**Exhibit 10.13**

 

SECURITIES PURCHASEAGREEMENT

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This SECURITIES PURCHASEAGREEMENT (this “Agreement”), dated as of February 11, 2016, is entered into by and between InCapta, Inc., a Nevadacorporation (the “Company”), and EMA Financial, LLC, a Delaware limited liability company (the “Purchaser”).

 

WHEREAS, subject to theterms and conditions set forth in this Agreement and pursuant to Section 4(2) of the Securities Act of 1933, as amended (the “SecuritiesAct” or “1933 Act”), and Rule 506 promulgated thereunder by the United States Securities and Exchange Commission(the “SEC”), the Company desires to issue and sell to the Purchaser, and the Purchaser desires to purchase from theCompany a 10% Convertible Note of the Company, in the form attached hereto as Exhibit A, in the principal amount of $60,000.00(together with any note(s) issued in replacement thereof or as interest thereon or otherwise with respect thereto in accordancewith the terms thereof, the “Note”), convertible into shares (“Conversion Shares”) of common stock, $0.001par value per share (the “Common Stock”), of the Company, upon the terms and subject to the limitations and conditionsset forth in such Note.

 

NOW, THEREFORE, IN CONSIDERATIONof the mutual covenants contained in this Agreement, and for other good and valuable consideration, the receipt and adequacy ofwhich are hereby acknowledged, the Company and the Purchaser agree as follows:

 

1.           Purchase and Sale of Note.

 

(a)          Purchaseof Note. On the Closing Date (as defined below), the Company shall issue and sell to the Purchaser, and the Purchaser agreesto purchase from the Company, the Note for an aggregate purchase price of $54,000.00 (“Purchase Price”).

 

 

 

(b)          Form of Payment.On the Closing Date (i) the Purchaser shall pay the Purchase Price by wire transfer of immediately available funds to the Company,in accordance with the Company’s written wiring instructions, simultaneously with delivery of the Note, and (ii) the Companyshall deliver such Note duly executed on behalf of the Company to the Purchaser, simultaneously with delivery of such PurchasePrice.

 

(c)          Closing Date.Subject to the satisfaction (or written waiver) of the conditions thereto set forth in Section 6 and Section 7 below, the closingof the transactions contemplated by this Agreement (the “Closing”) shall occur on the first business day followingthe date hereof or such other mutually agreed upon time (the “Closing Date”) at the offices of Purchaser’s counsel.

 

2.           Purchaser’s Representations and Warranties. ThePurchaser represents and warrants to the Company that:

 

(a)          Investment Purpose.Purchaser is acquiring the Securities for its own account and not with a view towards, or for resale in connection with, the publicsale or distribution thereof in violation of applicable securities laws; provided, however, by making the representations herein,Purchaser does not agree, or make any representation or warranty, to hold any of the Securities for any minimum or other specificterm and reserves the right to dispose of the Securities at any time in accordance with or pursuant to a registration statementor an exemption under the 1933 Act. The Purchaser is acquiring the Securities hereunder in the ordinary course of its business.The Purchaser does not presently have any agreement or understanding, directly or indirectly, with any person to distribute anyof the Securities in violation of applicable securities laws.

 

(b)          Accredited InvestorStatus. The Purchaser is an “accredited investor” as that term is defined in Rule 501(a) of Regulation D (an “AccreditedInvestor”).

 

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

 

(d)          Information.The Purchaser and its advisors, if any, have been, and for so long as the Securities remain outstanding will continue to be, furnishedwith all materials relating to the business, finances and operations of the Company and materials relating to the offer and saleof the Securities which have been reasonably requested by the Purchaser or its advisors, provided that the Purchaser has not beenfurnished with, and the Company shall not in the future deliver to the Purchaser without its consent, any material non-public informationconcerning the Company. The Purchaser and its advisors, if any, have been, and for so long as the Securities remain outstandingwill continue to be, afforded the opportunity to ask questions of the Company. Neither such inquiries nor any other due diligenceinvestigation conducted by Purchaser or any of its advisors or representatives shall modify, amend or affect Purchaser’sright to rely on the Company’s representations and warranties contained in Section 3 below. The Purchaser understands thatits investment in the Securities involves a significant degree of risk.

 

 

 

(e)          GovernmentalReview. The Purchaser understands that no United States federal or state agency or any other government or governmental agencyhas passed upon or made any recommendation or endorsement of the Securities.

 

(f)           Transfer or Resale.The Purchaser understands that (i) the sale or re-sale of the Securities has not been and is not being registered under the 1933Act or any applicable state securities laws, and the Securities may not be transferred unless (a) the Securities are sold pursuantto an effective registration statement under the 1933 Act, (b) the Purchaser shall have delivered to the Company an opinion ofcounsel that shall be in form, substance and scope customary for opinions of counsel in comparable transactions to the effect thatthe securities to be sold or transferred may be sold or transferred pursuant to an exemption from such registration, which opinionshall be reasonably acceptable to the Company, (c) the Securities are sold or transferred to an “affiliate” (as definedin Rule 144 promulgated under the 1933 Act (or a successor rule) (“Rule 144”) of the Purchaser who agrees to sell orotherwise transfer the Securities only in accordance with this Section 2(f) and who is an Accredited Investor, (d) the Securitiesare sold pursuant to Rule 144, or (e) the Securities are sold pursuant to Regulation S under the 1933 Act (or a successor rule)(“Regulation S”) and the Purchaser shall have delivered to the Company an opinion of counsel reasonably acceptableto the Company relating to such Regulation S; (ii) any sale of such Securities made in reliance on Rule 144 may be made only inaccordance with the terms of such Rule and further, if such Rule is not applicable, any re-sale of such Securities under circumstancesin which the seller (or the person through whom the sale is made) may be deemed to be an underwriter (as that term is defined inthe 1933 Act) may require compliance with some other exemption under the 1933 Act or the rules and regulations of the SEC thereunder;and (iii) neither the Company nor any other person is under any obligation to register such Securities under the 1933 Act or anystate securities laws or to comply with the terms and conditions of any exemption thereunder (in each case). Notwithstanding theforegoing or anything else contained herein to the contrary, the Securities may be pledged as collateral in connection with a bonafide margin account or other lending arrangement.

 

(g)          Legends.The Purchaser understands that the Securities have been issued (or will be issued in the case of the Conversion Shares) pursuantto an exemption from registration or qualification under the 1933 Act and applicable state securities laws, and except as set forthbelow, the Securities shall bear any legend as required by the “blue sky” laws of any state and a restrictive legendin substantially the following form (and a stop-transfer order may be placed against transfer of such stock certificates):

 

 

 

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

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The legend set forth above shall be removedand the Company shall issue a certificate without such legend to the holder of any Security upon which it is stamped, if, unlessotherwise required by applicable state securities laws, (a) such Security is registered for sale under an effective registrationstatement filed under the 1933 Act or otherwise may be sold pursuant to Rule 144 or Regulation S without any restriction as tothe number of securities as of a particular date that can then be immediately sold, or (b) such holder provides the Company withan opinion of counsel at the Company’s expense, in the form, substance and scope customary for opinions of counsel in comparabletransactions, to the effect that a public sale or transfer of such Security may be made without registration under the 1933 Act,which opinion shall be reasonably accepted by the Company so that the sale or transfer is effected. The Purchaser agrees to sellall Securities, including those represented by a certificate(s) from which the legend has been removed, in compliance with applicableprospectus delivery requirements, if any.

 

(h)          Authorization;Enforcement. This Agreement has been duly and validly authorized. This Agreement has been duly executed and delivered on behalfof the Purchaser, and this Agreement constitutes a valid and binding agreement of the Purchaser enforceable in accordance withits terms.

 

3.           Representations and Warranties of the Company. TheCompany represents and warrants to the Purchaser, as of the date hereof and the Closing Date, that:

 

(a)          Organizationand Qualification. The Company and each of its Subsidiaries (as defined below), if any, is a corporation duly organized, validlyexisting and in good standing under the laws of the jurisdiction in which it is incorporated, with full power and authority (corporateand other) to own, lease, use and operate its properties and to carry on its business as and where now owned, leased, used, operatedand conducted. Schedule 3(a) sets forth a list of all of the Subsidiaries of the Company and the jurisdiction in which each isincorporated. The Company and each of its Subsidiaries is duly qualified as a foreign corporation to do business and is in goodstanding in every jurisdiction in which its ownership or use of property or the nature of the business conducted by it makes suchqualification necessary except where the failure to be so qualified or in good standing would not have a Material Adverse Effect.“Material Adverse Effect” means any material adverse effect on the business, operations, assets, financial conditionor prospects of the Company or its Subsidiaries, if any, taken as a whole, or on the transactions contemplated hereby or by theagreements or instruments to be entered into in connection herewith. “Subsidiaries” means any corporation or otherorganization, whether incorporated or unincorporated, in which the Company owns, directly or indirectly, any equity or other ownershipinterest.

 

 

 

(b)          Authorization;Enforcement. (i) The Company has all requisite corporate power and authority to enter into and perform this Agreement and theNote and to consummate the transactions contemplated hereby and thereby and to issue the Securities, in accordance with the termshereof and thereof, (ii) the execution and delivery of this Agreement and the Note by the Company and the consummation by it ofthe transactions contemplated hereby and thereby (including without limitation, the issuance of the Note and the issuance and reservationfor issuance of the Conversion Shares issuable upon conversion and exercise thereof) have been duly authorized by the Company’sBoard of Directors and no further consent or authorization of the Company, its Board of Directors, or its shareholders is required,(iii) this Agreement has been duly executed and delivered by the Company by its authorized representative, and such authorizedrepresentative is the true and official representative with authority to sign this Agreement and the other documents executed inconnection herewith and bind the Company accordingly, and (iv) this Agreement constitutes, and upon execution and delivery by theCompany of the Note and each of such instruments will constitute, a legal, valid and binding obligation of the Company enforceableagainst the Company in accordance with its terms.

 

(c)          Capitalization.As of the date hereof, the authorized capital stock of the Company, and number of shares issued and outstanding, is as set forthin the Company’s most recent periodic report filed with the SEC. Except as disclosed on Schedule 3(c) hereof, no shares arereserved for issuance pursuant to the Company’s stock option plans. Except as disclosed in the SEC Documents no shares arereserved for issuance pursuant to securities exercisable for, or convertible into or exchangeable for shares of Common Stock. Allof such outstanding shares of capital stock are, or upon issuance will be, duly authorized, validly issued, fully paid and non-assessable.No shares of capital stock of the Company are subject to preemptive rights or any other similar rights of the shareholders of theCompany or any liens or encumbrances imposed through the actions or failure to act of the Company. As of the effective date ofthis Agreement, and except as disclosed in the SEC Documents, (i) there are no outstanding options, warrants, scrip, rights tosubscribe for, puts, calls, rights of first refusal, agreements, understandings, claims or other commitments or rights of any characterwhatsoever relating to, or securities, notes or rights convertible into or exchangeable for any shares of capital stock of theCompany or any of its Subsidiaries, or arrangements by which the Company or any of its Subsidiaries is or may become bound to issueadditional shares of capital stock of the Company or any of its Subsidiaries, (ii) there are no agreements or arrangements underwhich the Company or any of its Subsidiaries is obligated to register the sale of any of its or their securities under the 1933Act and (iii) there are no anti-dilution or price adjustment provisions contained in any security issued by the Company (or inany agreement providing rights to security holders) that will be triggered by the issuance of any of the Securities. The Companyhas furnished to the Purchaser true and correct copies of the Company’s Certificate of Incorporation as in effect on thedate hereof (“Certificate of Incorporation”), the Company’s By-laws, as in effect on the date hereof (the “By-laws”),and the terms of all securities convertible into or exercisable for Common Stock of the Company and the material rights of theholders thereof in respect thereto.

 

 

 

(d)          Issuance of Shares.The Conversion Shares are duly authorized and reserved for issuance and, upon conversion of the Note, as the case may be, in accordancewith their respective terms, will be validly issued, fully paid and non-assessable, and free from all taxes, liens, claims andencumbrances with respect to the issue thereof and shall not be subject to preemptive rights or other similar rights of shareholdersof the Company and will not impose personal liability upon the holder thereof.

 

(e)          Acknowledgmentof Dilution. The Company’s executive officers and directors understand the nature of the Securities being sold herebyand recognize that the issuance of the Securities will have a potential dilutive effect on the equity holdings of other holdersof the Company’s equity or rights to receive equity of the Company. The board of directors of the Company has concluded,in its good faith business judgment that the issuance of the Securities is in the best interests of the Company. The Company specificallyacknowledges that its obligation to issue the Conversion Shares upon conversion of the Notes is binding upon the Company and enforceableregardless of the dilution such issuance may have on the ownership interests of other stockholders of the Company or parties entitledto receive equity of the Company.

 

(f)           No Conflicts.The execution, delivery and performance of this Agreement, the Note by the Company and the consummation by the Company of the transactionscontemplated hereby and thereby (including, without limitation, the issuance and reservation for issuance of the Conversion Shares)will not (i) conflict with or result in a violation of any provision of the Certificate of Incorporation or By-laws, or (ii) violateor conflict with, or result in a breach of any provision of, or constitute a default (or an event which with notice or lapse oftime or both could become a default) under, or give to others any, patent license or instrument to which the Company or any ofits Subsidiaries is a party and that is not filed as an SEC Document or other document filed with the SEC, or (iii) result in aviolation of any law, rule, regulation, order, judgment or decree (including federal and state securities laws and regulationsand regulations of any self-regulatory organizations to which the Company or its securities are subject) applicable to the Companyor any of its Subsidiaries or by which any property or asset of the Company or any of its Subsidiaries is bound or affected (exceptfor such conflicts, defaults, terminations, amendments, accelerations, cancellations and violations as would not, individuallyor in the aggregate, have a Material Adverse Effect). Neither the Company nor any of its Subsidiaries is in violation of its Certificateof Incorporation, By-laws or other organizational documents and neither the Company nor any of its Subsidiaries is in default (andno event has occurred which with notice or lapse of time or both could put the Company or any of its Subsidiaries in default) under,and neither the Company nor any of its Subsidiaries has taken any action or failed to take any action that would give to othersany rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or instrument to which the Companyor any of its Subsidiaries is a party or by which any property or assets of the Company or any of its Subsidiaries is bound oraffected, except for possible defaults as would not, individually or in the aggregate, have a Material Adverse Effect. The businessesof the Company and its Subsidiaries, if any, are not being conducted, and shall not be conducted so long as the Purchaser ownsany of the Securities, in violation of any law, ordinance or regulation of any governmental entity. Except as specifically contemplatedby this Agreement and as required under the 1933 Act and any applicable state securities laws, the Company is not required to obtainany consent, authorization or order of, or make any filing or registration with, any court, governmental agency, regulatory agency,self regulatory organization or stock market or any third party in order for it to execute, deliver or perform any of its obligationsunder this Agreement and the Note in accordance with the terms hereof or thereof or to issue and sell the Securities in accordancewith the terms hereof and thereof and to issue the Conversion Shares. All consents, authorizations, orders, filings and registrationswhich the Company is required to obtain pursuant to the preceding sentence have been obtained or effected on or prior to the datehereof. The Company is not in violation of the listing requirements of the Over-the-Counter Bulletin Board (the “OTCBB”),or OTCQB, or OTC Pink and does not reasonably anticipate that the OTCBB, or OTCQB, or OTC Pink will delist the Common Stock inthe foreseeable future. The Company and its Subsidiaries are unaware of any facts or circumstances which might give rise to anyof the foregoing.

 

 

 

(g)          SEC Documents;Financial Statements. The Company has filed all reports, schedules, forms, statements and other documents required to be filedby it with the SEC (all of the foregoing filed prior to the date hereof and all exhibits included therein and financial statementsand schedules thereto and documents (other than exhibits to such documents) incorporated by reference therein, being hereinafterreferred to herein as the “SEC Documents”). Upon written request the Company will deliver to the Purchaser true andcomplete copies of the SEC Documents, except for such exhibits and incorporated documents.

 

As of their respectivedates, the SEC Documents complied in all material respects with the requirements of the Securities Exchange Act of 1934, as amended(“1934 Act” or “Exchange Act”), and none of the SEC Documents, at the time they were filed with the SEC,contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessaryin order to make the statements therein, in light of the circumstances under which they were made, not misleading. None of thestatements made in any such SEC Documents is, or has been, required to be amended or updated under applicable law (except for suchstatements as have been amended or updated in subsequent filings prior the date hereof). As of their respective dates, the financialstatements of the Company included in the SEC Documents complied as to form in all material respects with applicable accountingrequirements and the published rules and regulations of the SEC with respect thereto. Such financial statements have been preparedin accordance with United States generally accepted accounting principles, consistently applied, during the periods involved andfairly present in all material respects the consolidated financial position of the Company and its consolidated Subsidiaries asof the dates thereof and the consolidated results of their operations and cash flows for the periods then ended (subject, in thecase of unaudited statements, to normal year-end audit adjustments). Except as set forth in the financial statements of the Companyincluded in the SEC Documents, the Company has no liabilities, contingent or otherwise, other than (i) liabilities incurred inthe ordinary course of business, and (ii) obligations under contracts and commitments incurred in the ordinary course of businessand not required under generally accepted accounting principles to be reflected in such financial statements, which, individuallyor in the aggregate, are not material to the financial condition or operating results of the Company. The Company is subject tothe reporting requirements of the 1934 Act.

 

 

 

(h)          Absence of CertainChanges. Since November 4, 2015, there has been no material adverse change and no material adverse development in the assets,liabilities, business, properties, operations, financial condition, results of operations, prospects or 1934 Act reporting statusof the Company or any of its Subsidiaries.

 

(i)           Absence of Litigation.There is no action, suit, claim, proceeding, inquiry or investigation before or by any court, public board, government agency,self-regulatory organization or body pending or, to the knowledge of the Company or any of its Subsidiaries, threatened againstor affecting the Company or any of its Subsidiaries, or their officers or directors in their capacity as such, that could havea Material Adverse Effect. Schedule 3(i) contains a complete list and summary description of any pending or, to the knowledge ofthe Company, threatened proceeding against or affecting the Company or any of its Subsidiaries, without regard to whether it wouldhave a Material Adverse Effect. The Company and its Subsidiaries are unaware of any facts or circumstances which might give riseto any of the foregoing.

 

(j)           Patents, Copyrights,etc. The Company and each of its Subsidiaries owns or possesses the requisite licenses or rights to use all patents, patentapplications, patent rights, inventions, know-how, trade secrets, trademarks, trademark applications, service marks, service names,trade names and copyrights (“Intellectual Property”) necessary to enable it to conduct its business as now operated(and, as presently contemplated to be operated in the future); there is no claim or action by any person pertaining to, or proceedingpending, or to the Company’s knowledge threatened, which challenges the right of the Company or of a Subsidiary with respectto any Intellectual Property necessary to enable it to conduct its business as now operated (and, as presently contemplated tobe operated in the future); to the best of the Company’s knowledge, the Company’s or its Subsidiaries’ currentand intended products, services and processes do not infringe on any Intellectual Property or other rights held by any person and/orentity; and the Company is unaware of any facts or circumstances which might give rise to any of the foregoing. The Company andeach of its Subsidiaries have taken reasonable security measures to protect the secrecy, confidentiality and value of their IntellectualProperty.

 

(k)          No MateriallyAdverse Contracts, Etc. Neither the Company nor any of its Subsidiaries is subject to any charter, corporate or other legalrestriction, or any judgment, decree, order, rule or regulation which in the judgment of the Company’s officers has or isexpected in the future to have a Material Adverse Effect. Neither the Company nor any of its Subsidiaries is a party to any contractor agreement which in the judgment of the Company’s officers has or is expected to have a Material Adverse Effect.

 

(l)           Tax Status.The Company and each of its Subsidiaries has made or filed all federal, state and foreign income and all other tax returns, reportsand declarations required by any jurisdiction to which it is subject (unless and only to the extent that the Company and each ofits Subsidiaries has set aside on its books provisions reasonably adequate for the payment of all unpaid and unreported taxes)and has paid all taxes and other governmental assessments and charges that are material in amount, shown or determined to be dueon such returns, reports and declarations, except those being contested in good faith and has set aside on its books provisionsreasonably adequate for the payment of all taxes for periods subsequent to the periods to which such returns, reports or declarationsapply. There are no unpaid taxes in any material amount claimed to be due by the taxing authority of any jurisdiction, and theofficers of the Company know of no basis for any such claim. The Company has not executed a waiver with respect to the statuteof limitations relating to the assessment or collection of any foreign, federal, state or local tax. None of the Company’stax returns is presently being audited by any taxing authority.

 

 

 

(m)         Certain Transactions.Except for arm’s length transactions pursuant to which the Company or any of its Subsidiaries makes payments in the ordinarycourse of business upon terms no less favorable than the Company or any of its Subsidiaries could obtain from third parties andother than the grant of any stock options disclosed on Schedule 3(c), none of the officers, directors, or employees of the Companyis presently a party to any transaction with the Company or any of its Subsidiaries (other than for services as employees, officersand directors), including any contract, agreement or other arrangement providing for the furnishing of services to or by, providingfor rental of real or personal property to or from, or otherwise requiring payments to or from any officer, director or such employeeor, to the knowledge of the Company, any corporation, partnership, trust or other entity in which any officer, director, or anysuch employee has a substantial interest or is an officer, director, trustee or partner.

 

(n)          Disclosure.All information relating to or concerning the Company or any of its Subsidiaries set forth in this Agreement and provided to thePurchaser pursuant to Section 2(d) hereof and otherwise in connection with the transactions contemplated hereby is true and correctin all material respects and the Company has not omitted to state any material fact necessary in order to make the statements madeherein or therein, in light of the circumstances under which they were made, not misleading. No event or circumstance has occurredor exists with respect to the Company or any of its Subsidiaries or its or their business, properties, prospects, operations orfinancial conditions, which, under applicable law, rule or regulation, requires public disclosure or announcement by the Companybut which has not been so publicly announced or disclosed.

 

(o)          AcknowledgmentRegarding Purchaser’ Purchase of Securities. The Company acknowledges and agrees that the Purchaser is acting solelyin the capacity of arm’s length purchaser with respect to this Agreement and the transactions contemplated hereby. The Companyfurther acknowledges that the Purchaser is not acting as a financial advisor or fiduciary of the Company (or in any similar capacity)with respect to this Agreement and the transactions contemplated hereby and any statement made by the Purchaser or any of its respectiverepresentatives or agents in connection with this Agreement and the transactions contemplated hereby is not advice or a recommendationand is merely incidental to the Purchaser’s purchase of the Securities.

 

 

 

(p)          No IntegratedOffering. Neither the Company, nor any of its affiliates, nor any person acting on its or their behalf, has directly or indirectlymade any offers or sales in any security or solicited any offers to buy any security under circumstances that would require registrationunder the 1933 Act of the issuance of the Securities to the Purchaser. The issuance of the Securities to the Purchaser will notbe integrated with any other issuance of the Company’s securities (past, current or future) for purposes of any shareholderapproval provisions applicable to the Company or its securities.

 

(q)          Brokers.The Company hereby represents and warrants that it has not hired, retained or dealt with any broker, finder, consultant, person,firm or corporation in connection with the negotiation, execution or delivery of this Agreement or the transactions contemplatedhereunder. The Company covenants and agrees that should any claim be made against Purchaser for any commission or other compensationby any broker, finder, person, firm or corporation, including without limitation, the Broker, based upon the Company’s engagementof such person in connection with this transaction, the Company shall indemnify, defend and hold Purchaser harmless from and againstany and all damages, expenses (including attorneys’ fees and disbursements) and liability arising from such claim. The Companyshall pay the commission of the Broker, to the attention of the Broker, pursuant to their separate agreement(s) between the Companyand the Broker.

 

(r)           Permits; Compliance.The Company and each of its Subsidiaries is in possession of all franchises, grants, authorizations, licenses, permits, easements,variances, exemptions, consents, certificates, approvals and orders necessary to own, lease and operate its properties and to carryon its business as it is now being conducted (collectively, the “Company Permits”), and there is no action pendingor, to the knowledge of the Company, threatened regarding suspension or cancellation of any of the Company Permits. Neither theCompany nor any of its Subsidiaries is in conflict with, or in default or violation of, any of the Company Permits, except forany such conflicts, defaults or violations which, individually or in the aggregate, would not reasonably be expected to have aMaterial Adverse Effect. Since November 4, 2015, neither the Company nor any of its Subsidiaries has received any notificationwith respect to possible conflicts, defaults or violations of applicable laws, except for notices relating to possible conflicts,defaults or violations, which conflicts, defaults or violations would not have a Material Adverse Effect.

 

(s)          Environmental Matters.

 

(i)           There are, to theCompany’s knowledge, with respect to the Company or any of its Subsidiaries or any predecessor of the Company, no past orpresent violations of Environmental Laws (as defined below), releases of any material into the environment, actions, activities,circumstances, conditions, events, incidents, or contractual obligations which may give rise to any common law environmental liabilityor any liability under the Comprehensive Environmental Response, Compensation and Liability Act of 1980 or similar federal, state,local or foreign laws and neither the Company nor any of its Subsidiaries has received any notice with respect to any of the foregoing,nor is any action pending or, to the Company’s knowledge, threatened in connection with any of the foregoing. The term “EnvironmentalLaws” means all federal, state, local or foreign laws relating to pollution or protection of human health or the environment(including, without limitation, ambient air, surface water, groundwater, land surface or subsurface strata), including, withoutlimitation, laws relating to emissions, discharges, releases or threatened releases of chemicals, pollutants contaminants, or toxicor hazardous substances or wastes (collectively, “Hazardous Materials”) into the environment, or otherwise relatingto the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of Hazardous Materials,as well as all authorizations, codes, decrees, demands or demand letters, injunctions, judgments, licenses, notices or notice letters,orders, permits, plans or regulations issued, entered, promulgated or approved thereunder.

 

 

 

(ii)          Other than thosethat are or were stored, used or disposed of in compliance with applicable law, no Hazardous Materials are contained on or aboutany real property currently owned, leased or used by the Company or any of its Subsidiaries, and no Hazardous Materials were releasedon or about any real property previously owned, leased or used by the Company or any of its Subsidiaries during the period theproperty was owned, leased or used by the Company or any of its Subsidiaries, except in the normal course of the Company’sor any of its Subsidiaries’ business.

 

(iii)         There are no undergroundstorage tanks on or under any real property owned, leased or used by the Company or any of its Subsidiaries that are not in compliancewith applicable law.

 

(t)           Title to Property.The Company and its Subsidiaries have good and marketable title in fee simple to all real property and good and marketable titleto all personal property owned by them which is material to the business of the Company and its Subsidiaries, in each case freeand clear of all liens, encumbrances and defects except such as are described in Schedule 3(t) or such as would not have a MaterialAdverse Effect. Any real property and facilities held under lease by the Company and its Subsidiaries are held by them under valid,subsisting and enforceable leases with such exceptions as would not have a Material Adverse Effect.

 

(u)          Insurance.The Company and its Subsidiaries are insured by insurers of recognized financial responsibility against such losses and risks andin such coverage amounts as are prudent and customary in the businesses in which the Company is engaged, including, but not limitedto, directors and officers insurance coverage with coverage amounts that are at least equal to the aggregate Purchase Price. Neitherthe Company nor any Subsidiary has any reason to believe that it will not be able to renew its existing insurance coverage as andwhen such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business withouta significant increase in cost.

 

(v)          Internal AccountingControls. Except as disclosed in the SEC Documents, the Company and each of its Subsidiaries maintain a system of internalaccounting controls sufficient, in the judgment of the Company’s board of directors, to provide reasonable assurance that(i) transactions are executed in accordance with management’s general or specific authorizations, (ii) transactions are recordedas necessary to permit preparation of financial statements in conformity with generally accepted accounting principles and to maintainasset accountability, (iii) access to assets is permitted only in accordance with management’s general or specific authorizationand (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate actionis taken with respect to any differences.

 

 

 

(w)         Foreign CorruptPractices. Neither the Company, nor any of its Subsidiaries, nor any director, officer, agent, employee or other person actingon behalf of the Company or any Subsidiary has, in the course of his actions for, or on behalf of, the Company, used any corporatefunds for any unlawful contribution, gift, entertainment or other unlawful expenses relating to political activity; made any director indirect unlawful payment to any foreign or domestic government official or employee from corporate funds; violated or is inviolation of any provision of the U.S. Foreign Corrupt Practices Act of 1977, as amended, or made any bribe, rebate, payoff, influencepayment, kickback or other unlawful payment to any foreign or domestic government official or employee.

 

(x)          Solvency.Except as disclosed in the SEC Documents, the Company (after giving effect to the transactions contemplated by this Agreement)is solvent (i.e., its assets have a fair market value in excess of the amount required to pay its probable liabilities onits existing debts as they become absolute and matured) and currently the Company has no information that would lead it to reasonablyconclude that the Company would not, after giving effect to the transaction contemplated by this Agreement, have the ability to,nor does it intend to take any action that would impair its ability to, pay its debts from time to time incurred in connectiontherewith as such debts mature.

 

(y)          No InvestmentCompany. The Company is not, and upon the issuance and sale of the Securities as contemplated by this Agreement will not be,an “investment company” required to be registered under the Investment Company Act of 1940 (an “Investment Company”).The Company is not controlled by an Investment Company.

 

(z)          No “Shell”.The Company is not currently a shell as defined in Rule 144. To the Company’s knowledge in the past the Company has not atany time previously been a Shell Company, as defined in Rule 144.

 

4.           Covenants.

 

(a)          Best Efforts.The parties shall use their best efforts to satisfy timely each of the conditions described in Section 6 and 7 of this Agreement.

 

(b)          Form D; BlueSky Laws. The Company agrees to timely file a Form D with respect to the Securities as required under Regulation D and to providea copy thereof to the Purchaser promptly after such filing. The Company shall, on or before the Closing Date, take such actionas the Company shall reasonably determine is necessary to qualify the Securities for sale to the Purchaser at the applicable closingpursuant to this Agreement under applicable securities or “blue sky” laws of the states of the United States (or toobtain an exemption from such qualification), and shall provide evidence of any such action so taken to the Purchaser on or priorto the Closing Date.

 

 

 

(c)          Use of Proceeds.The Company shall use the proceeds from the sale of the Securities for general corporate purposes, marketing and sales, productdevelopment, key personnel recruiting and business development purposes.

 

(d)          Financial Information.Upon written request of the Purchaser, the Company agrees to send or make available the following reports to the Purchaser untilthe Purchaser transfers, assigns, or sells all of the Securities: (i) within ten (10) days after the filing (or the applicabledeadline to so file) with the SEC or OTC Markets Group, a copy of its Annual Report and its Quarterly Reports and any SupplementalReports; (ii) within one (1) day after release, copies of all press releases issued by the Company or any of its Subsidiaries;and (iii) contemporaneously with the making available or giving to the shareholders of the Company, copies of any notices or otherinformation the Company makes available or gives to such shareholders. Notwithstanding the foregoing, the Company shall not discloseany material nonpublic information to the Purchaser without its consent unless such information is disclosed to the public priorto or promptly following such disclosure to the Purchaser.

 

(e)          Listing.The Company will obtain and, so long as the Purchaser owns any of the Securities, maintain the listing and trading of its CommonStock on the OTCBB, and OTCQB, or OTC Pink or any equivalent replacement exchange, the NASDAQ Stock Market (“NASDAQ”),the New York Stock Exchange (“NYSE”), or the NYSE MKT, f/k/a American Stock Exchange (“AMEX”), and willcomply in all respects with the Company’s reporting, filing and other obligations under the bylaws or rules of the FinancialIndustry Regulatory Authority (“FINRA”) and such exchanges, as applicable. The Company shall promptly provide to thePurchaser copies of any notices it receives from the SEC, OTC Markets Group and any other exchanges or quotation systems on whichthe Common Stock is then listed regarding the continued eligibility of the Common Stock for listing on such exchanges and quotationsystems, provided that it shall not provide any notices constituting material nonpublic information.

 

(f)           Corporate Existence.So long as the Purchaser beneficially owns any Securities, the Company shall maintain its corporate existence and shall not sellall or substantially all of the Company’s assets, except in the event of a merger or consolidation or sale of all or substantiallyall of the Company’s assets, where the surviving or successor entity in such transaction (i) assumes the Company’sobligations hereunder and under the agreements and instruments entered into in connection herewith and (ii) is a publicly tradedcorporation whose Common Stock is listed for trading on NASDAQ, NYSE or AMEX.

 

(g)          No Integration.The Company shall not make any offers or sales of any security (other than the Securities) under circumstances that would requireregistration of the Securities being offered or sold hereunder under the 1933 Act or cause the offering of the Securities to beintegrated with any other offering of securities by the Company for the purpose of any stockholder approval provision applicableto the Company or its securities.

 

 

 

(h)          Securities LawsDisclosure; Publicity. The Company shall comply with applicable securities laws by filing a Current Report on Form 8-K, withinfour (4) Trading Days following the date hereof, disclosing all the material terms of the transactions contemplated hereby, ifthe Company deems the transactions contemplated hereby to constitute material non- public information. The Company and Purchasershall consult with each other in issuing any other press releases with respect to the transactions contemplated hereby, and neitherthe Company nor Purchaser shall issue any such press release or otherwise make any such public statement without the prior consentof the Company, with respect to any press release of any Purchaser, or without the prior consent of Purchaser, with respect toany press release of the Company, except if such disclosure is required by law, in which case the disclosing party shall promptlyprovide the other party with prior notice of such public statement or communication.

 

(i)           Non-Public Information.Except with respect to the material terms and conditions of the transactions contemplated by this Agreement, the Company covenantsand agrees that neither it nor any other person acting on its behalf will provide the Purchaser or its agents or counsel with anyinformation that the Company believes constitutes material non- public information, unless prior thereto the Purchaser shall haveexecuted a written agreement regarding the confidentiality and use of such information. The Company understands and confirms thatthe Purchaser shall be relying on the foregoing covenant in effecting transactions in securities of the Company.

 

(j)           Subsidiaries.So long as the Note remains outstanding, the Company shall not transfer any assets or rights to any of its subsidiaries or permitany of its subsidiaries to engage in any significant business or operations, whether such subsidiaries are currently existing orhereafter created.

 

(k)          Insurance.So long as the Note remains outstanding, the Company and its Subsidiaries shall maintain in full force and effect insurance reasonablybelieved by the Company to be adequate coverage (a) on all assets and activities, covering property loss or damage and loss ofincome by fire or other hazards or casualty, and (b) against all liabilities, claims and risks for which it is customary for companiessimilarly situated to the Company to insure, including without limitation applicable product liability insurance, required workmen’scompensation insurance, and other insurance covering injury or damage to persons or property, but excluding directors and officersinsurance coverage. The Company shall promptly furnish or cause to be furnished evidence of such insurance to the Purchaser, inform and substance reasonably satisfactory to the Purchaser.

 

(l)           Par Value.If the closing bid price at any time the Note is outstanding falls below $0.005, the Company shall cause the par value of its CommonStock to be reduced to $0.0001 or less.

 

 

 

5.           Transfer Agent Instructions. Uponreceipt of a duly executed Notice of Conversion, the Company shall issue irrevocable instructions to its transfer agent to issuecertificates, registered in the name of the Purchaser or its nominee, for the Conversion Shares in such amounts as specified fromtime to time by the Purchaser to the Company upon conversion of the Note, or any part thereof, in accordance with the terms thereof(the “Irrevocable Transfer Agent Instructions”). In the event that the Company proposes to replace its transfer agent,the Company shall provide, prior to the effective date of such replacement, a fully executed Irrevocable Transfer Agent Instructionsin a form as initially delivered pursuant to this Agreement and the Securities (including but not limited to the provision to irrevocablyreserve shares of Common Stock in the Reserved Amount (as defined in the Note)) signed by the successor transfer agent to Companyand the Company. Prior to registration of the Conversion Shares under the 1933 Act or the date on which the Conversion Shares maybe sold pursuant to Rule 144 without any restriction as to the number of Securities as of a particular date that can then be immediatelysold, all such certificates shall bear the restrictive legend specified in Section 2(g) of this Agreement. The Company warrantsthat: (i) no instruction other than the Irrevocable Transfer Agent Instructions referred to in this Section 5, and stop transferinstructions to give effect to Section 2(f) hereof (in the case of the Conversion Shares, prior to registration of the ConversionShares under the 1933 Act or the date on which the Conversion Shares may be sold pursuant to Rule 144 without any restriction asto the number of Securities as of a particular date that can then be immediately sold), will be given by the Company to its transferagent and that the Securities shall otherwise be freely transferable on the books and records of the Company as and to the extentprovided in this Agreement and the Note; (ii) it will not direct its transfer agent not to transfer or delay, impair, and/or hinderits transfer agent in transferring (or issuing)(electronically or in certificated form) any certificate for Conversion Shares tobe issued to the Purchaser upon conversion of or otherwise pursuant to the Note as and when required by the Note and this Agreement;and (iii) it will not fail to remove (or direct its transfer agent not to remove or impair, delay, and/or hinder its transfer agentfrom removing) any restrictive legend (or to withdraw any stop transfer instructions in respect thereof) on any certificate forany Conversion Shares issued to the Purchaser upon conversion of or otherwise pursuant to the Note as and when required by theNote and this Agreement. Nothing in this Section shall affect in any way the Purchaser’s obligations and agreement set forthin Section 2(g) hereof to comply with all applicable prospectus delivery requirements, if any, upon re-sale of the Securities.If the Purchaser provides the Company with (i) an opinion of counsel in form, substance and scope customary for opinions in comparabletransactions, to the effect that a public sale or transfer of such Securities may be made without registration under the 1933 Actand such sale or transfer is effected or (ii) the Purchaser provides reasonable assurances that the Securities can be sold pursuantto Rule 144, the Company shall permit the transfer, and, in the case of the Conversion Shares, promptly instruct its transfer agentto issue one or more certificates, free from restrictive legend, in such name and in such denominations as specified by the Purchaser.The Company acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the Purchaser, by vitiatingthe intent and purpose of the transactions contemplated hereby. Accordingly, the Company acknowledges that the remedy at law fora breach of its obligations under this Section 5 may be inadequate and agrees, in the event of a breach or threatened breach bythe Company of the provisions of this Section, that the Purchaser shall be entitled, in addition to all other available remedies,to an injunction restraining any breach and requiring immediate transfer, without the necessity of showing economic loss and withoutany bond or other security being required.

 

6.           Injunction Posting of Bond. Inthe event the Purchaser shall elect to convert the Note or any parts thereof, the Company may not refuse conversion or exercisebased on any claim that Purchaser or anyone associated or affiliated with Purchaser has been engaged in any violation of law, orfor any other reason. In connection with any injunction sought or attempted by the Company, the Company shall be required to posta bond at least equal to the greater of either: (i) the outstanding principal amount of the Note; and (ii) the market value ofthe Conversion Shares sought to be converted, exercised or issued, based on the sale price per share of Common Stock on the principalmarket on which it is traded.

 

 

 

7.           Delivery of Unlegended Shares.

 

(a)          Within three (3)business days (such third business day being the “Unlegended Shares Delivery Date”) after the business day on whichthe Company has received (i) a notice that Conversion Shares, or any other Common Stock held by the Purchaser has been sold pursuantto a registration statement or Rule 144 under the 1933 Act, a representation that the prospectus delivery requirements, or therequirements of Rule 144, as applicable and if required, have been satisfied, (iii) the original share certificates representingthe shares of Common Stock that have been sold, and (iv) in the case of sales under Rule 144, customary representation lettersof the Purchaser and, if required, Purchaser’s broker regarding compliance with the requirements of Rule 144, the Companyat its expense, shall deliver, and shall cause legal counsel selected by the Company to deliver to its transfer agent (with copiesto Purchaser) an appropriate instruction and opinion of such counsel, directing the delivery of shares of Common Stock withoutany legends including the legend set forth in Section 4(h) above (the “Unlegended Shares”); and (z) cause the transmissionof the certificates representing the Unlegended Shares together with a legended certificate representing the balance of the submittedCommon Stock certificate, if any, to the Purchaser at the address specified in the notice of sale, via express courier, by electronictransfer or otherwise on or before the Unlegended Shares Delivery Date.

 

(b)          The Company understandsthat a delay in the delivery of the Unlegended Shares later than the Unlegended Shares Delivery Date could result in economic lossto the Purchaser. As compensation to Purchaser for such loss, the Company agrees to pay late payment fees (as liquidated damagesand not as a penalty) to the Purchaser for late delivery of Unlegended Shares in the amount of $1,000.00 per business day afterthe Unlegended Shares Delivery Date. If during any three hundred and sixty (360) day period, the Company fails to deliver UnlegendedShares as required by this Section for an aggregate of thirty (30) days, then Purchaser or assignee holding Securities subjectto such default may, at its option, require the Company to redeem all or any portion of the shares subject to such default at aprice per share equal to the greater of (i) 200% of the most recent closing price of the Common Stock or (ii) a fraction in whichthe numerator is the highest closing price of the Common Stock during the aforedescribed thirty (30) day period and the denominatorof which is the lowest conversion price during such thirty (30) day period, multiplied by the conversion price or exercise price,as the case may be (“Unlegended Redemption Amount”). The Company shall pay any payments incurred under this Sectionin immediately available funds upon demand.

 

8.           Conditions to the Company’sObligation to Sell. The obligation of the Company hereunder to issue and sell the Note to the Purchaser at the Closing is subjectto the satisfaction, at or before the Closing Date of each of the following conditions thereto, provided that these conditionsare for the Company’s sole benefit and may be waived by the Company at any time in its sole discretion:

 

 

 

(a)          The Purchaser shall have executed thisAgreement and delivered the same to the Company.

 

(b)          The Purchaser shall have delivered thePurchase Price to the Company.

 

(c)          The representationsand warranties of the Purchaser shall be true and correct in all material respects as of the date when made and as of the ClosingDate as though made at that time (except for representations and warranties that speak as of a specific date), and the Purchasershall have performed, satisfied and complied in all material respects with the covenants, agreements and conditions required bythis Agreement to be performed, satisfied or complied with by the Purchaser at or prior to the Closing Date.

 

(d)          No litigation, statute,rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or endorsed by orin any court or governmental authority of competent jurisdiction or any self-regulatory organization having authority over thematters contemplated hereby which prohibits the consummation of any of the transactions contemplated by this Agreement.

 

9.           Conditions to The Purchaser’sObligation to Purchase. The obligation of the Purchaser hereunder to purchase the Note at the Closing is subject to the satisfaction,at or before the Closing Date of each of the following conditions, provided that these conditions are for the Purchaser’ssole benefit and may be waived by the Purchaser at any time in its sole discretion:

 

(a)          The Company shallhave executed this Agreement and delivered the same to the Purchaser.

 

(b)          The Company shallhave delivered to the Purchaser the duly executed Note (in such denominations as the Purchaser shall request) in accordance withSection 1 above.

 

(c)          The IrrevocableTransfer Agent Instructions, in form and substance satisfactory to the Purchaser, shall have been delivered to and acknowledgedin writing by the Company’s Transfer Agent (a copy of which written acknowledgment shall be provided to Purchaser simultaneouslywith Closing).

 

(d)          The representationsand warranties of the Company shall be true and correct in all material respects as of the date when made and as of the ClosingDate as though made at such time (except for representations and warranties that speak as of a specific date) and the Company shallhave performed, satisfied and complied in all material respects with the covenants, agreements and conditions required by thisAgreement to be performed, satisfied or complied with by the Company at or prior to the Closing Date. The Purchaser shall havereceived a certificate or certificates, executed by the chief executive officer of the Company, dated as of the Closing Date, tothe foregoing effect and as to such other matters as may be reasonably requested by the Purchaser including, but not limited tocertificates with respect to the Company’s Certificate of Incorporation, By-laws, incumbency, and Board of Directors’resolutions relating to the transactions contemplated hereby.

 

 

 

(e)          No litigation, statute,rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or endorsed by orin any court or governmental authority of competent jurisdiction or any self-regulatory organization having authority over thematters contemplated hereby which prohibits the consummation of any of the transactions contemplated by this Agreement.

 

(f)           No event shall haveoccurred which could reasonably be expected to have a Material Adverse Effect on the Company including but not limited to a changein the 1934 Act reporting status of the Company or the failure of the Company to be timely in its 1934 Act reporting obligations.

 

(g)          The Conversion Sharesshall have been authorized for quotation on the OTCBB, and OTCQB, and OTC Pink and trading of the Common Stock on the OTCBB, OTCQB,and OTC Pink shall not have been suspended by the SEC or the OTC Markets Group.

 

10.          Governing Law; Miscellaneous.

 

(a)          Governing Law.This Agreement shall be governed by and construed in accordance with the laws of the State of New York without regard to principlesof conflicts of laws thereof or any other State. Any action brought by any party against any other party hereto concerning thetransactions contemplated by this Agreement shall be brought only in the state courts of New York or in the federal courts locatedin the state and county of New York. The parties to this Agreement hereby irrevocably waive any objection to jurisdiction and venueof any action instituted hereunder and shall not assert any defense based on lack of jurisdiction or venue or based upon forumnon conveniens. The parties executing this Agreement and other agreements referred to herein or delivered in connection herewithon behalf of the Company agree to submit to the in personam jurisdiction of such courts and hereby irrevocably waive trial by jury.The prevailing party shall be entitled to recover from the other party its reasonable attorney’s fees and costs. In the eventthat any provision of this Agreement or any other agreement delivered in connection herewith is invalid or unenforceable underany applicable statute or rule of law, then such provision shall be deemed inoperative to the extent that it may conflict therewithand shall be deemed modified to conform with such statute or rule of law. Any such provision which may prove invalid or unenforceableunder any law shall not affect the validity or enforceability of any other provision of any agreement. Each party hereto herebyirrevocably waives personal service of process and consents to process being served in any suit, action or proceeding in connectionwith this Agreement or any other transaction document contemplated hereby by mailing a copy thereof via registered or certifiedmail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreementand agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained hereinshall be deemed to limit in any way any right to serve process in any other manner permitted by law.

 

 

 

(b)          Removal of RestrictiveLegends. In the event that Purchaser has any shares of the Company’s Common Stock bearing any restrictive legends, andPurchaser, through its counsel or other representatives, submits to the Transfer Agent any such shares for the removal of the restrictivelegends thereon in connection with a sale of such shares pursuant to any exemption to the registration requirements under the SecuritiesAct, and the Company and or its counsel refuses or fails for any reason (except to the extent that such refusal or failure is basedsolely on applicable law that would prevent the removal of such restrictive legends) to render an opinion of counsel or any otherdocuments or certificates required for the removal of the restrictive legends, then the Company hereby agrees and acknowledgesthat the Purchaser is hereby irrevocably and expressly authorized to have counsel to the Purchaser render any and all opinionsand other certificates or instruments which may be required for purposes of removing such restrictive legends, and the Companyhereby irrevocably authorizes and directs the Transfer Agent to, without any further confirmation or instructions from the Company,issue any such shares without restrictive legends as instructed by the Purchaser, and surrender to a common carrier for overnightdelivery to the address as specified by the Purchaser, certificates, registered in the name of the Purchaser or its designees,representing the shares of Common Stock to which the Purchaser is entitled, without any restrictive legends and otherwise freelytransferable on the books and records of the Company.

 

(c)          Filing Requirements.From the date of this Agreement until the Notes are no longer outstanding, the Company will timely and voluntarily comply withall reporting requirements that are applicable to an issuer with a class of shares registered pursuant to Section 12(g) of the1934 Act, whether or not the Company is then subject to such reporting requirements, and comply with all requirements related toany registration statement filed pursuant to this Agreement. The Company will use reasonable efforts not to take any action orfile any document (whether or not permitted by the 1933 Act or the 1934 Act or the rules thereunder) to terminate or suspend suchregistration or to terminate or suspend its reporting and filing obligations under said acts until the Notes are no longer outstanding.The Company will maintain the quotation or listing of its Common Stock on the OTCBB, OTCQB, and OTC Pink, NYSE, or NASDAQ StockMarket (whichever of the foregoing is at the time the principal trading exchange or market for the Common Stock (the “PrincipalMarket”), and will comply in all respects with the Company’s reporting, filing and other obligations under the bylawsor rules of the Principal Market, as applicable. The Company will provide Purchaser with copies of all notices it receives notifyingthe Company of the threatened and actual delisting of the Common Stock from any Principal Market. As of the date of this Agreementand the Closing Date, the OTC Pink, is the Principal Market. Until the Note is no longer outstanding, the Company will continuethe listing or quotation of the Common Stock on a Principal Market and will comply in all respects with the Company’s reporting,filing and other obligations under the bylaws or rules of the Principal Market.

 

(d)          144 Default.In the event commencing twelve (12) months after the Closing Date and ending twenty-four (24) months thereafter, the Purchaseris not permitted to resell any of the Conversion Shares without any restrictive legend or if such sales are permitted but subjectto volume limitations or further restrictions on resale as a result of the unavailability to Subscriber of Rule 144(b)(1)(i) underthe 1933 Act or any successor rule (a “144 Default”), for any reason except for Purchasers’ status as an Affiliateor “control person” of the Company, or as a result of a change in current applicable securities laws, then the Companyshall pay such Purchaser as liquidated damages and not as a penalty an amount equal to two percent (2%) of the value of ConversionShares (based on the closing sale of the Common Stock) subject to such 144 Default during the pendency of the 144 Default of eachthirty day period thereafter (or portion thereof).

 

 

 

(e)          Fees and Expenses.On or prior to the Closing, the Company shall pay or reimburse to Purchaser a non-refundable, non-accountable sum equal to $3,500.00as and for the fees, costs and expenses (including without limitation legal fees and disbursements and due diligence and administrativeexpenses) incurred by the Purchaser in connection with the Purchaser’s due diligence and negotiation, preparation and executionof the Transaction Documents and consummation of the Transactions. The Purchaser may withhold and offset the balance of such amountfrom the payment of its Purchase Price otherwise payable hereunder at Closing, which offset shall constitute partial payment ofsuch Purchase Price in an amount equal to such offset. Except as expressly set forth in this Agreement or the Note to the contrary,each party shall pay the fees and expenses of its advisers, counsel, accountants and other experts, if any, and all other expensesincurred by such party incident to the negotiation, preparation, execution, delivery and performance of this Agreement. The Companyshall pay all transfer agent fees, stamp taxes and other taxes and duties levied in connection with the delivery of any Securitiesto the Purchaser.

 

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

 

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

 

 

 

(h)          Severability.In the event that any provision of this Agreement is invalid or unenforceable under any applicable statute or rule of law, thensuch provision shall be deemed inoperative to the extent that it may conflict therewith and shall be deemed modified to conformwith such statute or rule of law. Any provision hereof which may prove invalid or unenforceable under any law shall not affectthe validity or enforceability of any other provision hereof.

 

(i)           Entire Agreement;Amendments. This Agreement and the instruments referenced herein contain the entire understanding of the parties with respectto the matters covered herein and therein and, except as specifically set forth herein or therein, neither the Company nor thePurchaser makes any representation, warranty, covenant or undertaking with respect to such matters. No provision of this Agreementmay be waived or amended other than by an instrument in writing signed by the Purchaser.

 

(j)           Notices.All notices, demands, requests, consents, approvals, and other communications required or permitted hereunder shall be in writingand, unless otherwise specified herein, shall be (i) personally served, (ii) deposited in the mail, registered or certified, returnreceipt requested, postage prepaid, (iii) delivered by reputable air courier service with charges prepaid, or (iv) transmittedby hand delivery, telegram, email or facsimile, addressed as set forth below or to such other address as such party shall havespecified most recently by written notice. Any notice or other communication required or permitted to be given hereunder shallbe deemed effective (a) upon hand delivery or delivery by facsimile or email, with accurate confirmation generated by the transmittingfacsimile machine or computer, at the address, email or number designated below (if delivered on a business day during normal businesshours where such notice is to be received), or the first business day following such delivery (if delivered other than on a businessday during normal business hours where such notice is to be received) or (b) on the second business day following the date of mailingby express courier service, fully prepaid, addressed to such address, or upon actual receipt of such mailing, whichever shall firstoccur. The addresses for such communications shall be:

 

Purchaser: EMA Financial, LLC

40 Wall Street, Suite 1700

New York, NY 10005

Attn: Felicia Preston

 

Company: InCapta, Inc.

1950 Fifth Avenue, Suite 100

San Diego, CA 92101

Attn: John Flemming, CEO:

 

Each party shall provide notice to the otherparty of any change in address.

 

(k)          Successors andAssigns. This Agreement shall be binding upon and inure to the benefit of the parties and their successors and assigns. Neitherthe Company nor the Purchaser shall assign this Agreement or any rights or obligations hereunder without the prior written consentof the other. Notwithstanding the foregoing, subject to Section 2(f), the Purchaser may assign its rights hereunder to any personthat purchases Securities in a private transaction from the Purchaser or to any of its “affiliates,” as that term isdefined under the 1934 Act, without the consent of the Company.

 

 

 

(l)           Third Party Beneficiaries.This Agreement is intended for the benefit of the parties hereto and their respective permitted successors and assigns, and isnot for the benefit of, nor may any provision hereof be enforced by, any other person.

 

(m)         Survival.The representations and warranties of the Company and the agreements and covenants set forth in this Agreement shall survive theclosing hereunder notwithstanding any due diligence investigation conducted by or on behalf of the Purchaser. The Company agreesto indemnify and hold harmless the Purchaser and all their officers, directors, employees and agents for loss or damage arisingas a result of or related to any breach or alleged breach by the Company of any of its representations, warranties and covenantsset forth in this Agreement or any of its covenants and obligations under this Agreement, including advancement of expenses asthey are incurred.

 

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

 

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

 

(p)          Remedies.The Company acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the Purchaser by vitiatingthe intent and purpose of the transaction contemplated hereby. Accordingly, the Company acknowledges that the remedy at law fora breach of its obligations under this Agreement will be inadequate and agrees, in the event of a breach or threatened breach bythe Company of the provisions of this Agreement, that the Purchaser shall be entitled, in addition to all other available remediesat law or in equity, and in addition to the penalties assessable herein, to an injunction or injunctions restraining, preventingor curing any breach of this Agreement and to enforce specifically the terms and provisions hereof, without the necessity of showingeconomic loss and without any bond or other security being required.

 

(q)          Counterparts.This Agreement may be executed in any number of counterparts, each of which when so executed and delivered shall be deemed to bean original and all of which together shall be deemed to be one and the same agreement.

 

(r)           Signatures.Any signature transmitted by facsimile, e-mail, or other electronic means shall be deemed to be an original signature.

 

 

 

IN WITNESS WHEREOF, theundersigned Purchaser and the Company have caused this Agreement to be duly executed as of the date first above written.