Exhibit 10.1

 

COMMON STOCK PURCHASE AGREEMENT

 

This COMMON STOCK PURCHASE AGREEMENT is made and entered into as of February 11,
2015 (this “Agreement”), by and between Beaufort Capital Partners, LLC, a New
York limited liability company (the “Investor”), and Soul and Vibe Interactive
Inc., a corporation organized and existing under the laws of the state of Nevada
(the “Company”). 

 

RECITALS

 

WHEREAS, the parties desire that, upon the terms and subject to the conditions
and limitations set forth herein, the Company may issue and sell to the
Investor, from time to time as provided herein, and the Investor shall purchase
from the Company, up to $2,000,000 of newly issued shares of the Company’s
common stock, $0.001 par value (“Common Stock”); 

 

WHEREAS, such investments will be made in reliance upon the provisions of the
Securities Act and upon such other exemption from the registration requirements
of the Securities Act as may be available with respect to any or all of the
investments in Common Stock to be made hereunder; and

 

WHEREAS, the parties hereto are concurrently entering into a Registration Rights
Agreement in the form of Exhibit A  hereto (the “Registration Rights
Agreement”), pursuant to which the Company shall register the Registrable
Securities (as defined in the Registration Rights Agreement), upon the terms and
subject to the conditions set forth therein;

 

NOW, THEREFORE, the parties hereto, intending to be legally bound, hereby agree
as follows:

 

ARTICLE I
DEFINITIONS

 

Capitalized terms used in this Agreement shall have the meanings ascribed to
such terms in Annex I hereto, and hereby made a part hereof, or as otherwise set
forth in this Agreement.

 

ARTICLE II
PURCHASE AND SALE OF COMMON STOCK

 

Section 2.1.           Purchase and Sale of Stock.  Upon the terms and subject
to the conditions of this Agreement, during the Investment Period, the Company
in its discretion may issue and sell to the Investor, and the Investor shall
purchase from the Company, up to $2,000,000 (the “Total Commitment”) of duly
authorized, validly issued, fully paid and nonassessable shares of Common Stock
(the “Aggregate Limit”), by the delivery to the Investor of Draw Down Notices as
provided in Article III hereof.

 

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Section 2.2.           Closing Date; Settlement Dates. This Agreement shall
become effective and binding (the “Closing”) upon the delivery of counterpart
signature pages of this Agreement and the Registration Rights Agreement executed
by each of the parties hereto and thereto, and the delivery of all other
documents, instruments and writings required to be delivered at the Closing, in
each case as provided in Section 7.1, to the offices of Sichenzia Ross Friedman
Ference LLP, 61 Broadway, New York, NY 10006, at 5:00 p.m., New York City time,
on the Closing Date. In consideration of and in express reliance upon the
representations, warranties and covenants contained in, and upon the terms and
subject to the conditions of, this Agreement, during the Investment Period the
Company shall issue and sell to the Investor, and the Investor shall purchase
from the Company, the Shares in respect of each Draw Down. The issuance and sale
of Shares to the Investor pursuant to any Draw Down shall occur on the
applicable Settlement Date in accordance with Section 3.5, provided  that all of
the conditions precedent thereto set forth in Article VII theretofore shall have
been fulfilled on or prior to such Settlement Date.

 

Section 2.3.           Initial Public Announcements and Required Filings.  The
Company shall, at or before 8:30 a.m., New York City time, on the second Trading
Day after the Closing, issue a press release (the “Press Release”) reasonably
acceptable to the Investor disclosing the execution of this Agreement and the
Registration Rights Agreement by the Company and the Investor, and briefly
describing the transactions contemplated thereby. At or before 8:30 a.m., New
York City time, on the second Trading Day following the Closing Date, the
Company shall file a Current Report on Form 8-K describing all the material
terms of the transactions contemplated by the Transaction Documents in the form
required by the Exchange Act and attaching copies of each of this Agreement, the
Registration Rights Agreement and the Press Release as exhibits thereto
(including all exhibits thereto, the “Current Report”). From and after the
issuance of the Press Release and the filing of the Current Report, the Company
shall have disclosed all material, nonpublic information delivered to the
Investor (or the Investor’s representatives or agents) by the Company or any of
its Subsidiaries, or any of their respective officers, directors, employees,
agents or representatives (if any) in connection with the transactions
contemplated by the Transaction Documents. The Investor covenants that until
such time as the transactions contemplated by this Agreement are publicly
disclosed by the Company as described in this Section 2.3, the Investor will
maintain the confidentiality of all disclosures made to it in connection with
the transactions contemplated by the Transaction Documents (including the
existence and terms of the transactions), except that the Investor may disclose
the terms of such transactions to its financial, accounting, legal and other
advisors (provided that the Investor directs such Persons to maintain the
confidentiality of such information). The Company shall prepare and file with
the Commission the Registration Statement (including the Prospectus) covering
only the resale by the Investor of the Registrable Securities in accordance with
the Securities Act and the Registration Rights Agreement.  At or before 8:30
a.m. (New York City time) on the Trading Day immediately following the Effective
Date, the Company shall file with the Commission in accordance with Rule 424(b)
under the Securities Act the final Prospectus to be used in connection with
sales pursuant to the Registration Statement. If the transactions contemplated
by any Draw Down are material to the Company (individually or collectively with
all other prior Draw Downs, the consummation of which have not previously been
reported in any Prospectus Supplement filed with the Commission under Rule
424(b) under the Securities Act or in any report, statement or other document
filed by the Company with the Commission under the Exchange Act), or if
otherwise required under the Securities Act (or the interpretations of the
Commission thereof), as may be reasonably determined by the Company, then, the
Company shall promptly file with the Commission a Prospectus Supplement pursuant
to Rule 424(b) under the Securities Act with respect to such transactions or
Draw Downs. To the extent not previously disclosed in the Prospectus or a
Prospectus Supplement, the Company shall disclose in its Quarterly Reports on
Form 10-Q and in its Annual Reports on Form 10-K the information described in
the immediately preceding sentence relating to all Draw Down(s) consummated
during the relevant fiscal quarter, and include each such Quarterly Report on
Form 10-Q and Annual Report on Form 10-K in a Prospectus Supplement and file
such Prospectus Supplement with the Commission under Rule 424(b) under the
Securities Act.

 

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ARTICLE III
DRAW DOWN TERMS

 

Subject to the satisfaction of the conditions set forth in this Agreement, the
parties agree as follows:

 

Section 3.1.           Draw Down Notice.  From time to time during the
Investment Period, the Company may, in its sole discretion, provide to the
Investor a Draw Down Notice, substantially in the form attached hereto
as Exhibit B (the “Draw Down Notice”). A Draw Down Notice shall be deemed
delivered on (i) the Trading Day it is received by email (to the address set
forth in Section 10.4 herein) by the Investor if such notice is received prior
to 5:00 pm Eastern Time, or (ii) the immediately succeeding Trading Day if it is
received by email after 5:00 pm Eastern Time on a Trading Day or at any time on
a day which is not a Trading Day (the “Draw Down Exercise Date”). No Draw Down
Notice may be deemed delivered on a day that is not a Trading Day. The Company
acknowledges and agrees that the Investor shall be entitled to treat any email
it receives from officers whose email addresses are identified by the Company
purporting to be a Draw Down Notice as a duly executed and authorized Draw Down
Notice from the Company.  The Draw Down Notice shall specify the Draw Down
Amount Requested (which shall not exceed the Maximum Draw Down Amount
Requested). Upon the terms and subject to the conditions of this Agreement, the
Investor is obligated to accept each Draw Down Notice prepared and delivered in
accordance with the provisions of this Agreement and shall purchase from the
Company the Shares subject to such Draw Down Notice at the applicable Discount
Price on the applicable Settlement Date. In addition, the Common Stock must be
DWAC eligible and sent to the Investor in electronic form, instead of
certificate form. In the event that the Investor sends written acceptance of
accepting a physical certificate, all fees and expenses for this certificate
will be paid by the Company. 

 

Section 3.2.           Intentionally Left Blank.

 

Section 3.3.           Reduction of Commitment.  On each Settlement Date, the
Investor’s Total Commitment under this Agreement automatically shall be reduced,
on a dollar-for-dollar basis, by the total dollar amount of shares of Common
Stock issued by the Company on such Settlement Date or in connection therewith.

 

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Section 3.4.           Maximum Draw Down Amount.  The maximum number of Shares
that the Investor shall be required to purchase for any Draw Down shall in no
event exceed (i) 300% of the average daily share volume of the Common Stock in
the five trading days immediately preceding the Draw Down Notice, (ii) such
number of shares as shall cause the aggregate holdings of the Investor’s shares
of common stock of the Company to exceed the Ownership Limitation set forth in
Section 3.7 below, or (iii) the aggregate offering price or number of shares of
Common Stock available for issuance under a Registration Statement (the
“Registration Limitation”) (the “Maximum Draw Down Amount Requested”).

 

Section 3.5.          Intentionally Left Blank.

 

Section 3.6.         Settlement. Within five (5) Trading Days of Delivery of a
Draw Down Notice, the Company shall, or shall cause its transfer agent to,
electronically transfer the Shares purchased by the Investor by crediting the
Investor’s or its designees’ account (provided the Investor shall have given the
Company written notice of such designee prior to the Settlement Date) at DTC
through its Deposit/Withdrawal at Custodian (“DWAC”) system, which Shares shall
be freely tradable and transferable and without restriction on resale pursuant
to the Registration Statement (the “Settlement Date”). Once such Shares have
been accepted by the Investor, the Investor shall immediately deliver to the
Company the amount of the Draw Down by wire transfer of immediately available
funds. On or prior to the Settlement Date, each of the Company and the Investor
shall deliver to the other all documents, instruments and writings required to
be delivered by either of them pursuant to Section 7.2 below in order to
implement and effect the transactions contemplated herein.

 

Section 3.6.         Intentionally Left Blank.

 

Section 3.7.           Certain Limitations. Notwithstanding anything to the
contrary contained in this Agreement, in no event may the Company issue a Draw
Down Notice to the extent that (i) the Draw Down Amount Requested in such Draw
Down Notice exceeds the Maximum Draw Down Amount Requested, (ii) the sale of
Shares pursuant to such Draw Down Notice would cause the Company to issue or
sell or the Investor to acquire or purchase a number of shares of Common Stock
which, when aggregated with shares of Common Stock issued pursuant to all Draw
Down Amounts paid by the Investor pursuant to all prior Draw Down Notices issued
under this Agreement, would exceed the Aggregate Limit, or (iii) the sale of
Shares pursuant to such Draw Down Notice would cause the Company to sell or the
Investor to purchase a number of shares of Common Stock which, when aggregated
with all other shares of Common Stock then beneficially owned (as calculated
pursuant to Section 13(d) of the Exchange Act and Rule 13d-3 promulgated
thereunder) by the Investor and its Affiliates, would result in the beneficial
ownership by the Investor or any of its Affiliates of more than 4.99% of the
then issued and outstanding shares of Common Stock (the “Ownership Limitation”)
(as of the date of this Agreement, Investor and its affiliates held zero (0%)
percent of the outstanding Common Stock). If the Company issues a Draw Down
Notice in which the Draw Down Amount Requested exceeds the Maximum Draw Down
Amount Requested, such Draw Down Notice shall be void ab initio to the extent
the Draw Down Amount Requested exceeds the Maximum Draw Down Amount Requested.
If the Company issues a Draw Down Notice that otherwise would require the
Investor to purchase shares of Common Stock which would cause the aggregate
purchases of Common Stock by the Investor under this Agreement to exceed the
Aggregate Limit, such Draw Down Notice shall be void ab initio to the extent of
the amount by which the dollar value of shares of Common Stock otherwise
issuable pursuant to such Draw Down Notice, together with all Draw Down Amounts
paid by the Investor pursuant to all prior Draw Down Notices issued under this
Agreement, would exceed the Aggregate Limit. If the Company issues a Draw Down
Notice that otherwise would require the Investor to purchase shares of Common
Stock which would cause the aggregate number of shares of Common Stock then
beneficially owned (as calculated pursuant to Section 13(d) of the Exchange Act
and Rule 13d-3 promulgated thereunder) by the Investor and its Affiliates to
exceed the Ownership Limitation, such Draw Down Notice shall be void ab
initio to the extent of the amount by which the number of shares of Common Stock
otherwise issuable pursuant to such Draw Down Notice, together with all shares
of Common Stock then beneficially owned by the Investor and its Affiliates,
would exceed the Ownership Limitation. 

 

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Section 3.8.       Intentionally Left Blank.

 

Section 3.9.       Intentionally Left Blank.

 

Section 3.10.    Overall Limit on Issuable Common Stock. Notwithstanding
anything contained herein to the contrary, if during the Commitment Period the
Company becomes listed on an exchange that limits the number of shares of Common
Stock that may be issued without shareholder approval, then the total number of
Shares issuable by the Company and purchasable by the Investor pursuant to this
Agreement shall not exceed that number of shares of Common Stock that may be
issuable without shareholder approval (the “Maximum Common Stock Issuance”).  If
such issuance of Shares could cause a delisting on the Trading Market, then the
Maximum Common Stock Issuance shall first be approved by the Company's
shareholders in accordance with applicable law and the By-laws and Articles of
Incorporation of the Company. The parties understand and agree that the
Company's failure to seek or obtain such shareholder approval shall in no way
adversely affect the validity and due authorization of the issuance and sale of
Shares in accordance with the terms and conditions hereof to the Investor or the
Investor's obligation in accordance with the terms and conditions hereof to
purchase a number of Shares in the aggregate up to the Maximum Common Stock
Issuance limitation, and that such approval pertains only to the applicability
of the Maximum Common Stock Issuance limitation provided in this Section 3.10.

 

Section 3.11. Valuation Event. The Company agrees that it shall not take any
action that would result in a Valuation Event occurring during a Pricing Period.
Valuation Event shall mean an event in which the Company at any time during a
Pricing Period takes any of the following actions: (i) subdivides or combines
its Common Stock or (ii) pays a dividend on its shares of Common Stock or makes
any other purchase of its shares of Common Stock.

 

ARTICLE IV
REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE INVESTOR

 

The Investor hereby makes the following representations, warranties and
covenants to the Company:

 

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Section 4.1.           Organization and Standing of the Investor.  The Investor
is a limited liability company duly organized, validly existing and in good
standing under the laws of the State of New York. 

 

Section 4.2.           Authorization and Power.  The Investor has the requisite
company power and authority to enter into and perform its obligations under this
Agreement and the Registration Rights Agreement and to purchase or acquire the
Securities in accordance with the terms hereof. The execution, delivery and
performance by the Investor of this Agreement and the Registration Rights
Agreement and the consummation by it of the transactions contemplated hereby and
thereby have been duly authorized by all necessary corporate action, and no
further consent or authorization of the Investor, its Board of Managers or its
members is required. Each of this Agreement and the Registration Rights
Agreement has been duly executed and delivered by the Investor and constitutes a
valid and binding obligation of the Investor enforceable against it in
accordance with its terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium, liquidation,
conservatorship, receivership, or similar laws relating to, or affecting
generally the enforcement of, creditor’s rights and remedies or by other
equitable principles of general application (including any limitation of
equitable remedies).

 

Section 4.3.           No Conflicts.  The execution, delivery and performance by
the Investor of this Agreement and the Registration Rights Agreement and the
consummation by the Investor of the transactions contemplated hereby and thereby
do not and shall not (i) result in a violation of such Investor’s charter
documents, operating agreement or other applicable organizational instruments,
(ii) conflict with, constitute a default (or an event which, with notice or
lapse of time or both, would become a default) under, or give rise to any rights
of termination, amendment, acceleration or cancellation of, any material
agreement, mortgage, deed of trust, indenture, note, bond, license, lease
agreement, instrument or obligation to which the Investor is a party or is
bound, (iii) create or impose any lien, charge or encumbrance on any property of
the Investor under any agreement or any commitment to which the Investor is
party or under which the Investor is bound or under which any of its properties
or assets are bound, or (iv) result in a violation of any federal, state, local
or foreign statute, rule, or regulation, or any order, judgment or decree of any
court or governmental agency applicable to the Investor or by which any of its
properties or assets are bound or affected, except, in the case of clauses (ii),
(iii) and (iv), for such conflicts, defaults, terminations, amendments,
acceleration, cancellations and violations as would not, individually or in the
aggregate, prohibit or otherwise interfere with, in any material respect, the
ability of the Investor to enter into and perform its obligations under this
Agreement and the Registration Rights Agreement. The Investor is not required
under any applicable federal, state, local or foreign law, rule or regulation 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 this Agreement and the
Registration Rights Agreement or to purchase the Securities in accordance with
the terms hereof; provided, however, that for purposes of the representation
made in this sentence, the Investor is assuming and relying upon the accuracy of
the relevant representations and warranties and the compliance with the relevant
covenants and agreements of the Company in the Transaction Documents to which it
is a party.

 

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Section 4.4.          Investment Purpose. The Investor is acquiring the
Securities for its own account, for investment purposes and not with a view
towards, or for resale in connection with, the public sale or distribution
thereof, except pursuant to sales registered under or exempt from the
registration requirements of the Securities Act; provided, however, that by
making the representations herein, the Investor does not agree, or make any
representation or warranty, to hold any of the Securities for any minimum or
other specific term and reserves the right to dispose of the Securities at any
time in accordance with or pursuant to a registration statement or an exemption
under the Securities Act. The Investor does not presently have any agreement or
understanding, directly or indirectly, with any Person to distribute any of the
Securities.

 

Section 4.5.          Accredited Investor Status. The Investor is an “accredited
investor” as that term is defined in Rule 501(a) of Regulation D.

 

Section 4.6.         Intentionally left blank.

 

Section 4.7.          Information. All materials relating to the business,
financial condition, management and operations of the Company and materials
relating to the offer and sale of the Securities which have been requested by
the Investor have been furnished or otherwise made available to the Investor or
its advisors, including, without limitation, the Commission Documents.  The
Investor understands that its investment in the Securities involves a high
degree of risk. The Investor is able to bear the economic risk of an investment
in the Securities and has such knowledge and experience in financial and
business matters that it is capable of evaluating the merits and risks of a
proposed investment in the Securities. The Investor and its advisors have been
afforded the opportunity to ask questions of and receive answers from
representatives of the Company concerning the financial condition and business
of the Company and other matters relating to an investment in the Securities. 
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 this Agreement or in any other Transaction Document to
which the Company is a party or the Investor’s right to rely on any other
document or instrument executed and/or delivered in connection with this
Agreement or the consummation of the transaction contemplated hereby. 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. The Investor understands that it (and not the
Company) shall be responsible for its own tax liabilities that may arise as a
result of this investment or the transactions contemplated by this Agreement.

 

Section 4.8.           Intentionally left blank.

 

Section 4.9.          No General Solicitation. The Investor is not purchasing
the Securities as a result of any form of general solicitation or general
advertising (within the meaning of Regulation D) in connection with the offer or
sale of the Securities.

 

Section 4.10.       Not an Affiliate. The Investor is not an officer, director
or an Affiliate of the Company.

 

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Section 4.11.      Statutory Underwriter Status. The Investor acknowledges that
it will be disclosed as an “underwriter” and a “selling stockholder” in the
Registration Statement and in any Prospectus contained therein to the extent
required by applicable law and to the extent the Prospectus is related to the
resale of Registrable Securities.

 

Section 4.12.       Resales of Securities. The Investor represents, warrants and
covenants that unless the Securities are eligible for resale pursuant to Rule
144, it will resell such Securities only pursuant to the Registration Statement,
in a manner described under the caption “Plan of Distribution” in the
Registration Statement, and in a manner in compliance with all applicable U.S.
federal and state securities laws, rules and regulations, including, without
limitation, any applicable prospectus delivery requirements of the Securities
Act.

 

Section 4.13.        Trading Activities. The Investor’s trading activities with
respect to the Common Stock shall be in compliance with all applicable
securities laws, rules and regulations and the rules and regulations of the
Principal Market on which the Common Stock is listed or traded. Investor makes
no representations or covenants that it will not engage in trading in the
securities of the Company, other than the Investor will not engage in any short
sales of the Common Stock, or other similar activity that profits on the decline
in the price of Common Stock, at any time during the Agreement. Nothing
contained in this Agreement shall be deemed a representation or warranty by the
Investor to hold any Stock for any period of time. The Company acknowledges and
agrees that transactions in its securities by the Investor may impact the market
price of the Stock, including during periods when the prices at which the
Company may be required to issue Investor’s stock are determined.

 

ARTICLE V
REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY

 

Except as set forth in the disclosure schedule delivered by the Company to the
Investor (which is hereby incorporated by reference in, and constitutes an
integral part of, this Agreement) (the “Disclosure Schedule”), the Company
hereby makes the following representations, warranties and covenants to the
Investor:

 

Section 5.1.         Organization, Good Standing and Power.  The Company and
each of its Subsidiaries is a corporation duly organized, validly existing and
in good standing under the laws of the jurisdiction of its incorporation and has
the requisite corporate power and authority to own, lease and operate its
properties and assets and to conduct its business as it is now being conducted
and as presently proposed to be conducted. The Company and each Subsidiary 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 or property
owned by it makes such qualification necessary, except for any jurisdiction in
which the failure to be so qualified would not have a Material Adverse Effect. 

 

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Section 5.2.          Authorization, Enforcement.  The Company has the requisite
corporate power and authority to enter into and perform its obligations under
each of the Transaction Documents to which it is a party and to issue the
Securities in accordance with the terms hereof and thereof. Except for approvals
of the Company’s Board of Directors or a committee thereof as may be required in
connection with any issuance and sale of Securities to the Investor hereunder
(which approvals shall be obtained prior to the delivery of any Draw Down
Notice), the execution, delivery and performance by the Company of each of the
Transaction Documents to which it is a party and the consummation by it of the
transactions contemplated hereby and thereby have been duly and validly
authorized by all necessary corporate action, and no further consent or
authorization of the Company, its Board of Directors or its stockholders is
required. Each of the Transaction Documents to which the Company is a party has
been duly executed and delivered by the Company and constitutes a valid and
binding obligation of the Company enforceable against the Company in accordance
with its terms, except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, liquidation,
conservatorship, receivership or similar laws relating to, or affecting
generally the enforcement of, creditor’s rights and remedies or by other
equitable principles of general application (including any limitation of
equitable remedies).

 

Section 5.3.          Capitalization and Voting Rights.  The authorized capital
stock of the Company and the shares thereof issued and outstanding were as set
forth in the Commission Documents as of the dates reflected therein. All of the
outstanding shares of Common Stock have been duly authorized and validly issued,
and are fully paid and nonassessable. Except as set forth in the Commission
Documents, this Agreement and the Registration Rights Agreement, there are no
agreements or arrangements under which the Company is obligated to register the
sale of any securities under the Securities Act. Except as set forth in the
Commission Documents, no shares of Common Stock are entitled to preemptive
rights and there are no outstanding debt securities and no contracts,
commitments, understandings, or arrangements by which the Company is or may
become bound to issue additional shares of the capital stock of the Company or
options, warrants, scrip, rights to subscribe to, calls or commitments of any
character whatsoever relating to, or securities or rights convertible into or
exchangeable for, any shares of capital stock of the Company other than those
issued or granted in the ordinary course of business pursuant to the Company’s
equity incentive and/or compensatory plans or arrangements. Except for customary
transfer restrictions contained in agreements entered into by the Company to
sell restricted securities or as set forth in the Commission Documents, the
Company is not a party to, and it has no Knowledge of, any agreement restricting
the voting or transfer of any shares of the capital stock of the Company. Except
as set forth in the Commission Documents, the offer and sale of all capital
stock, convertible or exchangeable securities, rights, warrants or options of
the Company issued prior to the Closing Date complied with all applicable
federal and state securities laws, and no stockholder has any right of
rescission or damages or any “put” or similar right with respect thereto that
would have a Material Adverse Effect. Except as set forth in the Commission
Documents, there are no securities or instruments containing anti-dilution or
similar provisions that will be triggered by this Agreement or any of the other
Transaction Documents or the consummation of the transactions described herein
or therein. The Company has furnished or made available to the Investor via
EDGAR true and correct copies of the Company’s Articles of Incorporation as in
effect on the Closing Date (the “Charter”), and the Company’s Bylaws as in
effect on the Closing Date (the “Bylaws”).   

 

Section 5.4.        Intentionally Left Blank.

 

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Section 5.5.           No Conflicts.  The execution, delivery and performance by
the Company of each of the Transaction Documents to which it is a party and the
consummation by the Company of the transactions contemplated hereby and thereby
do not and shall not (i) result in a violation of any provision of the Company’s
Charter or Bylaws, (ii) conflict with or result in a breach or violation of any
of the terms or provisions of, or constitute a default (or an event which, with
notice or lapse of time or both, would become a default) under, or give rise to
any rights of termination, amendment, acceleration or cancellation of, any
material agreement, mortgage, deed of trust, indenture, note, bond, license,
lease agreement, instrument or obligation to which the Company or any of its
Subsidiaries is a party or is bound, (iii) create or impose a lien, charge or
encumbrance on any property or assets of the Company or any of its Subsidiaries
under any agreement or any commitment to which the Company or any of its
Subsidiaries is a party or by which the Company or any of its Subsidiaries is
bound or to which any of their respective properties or assets is subject, or
(iv) result in a violation of any federal, state, local or foreign statute,
rule, regulation, order, judgment or decree applicable to the Company or any of
its Subsidiaries or by which any property or asset of the Company or any of its
Subsidiaries are bound or affected (including federal and state securities laws
and regulations and the rules and regulations of the Trading Market), except, in
the case of clauses (ii), (iii) and (iv), for such conflicts, defaults,
terminations, amendments, acceleration, cancellations, liens, charges,
encumbrances and violations as would not, individually or in the aggregate, have
a Material Adverse Effect.  Except as specifically contemplated by this
Agreement or the Registration Rights Agreement and as required under the
Securities Act and any applicable state securities laws, the Company is not
required under any federal, state, local or foreign law, rule or regulation to
obtain any consent, authorization or order of, or make any filing or
registration with, any court or governmental agency (including, without
limitation, the Trading Market) in order for it to execute, deliver or perform
any of its obligations under the Transaction Documents to which it is a party,
or to issue the Securities to the Investor in accordance with the terms hereof
and thereof (other than such consents, authorizations, orders, filings or
registrations as have been obtained or made prior to the Closing
Date); provided, however, that, for purposes of the representation made in this
sentence, the Company is assuming and relying upon the accuracy of the
representations and warranties of the Investor in this Agreement and the
compliance by it with its covenants and agreements contained in this Agreement
and the Registration Rights Agreement.

 

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Section 5.6. Commission Documents, Financial Statements.  (a)  The Company has
timely filed (giving effect to permissible extensions in accordance with Rule
12b-25 under the Exchange Act) all Commission Documents. The Company has
delivered or made available to the Investor via EDGAR or otherwise true and
complete copies of the Commission Documents filed with or furnished to the
Commission prior to the Closing Date. No Subsidiary of the Company is required
to file or furnish any report, schedule, registration, form, statement,
information or other document with the Commission. As of its filing date, each
Commission Document filed with or furnished to the Commission prior to the
Closing Date complied in all material respects with the requirements of the
Securities Act or the Exchange Act, as applicable, and other federal, state and
local laws, rules and regulations applicable to it, and, as of its filing date
(or, if amended or superseded by a filing prior to the Closing Date, on the date
of such amended or superseded filing), such Commission Document did not contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The Registration Statement, on the date it is filed with the
Commission, on the date it is declared effective by the Commission (or becomes
effective pursuant to Section 8 of the Securities Act), on each Draw Down
Exercise Date and on each Settlement Date, shall comply in all material respects
with the requirements of the Securities Act (including, without limitation, Rule
415 under the Securities Act) and shall not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein not misleading, except that
this representation and warranty shall not apply to statements in or omissions
from the Registration Statement made in reliance upon and in conformity with
information relating to the Investor furnished to the Company in writing by or
on behalf of the Investor expressly for use therein. The Prospectus and each
Prospectus Supplement required to be filed pursuant to this Agreement or the
Registration Rights Agreement after the Closing Date, when taken together, on
its date, on each Draw Down Exercise Date and on each Settlement Date, shall
comply in all material respects with the requirements of the Securities Act
(including, without limitation, Rule 424(b) under the Securities Act) and shall
not contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading, except that this representation and warranty shall not apply to
statements in or omissions from the Prospectus or any Prospectus Supplement made
in reliance upon and in conformity with information relating to the Investor
furnished to the Company in writing by or on behalf of the Investor expressly
for use therein. Each Commission Document (other than the Registration
Statement, the Prospectus or any Prospectus Supplement) to be filed with or
furnished to the Commission after the Closing Date and incorporated by reference
in the Registration Statement, the Prospectus or any Prospectus Supplement
required to be filed pursuant to this Agreement or the Registration Rights
Agreement (including, without limitation, the Current Report), when such
document is filed with or furnished to the Commission and, if applicable, when
such document becomes effective, as the case may be, shall comply in all
material respects with the requirements of the Securities Act or the Exchange
Act, as applicable, and other federal, state and local laws, rules and
regulations applicable to it, and shall not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading. The Company has delivered or made
available to the Investor via EDGAR or otherwise true and complete copies of all
comment letters and substantive correspondence received by the Company from the
Commission relating to the Commission Documents filed with or furnished to the
Commission as of the Closing Date, together with all written responses of the
Company thereto in the form such responses were filed via EDGAR. There are no
outstanding or unresolved comments or undertakings in such comment letters
received by the Company from the Commission. The Commission has not issued any
stop order or other order suspending the effectiveness of any registration
statement filed by the Company under the Securities Act or the Exchange Act.

 

(b)               The financial statements, together with the related notes and
schedules, of the Company included in the Commission Documents comply as to form
in all material respects with all applicable accounting requirements and the
published rules and regulations of the Commission and all other applicable rules
and regulations with respect thereto. Such financial statements, together with
the related notes and schedules, have been prepared in accordance with GAAP
applied on a consistent basis during the periods involved (except (i) as may be
otherwise indicated in such financial statements or the notes thereto or (ii) in
the case of unaudited interim statements, to the extent they may not include
footnotes or may be condensed or summary statements), and fairly present in all
material respects the financial condition of the Company and its consolidated
Subsidiaries as of the dates thereof and the results of operations and cash
flows for the periods then ended (subject, in the case of unaudited statements,
to normal year-end audit adjustments).

 

11

 

  

(c)                The Company has timely filed with the Commission and made
available to the Investor via EDGAR or otherwise all certifications and
statements required by (x) Rule 13a-14 or Rule 15d-14 under the Exchange Act or
(y) 18 U.S.C. Section 1350 (Section 906 of the Sarbanes-Oxley Act of 2002
(“SOXA”)) with respect to all relevant Commission Documents.  The Company
maintains disclosure controls and procedures required by Rule 13a-15 or Rule
15d-15 under the Exchange Act; Except as set forth in the Commission Documents,
such controls and procedures are effective to ensure that all material
information concerning the Company and its Subsidiaries is made known on a
timely basis to the individuals responsible for the timely and accurate
preparation of the Company’s Commission filings and other public disclosure
documents.  As used in this Section 5.6(c), the term “file” shall be broadly
construed to include any manner in which a document or information is furnished,
supplied or otherwise made available to the Commission.

 

(d)               HJ & Associates, LLC, which shall express its opinion on the
audited financial statements and related schedules to be included or
incorporated by reference in the Registration Statement and the Prospectus is,
with respect to the Company, independent public accountants as required by the
Securities Act and is an independent registered public accounting firm within
the meaning of SOXA as required by the rules of the Public Company Accounting
Oversight Board. HJ & Associates, LLC has not been engaged by the Company to
perform any “prohibited activities” (as defined in Section 10A of the Exchange
Act).

 

Section 5.7.            Intentionally left blank.

 

Section 5.8.           No Material Adverse Effect. Except as disclosed in any
Commission Documents filed since November 13, 2014, since November 13, 2014, the
Company has not experienced or suffered any Material Adverse Effect, and there
exists no current state of facts, condition or event which would have a Material
Adverse Effect.

 

Section 5.9.           No Undisclosed Liabilities. Except as set forth in the
Commission Documents, neither the Company nor any of its Subsidiaries has any
liabilities, obligations, claims or losses (whether liquidated or unliquidated,
secured or unsecured, absolute, accrued, contingent or otherwise) that would be
required to be disclosed on a balance sheet of the Company or any Subsidiary
(including the notes thereto) in conformity with GAAP and are not disclosed in
the Commission Documents, other than those incurred in the ordinary course of
the Company’s or its Subsidiaries respective businesses since November 13, 2014
and which, individually or in the aggregate, do not or would not have a Material
Adverse Effect.

 

Section 5.10.       No Undisclosed Events or Circumstances. Except as set forth
in the Commission Documents, no event or circumstance has occurred or
information exists with respect to the Company or any of its Subsidiaries or its
or their business, properties, liabilities, operations (including results
thereof) or conditions (financial or otherwise), which, under applicable law,
rule or regulation, requires public disclosure or announcement by the Company at
or before the Closing but which has not been so publicly announced or disclosed,
except for events or circumstances which, individually or in the aggregate, do
not or would not have a Material Adverse Effect.

 

12

 

 

Section 5.11.       Indebtedness; Solvency.  The Company’s Quarterly Report on
Form 10-Q for its fiscal quarter ended September 30, 2014 sets forth, as of
September 30, 2014, all outstanding secured and unsecured Indebtedness of the
Company or any Subsidiary, or for which the Company or any Subsidiary has
commitments through such date.  For the purposes of this Agreement,
“Indebtedness” shall mean (a) any liabilities for borrowed money or amounts owed
in excess of $1,000 (other than trade accounts payable incurred in the ordinary
course of business), (b) all guaranties, endorsements, indemnities and other
contingent obligations in respect of Indebtedness of others in excess of $1,000,
whether or not the same are or should be reflected in the Company’s balance
sheet (or the notes thereto), except guaranties by endorsement of negotiable
instruments for deposit or collection or similar transactions in the ordinary
course of business; and (c) the present value of any lease payments in excess of
$1,000 due under leases required to be capitalized in accordance with GAAP. 
There is no existing or continuing default or event of default in respect of any
Indebtedness of the Company or any of its Subsidiaries. The Company has not
taken any steps, and does not currently expect to take any steps, to seek
protection pursuant to Title 11 of the United States Code or any similar federal
or state bankruptcy law or law for the relief of debtors, nor does the Company
have any Knowledge that its creditors intend to initiate involuntary bankruptcy,
insolvency, reorganization or liquidation proceedings or other proceedings for
relief under Title 11 of the United States Code or any other federal or state
bankruptcy law or any law for the relief of debtors. The Company is financially
solvent and is generally able to pay its debts as they become due.

 

Section 5.12.       Title To Assets.  Each of the Company and its Subsidiaries
has good and valid title to, or has valid rights to lease or otherwise use, all
of their respective real and personal property reflected in the Commission
Documents, free of mortgages, pledges, charges, liens, security interests or
other encumbrances, except for those indicated in the Commission Documents and
those that would not have a Material Adverse Effect. All real property and
facilities held under lease by the Company or any of 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 or any of its Subsidiaries.

 

Section 5.13.       Actions Pending.  To the Knowledge of the Company, there is
no action, suit, claim, investigation or proceeding pending or threatened
against the Company or any Subsidiary which questions the validity of the
Transaction Documents or the transactions contemplated thereby or any action
taken or to be taken pursuant thereto.  Except as set forth in the Commission
Documents, to the Knowledge of the Company, there is no action, suit, claim,
investigation or proceeding pending or threatened against or involving the
Company, any Subsidiary or any of their respective properties or assets, or
involving any officers or directors of the Company or any of its Subsidiaries,
including, without limitation, any securities class action lawsuit or
stockholder derivative lawsuit related to the Company, in each case which, if
determined adversely to the Company, its Subsidiary or any officer or director
of the Company or its Subsidiaries, would have a Material Adverse Effect. Except
as set forth in the Commission Documents, no judgment, order, writ, injunction
or decree or award has been issued by or, to the Knowledge of the Company,
requested of any court, arbitrator or governmental agency which would be
reasonably expected to result in a Material Adverse Effect.

 

13

 

 

Section 5.14.       Compliance With Law. The business of the Company and the
Subsidiaries has been and is presently being conducted in compliance with all
applicable federal, state, local and foreign governmental laws, rules,
regulations and ordinances, except as set forth in the Commission Documents and
except for such non-compliance which, individually or in the aggregate, would
not have a Material Adverse Effect. Neither the Company nor any of its
Subsidiaries is in violation of any judgment, decree or order or any statute,
ordinance, rule or regulation applicable to the Company or any of its
Subsidiaries, and neither the Company nor any of its Subsidiaries will conduct
its business in violation of any of the foregoing, except in all cases for
possible violations which could not, individually or in the aggregate, have a
Material Adverse Effect. Without limiting the generality of the foregoing, the
Company has maintained all requirements for the continued listing or quotation
of its Common Stock on the Trading Market, and the Company is not in violation
of any of the rules, regulations or requirements of the Trading Market and has
no Knowledge of any facts or circumstances that could reasonably lead to
delisting or suspension of the Common Stock by the Trading Market in the
foreseeable future.

 

Section 5.15.       Certain Fees.  No brokers, finders or financial advisory
fees or commissions are or shall be payable by the Company or any Subsidiary (or
any of their respective Affiliates) with respect to the transactions
contemplated by the Transaction Documents.

 

Section 5.16.       Disclosure.  The Company confirms that neither it nor any
other Person acting on its behalf has provided the Investor or any of its
agents, advisors or counsel with any information that constitutes or could
reasonably be expected to constitute material, nonpublic information concerning
the Company or any of its Subsidiaries, other than the existence of the
transactions contemplated by the Transaction Documents. The Company understands
and confirms that the Investor will rely on the foregoing representations in
effecting transactions in securities of the Company. All disclosure provided to
Investor regarding the Company and its Subsidiaries, their businesses and the
transactions contemplated by the Transaction Documents (including, without
limitation, the representations and warranties of the Company contained in the
Transaction Documents to which it is a party (as modified by the Disclosure
Schedule)) furnished by or on behalf of the Company or any of its Subsidiaries,
taken together, is true and correct and does not contain any untrue statement of
a material fact or omit to state any material fact necessary in order to make
the statements made therein, in the light of the circumstances under which they
were made, not misleading. Each press release issued by the Company or any of
its Subsidiaries during the 12 months preceding the Closing Date did not at the
time of release (or, if amended or superseded by a later dated press release
issued by the Company or any of its Subsidiaries prior to the Closing Date or by
a later dated Commission Document filed with or furnished to the Commission by
the Company prior to the Closing Date, at the time of issuance of such later
dated press release or filing or furnishing of such Commission Document, as
applicable) contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they are made,
not misleading.

 

14

 

 

Section 5.17.       Operation of Business.  (a)  The Company or one or more of
its Subsidiaries possesses such permits, licenses, approvals, consents and other
authorizations (including licenses, accreditation and other similar
documentation or approvals of any local health departments) issued by the
appropriate federal, state, local or foreign regulatory agencies or bodies as
are necessary to conduct the business now operated by it (collectively,
“Governmental Licenses”), except where the failure to possess such Governmental
Licenses, individually or in the aggregate, would not have a Material Adverse
Effect. The Company and its Subsidiaries are in compliance with the terms and
conditions of all such Governmental Licenses, except where the failure to so
comply, individually or in the aggregate, would not have a Material Adverse
Effect or except as otherwise disclosed in the Commission Documents.  All of the
Governmental Licenses are valid and in full force and effect, except where the
invalidity of such Governmental Licenses or the failure of such Governmental
Licenses to be in full force and effect, individually or in the aggregate, would
not have a Material Adverse Effect or except as otherwise disclosed in the
Commission Documents.  Except as set forth in the Commission Documents, neither
the Company nor any of its Subsidiaries has received any written notice of
proceedings relating to the revocation or modification of any such Governmental
Licenses which, if the subject of any unfavorable decision, ruling or finding,
individually or in the aggregate, would have a Material Adverse Effect. This
Section 5.17 does not relate to environmental matters, such items being the
subject of Section 5.18.

 

(b)               The Company or one or more of its Subsidiaries owns or
possesses adequate patents, patent rights, licenses, inventions, copyrights,
know-how (including trade secrets and other unpatented and/or unpatentable
proprietary or confidential information, systems or procedures), trademarks,
service marks, trade names, trade dress, logos, copyrights and other
intellectual property, including, without limitation, all of the intellectual
property described in the Commission Documents as being owned or licensed by the
Company (collectively, “Intellectual Property”), necessary to carry on the
business now operated by it.  Except as set forth in the Commission Documents,
there are no actions, suits or judicial proceedings pending, or to the Company’s
Knowledge threatened, relating to patents or proprietary information to which
the Company or any of its Subsidiaries is a party or of which any property of
the Company or any of its Subsidiaries is subject, and neither the Company nor
any of its Subsidiaries has received any notice or is otherwise aware of any
infringement of or conflict with asserted rights of others with respect to any
Intellectual Property or of any facts or circumstances which could render any
Intellectual Property invalid or inadequate to protect the interest of the
Company and its Subsidiaries therein, and which infringement or conflict (if the
subject of any unfavorable decision, ruling or finding) or invalidity or
inadequacy, individually or in the aggregate, would have a Material Adverse
Effect.

 

15

 

 

Section 5.18.       Environmental Compliance.  Except as disclosed in the
Commission Documents, the Company and each of its Subsidiaries have obtained all
material approvals, authorization, certificates, consents, licenses, orders and
permits or other similar authorizations of all governmental authorities, or from
any other person, that are required under any Environmental Laws, except for any
approvals, authorization, certificates, consents, licenses, orders and permits
or other similar authorizations the failure of which to obtain does not or would
not have a Material Adverse Effect.  “Environmental Laws” shall mean all
applicable laws relating to the protection of the environment including, without
limitation, all requirements pertaining to reporting, licensing, permitting,
controlling, investigating or remediating emissions, discharges, releases or
threatened releases of hazardous substances, chemical substances, pollutants,
contaminants or toxic substances, materials or wastes, whether solid, liquid or
gaseous in nature, into the air, surface water, groundwater or land, or relating
to the manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of hazardous substances, chemical substances, pollutants,
contaminants or toxic substances, material or wastes, whether solid, liquid or
gaseous in nature.  Except for such instances as would not, individually or in
the aggregate, have a Material Adverse Effect, to the Company’s Knowledge, there
are no past or present events, conditions, circumstances, incidents, actions or
omissions relating to or in any way affecting the Company or its Subsidiaries
that violate or could reasonably be expected to violate any Environmental Law
after the Closing Date or that could reasonably be expected to give rise to any
environmental liability, or otherwise form the basis of any claim, action,
demand, suit, proceeding, hearing, study or investigation (i) under any
Environmental Law, or (ii) based on or related to the manufacture, processing,
distribution, use, treatment, storage (including without limitation underground
storage tanks), disposal, transport or handling, or the emission, discharge,
release or threatened release of any hazardous substance.

 

Section 5.19.       Material Agreements.  Except as set forth in the Commission
Documents, neither the Company nor any Subsidiary of the Company is a party to
any written or oral contract, instrument, agreement commitment, obligation, plan
or arrangement, a copy of which would be required to be filed with the
Commission as an exhibit to an annual report on Form 10-K (collectively,
“Material Agreements”).  Except as set forth in the Commission Documents, the
Company and each of its Subsidiaries have performed in all material respects all
the obligations then required to be performed by them under the Material
Agreements, have received no notice of default or an event of default by the
Company or any of its Subsidiaries thereunder and are not aware of any basis for
the assertion thereof, and neither the Company or any of its Subsidiaries nor,
to the Knowledge of the Company, any other contracting party thereto are in
default under any Material Agreement now in effect, the result of which would
have a Material Adverse Effect.  Except as set forth in the Commission
Documents, each of the Material Agreements is in full force and effect, and
constitutes a legal, valid and binding obligation enforceable in accordance with
its terms against the Company and/or any of its Subsidiaries and, to the
Knowledge of the Company, each other contracting party thereto, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation, conservatorship, receivership or
similar laws relating to, or affecting generally the enforcement of, creditor’s
rights and remedies or by other equitable principles of general application.

 

Section 5.20.       Transactions With Affiliates.  Except as set forth in the
Commission Documents, there are no loans, leases, agreements, contracts, royalty
agreements, management contracts, service arrangements or other continuing
transactions exceeding $120,000 between (a) the Company or any Subsidiary, on
the one hand, and (b) any person or entity who would be covered by Item 404(a)
of Regulation S-K, on the other hand.  Except as disclosed in the Commission
Documents, there are no outstanding amounts payable to or receivable from, or
advances by the Company or any of its Subsidiaries to, and neither the Company
nor any of its Subsidiaries is otherwise a creditor of or debtor to, any
beneficial owner of more than 5% of the outstanding shares of Common Stock, or
any director, employee or affiliate of the Company or any of its Subsidiaries,
other than (i) reimbursement for reasonable expenses incurred on behalf of the
Company or any of its Subsidiaries or (ii) as part of the normal and customary
terms of such person’s employment or service as a director with the Company or
any of its Subsidiaries.

 

16

 

  

Section 5.21.       Employees.  Neither the Company nor any Subsidiary of the
Company has any collective bargaining arrangements or agreements covering any of
its employees, except as set forth in the Commission Documents.  Except as
disclosed in the Commission Documents, no officer, consultant or key employee of
the Company or any Subsidiary whose termination, either individually or in the
aggregate, would reasonably be expected to have a Material Adverse Effect, has
terminated or, to the Knowledge of the Company, has any present intention of
terminating his or her employment or engagement with the Company or any
Subsidiary.

 

Section 5.22.       Use of Proceeds.  The proceeds from the sale of the Shares
shall be used by the Company and its Subsidiaries as set forth in the Prospectus
and any Prospectus Supplement filed pursuant to Section 2.3 of this Agreement
and pursuant to the Registration Rights Agreement.

 

Section 5.23.       Investment Company Act Status.  The Company is not, and as a
result of the consummation of the transactions contemplated by the Transaction
Documents and the application of the proceeds from the sale of the Shares as set
forth in the Prospectus and any Prospectus Supplement shall not be required to
be registered as, an “investment company” or a company “controlled” by an
“investment company,” within the meaning of the Investment Company Act of 1940,
as amended.

 

Section 5.24.       ERISA.  No liability to the Pension Benefit Guaranty
Corporation has been incurred with respect to any Plan by the Company or any of
its Subsidiaries which has had or would have a Material Adverse Effect.  No
“prohibited transaction” (as defined in Section 406 of ERISA or Section 4975 of
the Code) or “accumulated funding deficiency” (as defined in Section 302 of
ERISA) or any of the events set forth in Section 4043(b) of ERISA has occurred
with respect to any Plan which has had or would have a Material Adverse Effect,
and the execution and delivery of this Agreement and the issuance and sale of
the Securities hereunder shall not result in any of the foregoing events.  Each
Plan is in compliance in all material respects with applicable law, including
ERISA and the Code; the Company has not incurred and does not expect to incur
liability under Title IV of ERISA with respect to the termination of, or
withdrawal from, any Plan; and each Plan for which the Company would have any
liability that is intended to be qualified under Section 401(a) of the Code is
so qualified in all material respects and nothing has occurred, whether by
action or failure to act, which would cause the loss of such qualifications.  As
used in this Section 5.24, the term “Plan” shall mean an “employee pension
benefit plan” (as defined in Section 3 of ERISA) which is or has been
established or maintained, or to which contributions are or have been made, by
the Company or any Subsidiary or by any trade or business, whether or not
incorporated, which, together with the Company or any Subsidiary, is under
common control, as described in Section 414(b) or (c) of the Code.

 

17

 

 

Section 5.25.       Taxes.  The Company and each of its Subsidiaries (i) has
filed all necessary federal, state and foreign income and franchise tax returns
or has duly requested extensions thereof, except for those the failure of which
to file would not have a Material Adverse Effect, (ii) has paid all federal,
state, local and foreign taxes due and payable for which it is liable, except to
the extent that any such taxes are being contested in good faith and by
appropriate proceedings, except for such taxes the failure of which to pay would
not have a Material Adverse Effect, and (iii) does not have any tax deficiency
or claims outstanding or assessed or, to the Company’s Knowledge, proposed
against it which would have a Material Adverse Effect. There are no unpaid taxes
in any material amount claimed to be due by the taxing authority of any
jurisdiction, and the officers of the Company and its Subsidiaries know of no
basis for any such claim. The Company is not operated in such a manner as to
qualify as a passive foreign investment company, as defined in Section 1297 of
the Code.

 

Section 5.26.       Insurance. The Company and its Subsidiaries are insured by
insurers of recognized financial responsibility against such losses and risks
and in such amounts as management of the Company believes to be prudent and
customary in the businesses in which the Company and its Subsidiaries are
engaged. Neither the Company nor any such Subsidiary has been refused any
insurance coverage sought or applied for, and neither the Company nor any such
Subsidiary has any reason to believe that it will be unable to renew its
existing insurance coverage as and when such coverage expires or to obtain
similar coverage from similar insurers as may be necessary to continue its
business at a cost that would not have a Material Adverse Effect.

 

Section 5.27.       U.S. Real Property Holding Corporation. Neither the Company
nor any of its Subsidiaries is, or has ever been, and so long as any of the
Securities are held by the Investor, shall become a U.S. real property holding
corporation within the meaning of Section 897 of the Code.

 

Section 5.28.       Valid Issuances. At the request of and with the express
agreement of the Investor, the Shares will be delivered to the Investor via book
entry through DTC and will not bear legends noting restrictions as to resale of
such securities under federal or state securities laws, nor will any such
securities be subject to stop transfer instructions. Neither the offer or sale
of the Securities pursuant to, nor the Company’s performance of its obligations
under, the Transaction Documents to which it is a party shall (i) result in the
creation or imposition of any liens, charges, claims or other encumbrances upon
the Securities, or (ii) entitle the holders of any outstanding shares of capital
stock of the Company to preemptive or other rights to subscribe to or acquire
the shares of Common Stock or other securities of the Company.

 

Section 5.29.       No General Solicitation or Advertising. Neither the Company,
nor any of its Subsidiaries or Affiliates, nor any Person acting on its or their
behalf, has engaged in any form of general solicitation or general advertising
(within the meaning of Regulation D) in connection with the offer or sale of the
Securities.

 

Section 5.30.       No Integrated Offering. None of the Company, its
Subsidiaries or any of their Affiliates, nor any Person acting on their behalf
has, directly or indirectly, made any offers or sales of any security or
solicited any offers to buy any security, under circumstances that would require
registration of the issuance of any of the Securities under the Securities Act,
whether through integration with prior offerings or otherwise, or cause this
offering of the Securities to require approval of stockholders of the Company
under any applicable stockholder approval provisions, including, without
limitation, under the rules and regulations of the Trading Market.  None of the
Company, its Subsidiaries, their Affiliates nor any Person acting on their
behalf will take any action or steps referred to in the preceding sentence that
would require registration of the issuance of any of the Securities under the
Securities Act or cause the offering of any of the Securities to be integrated
with other offerings.

 

18

 

 

Section 5.31.       Dilutive Effect. The Company is aware and acknowledges that
issuance of the Securities could cause dilution to existing stockholders and
could significantly increase the outstanding number of shares of Common Stock.

 

Section 5.32.       Manipulation of Price.  Neither the Company nor any of its
officers, directors or Affiliates has, and, to the Knowledge of the Company, no
Person acting on their behalf has, (i) taken, directly or indirectly, any action
designed or intended to cause or to result in the stabilization or manipulation
of the price of any security of the Company, or which caused or resulted in, or
which would in the future reasonably be expected to cause or result in, the
stabilization or manipulation of the price of any security of the Company, in
each case to facilitate the sale or resale of any of the Securities, or (ii)
sold, bid for, purchased, or paid any compensation for soliciting purchases of,
any of the Securities. Neither the Company nor any of its officers, directors or
Affiliates will during the term of this Agreement, and, to the Knowledge of the
Company, no Person acting on their behalf will during the term of this
Agreement, take any of the actions referred to in the immediately preceding
sentence.

 

Section 5.33.       Securities Act. The Company has complied and shall comply
with all applicable federal and state securities laws in connection with the
offer, issuance and sale of the Securities hereunder, including, without
limitation, the applicable requirements of the Securities Act. The Registration
Statement, upon filing with the Commission and at the time it is declared
effective by the Commission (or becomes effective pursuant to Section 8 of the
Securities Act), shall satisfy all of the requirements of the Securities Act to
register the resale of the Registrable Securities by the Investor in accordance
with the Registration Rights Agreement on a delayed or continuous basis under
Rule 415 under the Securities Act at then-prevailing market prices, and not
fixed prices. The Company is not an issuer identified in Rule 144(i).

 

Section 5.34.       Listing and Maintenance Requirements. The Company’s Common
Stock is registered pursuant to Section 12(g) of the Exchange Act, and the
Company has taken no action designed to, 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 Commission
is contemplating terminating such registration. The Company has not, in the 12
months preceding the Closing Date, received notice from any Trading Market on
which the Common Stock is or has been listed or quoted to the effect that the
Company is not in compliance with the listing or maintenance requirements of
such Trading Market. As of the Closing Date, the Company is in compliance with
all such listing and maintenance requirements.

 

Section 5.35.       Application of Takeover Protections. The Company and its
Board of Directors have taken all necessary action, if any, in order to render
inapplicable any control share acquisition, business combination, poison pill
(including any distribution under a rights agreement) or other similar
anti-takeover provision under the Company’s Charter or the laws of its state of
incorporation that is or could become applicable to the Investor as a result of
the Investor and the Company fulfilling their respective obligations or
exercising their respective rights under the Transaction Documents (as
applicable), including, without limitation, as a result of the Company’s
issuance of the Securities and the Investor’s ownership of the Securities.

 

19

 

 

Section 5.36.       Foreign Corrupt Practices Act.  None of the Company, any
Subsidiary or, to the Knowledge of the Company, any director, officer, agent,
employee, affiliate or other Person acting on behalf of the Company or any of
its Subsidiaries, is aware of or has taken any action, directly or indirectly,
that would result in a violation by such Persons of the Foreign Corrupt
Practices Act of 1977, as amended, and the rules and regulations thereunder
(collectively, the “FCPA”), including, without limitation, making use of the
mails or any means or instrumentality of interstate commerce corruptly in
furtherance of an offer, payment, promise to pay or authorization of the payment
of any money, or other property, gift, promise to give, or authorization of the
giving of anything of value to any “foreign official” (as such term is defined
in the FCPA) or any foreign political party or official thereof or any candidate
for foreign political office, in contravention of the FCPA.  The Company and the
Subsidiaries have conducted their respective businesses in compliance with the
FCPA.

 

Section 5.37.       Money Laundering Laws.  The operations of the Company and
its Subsidiaries are and have been conducted at all times in compliance with
applicable financial recordkeeping and reporting requirements of the Currency
and Foreign Transactions Reporting Act of 1970, as amended, the money laundering
statutes of all jurisdictions, the rules and regulations thereunder and any
related or similar rules, regulations or guidelines, issued, administered or
enforced by any governmental agency (collectively, the “Money Laundering Laws”)
and, to the Knowledge of the Company, 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 the Money Laundering Laws
is pending or threatened. 

 

Section 5.38.       OFAC.  None of the Company, any Subsidiary or, to the
Knowledge of the Company, any director, officer, agent, employee, affiliate or
Person acting on behalf of the Company or any of its Subsidiaries is currently
subject to any U.S. sanctions administered by the Office of Foreign Assets
Control of the U.S. Treasury Department (“OFAC”); and the Company will not
directly or indirectly use the proceeds of the offering, or lend, contribute or
otherwise make available such proceeds to any subsidiary, joint venture partner
or other Person, for the purpose of financing the activities of any Person
currently subject to any U.S. sanctions administered by OFAC.

 

Section 5.39.      Intentionally Left Blank.

 

Section 5.40.      Intentionally Left Blank

 

Section 5.41.       Acknowledgement Regarding Investor’s Acquisition of
Securities. 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 by the Transaction Documents. 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 by the Transaction Documents,
and any advice given by the Investor or any of its representatives or agents in
connection therewith is merely incidental to the Investor’s acquisition of the
Securities. The Company further represents to the Investor that the Company’s
decision to enter into the Transaction Documents to which it is a party has been
based solely on the independent evaluation of the transactions contemplated
thereby by the Company and its representatives. The Company acknowledges and
agrees that the Investor has not made and does not make any representations or
warranties with respect to the transactions contemplated by the Transaction
Documents other than those specifically set forth in Article IV of this
Agreement.  

 

20

 

 

ARTICLE VI
ADDITIONAL COVENANTS

 

The Company covenants with the Investor, and the Investor covenants with the
Company, as follows, which covenants of one party are for the benefit of the
other party, during the Investment Period:

 

Section 6.1.           Securities Compliance. The Company shall notify the
Commission and the Trading Market, if and as applicable, in accordance with
their respective rules and regulations, of the transactions contemplated by the
Transaction Documents, and shall take all necessary action, undertake all
proceedings and obtain all registrations, permits, consents and approvals for
the legal and valid issuance of the Securities to the Investor in accordance
with the terms of the Transaction Documents, as applicable.

 

Section 6.2.           Reservation of Common Stock. The Company has available
and the Company shall reserve and keep available at all times, free of
preemptive and other similar rights of stockholders, the requisite aggregate
number of authorized but unissued shares of Common Stock to enable the Company
to timely effect the issuance, sale and delivery in full to the Investor of all
Securities to be issued and delivered under this Agreement, in any case prior to
the issuance to the Investor of such Securities. The number of shares of Common
Stock so reserved from time to time, as theretofore increased or reduced as
hereinafter provided, may be reduced by the number of shares of Common Stock
actually delivered pursuant to this Agreement.

 

Section 6.3.           Registration and Listing.  The Company shall take all
action necessary to cause the Common Stock to continue to be registered as a
class of securities under Sections 12(g) of the Exchange Act, shall comply with
its reporting and filing obligations under the Exchange Act, and shall not take
any action or file any document (whether or not permitted by the Securities Act
or the Exchange Act) to terminate or suspend such registration or to terminate
or suspend its reporting and filing obligations under the Exchange Act or
Securities Act, except as permitted herein. The Company shall use its reasonable
best efforts to continue the listing and trading of its Common Stock and the
listing of the Securities purchased or acquired by the Investor hereunder on the
Trading Market and to comply with the Company’s reporting, filing and other
obligations under the bylaws, listed securities maintenance standards and other
rules and regulations of the Trading Market. The Company shall not take any
action which could be reasonably expected to result in the delisting or
suspension of the Common Stock on the Trading Market. If the Company receives
any final and non-appealable notice that the listing or quotation of the Common
Stock on the Trading Market shall be terminated on a date certain, the Company
shall promptly (and in any case within 48 hours) notify the Investor of such
fact in writing and shall use its reasonable best efforts to cause the Common
Stock to be listed or quoted on another Trading Market prior to such date
certain. The Company shall use its reasonable best efforts to continue the
quotation and trading of its Common Stock and the quotation of the Securities
purchased or acquired by the Investor hereunder on the OTCQB, including (i)
undertaking a reverse stock split when required in order to regain compliance
with OTCQB’s minimum bid price requirement, (ii) paying the applicable fee, and
(iii) providing the required OTCQB certifications.

 

21

 

 

Section 6.4.          Compliance with Laws.

 

(i)              The Company shall comply, and cause each Subsidiary to comply,
(a) with all laws, rules, regulations and orders applicable to the business and
operations of the Company and its Subsidiaries, except as would not have a
Material Adverse Effect and (b) with all applicable provisions of the Securities
Act and the Exchange Act and the rules and regulations of the Trading Market.
Without limiting the foregoing, neither the Company, nor any of its
Subsidiaries, nor to the Knowledge of the Company, any of their respective
directors, officers, agents, employees or any other Persons acting on their
behalf shall, in connection with the operation of the Company’s and its
Subsidiaries’ respective businesses, (1) use any corporate funds for unlawful
contributions, payments, gifts or entertainment or to make any unlawful
expenditures relating to political activity to government officials, candidates
or members of political parties or organizations, (2) pay, accept or receive any
unlawful contributions, payments, expenditures or gifts, or (3) violate or
operate in noncompliance with any export restrictions, anti-boycott regulations,
embargo regulations or other applicable domestic or foreign laws and
regulations, including, without limitation, the FCPA and the Money Laundering
Laws.

 

(ii)          The Investor shall comply with all laws, rules, regulations and
orders applicable to the performance by it of its obligations under this
Agreement and its investment in the Securities, except as would not,
individually or in the aggregate, prohibit or otherwise interfere with the
ability of the Investor to enter into and perform its obligations under this
Agreement in any material respect. Without limiting the foregoing, the Investor
shall comply with all applicable provisions of the Securities Act and the
Exchange Act, including Regulation M thereunder, and any applicable securities
laws of any non-U.S. jurisdictions.

 

Section 6.5.          Keeping of Records and Books of Account; Due Diligence.

 

(i) The Company shall keep and cause each Subsidiary to keep adequate records
and books of account, in which complete entries shall be made in accordance with
GAAP consistently applied, reflecting all financial transactions of the Company
and its Subsidiaries, and in which, for each fiscal year, all proper reserves
for depreciation, depletion, obsolescence, amortization, taxes, bad debts and
other purposes in connection with its business shall be made.  The Company shall
maintain a system of internal accounting controls that (a) pertain to the
maintenance of records that in reasonable detail accurately and fairly reflect
the transactions and dispositions of the assets of the Company; (b) provide
reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted
accounting principles, and that receipts and expenditures of the Company are
being made only in accordance with authorizations of management and directors of
the Company; and (c) provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use or disposition of the Company’s
assets that could have a material effect on the Company’s financial statements
(it being acknowledged and agreed that the identification by the Company and/or
its independent registered public accounting firm of any “significant
deficiencies” or “material weaknesses” (each as defined by the Public Company
Accounting Oversight Board) in the Company’s internal controls over its
financial reporting shall not, in and of itself, constitute a breach of this
Section 6.5(i)).

 

22

 

 

(ii)               Subject to the requirements of Section 6.16 of this
Agreement, from time to time from and after the Closing Date, the Company shall
make available for inspection and review by the Investor during normal business
hours and after reasonable notice, customary documentation reasonably requested
by the Investor and/or its appointed counsel or advisors to conduct due
diligence; provided, however, that after the Closing Date, the Investor’s
continued due diligence shall not be a condition to the issuance of any Draw
Down Notice or the settlement of any Draw Down.

 

Section 6.6.           Limitations on Holdings and Issuances.  The Company shall
not be obligated to issue and the Investor shall not be obligated to purchase
any shares of Common Stock which would cause the aggregate number of shares of
Common Stock then beneficially owned (as calculated pursuant to Section 13(d) of
the Exchange Act and Rule 13d-3 promulgated thereunder) by the Investor and its
Affiliates to exceed the Ownership Limitation. Promptly following any request by
the Company, the Investor shall inform the Company of the number of shares of
Common Stock then beneficially owned by the Investor and its Affiliates.

 

Section 6.7.          Other Agreements.  The Company shall not enter into,
announce or recommend to its stockholders any agreement, plan, arrangement or
transaction in or of which the terms thereof would restrict, materially delay,
conflict with or impair the ability or right of the Company to perform its
obligations under the Transaction Documents to which it is a party, including,
without limitation, the obligation of the Company to deliver the Shares to the
Investor in respect of a Draw Down on the applicable Settlement Date. For the
avoidance of doubt, nothing in this Section 6.7 shall in any way limit the
Company’s right to terminate this Agreement in accordance with Section 8.1
(subject in all cases to Section 8.3).

 

Section 6.8.           Corporate Existence.  The Company shall take all steps
necessary to preserve and continue the corporate existence of the Company. For
the avoidance of doubt, nothing in this Section 6.8 shall in any way limit the
Company’s right to terminate this Agreement in accordance with Section 8.1
(subject in all cases to Section 8.3).

 

Section 6.9.           Prohibited Transactions. Except as related to the
transactions described herein, during the term of this Agreement, the Company
shall not enter into any Prohibited Transaction without the prior written
consent of the Investor, which consent may be withheld at the sole discretion of
the Investor. For the purposes of this Agreement, the term “Prohibited
Transaction” shall refer to the issuance by the Company of any “future priced
securities,” which shall mean the issuance of shares of Common Stock or
securities of any type whatsoever that are, or may become, convertible or
exchangeable into shares of Common Stock pursuant to any equity line financing
registered under the Securities Act to anyone other than the Investor. For
clarification purposes, the transactions contemplated herein are not considered
Prohibited Transactions.

 

23

 

  

Section 6.10.       Delivery of Registration Statement and Prospectus;
Subsequent Changes. In accordance with the Registration Rights Agreement, the
Company shall deliver or make available to the Investor and its counsel, without
charge, an electronic copy of the Registration Statement, the Prospectus and all
amendments and supplements to the Registration Statement or Prospectus that are
filed with the Commission during any period in which a Prospectus (or in lieu
thereof, the notice referred to in Rule 173(a) under the Securities Act) is
required by the Securities Act to be delivered in connection with resales of the
Registrable Securities, in each case as soon as reasonably practicable after the
filing thereof with the Commission. The Company shall provide the Investor a
reasonable opportunity to comment on a draft of each such document and shall
give due consideration to all such comments. The Company consents to the use of
the Prospectus (and of any Prospectus Supplement thereto) in accordance with the
provisions of the Securities Act and with the securities or “Blue Sky” laws of
the jurisdictions in which the Registrable Securities may be sold by the
Investor, in connection with the resale of the Registrable Securities and for
such period of time thereafter as the Prospectus (or in lieu thereof, the notice
referred to in Rule 173(a) under the Securities Act) is required by the
Securities Act to be delivered in connection with resales of the Registrable
Securities. If during such period of time any event shall occur that in the
reasonable judgment of the Company and its counsel is required to be set forth
in the Registration Statement, the Prospectus or any Prospectus Supplement or
should be set forth therein in order to make the statements made therein (in the
case of the Prospectus or any Prospectus Supplement, in light of the
circumstances under which they were made) not misleading, or if it is necessary
to amend the Registration Statement or supplement or amend the Prospectus or any
Prospectus Supplement to comply with the Securities Act or any other applicable
law or regulation, the Company shall forthwith (i) notify the Investor to
suspend the resale of Registrable Securities during such period and (ii) prepare
and file with the Commission an appropriate amendment to the Registration
Statement or Prospectus Supplement to the Prospectus, and shall expeditiously
furnish or make available to the Investor an electronic copy thereof, so as to
correct such statement or omission or effect such compliance.

 

Section 6.11.       Amendments to the Registration Statement; Prospectus
Supplements. Except as provided in this Agreement and other than periodic
reports required to be filed pursuant to the Exchange Act, the Company shall not
file with the Commission any amendment to the Registration Statement that
relates to the Investor, the Transaction Documents or the transactions
contemplated thereby or file with the Commission any Prospectus Supplement that
relates to the Investor, the Transaction Documents or the transactions
contemplated thereby with respect to which (a) the Investor shall not previously
have been advised, (b) the Company shall not have given due consideration to any
comments thereon received from the Investor or its counsel, or (c) the Investor
shall reasonably object after being so advised, unless it is necessary to amend
the Registration Statement or make any supplement to the Prospectus to comply
with the Securities Act or any other applicable law or regulation, in which case
the Company shall promptly so inform the Investor, the Investor shall be
provided with a reasonable opportunity to review and comment upon any disclosure
relating to the Investor and the Company shall expeditiously furnish to the
Investor an electronic copy thereof. In addition, for so long as, in the
reasonable opinion of counsel for the Investor, the Prospectus (or in lieu
thereof, the notice referred to in Rule 173(a) under the Securities Act) is
required to be delivered in connection with any sales of Registrable Securities
by the Investor, the Company shall not file any Prospectus Supplement without
delivering or making available a copy of such Prospectus Supplement to the
Investor promptly. Upon receipt of amendment to the Registration Statement or
Prospectus Supplement from the Company or its counsel, the Investor shall
promptly review such document and provide comments to the Company or its counsel
regarding such document, if any, within a reasonable period of time.

 

24

 

  

Section 6.12.       Stop Orders.  The Company shall notify the Investor as soon
as possible (but in no event later than 24 hours), and confirm in writing, upon
its becoming aware of the occurrence of any of the following events in respect
of the Registration Statement or related Prospectus or Prospectus Supplement
relating to an offering of Registrable Securities: (i) receipt of any request by
the Commission or any other federal or state governmental authority for any
additional information relating to the Registration Statement, the Prospectus or
any Prospectus Supplement, or for any amendment of or supplement to the
Registration Statement, the Prospectus, or any Prospectus Supplement; (ii) the
issuance by the Commission or any other federal or state governmental authority
of any stop order suspending the effectiveness of the Registration Statement or
prohibiting or suspending the use of the Prospectus or any Prospectus
Supplement, or of the suspension of qualification or exemption from
qualification of the Securities for offering or sale in any jurisdiction, or the
initiation or contemplated initiation of any proceeding for such purpose; and
(iii) any event or the existence of any condition or state of facts, which makes
any statement of a material fact made in the Registration Statement, the
Prospectus or any Prospectus Supplement untrue or which requires the making of
any additions to or changes to the statements then made in the Registration
Statement, the Prospectus or any Prospectus Supplement in order to state a
material fact required by the Securities Act to be stated therein or necessary
in order to make the statements then made therein (in the case of the Prospectus
or any Prospectus Supplement, in light of the circumstances under which they
were made) not misleading, or which requires an amendment to the Registration
Statement or a supplement to the Prospectus or any Prospectus Supplement to
comply with the Securities Act or any other law (other than the transactions
contemplated by any Draw Down Notice and the settlement thereof). The Company
shall not be required to disclose to the Investor the substance or specific
reasons of any of the events set forth in clauses (i) through (iii) of the
immediately preceding sentence, but rather, shall only be required to disclose
that the event has occurred.  The Company shall not issue any Draw Down during
the continuation of any of the foregoing events. If at any time the Commission
or any other federal or state governmental authority shall issue any stop order
suspending the effectiveness of the Registration Statement or prohibiting or
suspending the use of the Prospectus or any Prospectus Supplement, the Company
shall use commercially reasonable efforts to obtain the withdrawal of such order
at the earliest possible time.

 

Section 6.13.      Selling Restrictions.

 

(i)               Except as expressly set forth below, the Investor covenants
that from and after the Closing Date through and including the Trading Day next
following the expiration or termination of this Agreement, neither the Investor
nor any of its Affiliates nor any entity managed or controlled by the Investor
shall, directly or indirectly maintain a net short position in the Company’s
Common Stock.

 

25

 

 

(ii)               In addition to the foregoing, in connection with any sale of
Securities (including any sale permitted by paragraph (i) above), the Investor
shall comply in all respects with all applicable laws, rules, regulations and
orders, including, without limitation, the requirements of the Securities Act
and the Exchange Act.

 

Section 6.14.       Effective Registration Statement.  During the Investment
Period, the Company shall use its best efforts to maintain the continuous
effectiveness of the Registration Statement under the Securities Act.

 

Section 6.15.       Blue Sky.  The Company shall take such action, if any, as is
necessary in order to obtain an exemption for or to qualify the Securities for
issuance and sale to the Investor pursuant to the Transaction Documents, at the
request of the Investor, and the subsequent resale of Registrable Securities by
the Investor, in each case, under applicable state securities or “Blue Sky” laws
and shall provide evidence of any such action so taken to the Investor from time
to time following the Closing Date; provided, however, that the Company shall
not be required in connection therewith or as a condition thereto to (x) qualify
to do business in any jurisdiction where it would not otherwise be required to
qualify but for this Section 6.15, (y) subject itself to general taxation in any
such jurisdiction, or (z) file a general consent to service of process in any
such jurisdiction.

 

Section 6.16.       Non-Public Information.  Neither the Company or any of its
Subsidiaries, nor any of their respective directors, officers, employees or
agents shall disclose any material non-public information about the Company to
the Investor, unless a simultaneous public announcement thereof is made by the
Company in the manner contemplated by Regulation FD. In the event of a breach of
the foregoing covenant by the Company or any of its Subsidiaries, or any of
their respective directors, officers, employees and agents (as determined in the
reasonable good faith judgment of the Investor), (i) the Investor shall promptly
provide written notice of such breach to the Company and (ii) after such notice
has been provided to the Company and in addition to any other remedy provided
herein or in the other Transaction Documents, the Investor shall have the right
to make a public disclosure, in the form of a press release, public
advertisement or otherwise, of such material, non-public information without the
prior approval by the Company, any of its Subsidiaries, or any of their
respective directors, officers, employees or agents; provided that the Company
shall have failed to publicly disclose such material, non-public information
within 24 hours following demand therefor by the Investor. The Investor shall
not have any liability to the Company, any of its Subsidiaries, or any of their
respective directors, officers, employees, stockholders or agents, for any such
disclosure.

 

Section 6.17.       Broker/Dealer.  The Investor shall use one or more
broker-dealers to effectuate all sales, if any, of Securities that it may
purchase or otherwise acquire from the Company pursuant to the Transaction
Documents, as applicable, which (or whom) shall be unaffiliated with the
Investor and not then currently engaged or used by the Company (collectively,
the “Broker-Dealer”). The Investor shall, from time to time, provide the Company
with all information regarding the Broker-Dealer reasonably requested by the
Company. The Investor shall be solely responsible for all fees and commissions
of the Broker-Dealer, which shall not exceed customary brokerage fees and
commissions.

 

26

 

  

Section 6.18.      Disclosure Schedule.

 

(i)           The Company may, from time to time, update the Disclosure Schedule
as may be required to satisfy the condition set forth in Section 7.2(i).  For
purposes of this Section 6.18, any disclosure made in a schedule to the
Certificate substantially in the form attached hereto as Exhibit C shall be
deemed to be an update of the Disclosure Schedule. Notwithstanding anything in
this Agreement to the contrary, no update to the Disclosure Schedule pursuant to
this Section 6.18 shall cure any breach of a representation or warranty of the
Company contained in this Agreement and made prior to the update and shall not
affect any of the Investor’s rights or remedies with respect thereto.

 

(ii)          Notwithstanding anything to the contrary contained in the
Disclosure Schedule or in this Agreement, the information and disclosure
contained in any Schedule of the Disclosure Schedule shall be deemed to be
disclosed and incorporated by reference in any other Schedule of the Disclosure
Schedule as though fully set forth in such Schedule for which applicability of
such information and disclosure is readily apparent on its face.  The fact that
any item of information is disclosed in the Disclosure Schedule shall not be
construed to mean that such information is required to be disclosed by this
Agreement.  Except as expressly set forth in this Agreement, such information
and the thresholds (whether based on quantity, qualitative characterization,
dollar amounts or otherwise) set forth herein shall not be used as a basis for
interpreting the terms “material” or “Material Adverse Effect” or other similar
terms in this Agreement. 

 

ARTICLE VII
CONDITIONS TO CLOSING AND CONDITIONS TO THE SALE AND
PURCHASE OF THE SHARES

 

Section 7.1.         Conditions Precedent to Closing. The Closing is subject to
the satisfaction of each of the conditions set forth in this Section 7.1.

 

(i)            Accuracy of the Investor’s Representations and Warranties.  The
representations and warranties of the Investor contained in this Agreement (a)
that are not qualified by “materiality” shall be true and correct in all
material respects as of the Closing Date, except to the extent such
representations and warranties are as of another date, in which case, such
representations and warranties shall be true and correct in all material
respects as of such other date and (b) that are qualified by “materiality” shall
be true and correct as of the Closing Date, except to the extent such
representations and warranties are as of another date, in which case, such
representations and warranties shall be true and correct as of such other date.

 

(ii)           Accuracy of the Company’s Representations and Warranties.  The
representations and warranties of the Company contained in this Agreement (a)
that are not qualified by “materiality” or “Material Adverse Effect” shall be
true and correct in all material respects as of the Closing Date, except to the
extent such representations and warranties are as of another date, in which
case, such representations and warranties shall be true and correct in all
material respects as of such other date and (b) that are qualified by
“materiality” or “Material Adverse Effect” shall be true and correct as of the
Closing Date, except to the extent such representations and warranties are as of
another date, in which case, such representations and warranties shall be true
and correct as of such other date.

 

27

 

 

(iii)          Intentionally Left Blank.

 

(iv)          Closing Deliverables. At the Closing, counterpart signature pages
of this Agreement, the Registration Rights Agreement and Escrow Agreement
executed by each of the parties thereto shall be delivered as provided in
Section 2.2. Simultaneously with the execution and delivery of this Agreement,
the Registration Rights Agreement and the Escrow Agreement, the Investor’s
counsel shall have received a Closing Certificate from the Company, dated the
Closing Date, in the form of Exhibit C hereto.

 

 Section 7.2.  Conditions Precedent to a Draw Down. The right of the Company to
deliver a Draw Down Notice and the obligation of the Investor to accept a Draw
Down Notice and to acquire and pay for the Shares in accordance therewith is
subject to the satisfaction, at each Draw Down Exercise Date and at each
Settlement Date (except as otherwise expressly set forth below), of each of the
conditions set forth in this Section 7.2.

 

(i)            Accuracy of the Company’s Representations and Warranties.  The
representations and warranties of the Company contained in this Agreement (a)
that are not qualified by “materiality” or “Material Adverse Effect” shall have
been true and correct in all material respects when made and shall be true and
correct in all material respects as of the applicable Draw Down Exercise Date
and the applicable Settlement Date with the same force and effect as if made on
such dates, except to the extent such representations and warranties are as of
another date, in which case, such representations and warranties shall be true
and correct in all material respects as of such other date and (b) that are
qualified by “materiality” or “Material Adverse Effect” shall have been true and
correct when made and shall be true and correct as of the applicable Draw Down
Exercise Date and the applicable Settlement Date with the same force and effect
as if made on such dates, except to the extent such representations and
warranties are as of another date, in which case, such representations and
warranties shall be true and correct as of such other date. 

 

(ii)           Performance of the Company.  The Company shall have performed,
satisfied and complied in all material respects with all covenants, agreements
and conditions required by this Agreement and the Registration Rights Agreement
to be performed, satisfied or complied with by the Company at or prior to the
applicable Draw Down Exercise Date and the applicable Settlement Date. The
Company shall have delivered to the Investor on the applicable Settlement Date
the Compliance Certificate substantially in the form attached hereto as Exhibit
D. 

 

(iii)          Registration Statement Effective. The Registration Statement
covering the resale by the Investor of the Registrable Securities shall have
been declared effective under the Securities Act by the Commission or shall have
become effective pursuant to Section 8 of the Securities Act and shall remain
effective, and the Investor shall be permitted to utilize the Prospectus therein
to resell (a) all of the Shares issued pursuant to all prior Draw Down Notices,
and (b) all of the Shares issuable pursuant to the applicable Draw Down Notice.

 

28

 

 

(iv)             No Material Notices. None of the following events shall have
occurred and be continuing: (a) receipt of any request by the Commission or any
other federal or state governmental authority for any additional information
relating to the Registration Statement, the Prospectus or any Prospectus
Supplement, or for any amendment of or supplement to the Registration Statement,
the Prospectus, or any Prospectus Supplement; (b) the issuance by the Commission
or any other federal or state governmental authority of any stop order
suspending the effectiveness of the Registration Statement or prohibiting or
suspending the use of the Prospectus or any Prospectus Supplement, or of the
suspension of qualification or exemption from qualification of the Securities
for offering or sale in any jurisdiction, or the initiation or contemplated
initiation of any proceeding for such purpose; or (c) the occurrence of any
event or the existence of any condition or state of facts, which makes any
statement of a material fact made in the Registration Statement, the Prospectus
or any Prospectus Supplement untrue or which requires the making of any
additions to or changes to the statements then made in the Registration
Statement, the Prospectus or any Prospectus Supplement in order to state a
material fact required by the Securities Act to be stated therein or necessary
in order to make the statements then made therein (in the case of the Prospectus
or any Prospectus Supplement, in light of the circumstances under which they
were made) not misleading, or which requires an amendment to the Registration
Statement or a supplement to the Prospectus or any Prospectus Supplement to
comply with the Securities Act or any other law (other than the transactions
contemplated by the applicable Draw Down Notice and the settlement thereof). The
Company shall have no Knowledge of any event that could reasonably be expected
to have the effect of causing the suspension of the effectiveness of the
Registration Statement or the prohibition or suspension of the use of the
Prospectus or any Prospectus Supplement in connection with the resale of the
Registrable Securities by the Investor.

 

(v)               Other Commission Filings. The Current Report shall have been
filed with the Commission as required pursuant to Section 2.3, and the final
Prospectus and all other Prospectus Supplements required to have been filed with
the Commission pursuant to Section 2.3 and pursuant to the Registration Rights
Agreement shall have been filed with the Commission in accordance with Section
2.3 and the Registration Rights Agreement. All reports, schedules,
registrations, forms, statements, information and other documents required to
have been filed by the Company with the Commission pursuant to the reporting
requirements of the Exchange Act, including all material required to have been
filed pursuant to Section 13(a) or 15(d) of the Exchange Act, shall have been
filed with the Commission and, if any Registrable Securities are covered by a
Registration Statement on Form S-3, such filings shall have been made within the
applicable time period prescribed for such filing under the Exchange Act.

 

(vi)             No Suspension of Trading in or Notice of Delisting of Common
Stock.  Trading in the Common Stock shall not have been suspended by the
Commission, the Trading Market or the FINRA (except for any suspension of
trading of limited duration agreed to by the Company, which suspension shall be
terminated prior to the applicable Draw Down Exercise Date), the Company shall
not have received any final and non-appealable notice that the listing or
quotation of the Common Stock on the Trading Market shall be terminated on a
date certain (unless, prior to such date certain, the Common Stock is listed or
quoted on any other Trading Market), and trading in securities generally as
reported on the Trading Market shall not have been suspended or limited, nor
shall a banking moratorium have been declared either by the U.S. or New York
State authorities (except for any suspension, limitation or moratorium which
shall be terminated prior to the applicable Draw Down Exercise Date), nor shall
there have occurred any material outbreak or escalation of hostilities or other
national or international calamity or crisis that has had or would reasonably be
expected to have a material adverse change in any U.S. financial, credit or
securities market that is continuing as of the applicable Draw Down Exercise
Date.

 

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(vii)           Compliance with Laws.  The Company shall have complied with all
applicable federal, state and local governmental laws, rules, regulations and
ordinances in connection with the execution, delivery and performance of this
Agreement and the other Transaction Documents to which it is a party and the
consummation of the transactions contemplated hereby and thereby, including,
without limitation, the Company shall have obtained all permits and
qualifications required by any applicable state securities or “Blue Sky” laws
for the offer and sale of the Securities by the Company to the Investor and the
subsequent resale of the Registrable Securities by the Investor (or shall have
the availability of exemptions therefrom).

 

(viii)         No Injunction.  No statute, regulation, order, decree, writ,
ruling or injunction shall have been enacted, entered, promulgated, threatened
or endorsed by any court or governmental authority of competent jurisdiction
which prohibits the consummation of or which would materially modify or delay
any of the transactions contemplated by the Transaction Documents.

 

(ix)             No Proceedings or Litigation.  No action, suit or proceeding
before any arbitrator or any court or governmental authority shall have been
commenced or threatened, and no inquiry or investigation by any governmental
authority shall have been commenced or threatened, against the Company or any
Subsidiary, or any of the officers, directors or affiliates of the Company or
any Subsidiary, seeking to restrain, prevent or change the transactions
contemplated by the Transaction Documents, or seeking material damages in
connection with such transactions.  

 

(x)               Aggregate Limit.   The issuance and sale of the Shares
issuable pursuant to such Draw Down Notice shall not violate Sections 3.1, 3.7
and 6.6 hereof.

 

(xi)             Securities Authorized and Delivered.  The Shares issuable
pursuant to such Draw Down Notice shall have been duly authorized by all
necessary corporate action of the Company. The Company shall have delivered all
Shares relating to all prior Draw Down Notices.

 

(xii)           Listing of Securities.   All of the Securities that may be
issued pursuant to this Agreement shall have been approved for listing or
quotation on the Trading Market as of the Closing Date, subject only to notice
of issuance.

 

(xiii)         No Material Adverse Effect.  No condition, occurrence, state of
facts or event constituting a Material Adverse Effect shall have occurred and be
continuing.

 

(xiv)         No Prohibited Transaction. The Company shall not have entered into
any Prohibited Transaction.

 

(xv)           Intentionally Left Blank.

 

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ARTICLE VIII
TERMINATION

 

Section 8.1.           Termination.  Unless earlier terminated as provided
hereunder, this Agreement shall terminate automatically on the earlier to occur
of (i) the first day of the month next following the 36-month anniversary of the
Effective Date (it being hereby acknowledged and agreed that such term may not
be extended by the parties hereto) and (ii) the date on which the Investor shall
have purchased or acquired shares of Common Stock pursuant to this Agreement
equal to the Aggregate Limit. Subject to Section 8.3, the Company may, provided
that shares of Common Stock aggregating no less than twenty-five percent (25%)
of the Total Commitment shall have been sold by the Company to the Investor
pursuant hereto, terminate this Agreement effective upon one Trading Day’s prior
written notice to the Investor in accordance with Section 10.4. Subject to
Section 8.3, this Agreement may be terminated at any time by the mutual written
consent of the parties, effective as of the date of such mutual written consent
unless otherwise provided in such written consent.

 

Section 8.2.           Other Termination.  Subject to Section 8.3, the Investor
shall have the right to terminate this Agreement effective upon one Trading
Day’s prior written notice to the Company in accordance with Section 10.4, if:
(i) any condition, occurrence, state of facts or event constituting a Material
Adverse Effect has occurred and is continuing; (ii) the Registration Statement
is not filed by the filing deadline (as described in the Registration Rights
Agreement) or declared effective within six (6) months of the date hereof, or
the Company is otherwise in breach or default in any material respect under any
of the other provisions of the Registration Rights Agreement, and, if such
failure, breach or default is capable of being cured, such failure, breach or
default is not cured within 10 Trading Days after notice of such failure, breach
or default is delivered to the Company pursuant to Section 10.4; (iii) while the
Registration Statement is required to be maintained effective pursuant to the
terms of the Registration Rights Agreement and the Investor holds any
Registrable Securities, the effectiveness of the Registration Statement lapses
for any reason (including, without limitation, the issuance of a stop order) or
the Registration Statement, the Prospectus or any Prospectus Supplement is
otherwise unavailable to the Investor for the resale of all of the Registrable
Securities in accordance with the terms of the Registration Rights Agreement,
and such lapse or unavailability continues for a period of 20 consecutive
Trading Days or for more than an aggregate of 60 Trading Days in any 365-day
period, other than due to acts of the Investor; (iv) trading in the Common Stock
on the Trading Market shall have been suspended or the Common Stock shall have
failed to be listed or quoted on a Trading Market, and such suspension or
failure continues for a period of 20 consecutive Trading Days or for more than
an aggregate of 60 Trading Days in any 365-day period; (v) the Company has filed
for and/or is subject to any bankruptcy, insolvency, reorganization or
liquidation proceedings or other proceedings for relief under any bankruptcy law
or any law for the relief of debtors instituted by or against the Company or
(vi) the Company is in material breach or default of this Agreement, and, if
such breach or default is capable of being cured, such breach or default is not
cured within 10 Trading Days after notice of such breach or default is delivered
to the Company pursuant to Section 10.4. Unless notification thereof is required
elsewhere in this Agreement (in which case such notification shall be provided
in accordance with such other provision), the Company shall promptly (but in no
event later than 24 hours) notify the Investor (and, if required under
applicable law, including, without limitation, Regulation FD promulgated by the
Commission, or under the applicable rules and regulations of the Trading Market,
the Company shall publicly disclose such information in accordance with
Regulation FD and the applicable rules and regulations of the Trading Market)
upon becoming aware of any of the events set forth in the immediately preceding
sentence.

 

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Section 8.3.           Effect of Termination.  In the event of termination by
the Company or the Investor pursuant to Section 8.1 or 8.2, as applicable,
written notice thereof shall forthwith be given to the other party as provided
in Section 10.4 and the transactions contemplated by this Agreement shall be
terminated without further action by either party. If the Agreement is
terminated by the Company, one million shares of the Common Stock held in escrow
in accordance with the Escrow Agreement shall be released to the Investor and
the remaining six (6) million such shares shall be returned to the Company. If
this Agreement is terminated as provided in Section 8.1 or 8.2 herein, this
Agreement shall become void and of no further force and effect, except that (i)
the provisions of Article V (Representations and Warranties of the Company),
Article IX (Indemnification), Article X (Miscellaneous) (excluding Section
10.1(v)) and this Article VIII (Termination) shall remain in full force and
effect indefinitely notwithstanding such termination, and, (ii) so long as the
Investor owns any Securities, the covenants and agreements of the Company
contained in Article VI (Additional Covenants) shall remain in full force and
notwithstanding such termination for a period of six months following such
termination. Notwithstanding anything in this Agreement to the contrary, no
termination of this Agreement by any party shall (i) become effective prior to
the first Trading Day immediately following the Settlement Date related to any
pending Draw Down Notice that has not been fully settled in accordance with the
terms and conditions of this Agreement (it being hereby acknowledged and agreed
that no termination of this Agreement shall limit, alter, modify, change or
otherwise affect any of the Company’s or the Investor’s rights or obligations
under the Transaction Documents with respect to any pending Draw Down, and that
the parties shall fully perform their respective obligations with respect to any
such pending Draw Down under the Transaction Documents, provided  all of the
conditions to the settlement thereof set forth in Article VII are timely
satisfied), or (ii) limit, alter, modify, change or otherwise affect the
Company’s or the Investor’s rights or obligations under the Registration Rights
Agreement, all of which shall survive any such termination. Nothing in this
Section 8.3 shall be deemed to release the Company or the Investor from any
liability for any breach or default under this Agreement or any of the other
Transaction Documents to which it is a party, or to impair the rights of the
Company and the Investor to compel specific performance by the other party of
its obligations under the Transaction Documents to which it is a party.

 

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ARTICLE IX
INDEMNIFICATION

 

Section 9.1.           Indemnification of Investor. In consideration of the
Investor’s execution and delivery of this Agreement and acquiring the Shares
hereunder and in addition to all of the Company’s other obligations under the
Transaction Documents to which it is a party, subject to the provisions of this
Section 9.1, the Company shall indemnify and hold harmless the Investor, each of
its directors, officers, shareholders, members, partners, employees,
representatives, agents and advisors (and any other Persons with a functionally
equivalent role of a Person holding such titles notwithstanding the lack of such
title or any other title), each Person, if any, who controls the Investor
(within the meaning of Section 15 of the Securities Act or Section 20(a) of the
Exchange Act), and the respective directors, officers, shareholders, members,
partners, employees, representatives, agents and advisors (and any other Persons
with a functionally equivalent role of a Person holding such titles
notwithstanding the lack of such title or any other title) of such controlling
Persons (each, an “Investor Party”), from and against all losses, liabilities,
obligations, claims, contingencies, damages, costs and expenses (including all
judgments, amounts paid in settlement, court costs, reasonable attorneys’ fees
and costs of defense and investigation) (collectively, “Damages”) that any
Investor Party may suffer or incur as a result of or relating to (a) any breach
of any of the representations, warranties, covenants or agreements made by the
Company in this Agreement or in the other Transaction Documents to which it is a
party or (b) any action, suit, claim or proceeding (including for these purposes
a derivative action brought on behalf of the Company) instituted against such
Investor Party arising out of or resulting from the execution, delivery,
performance or enforcement of the Transaction Documents, other than claims for
indemnification within the scope of Section 6 of the Registration Rights
Agreement; provided, however, that (x) the foregoing indemnity shall not apply
to any Damages to the extent, but only to the extent, that such Damages resulted
directly and primarily from a breach of any of the Investor’s representations,
warranties, covenants or agreements contained in this Agreement or the
Registration Rights Agreement, and (y) the Company shall not be liable under
subsection (b) of this Section 9.1 to the extent, but only to the extent, that a
court of competent jurisdiction shall have determined by a final judgment (from
which no further appeals are available) that such Damages resulted directly and
primarily from any acts or failures to act, undertaken or omitted to be taken by
such Investor Party through its fraud, bad faith, gross negligence, or willful
or reckless misconduct.

 

The Company shall reimburse any Investor Party promptly upon demand (with
accompanying presentation of documentary evidence) for all legal and other costs
and expenses reasonably incurred by such Investor Party in connection with (i)
any action, suit, claim or proceeding, whether at law or in equity, to enforce
compliance by the Company with any provision of the Transaction Documents or
(ii) any other any action, suit, claim or proceeding, whether at law or in
equity, with respect to which it is entitled to indemnification under this
Section 9.1; provided  that the Investor shall promptly reimburse the Company
for all such legal and other costs and expenses to the extent a court of
competent jurisdiction determines that any Investor Party was not entitled to
such reimbursement.

 

An Investor Party’s right to indemnification or other remedies based upon the
representations, warranties, covenants and agreements of the Company set forth
in the Transaction Documents shall not in any way be affected by any
investigation or knowledge of such Investor Party. Such representations,
warranties, covenants and agreements shall not be affected or deemed waived by
reason of the fact that an Investor Party knew or should have known that any
representation or warranty might be inaccurate or that the Company failed to
comply with any agreement or covenant. Any investigation by such Investor Party
shall be for its own protection only and shall not affect or impair any right or
remedy hereunder.

 

To the extent that the foregoing undertakings by the Company set forth in this
Section 9.1 may be unenforceable for any reason, the Company shall make the
maximum contribution to the payment and satisfaction of each of the Damages
which is permissible under applicable law.  

 

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Section 9.2.           Indemnification Procedures.  Promptly after an Investor
Party receives notice of a claim or the commencement of an action for which the
Investor Party intends to seek indemnification under Section 9.1, the Investor
Party will notify the Company in writing of the claim or commencement of the
action, suit or proceeding; provided, however, that failure to notify the
Company will not relieve the Company from liability under Section 9.1, except to
the extent it has been materially prejudiced by the failure to give notice.  The
Company will be entitled to participate in the defense of any claim, action,
suit or proceeding as to which indemnification is being sought, and if the
Company acknowledges in writing the obligation to indemnify the Investor Party
against whom the claim or action is brought, the Company may (but will not be
required to) assume the defense against the claim, action, suit or proceeding
with counsel satisfactory to it.  After the Company notifies the Investor Party
that the Company wishes to assume the defense of a claim, action, suit or
proceeding, the Company will not be liable for any further legal or other
expenses incurred by the Investor Party in connection with the defense against
the claim, action, suit or proceeding except that if, in the opinion of counsel
to the Investor Party, it would be inappropriate under the applicable rules of
professional responsibility for the same counsel to represent both the Company
and such Investor Party.  In such event, the Company will pay the reasonable
fees and expenses of no more than one separate counsel for all such Investor
Parties promptly as such fees and expenses are incurred. Each Investor Party, as
a condition to receiving indemnification as provided in Section 9.1, will
cooperate in all reasonable respects with the Company in the defense of any
action or claim as to which indemnification is sought.  The Company will not be
liable for any settlement of any action effected without its prior written
consent, which consent shall not be unreasonably withheld, delayed, denied, or
conditioned. The Company will not, without the prior written consent of the
Investor Party, effect any settlement of a pending or threatened action with
respect to which an Investor Party is, or is informed that it may be, made a
party and for which it would be entitled to indemnification, unless the
settlement includes an unconditional release of the Investor Party from all
liability and claims which are the subject matter of the pending or threatened
action.

 

The remedies provided for in this Article IX are not exclusive and shall not
limit any rights or remedies which may otherwise be available to any Investor
Party at law or in equity.

 

ARTICLE X
MISCELLANEOUS

 

Section 10.1.      Fees and Expenses. Each party shall bear its own fees and
expenses related to the transactions contemplated by this Agreement; provided,
however, that the Investor has agreed to reimburse and pay directly to the
Company’s counsel a registration statement preparation fee in the aggregate
amount of $15,000 (collectively, the “Registration Statement Preparation Fee”)
For the avoidance of doubt, the Registration Statement Fee (and any portion
thereof) shall be non-refundable when paid, regardless of whether any Draw Downs
are issued by the Company or settled hereunder. The Company shall pay all U.S.
federal, state and local stamp and other similar transfer and other taxes and
duties levied in connection with issuance of the Securities pursuant hereto.

 

34

 

 

Section 10.2.      Specific Enforcement, Consent to Jurisdiction, Waiver of Jury
Trial.

 

(i)                 The Company and the Investor acknowledge and agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that either party shall be entitled
to an injunction or injunctions to prevent or cure breaches of the provisions of
this Agreement by the other party and to enforce specifically the terms and
provisions hereof (without the necessity of showing economic loss and without
any bond or other security being required), this being in addition to any other
remedy to which either party may be entitled by law or equity.

 

(ii)               Each of the Company and the Investor (a) hereby irrevocably
submits to the jurisdiction of the U.S. District Court and other courts of the
United States sitting in the State of New York for the purposes of any suit,
action or proceeding arising out of or relating to this Agreement, and (b)
hereby waives, and agrees not to assert in any such suit, action or proceeding,
any claim that it is not personally subject to the jurisdiction of such court,
that the suit, action or proceeding is brought in an inconvenient forum or that
the venue of the suit, action or proceeding is improper. Each of the Company and
the Investor consents to process being served in any such suit, action or
proceeding by mailing a copy thereof to such party at the address in effect for
notices to it under this Agreement and agrees that such service shall constitute
good and sufficient service of process and notice thereof. Nothing in this
Section 10.2 shall affect or limit any right to serve process in any other
manner permitted by law.

 

(iii)             EACH OF THE COMPANY AND THE INVESTOR HEREBY WAIVES TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN RESPECT TO ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER
OR IN CONNECTION WITH THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR
DISPUTES RELATING HERETO. EACH OF THE COMPANY AND THE INVESTOR (A) CERTIFIES
THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT
AND THE OTHER PARTIES HERETO HAVE BEEN TO ENTER INTO THIS AGREEMENT BY, AMONG
OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 10.2.

 

Section 10.3.       Entire Agreement; Amendment.  The Transaction Documents set
forth the entire agreement and understanding of the parties with respect to the
subject matter hereof and supersedes all prior and contemporaneous agreements,
negotiations and understandings between the parties, both oral and written, with
respect to such matters. There are no promises, undertakings, representations or
warranties by either party relative to subject matter hereof not expressly set
forth in the Transaction Documents. No provision of this Agreement may be
amended by the parties from and after the date that is one Trading Day
immediately preceding the initial filing of the Registration Statement with the
Commission. Subject to the immediately preceding sentence, no provision of this
Agreement may be amended other than by a written instrument signed by both
parties hereto. The Disclosure Schedule and all exhibits to this Agreement are
hereby incorporated by reference in, and made a part of, this Agreement as if
set forth in full herein.  

 

35

 

 

Section 10.4.       Notices.  Any notice, demand, request, waiver or other
communication required or permitted to be given hereunder shall be in writing
and shall be effective (a) upon hand delivery or facsimile (with facsimile
machine confirmation of delivery received) at the address or number designated
below (if delivered on a business day during normal business hours where such
notice is to be received), or the first business day following such delivery (if
delivered other than on a business day during normal business hours where such
notice is to be received) or (b) on the second business day following the date
of mailing by express courier service, fully prepaid, addressed to such address,
or upon actual receipt of such mailing, whichever shall first occur. The address
for such communications shall be:

 

If to the Company:

 

Soul and Vibe Interactive Inc. 

1660 South Hwy 100, Suite 500 

St. Louis Park, MN 55416 

Telephone Number: (763) 400-8040 

Fax: (763) 6455364
Attention: Peter Anthony Chiodo, CEO and President

 

With a copy (which shall not constitute notice) to:

 

Sichenzia Ross Friedman Ference LLP 

61 Broadway
New York, NY 10006
Telephone Number: (212) 930-9700
Fax:  (212) 930-9725
Attention: Richard A. Friedman, Esq. 

 

If to the Investor:

 

Beaufort Capital Partners LLC

660 White Plains Road, Suite 455

Tarrytown, NY 10591
Telephone Number: (914) 332-4500
Fax: (914) 332-4577
Attention:  Leib Schaeffer, Managing Member

 

With a copy (which shall not constitute notice) to:

 

Matthew McMurdo, Esq.

28 West 44th Street, 16th Floor

New York, NY 10036

Telephone Number: (917) 318-2865
Fax: (866) 606-8914
Attention: Matthew McMurdo

 

Either party hereto may from time to time change its address for notices by
giving at least 10 days advance written notice of such changed address to the
other party hereto.

 

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Section 10.5.       Waivers.  No provision of this Agreement may be waived by
the parties from and after the date that is one Trading Day immediately
preceding the initial filing of the Registration Statement with the Commission.
Subject to the immediately preceding sentence, no provision of this Agreement
may be waived other than in a written instrument signed by the party against
whom enforcement of such waiver is sought. No failure or delay in the exercise
of any power, right or privilege hereunder shall operate as a waiver thereof,
nor shall any single or partial exercise of any such power, right or privilege
preclude other or further exercises thereof or of any other right, power or
privilege.

 

Section 10.6.       Headings.  The article, section and subsection headings in
this Agreement are for convenience only and shall not constitute a part of this
Agreement for any other purpose and shall not be deemed to limit or affect any
of the provisions hereof. Unless the context clearly indicates otherwise, each
pronoun herein shall be deemed to include the masculine, feminine, neuter,
singular and plural forms thereof. The terms “including,” “includes,” “include”
and words of like import shall be construed broadly as if followed by the words
“without limitation.”  The terms “herein,” “hereunder,” “hereof” and words of
like import refer to this entire Agreement instead of just the provision in
which they are found.

 

Section 10.7.       Construction. The parties agree that each of them and their
respective counsel has reviewed and had an opportunity to revise the Transaction
Documents and, therefore, the normal rule of construction to the effect that any
ambiguities are to be resolved against the drafting party shall not be employed
in the interpretation of the Transaction Documents. In addition, each and every
reference to share prices and shares of Common Stock in any Transaction Document
shall be subject to adjustment for any stock splits, stock combinations, stock
dividends, recapitalizations and other similar transactions that occur on or
after the date of this Agreement. Any reference in this Agreement to “Dollars”
or “$” shall mean the lawful currency of the United States of America.

 

Section 10.8.       Successors and Assigns.  This Agreement shall be binding
upon and inure to the benefit of the parties and their respective successors and
assigns. The Company may not assign this Agreement or any rights or obligations
hereunder to any Person without the prior written consent of the Investor, which
may be withheld or delayed in the Investor’s sole discretion, including by any
Fundamental Transaction. The Investor may not assign its rights or obligations
under this Agreement.

 

Section 10.9.       No Third Party Beneficiaries.  Except as expressly provided
in Article IX, this Agreement is intended only 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.

 

Section 10.10.   Governing Law.  This Agreement shall be governed by and
construed in accordance with the internal procedural and substantive laws of the
State of New York, without giving effect to the choice of law provisions of such
state that would cause the application of the laws of any other jurisdiction.  

 

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Section 10.11.   Survival.  The representations, warranties, covenants and
agreements of the Company and the Investor contained in this Agreement shall
survive the execution and delivery hereof until the termination of this
Agreement; provided, however, that (i) the provisions of Article V
(Representations and Warranties of the Company), Article VIII (Termination),
Article IX (Indemnification) and this Article X (Miscellaneous) (excluding
Section 10.1(v)) shall remain in full force and effect indefinitely
notwithstanding such termination, and, (ii) so long as the Investor owns any
Securities, the covenants and agreements of the Company contained in Article VI
(Additional Covenants), shall remain in full force and effect notwithstanding
such termination for a period of six months following such termination.

 

Section 10.12.   Counterparts.  This Agreement may be executed in counterparts,
all of which taken together shall constitute one and the same original and
binding instrument and shall become effective when all counterparts have been
signed by each party and delivered to the other parties hereto, it being
understood that all parties hereto need not sign the same counterpart. In the
event any signature is delivered by facsimile, digital or electronic
transmission, such transmission shall constitute delivery of the manually
executed original and the party using such means of delivery shall thereafter
cause four additional executed signature pages to be physically delivered to the
other parties within five days of the execution and delivery hereof.  Failure to
provide or delay in the delivery of such additional executed signature pages
shall not adversely affect the efficacy of the original delivery.

 

Section 10.13.   Publicity.  The Investor shall have the right to approve, prior
to issuance or filing, any press release, Commission filing or any other public
disclosure made by or on behalf of the Company relating to the Investor, its
purchases hereunder or any aspect of the Transaction Documents or the
transactions contemplated thereby; provided, however, that except as otherwise
provided in this Agreement, the Company shall be entitled, without the prior
approval of the Investor, to make any press release or other public disclosure
(including any filings with the Commission) with respect thereto as is required
by applicable law and regulations (including the regulations of the Trading
Market), so long as prior to making any such press release or other public
disclosure, if reasonably practicable, the Company and its counsel shall have
provided the Investor and its counsel with a reasonable opportunity to review
and comment upon, and shall have consulted with the Investor and its counsel on
the form and substance of, such press release or other disclosure. For the
avoidance of doubt, the Company shall not be required to submit for review any
such disclosure (i) contained in periodic reports filed with the Commission
under the Exchange Act if it shall have previously provided the same disclosure
for review in connection with a previous filing or (ii) any Prospectus
Supplement if it contains disclosure that does not reference the Investor, its
purchases hereunder or any aspect of the Transaction Documents or the
transactions contemplated thereby.

 

Section 10.14.   Severability.  The provisions of this Agreement are severable
and, in the event that any court of competent jurisdiction shall determine that
any one or more of the provisions or part of the provisions contained in this
Agreement shall, for any reason, be held to be invalid, illegal or unenforceable
in any respect, such invalidity, illegality or unenforceability shall not affect
any other provision or part of a provision of this Agreement, and this Agreement
shall be reformed and construed as if such invalid or illegal or unenforceable
provision, or part of such provision, had never been contained herein, so that
such provisions would be valid, legal and enforceable to the maximum extent
possible.  

 

38

 

  

Section 10.15.   Further Assurances.  From and after the Closing Date, upon the
request of the Investor or the Company, each of the Company and the Investor
shall execute and deliver such instrument, documents and other writings as may
be reasonably necessary or desirable to confirm and carry out and to effectuate
fully the intent and purposes of this Agreement.

 

[Signature Page Follows] 

 

39

 

  

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

 

  SOUL AND VIBE INTERACTIVE INC.:         By:     Name: Peter Anthony Chiodo  
Title: Chief Executive Officer         BEAUFORT CAPITAL PARTNERS LLC, a New York
limited liability company:         By:     Name: Leib Schaeffer   Title:
Managing Member

 

40

 

  

ANNEX I TO THE
COMMON STOCK PURCHASE AGREEMENT
DEFINITIONS 

 

“Affiliate” means any Person that, directly or indirectly through one or more
intermediaries, controls, is controlled by, or is under common control with a
Person, as such terms are used in and construed under Rule 144.  With respect to
the Investor, without limitation, any Person owning, owned by, or under common
ownership with the Investor, and any investment fund or managed account that is
managed on a discretionary basis by the same investment manager as the Investor
will  be deemed to be an Affiliate.

 

“Aggregate Limit” shall have the meaning assigned to such term in Section 2.1
hereof.

 

“Agreement” shall have the meaning assigned to such term in the preamble hereof.

 

“Announcement Date” shall have the meaning assigned to such term in Section 3.8
hereof.

 

“Broker-Dealer” shall have the meaning assigned to such term in Section 6.17
hereof.

 

“Bylaws” shall have the meaning assigned to such term in Section 5.3 hereof.

 

“Charter” shall have the meaning assigned to such term in Section 5.3 hereof.

 

“Closing” shall have the meaning assigned to such term in Section 2.2 hereof.

 

“Closing Date” means the date of this Agreement.

 

“Code” means the Internal Revenue Code of 1986, as amended.

 

“Commission” means the U.S. Securities and Exchange Commission or any successor
entity.

 

“Commission Documents” shall mean (1) all reports, schedules, registrations,
forms, statements, information and other documents filed with or furnished to
the Commission by the Company pursuant to the reporting requirements of the
Exchange Act, including all material filed or furnished pursuant to Section
13(a), 13(c), 14 or 15(d) of the Exchange Act, and which hereafter shall be
filed with or furnished to the Commission by the Company, including, without
limitation, the Current Report, (2) the Registration Statement, as the same may
be amended from time to time, the Prospectus and each Prospectus Supplement and
(3) all information contained in such filings and all documents and disclosures
that have been and heretofore shall be incorporated by reference therein.

 

“Common Stock” shall have the meaning assigned to such term in the recitals
hereof.

 

“Company” shall have the meaning assigned to such term in the preamble hereof.

 

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“Current Report” shall have the meaning assigned to such term in Section 2.3
hereof.

 

“Damages” shall have the meaning assigned to such term in Section 9.1 hereof.

 

 “Disclosure Schedule” shall have the meaning assigned to such term in the
preamble to Article V hereof.

 

“Discount Price” means a price equal to 71% of the average of the lowest trading
price occurring on two separate days during the applicable Pricing Period.  

 

“Draw Down” means the transactions contemplated in Article III of this Agreement
with respect to any Draw Down Notice delivered by the Company in accordance with
Article III of this Agreement.

 

“Draw Down Amount” means the actual amount of proceeds received by the Company
pursuant to a Draw Down under this Agreement.

 

“Draw Down Amount Requested” shall mean the specific numbers of shares of Common
Stock requested by the Company in a Draw Down Notice delivered pursuant to
Section 3.1, up to the Maximum Draw Down Amount Requested.

 

“Draw Down Exercise Date” shall have the meaning assigned to such term in
Section 3.1 hereof.

 

“Draw Down Notice” shall have the meaning assigned to such term in Section 3.1
hereof.

 

“DTC” means The Depository Trust Company, or any successor thereto.

 

“EDGAR” means the Commission’s Electronic Data Gathering, Analysis and Retrieval
System.

 

“Effective Date” means the first Trading Day immediately following the date on
which the initial Registration Statement filed pursuant to Section 2(a) of the
Registration Rights Agreement is declared effective by the Commission or becomes
effective pursuant to Section 8 of the Securities Act.

 

“Environmental Laws” shall have the meaning assigned to such term in Section
5.18 hereof.

 

“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as
amended.

 

“Escrow Agreement” shall mean that certain escrow agreement, of even date
herewith, by and among the Company, the Investor and Matthew McMurdo, Esq.

 

2

 

  

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

 

“FCPA” shall have the meaning assigned to such term in Section 5.36 hereof.

 

“Filing Time” shall have the meaning assigned to such term in Section 3.8
hereof.  

 

“FINRA” means the Financial Industry Regulatory Authority.

 

“GAAP” shall mean generally accepted accounting principles in the United States
of America as applied by the Company.

 

“Governmental Licenses” shall have the meaning assigned to such term in Section
5.17 hereof.

 

“Indebtedness” shall have the meaning assigned to such term in Section 5.11
hereof.

 

“Intellectual Property” shall have the meaning assigned to such term in Section
5.17(b) hereof.

 

“Investment Period” means the period commencing on the Effective Date and
expiring on the date this Agreement is terminated pursuant to Article VIII
hereof.  

 

“Investor” shall have the meaning assigned to such term in the preamble hereof.

 

“Investor Party” shall have the meaning assigned to such term in Section 9.1
hereof.

 

“Knowledge” means the actual knowledge of the Company’s Chief Executive Officer
or Chief Financial Officer, after reasonable inquiry of all officers, directors
and employees of the Company who could reasonably be expected to have knowledge
or information with respect to the matter in question.

 

“Material Adverse Effect” means (i) any condition, occurrence, state of facts or
event having, or insofar as reasonably can be foreseen would likely have, any
material adverse effect on the legality, validity or enforceability of the
Transaction Documents or the transactions contemplated thereby, (ii) any
condition, occurrence, state of facts or event having, or insofar as reasonably
can be foreseen would likely have, any effect on the business, operations,
properties or financial condition of the Company that is material and adverse to
the Company and its Subsidiaries, taken as a whole, and/or (iii) any condition,
occurrence, state of facts or event that would, or insofar as reasonably can be
foreseen would likely, prohibit or otherwise materially interfere with or delay
the ability of the Company to perform any of its obligations under any of the
Transaction Documents to which it is a party; provided, however, that none of
the following, individually or in the aggregate, shall be taken into account in
determining whether a Material Adverse Effect has occurred or insofar as
reasonably can be foreseen would likely occur: (a) changes in conditions in the
U.S. or global capital, credit or financial markets generally, including changes
in the availability of capital or currency exchange rates, provided such changes
shall not have affected the Company in a materially disproportionate manner as
compared to other similarly situated companies; (b) changes generally affecting
the mineral resources exploration industry, provided such changes shall not have
affected the Company in a materially disproportionate manner as compared to
other similarly situated companies; (c) any effect of the announcement of, or
the consummation of the transactions contemplated by, this Agreement and the
other Transaction Documents on the Company’s relationships, contractual or
otherwise, with customers, suppliers, vendors, bank lenders, strategic venture
partners or employees; and (d) the receipt of any notice that the Common Stock
may be ineligible to continue listing or quotation on the Trading Market, other
than a final and non-appealable notice that the listing or quotation of the
Common Stock on the Trading Market shall be terminated on a date certain
(unless, prior to such date certain, the Common Stock is listed or quoted on any
other Trading Market).

 

3

 

 

“Material Agreements” shall have the meaning assigned to such term in Section
5.19 hereof.

 

“Maximum Draw Down Amount Requested” shall have the meaning set forth in Section
3.4.

 

“Money Laundering Laws” shall have the meaning assigned to such term in Section
5.37 hereof.

 

“OFAC” shall have the meaning assigned to such term in Section 5.38 hereof.

 

“Ownership Limitation” shall have the meaning assigned to such term in Section
3.7 hereof.

 

“Person” means any person or entity, whether a natural person, trustee,
corporation, partnership, limited partnership, limited liability company, trust,
unincorporated organization, business association, firm, joint venture,
governmental agency or authority.

 

“Plan” shall have the meaning assigned to such term in Section 5.24 hereof.

 

“Press Release” shall have the meaning assigned to such term in Section 2.3
hereof.

 

“Pricing Period” shall mean, with respect to each Draw Down, a period of five
consecutive Trading Days immediately preceding the date of the Draw Down Notice
in accordance with Section 3.1 hereof.

 

“Prohibited Transaction” shall have the meaning assigned to such term in Section
6.9 hereof.

 

“Prospectus” means the prospectus in the form included in the Registration
Statement, as supplemented from time to time by any Prospectus Supplement,
including the documents incorporated by reference therein.

 

“Prospectus Supplement” means any prospectus supplement to the Prospectus filed
with the Commission from time to time pursuant to Rule 424(b) under the
Securities Act, including the documents incorporated by reference therein.

 

4

 

 

“Registrable Securities” shall have the meaning assigned to such term in the
Registration Rights Agreement.

 

“Registration Rights Agreement” shall have the meaning assigned to such term in
the recitals hereof.

 

“Registration Statement” shall have the meaning assigned to such term in the
Registration Rights Agreement.

 

“Regulation D” shall mean Regulation D promulgated by the Commission under the
Securities Act.

 

“Required Delivery Date” shall have the meaning assigned to such term in Section
10.1(iv) hereto.

 

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

 

“Securities” means, collectively, the Shares.

 

“Securities Act” shall mean the Securities Act of 1933, as amended, and the
rules and regulations of the Commission thereunder.

 

“Settlement Date” shall have the meaning assigned to such term in Section 3.5
hereof.

 

“Shares” shall mean the whole shares of Common Stock that are and/or may be
purchased by the Investor under this Agreement pursuant to one or more Draw
Downs.

 

“Short Sales” shall mean “short sales” as defined in Rule 200 promulgated under
Regulation SHO under the Exchange Act.

 

“SOXA” shall mean the Sarbanes-Oxley Act of 2002 and the rules and regulations
of the Commission thereunder.

 

“Subsidiary” shall mean any corporation or other entity of which at least a
majority of the securities or other ownership interest having ordinary voting
power for the election of directors or other persons performing similar
functions are at the time owned directly or indirectly by the Company and/or any
of its other Subsidiaries.

 

“Total Commitment” shall have the meaning assigned to such term in Section 2.1
hereof.

 

“Trading Day” shall mean a full trading day (beginning at 9:30 a.m., New York
City time, and ending at 4:00 p.m., New York City time) on the Trading Market.

 

5

 

 

“Trading Market” means the OTCQB operated by OTC Markets Group
Inc.; provided, however, that in the event the Common Stock is ever listed or
quoted on the NASDAQ Global Market, the NASDAQ Global Select Market, the NASDAQ
Capital Market, the New York Stock Exchange, NYSE Arca, the NYSE MKT, or the
OTCQX operated by OTC Markets Group Inc., then the “Trading Market” shall mean
such other market or exchange or any successor to the foregoing on which the
Common Stock is then listed or quoted.  

 

“Transaction Documents” means, collectively, this Agreement (as qualified by the
Disclosure Schedule) and the exhibits hereto, the Registration Rights Agreement
and each of the other agreements, documents, certificates and instruments
entered into or furnished by the parties hereto in connection with the
transactions contemplated hereby and thereby.

 

6

 

 

EXHIBIT A TO THE
COMMON STOCK PURCHASE AGREEMENT
FORM OF REGISTRATION RIGHTS AGREEMENT  

 

1

 

 

EXHIBIT B TO THE
COMMON STOCK PURCHASE AGREEMENT
FORM OF DRAW DOWN NOTICE

 

Reference is made to the Common Stock Purchase Agreement dated as of February
11, 2015 (the  “Purchase Agreement”) between Soul and Vibe Interactive Inc., a
corporation organized and existing under the laws of the State of Nevada (the
“Company”), and Beaufort Capital Partners LLC, a New York limited liability
company. Capitalized terms used and not otherwise defined herein shall have the
meanings given such terms in the Purchase Agreement. In accordance with and
pursuant to Section 3.1 of the Purchase Agreement, the Company hereby issues
this Draw Down Notice to exercise a Draw Down for the Draw Down Amount Requested
indicated below.

 

Draw Down Amount Requested:

  Pricing Period start date:   Pricing Period end date:   Settlement Date:  

 

On behalf of the Company, the undersigned hereby certifies to the Investor that
(i) the above Draw Down Amount Requested does not exceed the Maximum Draw Down
Amount Requested, (ii) the sale of Shares pursuant to this Draw Down Notice
shall not cause the Company to sell or the Investor to purchase shares of Common
Stock which, when aggregated with all purchases made by the Investor pursuant to
all prior Draw Down Notices issued under the Purchase Agreement, would exceed
the Aggregate Limit, (iii) to the Company’s Knowledge, the sale of Shares
pursuant to this Draw Down Notice shall not cause the Company to sell or the
Investor to purchase shares of Common Stock which would cause the aggregate
number of shares of Common Stock then beneficially owned (as calculated pursuant
to Section 13(d) of the Exchange Act and Rule 13d-3 promulgated thereunder) by
the Investor and its Affiliates to exceed the Ownership Limitation, (iv) as of
the date hereof, the Company does not possess any material non-public
information, and (v) the Company has performed, satisfied and complied in all
material respects with all covenants, agreements and conditions required by the
Purchase Agreement and the Registration Rights Agreement to be performed,
satisfied or complied with by the Company at or prior to the date hereof and
shall perform, satisfy and comply in all material respects with all covenants,
agreements and conditions required by the Purchase Agreement and the
Registration Rights Agreement to be performed, satisfied or complied with by the
Company at or prior to the applicable settlement date, including without
limitation, delivery of all certificates and bring down opinions required to be
delivered by the Purchase Agreement.

 

1

 

  

 Dated:     By:         Name         Title:                   Address:       
Facsimile No. AGREED AND ACCEPTED      

 

By:           Name         Title:      

 

2

 

 

EXHIBIT C TO THE
COMMON STOCK PURCHASE AGREEMENT
CERTIFICATE OF THE COMPANY

 

CLOSING CERTIFICATE

 

_________ 20__

 

The undersigned, the [___________] of Soul and Vibe Interactive Inc., a
corporation organized and existing under the laws of the State of Nevada (the
“Company”), delivers this certificate in connection with the Common Stock
Purchase Agreement, dated as of February 11, 2015 (the “Agreement”), by and
between the Company and Beaufort Capital Partners LLC, a New York
limited liability company (the “Investor”), and hereby certifies on the date
hereof that (capitalized terms used herein without definition have the meanings
assigned to them in the Agreement):

 

1.         Attached hereto as Exhibit A is a true, complete and correct copy of
the Articles of Incorporation of the Company as filed with the Secretary of
State of the State of Nevada as amended to date. The Articles of Incorporation
of the Company have not been further amended or restated, and no document with
respect to any amendment to the Articles of Incorporation of the Company has
been filed in the office of the Secretary of State of the State of Nevada since
the date shown on the face of the state certification relating to the Company’s
Articles of Incorporation, which is in full force and effect on the date hereof,
and no action has been taken by the Company in contemplation of any such
amendment or the dissolution, merger or consolidation of the Company.

 

2.         Attached hereto as Exhibit B is a true and complete copy of the
Bylaws of the Company, as amended and restated through, and as in full force and
effect on, the date hereof, and no proposal for any amendment, repeal or other
modification to the Bylaws of the Company has been taken or is currently pending
before the Board of Directors or stockholders of the Company.

 

3.         The Board of Directors of the Company has approved the transactions
contemplated by the Transaction Documents; said approval has not been amended,
rescinded or modified and remains in full force and effect as of the date
hereof.

 

4.         Each person who, as an officer of the Company, or as attorney-in-fact
of an officer of the Company, signed the Transaction Documents to which the
Company is a party, was duly elected, qualified and acting as such officer or
duly appointed and acting as such attorney-in-fact, and the signature of each
such person appearing on any such document is his genuine signature.

 

IN WITNESS WHEREOF, I have signed my name as of the date first above written.

 

      Name:   Title:

 

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EXHIBIT D TO THE
COMMON STOCK PURCHASE AGREEMENT
COMPLIANCE CERTIFICATE

 

In connection with the issuance of shares of common stock of Soul and Vibe
Interactive Inc., a corporation organized and existing under the laws of the
State of Nevada (the “Company”), pursuant to the Draw Down Notice, dated
[_____________], delivered by the Company to Beaufort Capital Partners LLC, a
New York limited liability company (the “Investor”) pursuant to Article III of
the Common Stock Purchase Agreement, dated as of February 11, 2015, by and
between the Company and the Investor (the “Agreement”), the undersigned hereby
certifies to the Investor as follows:

 

1.         The undersigned is the duly appointed Chief Executive Officer of the
Company.

 

2.         Except as set forth in the attached Disclosure Schedule, the
representations and warranties of the Company set forth in Article V of the
Agreement (i) that are not qualified by “materiality” or “Material Adverse
Effect” are true and correct in all material respects as of [insert Draw Down
Exercise Date] and as of the date hereof with the same force and effect as if
made on such dates, except to the extent such representations and warranties are
as of another date, in which case, such representations and warranties are true
and correct in all material respects as of such other date and (ii) that are
qualified by “materiality” or “Material Adverse Effect” are true and correct as
of [insert Draw Down Exercise Date] and as of the date hereof with the same
force and effect as if made on such dates, except to the extent such
representations and warranties are as of another date, in which case, such
representations and warranties are true and correct as of such other date.

 

3.         The Company has performed, satisfied and complied in all material
respects with all covenants, agreements and conditions required by the Agreement
and the Registration Rights Agreement to be performed, satisfied or complied
with by the Company at or prior to [insert Draw Down Exercise Date] and the date
hereof.

 

4.         The Shares issuable on the date hereof in respect of the Draw Down
Notice referenced above shall be delivered electronically by crediting the
Investor’s or its designees’ account at DTC through its Deposit/Withdrawal at
Custodian (DWAC) system, and shall be freely tradable and transferable and
without restriction on resale.

 

5.         As of [insert Fixed Request Exercise Date] and the date hereof, the
Company did not and does not possess any material non-public information.

 

Capitalized terms used but not otherwise defined herein shall have the meanings
assigned to them in the Agreement.

 

The undersigned has executed this Certificate this [___] day of [___________],
20[__].

 

  By:           Name:           Title:  

 

1