the Company operates its business, including, in
each case, the rules and regulations thereunder.

 

 

 

(b)           “Applicable Laws” shall mean applicable laws, statutes, rules,
regulations, orders, executive orders, directives, policies, guidelines,
ordinance or regulation of any governmental entity and codes having the force of
law, whether local, national, or international, as amended from time to time,
including without limitation (i) all applicable laws that relate to money
laundering, terrorist financing, financial record keeping and reporting, (ii)
all applicable laws that relate to anti-bribery, anti-corruption, books and
records and internal controls, including the Anti-Bribery Laws, (iii) OFAC and
any Sanctions Laws or Sanctions Programs, and (iv) CAATSA and any CAATSA
Sanctions Programs, Anti-Money Laundering Laws.

 

(c)           “BHCA” shall mean the Bank Holding Company Act of 1956, as
amended.

 

(d)           “CAATSA” shall mean Public Law No. 115-44 The Countering America’s
Adversaries Through Sanctions Act.

 

(e)          “CAATSA Sanctions Programs” shall mean a country or territory that
is, or whose government is, the subject of sanctions imposed by CAATSA.

 

(f)            “Anti-Money Laundering Laws” shall mean applicable financial
recordkeeping and reporting requirements and all other applicable U.S. and
non-U.S. anti-money laundering laws, rules and regulations, including, but not
limited to, those of the Currency and Foreign Transactions Reporting Act of
1970, as amended, the United States Bank Secrecy Act, as amended by the USA
PATRIOT Act of 2001, and the United States Money Laundering Control Act of 1986
(18 U.S.C. §§1956 and 1957), as amended, as well as the implementing rules and
regulations promulgated thereunder, and the applicable money laundering statutes
of all applicable jurisdictions, the rules and regulations thereunder and any
related or similar rules, regulations or guidelines, issued, administered or
enforced by any governmental agency or self- regulatory.

 

(g)           “OFAC” shall mean the U.S. Department of Treasury’s Office of
Foreign Asset Control.

 

(h)           “Sanctioned Country” shall mean a country or territory that is the
subject or target of a comprehensive embargo or Sanctions Laws prohibiting trade
with the country or territory, including, without limitation, Crimea, Cuba,
Iran, North Korea, Sudan and Syria.

 

(i)            “Sanctions Laws” shall mean any sanctions administered or
enforced by OFAC or the U.S. Departments of State or Commerce and including,
without limitation, the designation as a “Specially Designated National” or on
the “Sectoral Sanctions identifications List”, collectively “Blocked Persons”),
the United Nations Security Council (“UNSC”), the European Union, Her Majesty’s
Treasury (“HMT”) or any other relevant sanctions authority.

 

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(j)            “Sanctions Programs” shall mean any OFAC, HMT or UNSC economic
sanction program including, without limitation, programs related to a Sanctioned
Country.

 

(k)           “Sarbanes-Oxley Act” means the Sarbanes-Qxley Act of 2002, as
amended.

 

2. PURCHASE AND SALE OF THE CONVERTIBLE DEBENTURE.

 

(a)           Purchase of the Convertible Debenture. Subject to the satisfaction
(or waiver) of the terms and conditions of this Agreement, the Investor agrees,
to purchase at the Closing and the Company agrees to sell and issue to Investor,
at the Closing the Convertible Debenture.

 

(b)          Closing Date. The Closing of the purchase and sale of the
Convertible Debenture shall take place at 10:00 a.m. Eastern Standard Time on
the 1st business day following the date hereof, subject to notification of
satisfaction of the conditions to the Closing set forth herein and in Sections 7
and 8 below (or such later date as is mutually agreed to by the Company and the
Investor (the “Closing Date”).

 

(c)           Form of Payment. Subject to the satisfaction of the terms and
conditions of this Agreement, on the Closing Date, (i) the Investor shall
deliver to the Company such aggregate proceeds for the Convertible Debenture to
be issued and sold to the Investor at the Closing, minus the fees to be paid
directly from the proceeds of such Closing as set forth herein, and (ii) the
Company shall deliver to the Investor a Convertible Debenture which the Investor
is purchasing at the Closing duly executed on behalf of the Company.

 

3. INVESTOR’S REPRESENTATIONS AND WARRANTIES.

 

The Investor represents and warrants, that:

 

(a)           Investment Purpose. The Investor is acquiring the Securities for
its own account for investment only and not with a view towards, or for resale
in connection with, the public sale or distribution thereof, except pursuant to
sales registered or exempted under the Securities Act; provided, however, that
by making the representations herein, the Investor reserves the right to dispose
of the Securities at any time in accordance with or pursuant to an effective
registration statement covering such Securities or an available exemption under
the Securities Act. The Investor does not presently have any agreement or
understanding, directly or indirectly, with any corporation, association,
partnership, organization, business, individual, government or political
subdivision thereof or governmental agency (“Person”) to distribute any of the
Securities.

 

(b)           Accredited Investor Status. The Investor is an “Accredited
Investor” as that term is defined in Rule 501(a)(3) of Regulation D.

 

(c)           Reliance on Exemptions. The Investor 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
the Investor’s compliance with, the representations, warranties, agreements,
acknowledgments and understandings of the Investor set forth herein in order to
determine the availability of such exemptions and the eligibility of the
Investor to acquire the Securities.

 

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(d)           Information. The Investor and its advisors (and his or, its
counsel), if any, have been furnished with all materials relating to the
business, finances and operations of the Company and information he deemed
material to making an informed investment decision regarding his purchase of the
Securities, which have been requested by the Investor. The Investor and its
advisors, if any, have been afforded the opportunity to ask questions of the
Company and its management. Neither such inquiries nor any other due diligence
investigations conducted by the Investor or its advisors, if any, or its
representatives shall modify, amend or affect the Investor’s right to rely on
the Company’s representations and warranties contained in Section 4 below. The
Investor understands that its investment in the Securities involves a high
degree of risk. The Investor is in a position regarding the Company, which,
based upon employment, family relationship or economic bargaining power, enabled
and enables the Investor to obtain information from the Company in order to
evaluate the merits and risks of this investment. The Investor 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.

 

(e)           No Governmental Review. The Investor 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.

 

(f)           Transfer or Resale. The Investor understands that except as
provided for in the Registration Rights Agreement: (i) the Securities have not
been and are not being registered under the Securities Act or any state
securities laws, and may not be offered for sale, sold, assigned or transferred
unless (A) subsequently registered thereunder, (B) the Investor shall have
delivered to the Company an opinion of counsel, in a generally acceptable form,
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
requirements, or (C) the Investor provides the Company with reasonable
assurances (in the form of seller and broker representation letters) that such
Securities can be sold, assigned or transferred pursuant to Rule 144 or Rule
144A promulgated under the Securities Act, as amended (or a successor rule
thereto) (collectively, “Rule 144”), in each case following the applicable
holding period set forth therein; (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 through whom the sale is made)
may be deemed to be an underwriter (as that term is defined in the Securities
Act) may require compliance with some other exemption under the Securities Act
or the rules and regulations of the SEC thereunder; and (iii) neither the
Company nor any other person is under any obligation to register the Securities
under the Securities Act or any state securities laws or to comply with the
terms and conditions of any exemption thereunder.

 

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(g)           Legends. The Investor agrees to the imprinting, so long as is
required by this Section 3(g), of a restrictive legend in substantially the
following form:

 

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 HAVE BEEN ACQUIRED SOLELY FOR INVESTMENT PURPOSES AND NOT WITH A VIEW
TOWARD RESALE AND MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED IN
THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS, OR AN
OPINION OF COUNSEL, IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT
REQUIRED UNDER SAID ACT OR APPLICABLE STATE SECURITIES LAWS.

 

Certificates evidencing the Conversion Shares, and if the Warrant is issued, the
Warrant Shares, shall not contain any legend (including the legend set forth
above), (i) while a registration statement covering the resale of such security
is effective under the Securities Act, (ii) following any sale of such
Conversion Shares or Warrant Shares pursuant to Rule 144, (iii) if such
Conversion Shares or Warrant Shares are eligible for sale under Rule 144, or
(iv) if such legend is not required under applicable requirements of the
Securities Act (including judicial interpretations and pronouncements issued by
the staff of the SEC). The Company shall cause its counsel to issue a legal
opinion to the Company’s transfer agent promptly after the effective date (the
“Effective Date”) of a registration statement if required by the Company’s
transfer agent to effect the removal of the legend hereunder. If all or any
portion of the Convertible Debenture is converted and/or the Warrant is
exercised by the Investor that is not an Affiliate of the Company (a
“Non-Affiliated Investor”) at a time when there is an effective registration
statement to cover the resale of the Conversion Shares and Warrant Shares, such
Conversion Shares and/or Warrant Shares shall be issued free of all legends. The
Company agrees that following the Effective Date or at such time as such legend
is no longer required under this Section 3(g), it will, no later than 3 Trading
Days following the delivery by a Non-Affiliated Investor to the Company or the
Company’s transfer agent of a certificate representing Conversion Shares and/or
the Warrant Shares, issued with a restrictive legend (such 3rd Trading Day, the
“Legend Removal Date”‘), deliver or cause to be delivered to such Non-Affiliated
Investor a certificate representing such shares that is free from all
restrictive and other legends. The Company may not make any notation on its
records or give instructions to any transfer agent of the Company that enlarge
the restrictions on transfer set forth in this Section. The Investor
acknowledges that the Company’s agreement hereunder to remove all legends from
Conversion Shares and/or the Warrant Shares is not an affirmative statement or
representation that such Conversion Shares and/or Warrant Shares are freely
tradable. The Investor, agrees that the removal of the restrictive legend from
certificates representing Securities as set forth in this Section 3(g) is
predicated upon the Company’s reliance that the Investor will sell any
Securities pursuant to either the registration requirements of the Securities
Act, including any applicable prospectus delivery requirements, or an exemption
therefrom, and that if Securities are sold pursuant to a registration statement,
they will be sold in compliance with the plan of distribution set forth therein.

 

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(h)          Authorization, Enforcement. This Agreement has been duly and
validly authorized, executed and delivered on behalf of the Investor and is a
valid and binding agreement of the Investor enforceable in accordance with its
terms, except as such enforceability may be limited by general principles of
equity or applicable bankruptcy, insolvency, reorganization, moratorium,
liquidation and other similar laws relating to, or affecting generally, the
enforcement of applicable creditors’ rights and remedies.

 

(i)            Receipt of Documents. The Investor and his or its counsel has
received and read in their entirety: (i) this Agreement and each representation,
warranty and covenant set forth herein and the Transaction Documents (as defined
herein); (ii) all due diligence and other information necessary to verify the
accuracy and completeness of such representations, warranties and covenants;
(iii) the Company’s Form 10-K for the fiscal year ended September 30, 2018; (iv)
the Company’s Form 10-Q for the fiscal quarters ended March 31, 2018, June 30,
2018 and December 31, 2018, all as amended pursuant to the Form 8-k filed on
November 27, 2018 and (v) answers to all questions the Investor submitted to the
Company regarding an investment in the Company; and the Investor has relied on
the information contained therein and has not been furnished any other
documents, literature, memorandum or prospectus.

 

(j)            Due Formation of Corporate and Other Investors. If the Investor
is a corporation, trust, partnership or other entity that is not an individual
person, it has been formed and validly exists and has not been organized for the
specific purpose of purchasing the Securities and is not prohibited from doing
so.

 

(k)           No Legal Advice From the Company. The Investor acknowledges, that
it had the opportunity to review this Agreement and the transactions
contemplated by this Agreement with his or its own legal counsel and investment
and tax advisors. The Investor is relying solely on such counsel and advisors
and not on any statements or representations of the Company or any of its
representatives or agents for legal, tax or investment advice with respect to
this investment, the transactions contemplated by this Agreement or the
securities laws of any jurisdiction.

 

4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

 

Except as set forth under the corresponding section of the Disclosure Schedules
which Disclosure Schedules shall be deemed a part hereof and to qualify any
representation or warranty otherwise made herein to the extent of such
disclosure, the Company hereby makes the representations and warranties set
forth below to the Investor:

 

(a)           Subsidiaries. All of the direct and indirect subsidiaries of the
Company are set forth on Schedule 4(a). The Company owns, directly or
indirectly, all of the capital stock or other equity interests of each
subsidiary free and clear of any liens, and all the issued and outstanding
shares of capital stock of each subsidiary are validly issued and are fully
paid, non-assessable and free of preemptive and similar rights to subscribe for
or purchase securities.

 

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(b)           Security Interests Granted. Except as set forth on Disclosure
Schedule 4(b). There are no security interests granted, issued or allowed to
exist in any assets of the Company or subsidiary.

 

(c)           Organization and Qualification. The Company and its subsidiaries
are corporations duly organized and validly existing in good standing under the
laws of the jurisdiction in which they are incorporated, and have the requisite
corporate power to own their properties and to carry on their business as now
being conducted. Each of the Company and its subsidiaries is duly qualified as a
foreign corporation to do business and is in good standing in every jurisdiction
in which 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 or reasonably be expected to result in (i) a
material adverse effect on the legality, validity or enforceability of any
Transaction Document, (ii) a material adverse effect on the results of
operations, assets, business or condition (financial or otherwise) of the
Company and the subsidiaries, taken as a whole, or (iii) a material adverse
effect on the Company’s ability to perform in any material respect on a timely
basis its obligations under any Transaction Document (any of (i), (ii) or (iii),
a “Material Adverse Effect”) and no proceeding has been instituted in any such
jurisdiction revoking, limiting or curtailing or seeking to revoke, limit or
curtail such power and authority or qualification.

 

(d)           Authorization, Enforcement, Compliance with Other Instruments.
(i)The Company has the requisite corporate power and authority to enter into and
perform its obligations under this Agreement, the Convertible Debenture, the
Registration Rights Agreement, the Irrevocable Transfer Agent Instructions, the
Warrant if issued, and each of the other agreements entered into by the parties
hereto in connection with the transactions contemplated by this Agreement
(collectively the “Transaction Documents”) and to issue the Securities in
accordance with the terms hereof and thereof, (ii) the execution and delivery of
the Transaction Documents by the Company and the consummation by it of the
transactions contemplated hereby and thereby, including, without limitation, the
issuance of the Securities, the reservation for issuance and the issuance of the
Conversion Shares and in the event that the Warrant is issued the Warrant
Shares, have been duly authorized by the Company’s Board of Directors and no
further consent or authorization is required by the Company, its Board of
Directors or its stockholders, (iii) the Transaction Documents have been duly
executed and delivered by the Company, (iv) the Transaction Documents constitute
the valid and binding obligations of the Company enforceable against the Company
in accordance with their 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 creditors’ rights and remedies. The
authorized officer of the Company executing the Transaction Documents knows of
no reason why the Company cannot file the Registration Statement as required
under the Registration Rights Agreement if demanded by the Investor or perform
any of the Company’s other obligations under the Transaction Documents.

 

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(e)           Capitalization. The authorized capital stock of the Company
consists of 500,000,000 shares of Common Stock and 15,000,000 shares of
Preferred Stock, par value $0.0001 (“Preferred Stock”) of which [17,018,975]
shares of Common Stock and no shares of Preferred Stock are issued and
outstanding. All of the outstanding shares of capital stock of the Company are
validly issued, fully paid and nonassessable, have been issued in compliance
with all federal and state securities laws, and none of such outstanding shares
was issued in violation of any preemptive rights or similar rights to subscribe
for or purchase securities. Except as disclosed in Schedule 4(e): (i) none of
the Company’s capital stock is subject to preemptive rights or any other similar
rights or any liens or encumbrances suffered or permitted by the Company; (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
material amounts, either singly or in the aggregate, filed in connection with
the Company or any of its subsidiaries; (v) 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; (vi) there are no securities or instruments containing
anti-dilution or similar provisions that will be triggered by the issuance of
the Securities; (vii) the Company does not have any stock appreciation rights or
“phantom stock” plans or agreements or any similar plan or agreement; and (viii)
the Company and its subsidiaries have no liabilities or obligations required to
be disclosed in the SEC Documents but 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 would not have a Material Adverse Effect. The Company has furnished to
the Investor true, correct and complete copies of the Company’s Certificate of
Incorporation, as amended and as in effect on the date hereof (the “Certificate
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. No further approval or authorization
of any stockholder, the Board of Directors of the Company or others is required
for the issuance and sale of the Securities. There are no stockholders
agreements, voting agreements or other similar agreements with respect to the
Company’s capital stock to which the Company is a party or, to the knowledge of
the Company, between or among any of the Company’s stockholders.

 

(f)            Issuance of Securities. The issuance of the Convertible Debenture
and the Warrant, in the event that the Warrant is issued, is duly authorized and
free from all taxes, liens and charges with respect to the issue thereof. Upon
conversion in accordance with the terms of the Convertible Debenture and in the
event that the Warrant is issued, upon exercise of the Warrant, the Conversion
Shares and/or the Warrant Shares, when issued will be validly issued, fully paid
and nonassessable, free from all taxes, liens and charges with respect to the
issue thereof. The Company has reserved from its duly authorized capital stock
the appropriate number of shares of Common Stock as set forth in this Agreement.

 

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(g)           No Conflicts. The execution, delivery and performance of the
Transaction Documents by the Company and the consummation by the Company of the
transactions contemplated hereby and thereby (including, without limitation, the
issuance of the Convertible Debenture, and reservation for issuance and issuance
of the Conversion Shares, the issuance of the Warrant, in the event that it is
issued and the issuance of the Warrant Shares) will not (i) result in a
violation of any certificate of incorporations certificate of formation, any
certificate of designations or other constituent documents of the Company or any
of its subsidiaries, any capital stock of the Company or any of its subsidiaries
or bylaws of the Company or any of its subsidiaries or (ii) conflict with, or
constitute a default (or an event which with notice or lapse of time or both
would become a default) in any respect 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 its 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 National Association of
Securities Dealers Inc.’s OTC Markets) applicable to the Company or any of its
subsidiaries or by which any property or asset of the Company or any of its
subsidiaries is bound or affected; except in the case of each of clauses (ii)
and (iii), such as could not, individually or in the aggregate, have or
reasonably be expected to result in a Material Adverse Effect. The business of
the Company and its subsidiaries is not being conducted, and shall not be
conducted in violation of any material law, ordinance, or regulation of any
governmental entity. Except as specifically contemplated by this Agreement and
as required under the Securities Act and any applicable state securities laws,
the Company is not required to obtain any consent, authorization or order of, or
make any filing or registration with, any court or governmental agency in order
for it to execute, deliver or perform any of its obligations under or
contemplated by this Agreement or the Registration Rights Agreement in
accordance with the terms hereof or thereof. All consents, authorizations,
orders, filings and registrations which the Company is required to obtain
pursuant to the preceding sentence have been obtained or effected on or prior to
the date hereof. The Company and its subsidiaries are unaware of any facts or
circumstance, which might give rise to any of the foregoing.

 

(h)           SEC Documents; Financial Statements. The Company has filed all
reports, schedules, forms, statements and other documents required to be filed
by it with the SEC under Section 13 or 15(d) of the Securities Exchange Act of
1934 (the “Exchange Act”) during the 2 years preceding the date hereof (or such
shorter period as the Company was required by law or regulation to file such
material) (all of the foregoing filed within the 2 years preceding the date
hereof as amended after the date hereof and all exhibits included therein and
financial statements and schedules thereto and documents incorporated by
reference therein, being hereinafter referred to as the “SEC Documents”) on a
timely basis or has received a valid extension of such time of filing and has
filed any such SEC Document prior to the expiration of any such extension
(including pursuant to SEC from 12b-25). The Company has delivered to the
Investor or its representatives, or made available through the SEC’s website at
http://www.sec.gov, true and complete copies of the SEC Documents. As of their
respective dates, the SEC Documents complied in all material respects with the
requirements of the Exchange 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 and its
subsidiaries included in the SEC Documents complied as to form in all material
respects with applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto. Such financial statements have been
prepared in accordance with generally accepted accounting principles,
consistently applied, during the periods involved (except (i) as may be
otherwise indicated in such financial statements or the Debenture 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). No other information provided by or on behalf of the Company to
the Investor which is not included in the SEC Documents contains any untrue
statement of a material fact or omits to state any material fact necessary in
order to make the statements therein, in the light of the circumstance under
which they are or were made, not misleading.

 

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(i)            10(b)-5. The SEC Documents do not include any untrue statements
of material fact, nor do they omit to state any material fact required to be
stated therein necessary to make the statements made, in light of the
circumstances under which they were made, not misleading.

 

(j)            Absence of Litigation. There is no action, suit, proceeding,
inquiry or investigation before or by any court, public board, government
agency, self-regulatory organization or body pending against or affecting the
Company, the Common Stock or any of the Company’s subsidiaries, wherein an
unfavorable decision, ruling or finding would have a Material Adverse Effect.

 

(k)           CAATSA. Neither the Company or its subsidiaries, nor, to Company’s
knowledge, any director, officer, agent, employee or affiliate of the Company or
subsidiaries, is a Person that is, or is owned or controlled by a Person that
has a place of business in, or is operating, organized, resident or doing
business in a country or territory that is, or whose government is, the subject
of the CAATSA Sanctions Programs.

 

(l)            Sarbanes-Oxley Act. The Company and its subsidiaries are in
compliance with any and all applicable requirements of the Sarbanes-Oxley Act,
that are effective as of the date hereof, and any and all applicable rules and
regulations promulgated by the SEC thereunder that are applicable to the Company
and its subsidiaries and effective as of the date hereof.

 

(m)          BHCA. Neither the Company nor any of its Subsidiaries or affiliates
is subject to BHCA and to regulation by the Board of Governors of the Federal
Reserve System (the “Federal Reserve). Neither the Company nor any of its
Subsidiaries or affiliates owns or controls, directly or indirectly, 5% or more
of the outstanding shares of any class of voting securities or 25% or more of
the total equity of a bank or any entity that is subject to the BHCA and to
regulation by the Federal Reserve. Neither the Company nor any of its
Subsidiaries or affiliates exercises a controlling influence over the management
or policies of a bank or any entity that is subject to the BHCA and to
regulation by the Federal Reserve.

 

 10

 

(n)           No Disagreements with Accountants and Lawyers. There are no
material disagreements of any kind presently existing, or reasonably anticipated
by the Company to arise, between the Company and the accountants and lawyers
formerly or presently employed by the Company and the Company is current with
respect to any fees owed to its accountants and lawyers which could affect the
Company’s ability to perform any of its obligations under any of the Transaction
Documents.

 

(o)           Compliance with Applicable Laws. The operations of the Company and
its Subsidiaries are and have been conducted at all times in compliance
Applicable Laws and no action, suit or proceeding by or before any court or
governmental agency, authority or body or any arbitrator involving the Company
or any of its Subsidiaries with respect to Applicable Laws is pending or, to the
knowledge of the Company, threatened.

 

(p)           No Conflicts with Sanctions Laws. Neither the Company nor any of
its Subsidiaries, nor any director, officer, employee, agent, affiliate or other
person associated with or acting on behalf of the Company or any of its
Subsidiaries or affiliates is, or is directly or indirectly owned or controlled
by, a Person that is currently the subject or the target of any Sanctions Laws
or is a Blocked Person; neither the Company, any of its Subsidiaries, nor any
director, officer, employee, agent, affiliate or other person associated with or
acting on behalf of the Company or any of its Subsidiaries or affiliates, is
located, organized or resident in a country or territory that is the subject or
target of a comprehensive embargo, Sanctions Laws or Sanctions Programs
prohibiting trade with a Sanctioned Country; the Company maintains in effect and
enforces policies and procedures designed to ensure compliance by the Company
and its Subsidiaries with applicable Sanctions Laws and Sanctions Programs;
neither the Company, any of its Subsidiaries, nor any director, officer,
employee, agent, affiliate or other person associated with or acting on behalf
of the Company or any of its Subsidiaries or affiliates, acting in any capacity
in connection with the operations of the Company, conducts any business with or
for the benefit of any Blocked Person or engages in making or receiving any
contribution of funds, goods or services to, from or for the benefit of any
Blocked Person, or deals in, or otherwise engages in any transaction relating
to, any property or interests in property blocked or subject to blocking
pursuant to any applicable Sanctions Laws or Sanctions Programs; no action of
the Company or any of its Subsidiaries in connection with (i) the execution,
delivery and performance of this Agreement and the other Transaction Documents,
(ii) the issuance and sale of the Securities, or (iii) the direct or indirect
use of proceeds from the Securities or the consummation of any other transaction
contemplated hereby or by the other Transaction Documents or the fulfillment of
the terms hereof or thereof, will result in the proceeds of the transactions
contemplated hereby and by the other Transaction Documents being used, or
loaned, contributed or otherwise made available, directly or indirectly, to any
Subsidiary, joint venture partner or other person or entity, for the purpose of
(i) unlawfully funding or facilitating any activities of or business with any
person that, at the time of such funding or facilitation, is the subject or
target of Sanctions Laws or Sanctions Programs, (ii) unlawfully funding or
facilitating any activities of or business in any Sanctioned Country or (iii) in
any other manner that will result in a violation by any Person (including any
Person participating in the transaction, whether as underwriter, advisor,
investor or otherwise) of Sanctions Laws or Sanctions Programs. For the past 5
years, the Company and its Subsidiaries have not knowingly engaged in and are
not now knowingly engaged in any dealings or transactions with any person that
at the time of the dealing or transaction is or was the subject or the target of
Sanctions Laws, Sanctions Programs or with any Sanctioned Country.

 

 11

 

(q)           No Conflicts with Anti-Bribery Laws. Neither the Company nor any
of the Subsidiaries has made any contribution or other payment to any official
of, or candidate for, any federal, state or foreign office in violation of any
law. Neither the Company, nor any of its Subsidiaries or affiliates, nor any
director, officer, agent, employee or other person associated with or acting on
behalf of the Company, or any of its Subsidiaries or affiliates, has (i) used
any funds for any unlawful contribution, gift, entertainment or other unlawful
expense relating to political activity, (ii) made any direct or indirect
unlawful payment to any foreign or domestic government official or employee, to
any employee or agent of a private entity with which the Company does or seeks
to do business (a “Private Sector Counterparty”) or to foreign or domestic
political parties or campaigns, (iii) violated or is in violation of any
provision of any Anti-Bribery Laws, (iv) taken, is currently taking or will take
any action in furtherance of an offer, payment, gift or anything else of value,
directly or indirectly, to any person while knowing that all or some portion of
the money or value will be offered, given or promised to anyone to improperly
influence official action, to obtain or retain business or otherwise to secure
any improper advantage or (v) otherwise made any offer, bribe, rebate, payoff,
influence payment, unlawful kickback or other unlawful payment; the Company and
each of its respective Subsidiaries has instituted and has maintained, and will
continue to maintain, policies and procedures reasonably designed to promote and
achieve compliance with the laws referred to in (iii) above and with this
representation and warranty; none of the Company, nor any of its Subsidiaries or
affiliates will directly or indirectly use the proceeds of the Securities or
lend, contribute or otherwise make available such proceeds to any subsidiary,
affiliate, joint venture partner or other person or entity for the purpose of
financing or facilitating any activity that would violate the laws and
regulations referred to in (iii) above; to the knowledge of the Company, there
are, and have been, no allegations, investigations or inquiries with regard to a
potential violation of any Anti-Bribery Laws by the Company, its Subsidiaries or
affiliates, or any of their respective current or former directors, officers,
employees, stockholders, representatives or agents, or other persons acting or
purporting to act on their behalf.

 

(r)            No Disqualification Events. With respect to Securities to be
offered and sold hereunder in reliance on Rule 506(b) under the 1933 Act
(“Regulation D Securities”), none of the Company, any of its predecessors, any
affiliated issuer, any director, executive officer, other officer of the Company
participating in the offering hereunder, any beneficial owner of 20% or more of
the Company’s outstanding voting equity securities, calculated on the basis of
voting power, nor any promoter (as that term is defined in Rule 405 under the
1933 Act) connected with the Company in any capacity at the time of sale (each,
an “Issuer Covered Person” and, together, “Issuer Covered Persons”) is subject
to any of the “Bad Actor” disqualifications described in Rule 506(d)(l)(i) to
(viii) under the 1933 Act (a “Disqualification Event”), except for a
Disqualification Event covered by Rule 506(d)(2) or (d)(3). The Company has
exercised reasonable care to determine whether any Issuer Covered Person is
subject to a Disqualification Event. The Company has complied, to the extent
applicable, with its disclosure obligations under Rule 506(e), and has furnished
to the Investor a copy of any disclosures provided thereunder.

 

 12

 

(s)           Acknowledgment Regarding Investor’s Purchase of the Convertible
Debenture. The Company acknowledges and agrees that the Investor is acting
solely in the capacity of an arm’s length purchaser with respect to this
Agreement and the transactions contemplated hereby. The Company further
acknowledges that the Investor is not acting as a financial advisor or fiduciary
of the Company (or in any similar capacity) with respect to this Agreement and
the transactions contemplated hereby and any advice given by the Investor or any
of their respective representatives or agents in connection with this Agreement
and the transactions contemplated hereby is merely incidental to the Investor’s
purchase of the Securities. The Company further represents to the Investor that
the Company’s decision to enter into this Agreement has been based solely on the
independent evaluation by the Company and its representatives.

 

(t)            No General Solicitation. Neither the Company, nor any of its
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 under the Securities Act) in connection with the offer or sale of
the Securities.

 

(u)           No Integrated Offering. Neither the Company, nor any of its
affiliates, nor any person acting on its or their behalf has, directly or
indirectly, made any offers or sales of any security or solicited any offers to
buy any security, under circumstances that would require registration of the
Securities under the Securities Act or cause this offering of the Securities to
be integrated with prior offerings by the Company for purposes of the Securities
Act.

 

(v)           Employee Relations. Neither the Company nor any of its
subsidiaries is involved in any labor dispute or, to the knowledge of the
Company or any of its subsidiaries, is any such dispute threatened. None of the
Company’s or its subsidiaries’ employees is a member of a union and the Company
and its subsidiaries believe that their relations with their employees are good.

 

(w)          Intellectual Property Rights. The Company and its 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, inventions, licenses, approvals, governmental
authorizations, trade secrets and rights necessary to conduct their respective
businesses as now conducted. The Company and its subsidiaries do not have any
knowledge of any infringement by the Company or its subsidiaries of trademark,
trade name rights, patents, patent rights, copyrights, inventions, licenses,
service names, service marks, service mark registrations, trade secret or other
similar rights of others, and, to the knowledge of the Company there is no
claim, action or proceeding being made or brought against, or to the Company’s
knowledge, being threatened against, the Company or its subsidiaries regarding
trademark, trade name, patents, patent rights, invention, copyright, license,
service names, service marks, service mark registrations, trade secret or other
infringement; and the Company and its subsidiaries are unaware of any facts or
circumstances which might give rise to any of the foregoing.

 

 13

 

(x)           Environmental Laws. The Company and its subsidiaries are (i) in
compliance with any and all applicable foreign, federal, state and local laws
and regulations relating to the protection of human health and safety, the
environment or hazardous or toxic substances or wastes, pollutants or
contaminants (“Environmental Laws”), (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.

 

(y)           Title. All real property and facilities held under lease by the
Company and its subsidiaries are held by them under valid, subsisting and
enforceable leases with such exceptions as are not material and do not interfere
with the use made and proposed to be made of such property and buildings by the
Company and its subsidiaries.

 

(z)           Insurance. The Company and each of its subsidiaries is insured by
insurers of recognized financial responsibility against such losses and risks
and in such amounts as management of the Company believes to be prudent and
customary in the businesses in which the Company and its subsidiaries are
engaged. Neither the Company nor any such subsidiary has 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 not be able to renew its
existing insurance coverage as and when such coverage expires or to obtain
similar coverage from similar insurers as may be necessary to continue its
business at a cost that would not materially and adversely affect the condition,
financial or otherwise, or the earnings, business or operations of the Company
and its subsidiaries, taken as a whole.

 

(aa)         Regulatory Permits. The Company and its subsidiaries possess all
material certificates, authorizations and permits issued by the appropriate
federal, state or foreign regulatory authorities necessary to conduct their
respective businesses, 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.

 

(bb)        Internal Accounting Controls. The Company and each of its
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
accountability, and (iii) the recorded amounts for assets are compared with the
existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.

 

(cc)         No Material Adverse Breaches, etc. Neither the Company nor any of
its subsidiaries is subject to any charter, corporate or other legal
restriction, or any judgment, decree, order, rule or regulation which in the
judgment of the Company’s officers has or is expected in the future to have a
Material Adverse Effect on the business, properties, operations, financial
condition, results of operations or prospects of the Company or its
subsidiaries. Neither the Company nor any of its subsidiaries is in breach of
any contract or agreement which breach, in the judgment of the Company’s
officers, has or is expected to have a Material Adverse Effect on the business,
properties, operations, financial condition, results of operations or prospects
of the Company or its subsidiaries.

 

 14

 

(dd)        Tax Status. The Company and each of its subsidiaries has made and
filed all federal and state income and all other tax returns, reports and
declarations required by any jurisdiction to which it is subject and (unless and
only to the extent that the Company and each of its subsidiaries has set aside
on its books provisions reasonably adequate for the payment of all unpaid and
unreported taxes) has paid all taxes and other governmental assessments and
charges that are material in amount, shown or determined to be due on such
returns, reports and declarations, except those being contested in good faith
and has set aside on its books provision reasonably adequate for the payment of
all taxes for periods subsequent to the periods to which such returns, reports
or declarations apply. There are no unpaid taxes in any material amount claimed
to be due by the taxing authority of any jurisdiction, and the officers of the
Company know of no basis for any such claim.

 

(ee)         Certain Transactions. Except for arm’s length transactions pursuant
to which the Company makes payments in the ordinary course of business upon
terms no less favorable than the Company could obtain from third parties and
other than the grant of stock options disclosed in the SEC Documents, none of
the officers, directors, or employees of the Company is presently a party to any
transaction with the Company (other than for services as employees, officers and
directors), including any contract, agreement or other arrangement providing for
the furnishing of services to or by, providing for rental of real or personal
property to or from, or otherwise requiring payments to or from any officer,
director or such employee or, to the knowledge of the Company, any corporation,
partnership, trust or other entity in which any officer, director, or any such
employee has a substantial interest or is an officer, director, trustee or
partner.

 

(ff)          Except with respect to the material terms and conditions of the
transactions contemplated by this Agreement, all of which shall be publicly
disclosed by the Company as soon as possible after the date hereof, the Company
covenants and agrees that neither the Company, nor any other person acting on
its behalf, will provide the Investor or its agents or counsel with any
information that the Company believes constitutes material non-public
information, unless prior thereto the Investor shall have entered into a written
agreement with the Company regarding the confidentiality and use of such
information. The Company understands and confirms that the Investor shall be
relying on the foregoing covenant in effecting transactions in securities of the
Company.

 

(gg)        Fees and Rights of First Refusal. The Company is not obligated to
offer the securities offered hereunder on a right of first refusal basis or
otherwise to any third parties including, but not limited to, current or former
shareholders of the Company, underwriters, brokers, agents or other third
parties.

 

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

 

(ii)           Registration Rights. No Person has any right to cause the Company
to effect the registration under the Securities Act of any securities of the
Company. There are no outstanding registration statements not yet declared
effective and there are no outstanding comment letters from the SEC or any other
regulatory agency.

 

 15

 

(jj)           Private Placement. Assuming the accuracy of the Investor’s
representations and warranties set forth in Section 3, no registration under the
Securities Act is required for the offer and sale of the Securities by the
Company to the Investor as contemplated hereby. The issuance and sale of the
Securities hereunder does not contravene the rules and regulations of the
OTCQB-MKT (the “Primary Market”).

 

(kk)         Listing and Maintenance Requirements. The Company’s Common Stock is
registered pursuant to Section 12(b) or 12(g) of the Exchange Act, and the
Company has taken no action designed to terminate, or which to its knowledge is
likely to have the effect of, terminating the registration of the Common Stock
under the Exchange Act nor has the Company received any notification that the
SEC is contemplating terminating such registration. The Company has not, in the
12 months preceding the date hereof, received notice from the Primary Market on
which the Common Stock is or has been listed or quoted to the effect that the
Company is not in compliance with the listing or maintenance requirements of
such Primary Market. The Company is, and has no reason to believe that it will
not in the foreseeable future continue to be, in compliance with all such
listing and maintenance requirements.

 

(ll)           Reporting Status. With a view to making available to the Investor
the benefits of Rule 144 or any similar rule or regulation of the SEC that may
at any time permit the Investor to sell securities of the Company to the public
without registration, and as a material inducement to the Investor’s purchase of
the Securities, the Company represents and warrants to the following: (i) the
Company is, and has been for a period of at least 90 days immediately preceding
the date hereof, subject to the reporting requirements of section 13 or 15(d) of
the Exchange Act (ii) the Company has filed all required reports under section
13 or 15(d) of the Exchange, as applicable, during the 12 months preceding the
date hereof (or for such shorter period that the Company was required to file
such reports), (iii) the Company is not an issuer defined as a “Shell Company,”
and (iv) the Company is not an issuer that has been at any time previously an
issuer defined as a “Shell Company.” For the purposes hereof, the term “Shell
Company” shall mean an issuer that meets the description defined in paragraph
(i)(1)(i) of Rule 144.

 

(mm)       Disclosure. The Company has made available to the Investor and its
counsel all the information reasonably available to the Company that the
Investor or its counsel have requested for deciding whether to acquire the
Securities. No representation or warranty of the Company contained in this
Agreement (as qualified by the Disclosure Schedule) or any of the other
Transaction Documents, and no certificate furnished or to be furnished to the
Investor at the Closing, or any due diligence evaluation materials furnished by
the Company or on behalf of the Company, including without limitation, due
diligence questionnaires, or any other documents, presentations, correspondence,
or information contains any untrue statement of a material fact or omits to
state a material fact necessary in order to make the statements contained herein
or therein not misleading in light of the circumstances under which they were
made.

 

 16

 

(nn)        Manipulation of Price. The Company has not, and to its knowledge no
one acting on its behalf has, (i) taken, directly or indirectly, any action
designed to cause or to result in the stabilization or manipulation of the price
of any security of the Company to facilitate the sale or resale of any of the
Securities, (ii) sold, bid for, purchased, or, paid any compensation for
soliciting purchases of, any of the Securities, or (iii) paid or agreed to pay
to any Person any compensation for soliciting another to purchase any other
securities of the Company, other than, in the case of clauses (ii) and (iii),
compensation paid to the Company’s placement agent in connection with the
placement of the Securities.

 

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

 

5. 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 7
and 8 of this Agreement.

 

(b)          Compliance with Applicable Laws. While the Investor owns any
Securities the Company shall comply with all Applicable Laws and will not take
any action which will cause the Investor to be in violation of any such
Applicable Laws.

 

(c)           Conduct of Business. While the Investor owns any Securities, the
business of the Company shall not be conducted in violation of Applicable Laws
and will not take any action which will cause the Investor to be in violation of
any such Applicable Laws.

 

(d)          While the Investor owns any Securities, neither the Company, nor
any of its Subsidiaries or affiliates, directors, officers, employees,
representatives or agents shall:

 

(i)          conduct any business or engage in any transaction or dealing with
or for the benefit of any Blocked Person, including the making or receiving of
any contribution of funds, goods or services to, from or for the benefit of any
Blocked Person;

 

(ii)         deal in, or otherwise engage in any transaction relating to, any
property or interests in property blocked or subject to blocking pursuant to the
applicable Sanctions Laws, Sanctions Programs, located in a Sanctioned Country,
or CAATSA or CAATSA Sanctions Programs;

 

(iii)        use any of the proceeds of the transactions contemplated by this
Agreement to finance, promote or otherwise support in any manner any illegal
activity, including, without limitation, in contravention of any Anti-Money
Laundering Laws, Sanctions Laws, Sanctioned Program, Anti-Bribery Laws or in any
Sanctioned Country.

 

 17

 

(iv)          violate, attempt to violate, or engage in or conspire to engage in
any transaction that evades or avoids, or has the purpose of evading or
avoiding, any of the Anti-Money Laundering Laws, Sanctions Laws, Sanctions
Program, Anti-Bribery Laws, CAATSA or CAATSA Sanctions Programs.

 

(e)           While the Investor owns any Securities, the Company shall maintain
in effect and enforce policies and procedures designed to ensure compliance by
the Company and its Subsidiaries and their directors, officers, employees,
agents representatives and affiliates with Applicable Laws.

 

(f)           While any Investor owns any Securities, the Company will promptly
notify the Investor in writing if any of the Company, or any of its Subsidiaries
or affiliates, directors, officers, employees, representatives or agents, shall
become a Blocked Person, or become directly or indirectly owned or controlled by
a Blocked Person.

 

(g)          The Company shall provide such information and documentation it may
have as the Investor or any of their affiliates may reasonably request to
satisfy compliance with Applicable Laws.

 

(h)          The covenants set forth above shall be ongoing while the Investor
owns any Securities. The Company shall promptly notify the Investor in writing
should it become aware during such period (a) of any changes to these covenants,
or (b) if it cannot comply with the covenants set forth herein. The Company
shall also promptly notify the Investor in writing during such period should it
become aware of an investigation, litigation or regulatory action relating to an
alleged or potential violation of Applicable Laws.

 

(i)            Form D. 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 the
Investor promptly after such filing. The Company shall, on or before the Closing
Date, take such action as the Company shall reasonably determine is necessary to
qualify the Securities, or obtain an exemption for the Securities for sale to
the Investor at the Closing pursuant to this Agreement under applicable
securities or “Blue Sky” laws of the states of the United States, and shall
provide evidence of any such action so taken to the Investor on or prior to the
Closing Date.

 

(j)            Reporting Status. With a view to making available to the Investor
the benefits of Rule 144 or any similar rule or regulation of the SEC that may
at any time permit the Investor to sell securities of the Company to the public
without registration, and as a material inducement to the Investor’s purchase of
the Securities, the Company represents, warrants, and covenants to the
following:

 

(i)          The Company is subject to the reporting requirements of section 13
or 15(d) of the Exchange Act and has filed all required reports under section 13
or 15(d) of the Exchange Act during the 12 months prior to the date hereof (or
for such shorter period that the issuer was required to file such reports),
other than Form 8-K reports;

 

(ii)         From the date hereof until all the Securities either have been sold
by the Investor, or may permanently be sold by the Investor without any
restrictions pursuant to Rule 144, (the “Registration Period”) the Company shall
file with the SEC in a timely manner all required reports under section 13 or
15(d) of the Exchange Act and such reports shall conform to the requirement of
the Exchange Act and the SEC for filing thereunder;

 

 18

 

(iii)        The Company shall furnish to the Investor so long as the Investor
owns Securities, promptly upon request, (i) a written statement by the Company
that it has complied with the reporting requirements of Rule 144, (ii) a copy of
the most recent annual or quarterly report of the Company and such other reports
and documents so filed by the Company, and (iii) such other information as may
be reasonably requested to permit the Investor to sell such securities pursuant
to Rule 144 without registration; and

 

(iv)        During the Registration Period the Company shall not terminate its
status as an issuer required to file reports under the Exchange Act even if the
Exchange Act or the rules and regulations thereunder would otherwise permit such
termination.

 

(k)           Use of Proceeds. The Company shall use the proceeds from the
issuance of the Debenture hereunder for working capital and other general
corporate purposes. So long as any amounts are outstanding on the Debenture, the
Company shall not pay any related party obligations all of which related party
obligations shall be subordinated to the obligations owed to the Investor.
Neither the Company nor any subsidiary shall, directly or indirectly, use any
portion of the proceeds of the transactions contemplated herein, or lend,
contribute, facilitate or otherwise make available such proceeds to any Person
(i) to make any payment towards any indebtedness or other obligations of the
Company or subsidiary, except to the extent set forth in the Use of Proceeds
Confirmation; (ii) to pay any obligations of any nature or kind due or owing to
any officers, directors, employees, or shareholders of the Company or
subsidiary, other than salaries payable in the ordinary course of business of
the Company; (iii) to fund, either directly or indirectly, any activities or
business of or with any Blocked Person, in any Sanctioned Country, (iv) or in
any manner or in a country or territory, that, at the time of such funding, is,
or whose government is, the subject of CAATSA Sanctions Programs or (iv) in any
other manner that will result in a violation of Anti-Money Laundering Laws,
Sanctions Laws, Sanctioned Program, Anti-Bribery Laws or CAATSA Sanctions
Programs. .

 

(1)           Reservation of Shares. On the date hereof, the Company shall
reserve for issuance to the Investor 875,000 shares for issuance upon
conversions of the Convertible Denture and in the event that the Warrant is
issued the Company shall also reserve such Warrant Shares for issuance to the
Investor (the “Share Reserve”). The Company represents that it has sufficient
authorized and unissued shares of Common Stock available to create the Share
Reserve after considering all other commitments that may require the issuance of
Common Stock. The Company shall take all action reasonably necessary to at all
times have authorized, and reserved for the purpose of issuance, such number of
shares of Common Stock as shall be necessary to effect the full conversion of
the Convertible Debenture and the Warrant in the event that the Warrant is
issued. If at any time the Share Reserve is insufficient to effect the full
conversion of the Convertible Debenture and the Warrant, if applicable, the
Company shall increase the Share Reserve accordingly. If the Company does not
have sufficient authorized and unissued shares of Common Stock available to
increase the Share Reserve, the Company shall call and hold a special meeting of
the shareholders within 30 days of such occurrence, for the sole purpose of
increasing the number of shares authorized. The Company’s management shall
recommend to the shareholders to vote in favor of increasing the number of
shares of Common Stock authorized. Management shall also vote all of its shares
in favor of increasing the number of authorized shares of Common Stock.

 

 19

 

(m)          Listings or Quotation. The Company’s Common Stock shall be listed
or quoted for trading on the Primary Market. The Company shall promptly secure
the listing of all of the Registrable Securities (as defined in the Registration
Rights Agreement) upon each national securities exchange and automated quotation
system, if any, upon which the Common Stock is 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.

 

(n)           Fees and Expenses.

 

(i)          The Company shall pay all of its costs and expenses incurred by it
connection with the negotiation, investigation, preparation, execution and
delivery of the Transaction Documents.

 

(ii)         On the Closing Date, the Company shall pay to YA Global II SPV LLC
{as designee of the Investor, the “Designee”) a due diligence and structuring
fee of $50,000 which amount shall be deducted by the Investor from the proceeds
of the Purchase Price of the Convertible Debenture and paid by the Investor to
Designee on behalf of the Company.

 

(iii)        In the event that the registration statement to be filed pursuant
to the Registration Rights Agreement is not filed by April 1, 2019 the Company
shall issue to the Investor the Warrant.

 

(o)           Corporate Existence. So long as the Convertible Debenture remains
outstanding, the Company shall not directly or indirectly consummate any merger,
reorganization, restructuring, reverse stock split consolidation, sale of all or
substantially all of the Company’s assets or any similar transaction or related
transactions (each such transaction, an “Organizational Change”) unless, prior
to the consummation an Organizational Change, the Company obtains the written
consent of the Investor. In any such case, the Company will make appropriate
provision with respect to such holders’ rights and interests to insure that the
provisions of this Section 5(o) will thereafter be applicable to the Convertible
Debenture.

 

(p)          Transactions With Affiliates. So long as the Convertible Debenture
is outstanding, the Company shall not, and shall cause each of its subsidiaries
not to, enter into, amend, modify or supplement, or permit any subsidiary to
enter into, amend, modify or supplement any agreement, transaction, commitment,
or arrangement with any of its or any subsidiary’s officers, directors, person
who were officers or directors at any time during the previous 2 years,
stockholders who beneficially own 5% or more of the Common Stock, or Affiliates
(as defined below) or with any individual related by blood, marriage, or
adoption to any such individual or with any entity in which any such entity or
individual owns a 5% or more beneficial interest (each a “Related Party”),
except for (a) customary employment arrangements and benefit programs on
reasonable terms, (b) any investment in an Affiliate of the Company, (c) any
agreement, transaction, commitment, or arrangement on an arms-length basis on
terms no less favorable than terms which would have been obtainable from a
person other than such Related Party, (d) any agreement, transaction,
commitment, or arrangement which is approved by a majority of the disinterested
directors of the Company. “Affiliate” for purposes hereof means, with respect to
any person or entity, another person or entity that, directly or indirectly, (i)
has a 10% or more equity interest in that person or entity, (ii) has 10% or more
common ownership with that person or entity, (iii) controls that person or
entity, or (iv) shares common control with that person or entity. “Control” or
“controls” for purposes hereof means that a person or entity has the power,
direct or indirect, to conduct or govern the policies of another person or
entity.

 

 20

 

(q)           Transfer Agent. The Company covenants and agrees that, in the
event that the Company’s agency relationship with the transfer agent should be
terminated for any reason prior to a date which is 2 years after the Closing
Date, the Company shall immediately appoint a new transfer agent and shall
require that the new transfer agent execute and agree to be bound by the terms
of the Irrevocable Transfer Agent Instructions (as defined herein).

 

(r)            Restriction on Issuance of the Capital Stock. So long as the
Convertible Debenture is outstanding, the Company shall not, without the prior
written consent of the Investor, (i) issue or sell shares of Common Stock or
Preferred Stock without consideration or for a consideration per share less than
the bid price of the Common Stock determined immediately prior to its issuance,
(ii) issue any preferred stock, warrant, option, right, contract, call, or other
security or instrument granting the holder thereof the right to acquire Common
Stock without consideration or for a consideration less than such Common Stock’s
Bid Price, as quoted by Bloomberg, LP and determined immediately prior to its
issuance, (iii) enter into any security instrument granting the holder a
security interest in any and all assets of the Company, or (iv) file any
registration statement on Form S-8.

 

(s)           Neither the Investor nor any of its affiliates have an open short
position in the Common Stock of the Company, and the Investor agrees that it
shall not, and that it will cause its affiliates not to, engage in any short
sales of or hedging transactions with respect to the Common Stock as long as any
Convertible Debenture shall remains outstanding.

 

(t)           Additional Registration Statements. Until the effective date of
the initial Registration Statement, the Company will not file a registration
statement under the Securities Act relating to securities that are not the
Securities without including the Registrable Securities (as this term is defined
in the Registration Rights Agreement).

 

(u)          Review of Public Disclosures. All SEC filings (including, without
limitation, all filings required under the Exchange Act, which include Forms
10-Q and 10-QSB, 10-K and 10K-SB, 8-K, etc) and other public disclosures made by
the Company, including, without limitation, all press releases, investor
relations materials, and scripts of analysts meetings and calls, shall be
reviewed and approved for release by the Company’s attorneys and, if containing
financial information, the Company’s independent certified public accountants.

 

 21

 

(v)           Disclosure of Transaction. Within 4 Business Day following the
date of this Agreement, the Company shall file a Current Report on Form 8-K
describing the terms of the transactions contemplated by the Transaction
Documents in the form required by the Exchange Act and attaching the material
Transaction Documents (including, without limitation, this Agreement, the form
of the Convertible Debenture, and the form of the Registration Rights Agreement)
as exhibits to such filing.

 

(w)          Granting of Security. So long as any portion of Convertible
Debenture is outstanding neither the Company nor any subsidiary may grant, issue
or allow to exist any security interest in any or all of the assets of the
Company and or subsidiary.

 

6.          TRANSFER AGENT INSTRUCTIONS.

 

The Company shall issue the Irrevocable Transfer Agent Instructions to its
transfer agent in a form acceptable to the Investor.

 

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

 

The obligation of the Company hereunder to issue and sell the Convertible
Debenture to the Investor 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 its sole discretion:

 

(a)           The Investor shall have executed the Transaction Documents and
delivered them to the Company.

 

(b)          The Investor shall have delivered to the Company the Purchase Price
for the Convertible Debenture, minus any fees to be paid directly from the
proceeds the Closing as set forth herein, by wire transfer of immediately
available U.S. funds pursuant to the wire instructions provided by the Company.

 

(c)          The representations and warranties of the Investor 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), and the Investor shall have
performed, satisfied and complied in all material respects with the covenants,
agreements and conditions required by this Agreement to be performed, satisfied
or complied with by the Investor at or prior to the Closing Date.

 

 22

 

8.          CONDITIONS TO THE INVESTOR’S OBLIGATION TO PURCHASE.

 

(a)           The obligation of the Investor hereunder to purchase the
Convertible Debenture 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 Investor’s sole benefit and may be waived by the
Investor at any time in its sole discretion:

 

(a)           The Company, and the Company’s Transfer Agent as applicable, shall
have executed the Transaction Documents and delivered the same to the Investor.

 

(b)          The Common Stock shall be authorized for quotation or trading on
the Primary Market, trading in the Common Stock shall not have been suspended
for any reason.

 

(c)           The representations and warranties of the Company shall be true
and correct in all material respects (except to the extent that any of such
representations and warranties is already qualified as to materiality in Section
4 above, in which case, such representations and warranties shall be true and
correct without further qualification) 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) and the Company shall have
performed, satisfied and complied in all material respects with the covenants,
agreements and conditions required by this Agreement to be performed, satisfied
or complied with by the Company at or prior to the Closing Date.

 

(d)           The Company shall have executed and delivered to the Investor the
Convertible Debenture.

 

(e)           The Investor shall have received an opinion of counsel from
counsel to the Company in a form satisfactory to the Investor.

 

(f)           The Company shall have provided to the Investor an executed
Officer’s Certificate in a form satisfactory to the Investor.

 

(g)          The Company shall have provided Investor a true copy of a
certificate of good standing evidencing the formation and good standing of the
Company from the secretary of state (or comparable office) from the jurisdiction
in which the Company is incorporated, as of a date within 10 days of the Closing
Date.

 

(h)          The Company shall have delivered to the Investor a certificate,
executed by an officer of the Company in a form satisfactory to the Investor and
dated as of the Closing Date, as to (i) the Company’s Article of Incorporation,
(ii) the Bylaws of the Company, (iii) the resolutions as adopted by the
Company’s Board of Directors in a form reasonably acceptable to the Investor,
(iv) the Company’s Certificate of Good, each as in effect at the Closing,

 

(i)            The Company shall have created the Share Reserve.

 

 23

 

9. INDEMNIFICATION.

 

(a)           In consideration of the Investor’s execution and delivery of this
Agreement and acquiring the Convertible Debenture the Conversion Shares upon
conversion of the Debenture, and if issued the Warrant and the Warrant Shares
issued upon exercise of the Warrant and in addition to all of the Company’s
other obligations under this Agreement, the Company shall defend, protect,
indemnify and hold harmless the Investor, and all of their officers, directors,
employees and agents (including, without limitation, those retained in
connection with the transactions contemplated by this Agreement) (collectively,
the “Investor 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 Investor
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 the Investor Indemnitees or any of them
as a result of, or arising out of, or relating to (a) any misrepresentation or
breach of any representation or warranty made by the Company in this Agreement,
the Convertible Debenture or the other Transaction Documents or any other
certificate, instrument or document contemplated hereby or thereby, (b) any
breach of any covenant, agreement or obligation of the Company contained in this
Agreement, or the other Transaction Documents or any other certificate,
instrument or document contemplated hereby or thereby, or (c) any cause of
action, suit or claim brought or made against such Investor Indemnitee and
arising out of or resulting from the execution, delivery, performance or
enforcement of this Agreement or any other instrument, document or agreement
executed pursuant hereto by any of the parties hereto, any transaction financed
or to be financed in whole or in part, directly or indirectly, with the proceeds
of the issuance of the Convertible Debenture or the status of the Investor or
holder of the Convertible Debenture or the Conversion Shares, as an Investor of
Convertible Debentures in the Company. 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.

 

(b)           In consideration of the Company’s execution and delivery of this
Agreement, and in addition to all of the Investor’s other obligations under this
Agreement, the Investor shall defend, protect, indemnify and hold harmless the
Company and all of its officers, directors, employees and agents (including,
without limitation, those retained in connection with the transactions
contemplated by this Agreement) (collectively, the “Company Indemnitees’) from
and against any and all Indemnified Liabilities incurred by the Indemnitees or
any of them as a result of, or arising out of, or relating to (a) any
misrepresentation or breach of any representation or warranty made by the
Investor(s) in this Agreement, instrument or document contemplated hereby or
thereby executed by the Investor, (b) any breach of any covenant, agreement or
obligation of the Investor(s) contained in this Agreement, the Transaction
Documents or any other certificate, instrument or document contemplated hereby
or thereby executed by the Investor, or (c) any cause of action, suit or claim
brought or made against such Company Indemnitee based on material
misrepresentations or due to a material breach and arising out of or resulting
from the execution, delivery, performance or enforcement of this Agreement, the
Transaction Documents or any other instrument, document or agreement executed
pursuant hereto by any of the parties hereto. To the extent that the foregoing
undertaking by the Investor may be unenforceable for any reason, the Investor
shall make the maximum contribution to the payment and satisfaction of each of
the Indemnified Liabilities, which is permissible under applicable law.

 

 24

 

10. COMPANY LIABILITY.

 

(a)           The Company shall be liable for all debt, principal, interest, and
other amounts owed to the Investor by Company pursuant to this Agreement, the
Transaction Documents, or any other agreement, whether absolute or contingent,
due or to become due, now existing or hereafter arising (the “Obligations”) and
the Investor may proceed against the Company to enforce the Obligations without
waiving its right to proceed against any other party. This Agreement and the
Debenture are a primary and original obligation of the Company and shall remain
in effect notwithstanding future changes in conditions, including any change of
law or any invalidity or irregularity in the creation or acquisition of any
Obligations or in the execution or delivery of any agreement between the
Investor and the Company. The Company shall be liable for existing and future
Obligations as fully as if all of the funds advanced by the Investor hereunder
were advanced to the Company.

 

(b)           Notwithstanding any other provision of this Agreement or any other
Transaction Documents the Company irrevocably waives, until all obligations are
paid in full, all rights that it may have at law or in equity (including,
without limitation, any law subrogating the Company to the rights of Investor
under the Transaction Documents) to seek contribution, indemnification, or any
other form of reimbursement from the Company, or any other person now or
hereafter primarily or secondarily liable for any of the Obligations, for any
payment made by the Company with respect to the Obligations in connection with
the Transaction Documents or otherwise and all rights that it might have to
benefit from, or to participate in, any security for the Obligations as a result
of any payment made by the Company with respect to the Obligations in connection
with the Transaction Documents or otherwise. Any agreement providing for
indemnification, reimbursement or any other arrangement prohibited under this
Section shall be null and void. If any payment is made to the Company in
contravention of this Section, the Company shall hold such payment in trust for
the Investor and such payment shall be promptly delivered to the Investor for
application to the Obligations, whether matured or unmatured.

 

11. GOVERNING LAW: MISCELLANEOUS.

 

(a)           Governing Law: Mandatory Jurisdiction. TO INDUCE INVESTOR TO
PURCHASE THE DEBENTURE, THE COMPANY IRREVOCABLY AGREES THAT ANY DISPUTE ARISING
UNDER, RELATING TO, OR IN CONNECTION WITH, DIRECTLY OR INDIRECTLY, THIS
AGREEMENT OR RELATED TO ANY MATTER WHICH IS THE SUBJECT OF OR INCIDENTAL TO THIS
AGREEMENT ANY OTHER TRANSACTION DOCUMENT (WHETHER OR NOT SUCH CLAIM IS BASED
UPON BREACH OF CONTRACT OR TORT) SHALL BE SUBJECT TO THE EXCLUSIVE JURISDICTION
AND VENUE OF THE STATE COURTS SITTING IN UNION COUNTY, NEW JERSEY AND THE
FEDERAL COURTS SITTING IN NEWARK, NEW JERSEY; PROVIDED, HOWEVER, INVESTOR MAY,
AT ITS SOLE OPTION, ELECT TO BRING ANY ACTION IN ANY OTHER JURISDICTION. THIS
PROVISION IS INTENDED TO BE A “MANDATORY” FORUM SELECTION CLAUSE AND GOVERNED BY
AND INTERPRETED CONSISTENT WITH NEW JERSEY LAW. THE COMPANY HEREBY CONSENTS TO
THE EXCLUSIVE JURISDICTION AND VENUE OF ANY STATE OR FEDERAL COURT HAVING ITS
SITUS IN SAID COUNTY, AND WAIVES ANY OBJECTION BASED ON FORUM NON CONVENIENS.
THE COMPANY HEREBY WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS AND CONSENT
THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE BY CERTIFIED MAIL, RETURN RECEIPT
REQUESTED, DIRECTED TO THE COMPANY AS SET FORTH HEREIN IN THE MANNER PROVIDED BY
APPLICABLE STATUTE, LAW, RULE OF COURT OR OTHERWISE

 

 25

 

(b)          Counterparts. This Agreement may be executed in 2 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
physically or electronically delivered to the other party.

 

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

 

(d)           Headings. The headings of this Agreement are for convenience of
reference and shall not form part of, or affect the interpretation of, this
Agreement.

 

(e)           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.

 

(f)           Entire Agreement, Amendments. This Agreement supersedes all other
prior oral or written agreements between the Investor, the Company, their
affiliates and persons acting on their behalf with respect to the matters
discussed herein, and this Agreement and the instruments referenced herein
contain the entire understanding of the parties with respect to the matters
covered herein and therein and, except as specifically set forth herein or
therein, neither the Company nor any Investor makes any representation,
warranty, covenant or undertaking with respect to such matters. No provision of
this Agreement may be waived or amended other than by an instrument in writing
signed by the party to be charged with enforcement.

 

 26

 

12. 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 upon: (i) receipt, when delivered
personally, (ii) 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, or (iii) receipt, when sent by electronic mail (provided
that the electronic mail transmission is not returned in error or the sender is
not otherwise notified of any error in transmission. The addresses and e-mail
addresses for such communications shall be:

 

If to the Company, to:

Seedo Corp.
HaCarmel 2
Yokneam, Israel 20692
Attention: Zohar Levy
Telephone: +972 526 642 2228
Email: zohar@seedolab.com

 

With a copy to: Law Offices of David E. Price, PC
#3 Bethesda Metro Center – Suite 700
Bethesda,MD 20814
Attention: David E. Price, Esq.
Telephone: (202)536-5191
Email: David@TopTier.eu     If to the Investor:

YAII PN, Ltd.

c/o Yorkville Advisors Global, LP

1012 Springfield Avenue

Mountainside, NJ 07092

Attention: Matthew Beckman

Telephone: (732)213-1864

Email: mbeckman@yorkvilleadvisors.com

 

With a copy to:

David Gonzalez, Esq.

1012 Springfield Avenue

Mountainside, NJ 07092

Telephone: (201)536-5109

Email: dgonzalez@yorkvilleadvisors.com

 

 

or at such other address and/or electronic email address and/or to the attention
of such other person as the recipient party has specified by written notice
given to each other party 3 Business Days prior to the effectiveness of such
change. Written confirmation of receipt (i) given by the recipient of such
notice, consent, waiver or other communication, (ii) mechanically or
electronically generated by the sender’s computer containing the time, date,
recipient’s electronic mail address and the text of such electronic mail or
(iii) provided by a nationally recognized overnight delivery service, shall be
rebuttable evidence of personal service, receipt by electronic mail or receipt
from a nationally recognized overnight delivery service in accordance with
clause (i), (ii) or (iii) above, respectively.

 

 27

 

(a)           Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties and their respective successors and assigns.
Neither the Company nor any Investor shall assign this Agreement or any rights
or obligations hereunder without the prior written consent of the other party
hereto.

 

(b)           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.

 

(c)           Survival. Unless this Agreement is terminated under Section 11(f),
all agreements, representations and warranties contained in this Agreement or
made in writing by or on behalf of any party in connection with the transactions
contemplated by this Agreement shall survive the execution and delivery of this
Agreement and the Closing.

 

(d)           Publicity. The Company and the Investor shall have the right to
approve, before issuance any press release or any other public statement with
respect to the transactions contemplated hereby made by any party; provided,
however, that the Company shall be entitled, without the prior approval of the
Investor, to issue any press release or other public disclosure with respect to
such transactions required under applicable securities or other laws or
regulations (the Company shall use its best efforts to consult the Investor in
connection with any such press release or other public disclosure prior to its
release and Investor shall be provided with a copy thereof upon release
thereof)-

 

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

 

(f)           Termination. In the event that the Closing shall not have occurred
on or before 5th business days from the date hereof due to the Company’s or the
Investor’s failure to satisfy the conditions set forth in Sections 7 and 8 above
(and the non-breaching party’s failure to waive such unsatisfied condition(s)),
the non-breaching party shall have the option to terminate this Agreement with
respect to such breaching party at the close of business on such date without
liability of any party to any other party.

 

(g)           Brokerage. The Company represents that no broker, agent finder or
other party has been retained by it in connection with the transactions
contemplated hereby and that no other fee or commission has been agreed by the
Company to be paid for or on account of the transactions contemplated hereby.

 

(h)          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.

 

[REMAINDER PAGE INTENTIONALLY LEFT BLANK]

 

 28

 

IN WITNESS WHEREOF, each of the Investor and the Company has affixed their
respective signatures to this Convertible Debenture Purchase Agreement as of the
date first written above.

 

  COMPANY:
SEEDO CORP.   By:  [ex102101_v1.jpg]   Name:  Zohar Levy   Title: Chief
Executive Officer        

INVESTOR:
YAII PN, LTD.

 

  By: Yorkville Advisors Global, LP   Its: Investment Manager       By:
Yorkville Advisors Global II, LLC   Its: General Partner       By:
 [ex102102_v1.jpg]   Name:  David Gonzalez   Title: Member & General Council

 

 29

 

LIST OF EXHIBITS:

 

Disclosure Schedule

 

Exhibit A – Form of Convertible Debenture

 

Exhibit B – Form of Warrant

 

 

 

DISCLOSURE SCHEDULE

 

Schedule 4(a) – Subsidiaries –

 

● Urban Auto Grow Inc.: Nevada USA, 100% holding, no address (not active).

 

● E.L. Urban Auto Grow LTD.: Nicosia, Cyprus, 100% holding, no address (not
active).

 

● Seedo USA LLC: Las Vegas USA, 100% holding, no address (not active).

 

● Seedo US Inc.: Colorado U.S.A, 100% holding, 260 Madison Ave, Suite 204.

 

● Eroll Grow Tech Ltd.: HaCarmel St 2, Yokne’am Illit, Israel, 100% holding.

 

Schedule 4(b) – Security Interests Granted – None

 

Schedule 4(c) – Capitalization – None

 

--------------------------------------------------------------------------------

 

EXHIBIT A

 

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EXHIBIT B