Document:

Exhibit 10.2

 

SHAREHOLDER VOTING SUPPORT AND CONFIDENTIALITY
AGREEMENT

 

SHAREHOLDER VOTING SUPPORT
AND CONFIDENTIALITY AGREEMENT (this “Agreement”), dated as of March 31, 2017, by and among First Capital Real Estate
Trust Incorporated, a Maryland corporation (“First Capital”), and those holders of securities of PhotoMedex, Inc. a
Nevada corporation (the “Company”), listed on Schedule I annexed hereto (each a “Stockholder” and collectively,
the Stockholders”).

 

Whereas, First Capital,
First Capital Real Estate Operating Partnership, L.P. (the “Contributor”), the Company, and FC Global Realty Operating
Partnership, LLC (the “Acquiror”) have entered into a Contribution Agreement dated March 31, 2017 (the “Contribution
Agreement”), pursuant to which the Contributor will contribute to the Acquiror its interests in and to certain entities and
real properties in exchange for shares of common stock, par value $.01 per share, of the Company, shares of preferred stock, par
value $.01 per share, of the Company and warrants to purchase shares of common stock, par value $0.01 per share, of the Company.

 

Whereas, in connection
with the Contribution Agreement, the parties hereto desire to enter into this shareholder voting support and confidentiality agreement.

 

Capitalized terms used
herein and not otherwise defined herein shall have the respective meanings set forth in the Contribution Agreement.

 

As of the date hereof,
each Stockholder is the record owner of the number and type of securities of the Company set forth opposite the name of such Stockholder
on Schedule I hereto.

 

As a condition to the willingness
of First Capital to enter into the Contribution Agreement and as an inducement and in consideration therefor, First Capital and
each Stockholder have agreed to enter into this Agreement.

 

The parties, intending
to be legally bound, agree as follows:

 

SECTION 1. Stockholder
Meetings; Voting. Each Stockholder hereby agrees that from and after the date hereof and until this Agreement is terminated
in accordance with Section 7, such Stockholder shall appear in person or by proxy at any meeting of the stockholders of the Company
called for purposes, and any adjournment or postponement thereof, or in any other circumstances upon which a vote, consent or other
approval with respect to the Contribution Agreement or the transactions contemplated by the Contribution Agreement is sought by
the Company and approved by the board of directors of the Company and recommended to the stockholders of the Company by the board
of directors that include any of the following (i) the adoption of the Contribution Agreement and the transactions contemplated
by the Contribution Agreement, or (ii) the approval of the number of shares or voting power that can be issued or granted by the
Company to First Capital or its stockholders or Affiliates; provided, however, that if a proposal presented to the stockholders
of the Company involves the approval of the issuance of the Company’s securities in connection with the contribution of the
Mandatory Entity Interests or the Optional Entity Interests, then the board shall have approved and recommended this proposal to
the stockholders of the Company by a vote of at least six board members in favor of the proposal. The Company shall notify the
Stockholders of whether such requirement has been met.

 

    	 	 	 

     

    

 

Each Stockholder hereby
agrees that from and after the date hereof and until this Agreement is terminated in accordance with Section 7, such Stockholder
shall exercise all of his, her or its rights as a holder of securities of the Company to vote as follows to the extent that the
following are approved by the board of directors of the Company and recommended to the stockholders of the Company: (i) in favor
of the adoption of the Contribution Agreement and the approval of the transactions contemplated by the Contribution Agreement;
(ii) in favor of any proposal seeking approval for the issuance to the Contributor or its designees of common stock of the Company
(or securities convertible into or exercisable for common stock of the Company) equal to 20 percent or more of the common stock
or 20 percent or more of the voting power outstanding before the issuance, in order that (A) any shares of Series A Preferred Stock
of the Company previously issued by the Company to the Contributor or its designees can be immediately converted into Common Stock
of the Company, (B) the Warrant (as defined in the Contribution Agreement) can be fully exercised for Common Stock of the Company
in accordance with its terms, and (iii) all shares of Common Stock of the Company issuable to the Contributor or its designees
pursuant to the Contribution Agreement can be issued to the Contributor as provided therein , (iii) against any proposal made in
opposition to, or in competition with, the matters set forth in (i) or (ii) above; and (iv) against any other action that is intended,
or would reasonably be expected to, impede, interfere with, delay, postpone, discourage or adversely affect the adoption of the
Contribution Agreement and approval of the transactions contemplated by the Contribution Agreement; at any meeting of the stockholders
of the Company. Notwithstanding the foregoing, if a proposal presented to the stockholders of the Company involves the approval
of the issuance of the Company’s securities in connection with the contribution of the Mandatory Entity Interests or the
Optional Entity Interests, then the board shall have approved and recommended this proposal to the stockholders of the Company
by a vote of at least six board members in favor of the proposal. The Company shall notify the Stockholders of whether such requirement
has been met. It is the intention of this paragraph that each Stockholder shall be obligated to vote in accordance with the above
regardless of the particular wording of any proposal put forth to the stockholders of the Company, in a manner consistent with
the purpose of authorizing the Contribution Agreement and the issuance to the Contributor or its designees of shares of Common
Stock of the Company having the maximum voting power as is contemplated by the Contribution Agreement.

 

SECTION 2. Restriction
on Transfer.

 

(a) Each Stockholder agrees
that he, she or it will not directly or indirectly, prior to the termination of this Agreement: (i) transfer, assign, sell, lend,
sell short, gift-over, pledge, encumber, hypothecate, exchange or otherwise dispose (whether by sale, liquidation, dissolution,
dividend or distribution), or offer or solicit to do any of the foregoing, of any or all of the equity securities and/or any debt
or similar securities that are convertible into equity securities of the Company held by him, her or it, including any additional
equity securities and/or any debt or similar securities that are convertible into equity securities of the Company which Stockholder
may subsequently acquire, including all additional equity securities which may be issued to Stockholder upon the exercise of any
options, warrants or other securities convertible into or exchangeable for securities of the Company (all such securities of such
Stockholder, “Subject Securities”) or any right or interest therein, or consent to any of the foregoing (any such action,
a “Transfer”), (ii) enter or offer to enter into any derivative arrangement with respect to, or create or suffer to
exist any liens or encumbrances with respect to, any or all of the Subject Securities or any right or interest therein, in either
case that would reasonably be expected to prevent or delay such Stockholder’s compliance with his, her or its obligations
hereunder; (iii) enter of offer to enter into any contract, option or other agreement, arrangement or understanding with respect
to any Transfer; (iv) grant any proxy, power-of-attorney or other authorization or consent with respect to any Subject Securities
with respect to any matter that is, or that could be exercised in a manner, inconsistent with the transactions contemplated by
the Contribution Agreement and this Agreement or the provisions thereof and hereof; (v) deposit any Subject Securities into
a voting trust, or enter into a voting agreement or arrangement with respect to any Subject Securities; or (vi) enter or offer
to enter into any contract or agreement that would be breached by, or take any other action that would reasonably be expected to
prevent or delay such Stockholder’s compliance with its obligations hereunder.

 

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(b) Each Stockholder hereby
acknowledges and agrees that the Company shall be entitled, during the term of this Agreement, to cause any transfer agent for
the Subject Securities to decline to effect any Transfer and to note stop transfer restrictions on the stock register and other
records relating to Subject Securities, and each Stockholder agrees to execute and deliver any further documents reasonably requested
by the Company in furtherance of the same.

 

(c) Notwithstanding the
foregoing, the restrictions set forth in this Section 2 shall not apply (A) to the exercise of any option, warrant or other securities
convertible or exchangeable for securities of the Company or (B) to the following Transfers of Subject Securities by the Stockholder:

 

(i) if such Stockholder is
an individual (A) for nominal consideration or as a gift to any member of such Stockholder’s “immediate family”
(defined for purposes of this Agreement as the spouse, parents, lineal descendants, the spouse of any lineal descendant, and brothers
and sisters) or a trust for the benefit of such Stockholder or any member of such Stockholder’s immediate family, or (B)
upon the death of such Stockholder pursuant to a will or other instrument taking effect upon the death of such Stockholder, or
pursuant to the applicable laws of descent and distribution to such Stockholder’s estate, heirs or distributees; and

 

(ii) if the Stockholder is
a corporation, partnership, limited liability company or other entity, any Transfer to an Affiliate of the Stockholder if such
Transfer is not for value;

 

provided, however, that in
the case of any Transfer described in clauses (i) or (ii) of this Section 2(c), it shall be a condition to the Transfer that (x)
the transferee executes and delivers to the Company and First Capital, not later than one business day prior to such Transfer,
a written agreement that is reasonably satisfactory in form and substance to the Company and First Capital to be bound by all of
the terms of this Agreement and the Contribution Agreement (any references to immediate family in the agreement executed by such
transferee shall expressly refer only to the immediate family of the Stockholder and not to the immediate family of the transferee)
and (y) if the Stockholder is required to file a report under Section 16(a) of the Securities Exchange Act of 1934, as amended,
reporting a reduction in beneficial ownership of the Subject Securities or any securities convertible into or exercisable or exchangeable
for the Subject Securities, the Stockholder shall include a statement in such report to the effect that, in the case of any Transfer
pursuant to Section 2(c)(i) above, such Transfer is being made as a gift or by will or intestate succession or, in the case of
any Transfer pursuant to Section 2(c)(ii) above, such Transfer is being made to a shareholder, partner or member of, or owner of
a similar equity interest in, the Stockholder and is not a Transfer for value.

 

(iii) For purposes hereof,
“Affiliate” shall mean, with respect to any entity, any other person or entity directly or indirectly controlling,
controlled by or under common control with such entity. For purposes hereof, “control” (including the terms “controlled
by” and “under common control with”), as used with respect to any entity or person, means the possession, directly
or indirectly, of the power to direct or cause the direction of the management and policies of such entity or person, whether through
the ownership of voting securities or otherwise.

 

SECTION 3. Representations
and Warranties of Stockholders. Each Stockholder on its own behalf hereby represents and warrants to First Capital as follows:

 

(a) Such Stockholder is
the record owner of the equity securities and/or any debt or similar securities that are convertible into equity securities of
the Company set forth opposite the name of such Stockholder on Schedule I to this Agreement. As of the date of this Agreement,
the equity securities and/or any debt or similar securities that are convertible into equity securities of the Company set forth
opposite the name of such Stockholder on Schedule I to this Agreement represent all of the shares of equity securities and/or any
debt or similar securities that are convertible into equity securities of the Company owned of record by such Stockholder.

 

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(b) If the Stockholder
is a corporation, partnership, limited liability company or other entity, such Stockholder is an entity duly organized, validly
existing and in good standing under the laws of its jurisdiction, and has all requisite organizational power and authority to execute
and deliver this Agreement and to consummate the transactions contemplated hereby, and has taken all necessary organizational action
to authorize the execution, delivery and performance of this Agreement.

 

(c) If the Stockholder
is an individual, such Stockholder has the valid capacity to execute and deliver this Agreement and has duly executed and delivered
this Agreement.

 

(d) If the Stockholder
is a corporation, partnership, limited liability company or other entity, this Agreement has been duly authorized, executed and
delivered by such Stockholder.

 

(e) This Agreement, assuming
it constitutes a valid and binding obligation of First Capital, constitutes a valid and binding obligation of the Stockholder,
enforceable against such Stockholder in accordance with its terms, except as limited by applicable bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance and other laws of general application affecting enforcement of creditors’ rights generally.

 

(f) The execution, delivery
and performance by such Stockholder of this Agreement does not require any consent, approval, authorization or permit of, action
by, filing with or notification to any governmental authority or other third party, other than any consent, approval, authorization,
permit, action, filing or notification the failure of which to make or obtain would not, individually or in the aggregate, be reasonably
expected to prevent or materially delay the consummation of the transactions contemplated by the Contribution Agreement or such
Stockholder’s ability to observe and perform its material obligations hereunder (a “Stockholder Material Adverse Effect”).

 

(g) The execution, delivery
and performance by such Stockholder of this Agreement will not (i) result in a violation of, or default (with or without notice
or lapse of time, or both) under, require consent under or give rise to a right of termination, cancellation or acceleration of
any obligation or the loss of any benefit under any (A) contract, trust, commitment, agreement, understanding or arrangement of
any kind (a “Contract”) or (B) permit, concession, franchise, right or license binding upon such Stockholder, (ii)
result in the creation of any pledges, liens, claims, security interests, proxies, voting trusts or agreements, options, rights
(other than community property interests), understandings or arrangements or any other encumbrance or restriction whatsoever on
title transfer (collectively, “Encumbrances”), other than Encumbrances imposed by federal or state securities laws
(collectively, “Permitted Encumbrances”), upon any of the properties or assets of such Stockholder, (iii) If the Stockholder
is a corporation, partnership, limited liability company or other entity, conflict with or result in any violation of any provision
of the organizational documents of such Stockholder, or (iv) conflict with or violate any applicable laws, other than, in the case
of clauses (i), (ii) and (iv), as would not, individually or in the aggregate, be reasonably expected to have a Stockholder Material
Adverse Effect. The consummation by such Stockholder of the transactions contemplated by this Agreement will not (i) violate
any provision of any judgment, order or decree applicable to such Stockholder or (ii) require any consent, approval, or notice
under any statute, law, rule or regulation applicable to such Stockholder.

 

(h) Such Stockholder’s
Subject Securities are now, and at all times during the term hereof will be, held by such Stockholder or by a nominee or custodian
for the benefit of such Stockholder, free and clear of all Encumbrances, except for (i) any such Encumbrances arising hereunder,
(ii) Permitted Encumbrances and (iii) any Encumbrance imposed by any margin account in with the Subject Securities may be held
(provided, that the Stockholder retains voting and dispositional control of any such Subject Securities); provided, that such Stockholder
may Transfer such Subject Securities in accordance with the provisions of a separate lock-up agreement being entered into between
such Stockholder and the other parties thereto in accordance with the Contribution Agreement.

 

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(i) Such Stockholder understands
and acknowledges that First Capital is entering into the Contribution Agreement in reliance upon Stockholder’s execution
and delivery of this Agreement.

 

(j) No broker, investment
bank, financial advisor or other person is entitled to any broker’s, finder’s, financial adviser’s or similar
fee or commission in connection with the transactions contemplated hereby based upon arrangements made by or on behalf of such
Stockholder.

 

SECTION 4. Representations
and Warranties of First Capital. First Capital hereby represents and warrants to the Stockholders as follows:

 

(a) First Capital is a
corporation duly organized, validly existing and in good standing under the laws of the State of Maryland, and First Capital has
all requisite organizational power and authority to execute and deliver this Agreement and to consummate the transactions contemplated
hereby, and has taken all necessary corporate action to authorize the execution, delivery and performance of this Agreement.

 

(b) This Agreement has
been duly authorized, executed and delivered by First Capital, and, assuming this Agreement constitutes a valid and binding obligation
of the other parties hereto, constitutes a valid and binding obligation of First Capital, enforceable against it in accordance
with its terms, except as limited by applicable bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium and other
laws of general application affecting enforcement of creditors’ rights generally.

 

(c) The execution, delivery
and performance by First Capital of this Agreement does not require any consent, approval, authorization or permit of, action by,
filing with or notification to any governmental authority or other third party, other than any consent, approval, authorization,
permit, action, filing or notification the failure of which to make or obtain would not, individually or in the aggregate, be reasonably
expected to prevent or materially delay the consummation of the transaction contemplated by the Contribution Agreement or First
Capital’s ability to observe and perform its material obligations hereunder (a “First Capital Material Adverse Effect”).

 

(d) The execution, delivery
and performance by First Capital of this Agreement will not (i) result in a violation of, or default (with or without notice or
lapse of time, or both) under, require consent under or give rise to a right of termination, cancellation or acceleration of any
obligation or the loss of any benefit under any (A) Contract or (B) permit, concession, franchise, right or license binding upon
First Capital, (ii) result in the creation of Encumbrances (other than Permitted Encumbrances) upon any of the properties or assets
of First Capital, (iii) conflict with or result in any violation of any provision of the organizational documents of First Capital,
or (iv) conflict with or violate any applicable laws, other than, in the case of clauses (i), (ii) and (iv), as would not, individually
or in the aggregate, be reasonably expected to have a First Capital Material Adverse Effect. The consummation by First Capital
of the transactions contemplated by this Agreement will not (i) violate any provision of any judgment, order or decree applicable
to First Capital or (ii) require any consent, approval, or notice under any statute, law, rule or regulation applicable to
First Capital.

 

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SECTION 5. Confidentiality.

 

(a) Confidentiality
by the Stockholders. Except as otherwise required by applicable law, each Stockholder agrees to treat and hold as confidential,
any confidential or proprietary information of First Capital relating, except for any such information which is generally known
to the public or becomes generally known to the public, other than as a result of a disclosure by such Stockholder and not due
to the breach of this Agreement (“Confidential Information”), and to refrain from disclosing any Confidential Information,
except in accordance with the provisions of this Section 5. Unless otherwise public information, the existence of any business
negotiations, discussions, consultations or agreements in progress between the parties hereto, or between First Capital and certain
third parties, shall not be released to any form of public media without the prior written consent of First Capital. Each Stockholder
agrees that it shall treat all Confidential Information with at least the same degree of care as it accords to its own information
of like nature, and each Stockholder represents that it exercises at least reasonable care to protect its own confidential information.
Each Stockholder may disclose Confidential Information only to those of its employees, officers, directors, shareholders, partners,
members, or owners of a similar equity interest in the Stockholder, or any of Stockholder’s agents or representatives (all
such persons or entities, collectively, “Stockholder Representatives”) who (i) need to know such information for
the purposes of advising such Stockholder with respect to the Contribution Agreement and the consummation of the transactions contemplated
by the Contribution Agreement and (ii) are informed by such Stockholder of the confidential nature of the Confidential Information
and the obligations under this Agreement with respect to such Confidential Information. Each Stockholder also agrees to be responsible
for enforcing the terms of this letter agreement as to its Stockholder Representatives and maintaining the confidentiality of the
Confidential Information and to take such action, legal or otherwise, to the extent necessary to cause them to comply with the
terms and conditions of this letter agreement and thereby prevent any disclosure or prohibited use of Confidential Information
by any of its Stockholder Representatives.

 

(b) Disclosure Required
by Law. Notwithstanding the foregoing, the Stockholder or any of the Stockholder’s Representatives may disclose Confidential
Information without First Capital’s consent to the extent required by law or legal process (provided that, unless prohibited
by law, it first provides prompt notice to First Capital so that First Capital may seek a protective order or other appropriate
remedy or consent to the disclosure). In the event the Stockholder or any of the Stockholder’s Representatives are required
to so disclose Confidential Information, the Stockholder or such Representative may furnish that portion (and only that portion)
of the Confidential Information that such person or entity has been advised by legal counsel that it is legally compelled or otherwise
required to disclose, and such person or entity shall use all reasonable efforts to obtain reliable assurance that confidential
treatment will be accorded any Confidential Information so disclosed and, if requested by First Capital, shall use reasonable efforts
to assist First Capital in obtaining an order or other assurance that confidential treatment will be accorded to such Confidential
Information so disclosed.

 

(c) Stockholder Acknowledgment.
Each Stockholder also acknowledges and agrees that he, she or it is aware of the restrictions imposed by the United States federal
securities laws and other applicable foreign and domestic laws on a person or entity in possession of material non-public information
about a public company and that such Stockholder will comply with such laws.

 

SECTION 6. Fiduciary
Responsibilities. No Stockholder executing this Agreement who is or becomes during the term hereof a director or officer of
the Company makes (or shall be deemed to have made) any agreement or understanding herein in his or her capacity as such director
or officer. Without limiting the generality of the foregoing, each Stockholder signs solely in his or her capacity as the record
owner of such Stockholder’s Subject Securities and nothing herein shall limit or affect any actions taken by such Stockholder
(or a designee of such Stockholder) in his or her capacity as an officer or director of the Company in exercising his or her or
the Company’s or the Company’s Board of Directors’ rights in connection with the Contribution Agreement or otherwise
and such actions shall not be deemed to be a breach of this Agreement.

 

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SECTION 7. Termination.

 

(a) This Agreement, and
all rights and obligations of the parties hereunder, shall terminate immediately upon the earliest to occur of the following:

 

(i) that date of the termination
of the Contribution Agreement in accordance with its terms;

 

(ii) the later of (A) the
date of the last closing of the transactions described in the Contribution Agreement or (B) the first Business Day following the
date of the approval by the stockholders of the Company of the full issuance of Transaction Shares having voting rights in excess
of 20% to First Capital or its stockholders or Affiliates;

 

(iii) upon the earlier of
(1) 14 days written notice by Stockholder to the Company and First Capital or (2) the day preceding the initial date of the meeting
of the Stockholders called to vote on the adoption of the Contribution Agreement, following any modification, waiver or amendment
of the Contribution Agreement that has a materially adverse effect on (x) the value of (A) the Subject Securities following the
closing of the transactions described in the Contribution Agreement or (B) the consideration to be paid to such Stockholder pursuant
to the Contribution Agreement, or (y) the date of the closing of the transactions described in the Contribution Agreement;

 

(iv) the mutual written consent
of First Capital and the Stockholders.

 

(b) Except as set forth
in Section 6(c), upon termination of this Agreement, except in the case of liability for any willful breach by any party to this
Agreement prior to termination from which liability termination shall not relieve any such party, all obligations of the parties
under this Agreement will terminate, without any liability or other obligation on the part of any party hereto to any person or
entity in respect hereof or the transactions contemplated hereby, and no party shall have any claim against another (and no person
shall have any rights against such party), whether under contract, tort or otherwise.

 

(c)Sections 4
of this Agreement shall survive the termination of this Agreement until the first anniversary of the date of this Agreement. Section
7 of this Agreement shall survive the termination of this Agreement indefinitely.

 

SECTION 8. Expenses.
All fees and expenses incurred in connection with this Agreement and the transactions contemplated hereby shall be paid by the
party incurring such fees or expenses, whether or not the transactions contemplated by the Contribution Agreement are consummated.

 

SECTION 9. Miscellaneous.

 

(a) Liabilities Several.
The agreements, obligations, representations and warranties of the Stockholders hereunder are made severally and not jointly.

 

(b) Effectiveness of
Agreement. The agreements, obligations, representations and warranties of the Stockholders set forth in this Agreement shall
not be effective or binding upon any Stockholder until after such time as the Contribution Agreement is executed and delivered
by the parties thereto.

 

(c) Notices. All
notices, consents, waivers and other communications required or permitted by this Agreement shall be in writing and shall be deemed
given to a party when (a) delivered to the appropriate address by hand or by nationally recognized overnight courier service;
or (b) transmitted by telecopy or e-mail (with confirmation of transmission) by the transmitting equipment confirmed with
a copy delivered as provided in clause (a), in each case to the following addresses, facsimile numbers or e-mail addresses
and marked to the attention of the person (by name or title) designated below (or to such other address, telecopy number, e-mail
address or person as a party may designate by notice to the other parties).

 

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If to a Stockholder, to:

 

the address set forth on the signature page hereof

 

and to:

 

PhotoMedex, Inc.

2300 Computer Drive, Building G

Willow Grove, PA 19090

Attention: Dr. Dolev Rafaeli

Email: dolev@radiancy.com

 

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

 

BEVILACQUA PLLC

1629 K Street, NW, Suite 300

Washington, DC  20006

Attention: Louis A. Bevilacqua, Esq.

Email: lou@bevilacquapllc.com

 

If to the Company or Acquiror, to:

 

First Capital Real Estate Trust Incorporated

60 Broad Street, 34th Floor

New York NY 10004

Attention: Suneet Singal

Email: s@firstcapitalre.com

 

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

 

Ellenoff Grossman & Schole LLP

1345 Avenue of the Americas

New York, New York 10105

Attention:  Barry I. Grossman, Esq.

Facsimile: (212) 370-7889

(d) Headings. The
headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation
of this Agreement.

 

(e) Counterparts.
This Agreement may be executed in one or more counterparts, each of which shall be deemed an original and all of which taken together
shall constitute one and the same instrument. This Agreement or any counterpart may be executed and delivered by facsimile copies
or delivered by electronic communications by portable document format (.pdf), each of which shall be deemed an original to the
other parties.

 

(f) Entire Agreement;
No Third Party Beneficiaries. This Agreement (including the Exhibits and Schedules hereto) constitutes the entire agreement,
and supersedes all prior agreements and understandings, both written and oral, among the parties with respect to the subject matter
of this Agreement, including the Original Agreement and (b) is not intended to confer, nor shall it confer, upon any Person
other than the parties hereto any legal or equitable rights or remedies or benefits of any nature whatsoever.

 

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(g) Governing Law.
This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York, regardless of the laws
that might otherwise apply under applicable principles of conflicts of law thereof.

 

(h) Waiver of Jury Trial.
EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR LITIGATION BETWEEN
THE PARTIES HERETO ARISING OUT OF OR RELATING TO THIS AGREEMENT.

 

(i) Assignment; Binding
Effect. Neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned (in whole or in
part) by any of the parties hereto (whether by operation of law or otherwise) without the prior written consent of the other parties,
and any such assignment without such consent shall be null and void. No assignment by any party shall relieve such party of any
of its obligations hereunder. Subject to the preceding sentences, this Agreement shall be binding upon, and shall inure to the
benefit of, and shall be enforceable by the parties hereto and their respective successors and assigns.

 

(j) Severability of
Provisions. If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any rule
of law or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect,
insofar as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse
to any party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the
parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely
as possible to the fullest extent permitted by applicable law in an acceptable manner to the end that the transactions contemplated
hereby are fulfilled to the extent possible.

 

(k) Specific Performance,
Jurisdiction, Enforcement.

 

(i) The parties agree that
irreparable damage for which money damages, even if available, would not be an adequate remedy, if any provision of this Agreement
is not performed in accordance with its specific terms or is otherwise breached. Accordingly, the parties agree that, prior to
the valid termination of this Agreement in accordance with Section 7, each party shall be entitled to an injunction or injunctions,
or any other appropriate form of specific performance or equitable relief, to prevent breaches of this Agreement and to enforce
specifically the terms and provisions of this Agreement exclusively in the federal and state courts located in New York County,
New York, this being in addition to any other remedy to which they are entitled at law or in equity. Each party further agrees
that no other party shall be required to obtain, furnish or post any bond or similar instrument in connection with or as a condition
to obtaining any remedy referred to in this Section 9(k), and each party hereto hereby irrevocably waives any right he, she or
it may have to require the obtaining, furnishing or posting of any such bond or similar instrument.

 

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(ii) Each of the parties
irrevocably submits itself to the exclusive jurisdiction of the federal and state courts located in the New York County, New York
for the purpose of any action, proceeding or litigation directly or indirectly based upon, relating to or arising out of this Agreement
or any of the transactions contemplated by this Agreement or the negotiation, execution or performance hereof or thereof, or any
other appropriate form of specific performance or equitable relief, (b) agrees that it will not attempt to deny or defeat
such personal jurisdiction by motion or other request for leave from any such court and (c) agrees that it will not bring
any action, proceeding or ligitation relating to this Agreement or the transactions contemplated by this Agreement in any court
other than any of the federal and state courts located in the State of Delaware. Each of the parties hereby irrevocably waives,
and agrees not to assert, by way of motion, as a defense, counterclaim or otherwise, in any action, proceeding or litigation with
respect to this Agreement, (i) any claim that it is not personally subject to the jurisdiction of the above-named courts for
any reason other than the failure to serve in accordance with this Section 9(k), (ii) any claim that it or its property is
exempt or immune from jurisdiction of any such court or from any legal process commenced in such courts (whether through service
of notice, attachment prior to judgment, attachment in aid of execution of judgment, execution of judgment or otherwise) and (iii) to
the fullest extent permitted by the applicable law, any claim that (A) the suit, action or proceeding in such court is brought
in an inconvenient forum, (B) the venue of such suit, action or proceeding is improper or (C) this Agreement, or the
subject matter of this Agreement, may not be enforced in or by such courts.

 

(iii) Each of the parties
hereby irrevocably consents to service being made through the notice procedures set forth in Section 9(c) and agrees that
service of any process, summons, notice or document by personal delivery or by registered mail (return receipt requested and first-class
postage prepaid) to the respective addresses set forth in Section 9(c) and on the signature pages hereto shall be effective
service of process for any action, proceeding or litigation in connection with this Agreement or the transactions contemplated
hereby. Nothing in this Section 9(k) shall affect the right of any party to serve legal process in any other manner permitted
by law.

 

(l) Amendment. No
amendment or modification of this Agreement shall be effective unless it shall be in writing and signed by each of the parties
hereto, and no waiver or consent hereunder shall be effective against any party unless it shall be in writing and signed by such
party.

 

[Signature Page Follows]

 

    	 	10	 

     

    

  

IN WITNESS WHEREOF, each
of the parties hereto has caused this Agreement to be duly executed and delivered as of the date first written above.

 

	 	FIRST CAPITAL REAL ESTATE OPERATING PARTNERSHIP, L.P.
	 	 
	 	By: First Capital Real Estate Trust Incorporated, its  general partner
	 	 
	 	By: 	          /s/ Suneet
    Singal
	 	Name: Suneet Singal
	 	Title: Chief Executive Officer

 

	 	STOCKHOLDERS:
	 	 
	 	/s/ Lewis C. Pell
	 	Lewis C. Pell
	 	 
	 	/s/ Yoav Ben-Dror
	 	Yoav Ben-Dror
	 	 
	 	/s/ Dolev Rafaeli
	 	Dolev Rafaeli
	 	 
	 	/s/ Dennis M. McGrath
	 	Dennis M. McGrath
	 	 
	 	/s/ Katsumi Oneda
	 	Katsumi Oneda
	 	 
	 	/s/ Stephen P. Connelly
	 	Stephen P. Connelly

 

    	 	 	 

     

    

 

SCHEDULE I

 

 

	Name and Address	 	Type of Security	 	Number of Shares	 
	Lewis C. Pell 
2300 Computer Drive, Building G 
Willow Grove, PA 19090 
	 	Common stock	 	 	401,064	 
	 	 	 	 	 	 	 
	Yoav Ben-Dror 
2300 Computer Drive, Building G 
Willow Grove, PA 19090 
	 	Common stock	 	 	299,185	 
	 	 	 	 	 	 	 
	Dolev Rafaeli 
2300 Computer Drive, Building G 
Willow Grove, PA 19090 
	 	Common stock	 	 	149,775	 
	 	 	 	 	 	 	 
	Dennis M. McGrath 
2300 Computer Drive, Building G 
Willow Grove, PA 19090 
	 	Common stock	 	 	51,278	 
	 	 	 	 	 	 	 
	Katsumi Oneda 
2300 Computer Drive, Building G 
Willow Grove, PA 19090 
	 	Common stock	 	 	265,033	 
	 	 	 	 	 	 	 
	Stephen P. Connelly 
2300 Computer Drive, Building G 
Willow Grove, PA 19090	 	Common stock	 	 	1,435bpsr_ex101.htm

EXHIBIT 10.1

 

 

SECURITIES PURCHASE AGREEMENT

 

This Securities Purchase Agreement (this “Agreement”) is dated as of March 29, 2017, between Biotech Products Services and Research, Inc. (and together with all of its current and future, direct and/or indirect, wholly owned and/or partially owned Subsidiaries, collectively, the “Company”), and each purchaser identified on the signature pages hereto (each, including its successors and assigns, a “Purchaser” and collectively, the “Purchasers”).

 

WHEREAS, subject to the terms and conditions set forth in this Agreement and pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”), the Company desires to issue and sell to each Purchaser, and each Purchaser, severally and not jointly, desires to purchase from the Company, securities of the Company as more fully described in this Agreement.

 

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

 

ARTICLE I.

DEFINITIONS

 

1.1 Definitions. In addition to the terms defined elsewhere in this Agreement: (a) capitalized terms that are not otherwise defined herein have the meanings given to such terms in the Notes (as defined herein), and (b) the following terms have the meanings set forth in this Section 1.1:

 

“Acquiring Person” shall have the meaning ascribed to such term in Section 4.7.

 

“Action” shall have the meaning ascribed to such term in Section 3.1(j).

 

“Affiliate” means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control with a Person, as such terms are used in and construed under Rule 405 under the Securities Act. 

 

“Board of Directors” means the board of directors of the Company.

 

“Business Day” means any day except any Saturday, any Sunday, any day which is a federal legal holiday in the United States or any day on which banking institutions in the State of New York are authorized or required by law or other governmental action to close.

 

“Closing Date” means the Trading Day(s) on which all of the Transaction Documents have been executed and delivered by the applicable parties thereto in connection with a Closing, and all conditions precedent to (i) the Purchasers’ obligations to pay the Subscription Amount as to such Closing and (ii) the Company’s obligations to deliver the Securities as to such Closing, in each case, have been satisfied or waived.

 

“Closing” means the closing of the purchase and sale of the Securities pursuant to Section 2.2. 

 

“Closing Statement” means the Closing Statement in the form on Annex A attached hereto.

 
	 
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“Commission” means the United States Securities and Exchange Commission.

 

“Common Stock” means the common stock of the Company, par value $0.001 per share, and any other class of securities into which such securities may hereafter be reclassified or changed.

 

“Common Stock Equivalents” means any securities of the Company or the Subsidiaries which would entitle the holder thereof to acquire at any time Common Stock, including, without limitation, any debt, preferred stock, right, option, warrant or other instrument that is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Common Stock.

 

“Contingent Obligation” means as to any Person, any direct or indirect liability, contingent or otherwise, of that Person with respect to any indebtedness, lease, dividend or other obligation of another Person if the primary purpose or intent of the Person incurring such liability, or the primary effect thereof, is to provide assurance to the obligee of such liability that such liability will be paid or discharged, or that any agreements relating thereto will be complied with, or that the holders of such liability will be protected (in whole or in part) against loss with respect thereto.

 

“Conversion Price” shall have the meaning ascribed to such term in the Notes.

 

“Conversion Shares” shall have the meaning ascribed to such term in the Notes.

 

“Disclosure Schedules” shall have the meaning ascribed to such term in Section 3.1.

 

“Effective Date” means the earliest of the date that (a) all of the Securities have been sold pursuant to Rule 144 or may be sold pursuant to Rule 144 without the requirement for the Company to be in compliance with the current public information required under Rule 144 and without volume or manner-of-sale restrictions or (c) following the one year anniversary of the Closing Date provided that a holder of Securities is not an Affiliate of the Company, all of the Securities may be sold pursuant to an exemption from registration under Section 4(a)(1) of the Securities Act without volume or manner-of-sale restrictions and holder has received a standing written unqualified opinion that resales may then be made by such holders of the Securities pursuant to such exemption which opinion shall be in form and substance reasonably acceptable to such holders.

 
	 
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“Equity Conditions” means, during the period in question, (a) no Event of Default shall have occurred, (b) the Company has timely filed (or obtained extensions in respect thereof and filed within the applicable grace period) all reports other than Form 8-K reports required to be filed by the Company after the date hereof pursuant to the Exchange Act, (c) on any date that the Company desires to make a payment of interest, the average daily dollar volume of the Common Stock for the previous twenty (20) Trading Days must be greater than $20,000, (d) the Common Stock must be DWAC Eligible and not subject to a “DTC chill”, (e) the Conversion Shares must be delivered via an “Automatic Conversion” of principal and/or interest, and (f) the Conversion Shares have been registered and are freely tradeable or are eligible to be sold under Rule 144 of the Securities Act. 

 

“Evaluation Date” shall have the meaning ascribed to such term in Section 3.1(r). 

 

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

 

“Exempt Issuance” means the issuance of (a) shares of Common Stock or options to employees, officers or directors of the Company pursuant to any stock or option plan for 10,000,000 shares of Common Stock duly adopted for such purpose, by a majority of the members of the Board of Directors and stockholders of the Company, (b) securities upon the exercise or exchange of or conversion of any Securities issued hereunder, (c) with Agent’s (as defined below) prior written consent, securities issued pursuant to acquisitions or strategic transactions approved by a majority of the disinterested directors of the Company, provided that any such issuance shall only be to a Person (or to the equityholders of a Person) which is, itself or through its subsidiaries, an operating company, but shall not include a transaction in which the Company is issuing securities primarily for the purpose of raising capital or to an entity whose primary business is investing in securities, (d) shares of Common Stock or Common Stock Equivalents issued to the national director of sales, and (e) securities of Mint Organics, Inc., a Florida corporation. 

 

“FCPA” means the Foreign Corrupt Practices Act of 1977, as amended.

 

“GAAP” shall have the meaning ascribed to such term in Section 3.1(h).

 

“Indebtedness” shall have the meaning ascribed to such term in Section 3.1(aa).

 

“Intellectual Property Rights” shall have the meaning ascribed to such term in Section 3.1(o).

 

“Indebtedness” means, with respect to any Person at any date, without duplication, (i) all indebtedness of such Person for borrowed money, (ii) all obligations of such Person for the deferred purchase price of property or services, (iii) all obligations of such Person evidenced by notes, bonds, debentures or other similar instruments, (iv) all indebtedness created or arising under any conditional sale or other title retention agreement with respect to property acquired by such Person (even though the rights and remedies of the seller or the Purchasers under such agreement in the event of default are limited to repossession or sale of such property), (v) all capital lease obligations of such Person, (vi) all obligations of such Person, contingent or otherwise, as an account party or applicant under acceptance, letter of credit, surety bond or similar facilities, (vii) all obligations of such Person, contingent or otherwise, to purchase, redeem, retire or otherwise acquire for value any capital stock of such Person, (viii) all obligations for any earn-out consideration, (ix) the liquidation value of all capital stock of such Person, (x) all guarantee obligations of such Person in respect of obligations of the kind referred to in clauses (i) through (ix) above, (xi) all obligations of the kind referred to in clauses (i) through (ix) above secured by (or for which the holder of such obligation has an existing right, contingent or otherwise, to be secured by) any lien on property (including, without limitation, accounts and contract rights) owned by such Person, whether or not such Person has assumed or become liable for the payment of such obligation and all obligations of such Person in respect of hedge agreements; and (xii) all Contingent Obligations in respect to indebtedness or obligations of any Person of the kind referred to in clauses (i)-(xi) above. The Indebtedness of any Person shall include, without duplication, the Indebtedness of any other entity (including any partnership in which such Person is a general partner) to the extent such Person is liable therefor as a result of such Person’s ownership interest in or other relationship with such entity, except to the extent the terms of such Indebtedness expressly provide that such Person is not liable therefor

 
	 
	3

	

	 

 

“Legend Removal Date” shall have the meaning ascribed to such term in Section 4.1(c). 

 

“Liens” means a lien, charge, pledge, security interest, encumbrance, right of first refusal, preemptive right or other restriction. 

 

“Material Adverse Effect” shall have the meaning assigned to such term in Section 3.1(b).

 

“Material Permits” shall have the meaning ascribed to such term in Section 3.1(m).

 

“Maximum Rate” shall have the meaning ascribed to such term in Section 5.17.

 

“Note” means the 10% Original Issue Discount Convertible Secured Promissory Note and Guarantee, subject to the terms therein, twelve (12) months from its date of issuance, issued by the Company to the Purchasers hereunder, in the form of Exhibit A attached hereto.

 

“Participation Maximum” shall have the meaning ascribed to such term in Section 4.12(a). 

 

“Intellectual Property Security Agreement” means the Intellectual Property Security Agreement date on or about the date hereof, by and among the Purchasers and the Company and the Company’s subsidiaries and all documents filed to perfect the Purchaser’s security interest in the Patents and Trademarks, both terms as defined in such agreement, which is annexed hereto as Exhibit C. 

 

“Person” means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.

 
	 
	4

	

	 

 

“Pre-Notice” shall have the meaning ascribed to such term in Section 4.12(b). 

 

“Principal Amount” means, as to each Purchaser, the amounts set forth below such Purchaser’s signature block on the signature pages hereto next to the heading “Principal Amount,” in United States Dollars.

 

“Pro Rata Portion” shall have the meaning ascribed to such term in Section 4.12(e).

 

“Proceeding” means an action, claim, suit, investigation or proceeding (including, without limitation, an informal investigation or partial proceeding, such as a deposition), whether commenced or threatened.

 

“Public Information Failure” shall have the meaning ascribed to such term in Section 4.3(b).

 

“Public Information Failure Payments” shall have the meaning ascribed to such term in Section 4.3(b).

 

“Purchaser Party” shall have the meaning ascribed to such term in Section 4.10.

 

“Purchaser UCC Filings” shall mean a UCC-1 Financing Statement of the Purchasers on all of the assets of the Company and the Subsidiaries (the “Purchasers’ UCC-1”) to be filed with the Secretary of State of the relevant jurisdiction on or about the Closing Date, and all financing statements (or comparable documents now or hereafter filed in accordance with the UCC or other comparable or similar laws, rules or regulations) in favor of the Purchasers as secured parties perfecting all Liens the Purchasers have on the Collateral (which security interests and Liens of the Purchasers shall be senior to all Indebtedness of the Company), the Intellectual Property Security Agreement (annexed hereto as Exhibit C), and such other documents, instruments, certificates, supplements, amendments, exhibits and schedules required and/or attached pursuant to this Agreement and/or any of the above documents, and/or any other document and/or instrument related to the above agreements, documents and/or instruments, and the transactions hereunder and/or thereunder and/or any other agreement, documents or instruments required or contemplated hereunder or thereunder, whether now existing or at any time hereafter arising. 

 

“Registrable Securities” means (i) the Common Stock into which the principal amount, together with any accrued interest and any other amounts payable under the Notes may be converted, and (ii) any shares of capital stock issued or issuable in exchange for or otherwise with respect to the foregoing.

 

“Required Approvals” shall have the meaning ascribed to such term in Section 3.1(e).

 
	 
	5

	

	 

 

“Required Minimum” means, as of any date, the maximum aggregate number of shares of Common Stock then issued or potentially issuable in the future pursuant to the Transaction Documents, including any Underlying Shares issuable upon conversion in full of all Notes (including Underlying Shares issuable as payment of interest on the Notes), ignoring any conversion or exercise limits set forth therein, and assuming that the Conversion Price is at all times on and after the date of determination 100% of the then Conversion Price on the Trading Day immediately prior to the date of determination.

 

“Reserved Amount” shall have the meaning ascribed to such term in Section 4.11(a).

 

“Robinson Brog” means Robinson Brog Leinwand Greene Genovese & Gluck P.C., with offices located at 875 Third Avenue, New York, New York 10022.

 

“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 as such Rule.

 

“Rule 424” means Rule 424 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended or interpreted from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same purpose and effect as such Rule.

 

“SEC Reports” shall have the meaning ascribed to such term in Section 3.1(h).

 

“Securities” means the Notes, the Underlying Shares, and the Commitment Shares.

 

“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

 

“Short Sales” means all “short sales” as defined in Rule 200 of Regulation SHO under the Exchange Act (but shall not be deemed to include the location and/or reservation of borrowable shares of Common Stock). 

 

“Subscription Amount” means, as to each Purchaser, the aggregate amount to be paid for Notes purchased hereunder as specified below such Purchaser’s name on the signature page of this Agreement and next to the heading “Subscription Amount,” in United States dollars and in immediately available funds.

 

“Subsequent Financing” shall have the meaning ascribed to such term in Section 4.12(a).

 

“Subsequent Financing Notice” shall have the meaning ascribed to such term in Section 4.12(b). 

 
	 
	6

	

	 

 

“Subsidiary” means, with respect to any Person, a corporation, partnership, limited liability company or other entity of which shares of stock or other ownership interests having ordinary voting power (other than stock or such other ownership interests having such power only by reason of the happening of a contingency) to elect a majority of the board of directors or other managers of such corporation, partnership or other entity are at the time owned, or the management of which is otherwise controlled, directly or indirectly through one or more intermediaries, or both, by such Person. All of the Company’s Subsidiaries are set forth on Schedule 3.1(a) hereto.

 

“Subsidiary Guarantee” means the Subsidiary Guarantee, dated the date hereof, by each Subsidiary in favor of the Purchasers, in the form of Exhibit D, attached hereto.

 

“Trading Day” means a day on which the principal Trading Market is open for trading.

 

“Trading Market” means any of the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date in question: the NYSE MKT, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, the New York Stock Exchange or the OTC Bulletin Board (or any successors to any of the foregoing).

 

“Transaction Documents” means this Agreement, the Note, each Joinder to Note, the Security Agreement, the Intellectual Property Security Agreement, the Subsidiary Guarantee, the Transfer Agent Instruction Letter, all exhibits and schedules thereto and hereto and any other documents or agreements executed in connection with the transactions contemplated hereunder.

 

“Transfer Agent” means the current transfer agent of the Company and any successor transfer agent of the Company.

 

“Transfer Agent Instruction Letter” means the letter from the Company to the Transfer Agent which instructs the Transfer Agent to issue Underlying Shares pursuant to the Transaction Documents, in the form of Exhibit B attached hereto. 

 

“UCC” means the Uniform Commercial Code of as in effect from time to time in the State of New York; provided, however, that, in the event that, by reason of mandatory provisions of law, any or all of the attachment, perfection, priority, or remedies with respect to the Purchasers’ Liens on any Collateral is governed by the Uniform Commercial Code as enacted and in effect in a jurisdiction other than the State of New York, the term “UCC” shall mean the Uniform Commercial code as enacted and in effect in such other jurisdiction solely for purposes of the provisions thereof relating to such attachment, perfection, priority, or remedies. Terms used in this Agreement that are defined in the UCC shall, unless the context indicates otherwise or are otherwise defined in this Agreement, have the meanings provided for by the UCC.

 

“Underlying Shares” means the shares of Common Stock issued and issuable upon conversion or redemption of the Notes and issued and issuable in lieu of the cash payment of interest on the Notes in accordance with the terms of the Notes.

 

“Variable Rate Transaction” shall have the meaning ascribed to such term in Section 4.18.

 
	 
	7

	

	 

 

“VWAP” means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed or quoted on a Trading Market, the daily volume weighted average price of the Common Stock for such date (or the nearest preceding date) on the Trading Market on which the Common Stock is then listed or quoted as reported by Bloomberg L.P. (based on a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)), (b)  if the OTC Bulletin Board is not a Trading Market, the volume weighted average price of the Common Stock for such date (or the nearest preceding date) on the OTC Bulletin Board, (c) if the Common Stock is not then listed or quoted for trading on the OTC Bulletin Board and if prices for the Common Stock are then reported in the “Pink Sheets” published by Pink OTC Markets, Inc. (or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per share of the Common Stock so reported, or (d) in all other cases, the fair market value of a share of Common Stock as determined by an independent appraiser selected in good faith by the Purchasers of a majority in interest of the Securities then outstanding and reasonably acceptable to the Company, the fees and expenses of which shall be paid by the Company.

 

ARTICLE II.

PURCHASE AND SALE

 

2.1 Purchase. 

 

(a) General. The Purchasers will purchase, severally and not jointly, an aggregate of up to $1,500,000 in Subscription Amount of Note (subject to the adjustments described in Section (2)(b)(ii)) corresponding to an aggregate of up to $1,666,667 in Principal Amount of Note (subject to the adjustments described in Section (2)(b)(ii)). The purchase will occur in several tranches (each a “Tranche,” and collectively the “Tranches”). The Closings with respect to Tranches subsequent to the second Tranche shall occur at such times and on such financial terms as set forth in the Note and agreed to by and among the Company and any of the Purchasers. The Company acknowledges that the Purchasers may fund to the Company different Subscription Amounts at each Closing after the closing of the second Tranche and that not all Purchasers will participate in each Tranche. In the event that any Purchaser does not participate in any Tranche subsequent to the second Tranche, the remaining Purchasers shall have the right to participate in such Tranche in an amount up to 100% of the entire Tranche. In the event that such participating Purchasers do not collectively fund 100% of the desired Tranche amount, then the Company shall be permitted to request from any Person the remaining amount, so long as such Person(s) agree to execute this Agreement (and further, the Company and the Purchasers agree to amend this Agreement and the Note as necessary). Notwithstanding the foregoing, the participating Purchasers shall have at least forty-eight (48) hours prior to the closing of such Tranche to notify the Company as to whether the participating Purchasers, collectively, will fund one hundred percent (100%) of the desired amount. Additionally, the Purchasers shall not be required to fund any Tranches subsequent to the initial Tranche if: (i) the Company, its Subsidiaries, or any of the directors or officers of the Company or its Subsidiaries commit fraud; (ii) the Company or its Subsidiaries breach any covenant contained herein or in the other Transaction Documents (subject to the cure periods, if any, set forth in the applicable Transaction Document); (iii) if there is an Event of Default (as defined in the Note); or (iv) the remaining third party debt (the “Third Party Debt”) of the third party debt holders Lender #1 Ltd. and Lender #2 are not fully satisfied and such debt claims are not released.

 
	 
	8

	

	 

 

(b) Funding of the Initial Tranche through the Second Tranche. The initial Tranche through the second Tranche will be for an aggregate of up to $600,000 (subject to adjustment as described herein) in Subscription Amount of Note corresponding to an aggregate of up to $666,666.67 in Principal Amount of Note. The Subscription Amounts of each Purchaser for each of the initial Tranche through second Tranche is set forth on the Schedule of Purchasers annexed hereto as Annex B. The Closing Date of the initial Tranche of $475,000 will be on the date of execution of this Agreement (the “First Closing”). The second Tranche will be for $125,000 and will be funded to the Company on July 15, 2017 (subject to the conditions in Section 2.1(a)). Notwithstanding anything to the contrary contained in this Section 2.1(b)(i), the Company and the Purchasers acknowledge and agree that $300,000 of the Subscription Amount of the initial Tranche will be funded through the rollover of funding by certain Purchasers prior to the date of this Agreement

 

(c) Issuance of Commitment Shares. Within three (3) Trading Days of the execution of this Agreement, the Company shall issue to the Purchases an aggregate of four million (4,000,000) shares of Common Stock as commitment shares (the “Commitment Shares”), at the closing price of the Common Stock on the applicable Trading Market on the date hereof. The Commitment Shares shall be issued to the Purchases in the denominations set forth in Annex B.

 

2.2 Closings. On the First Closing Date, upon the terms and subject to the conditions set forth herein, substantially concurrent with the execution and delivery of this Agreement by the parties hereto, the Company agrees to sell, and each Purchaser, severally and not jointly, agrees to purchase, such Purchaser’s Closing Subscription Amount as set forth on the signature page hereto executed by the Purchaser. At each Closing, the Purchasers shall deliver to the Company, via wire transfer to an account designated by the Company, immediately available funds equal to such Purchaser’s Subscription Amount as set forth on the signature page hereto executed by such Purchaser, and the Company shall deliver to such Purchaser its respective Note, as determined pursuant to Section 2.3(a), and the Company and such Purchaser shall deliver the other items set forth in Section 2.3 deliverable at the First Closing. Upon satisfaction of the covenants and conditions set forth in Sections 2.3 and 2.4 for each Closing, each Closing shall occur at the offices of Robinson Brog or such other location as the parties shall mutually agree, and may by agreement be undertaken remotely by electronic exchange of Closing documentation.

 

2.3 Deliveries.

 

(a) On or prior to each Closing Date (except as noted), the Company shall deliver or cause to be delivered to each Purchaser (except for (vii) below) the following:

 

(i) As to the First Closing, this Agreement duly executed by the Company;

 

(ii) As to the First Closing, the Security Agreement, duly executed by the Company;

 
	 
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(iii) As to the First Closing, the Intellectual Property Security Agreement, duly executed by the Company and its Subsidiaries;

 

(iv) As to the First Closing, the Subsidiary Guarantee, duly executed by the Company and its Subsidiaries;

 

(v) The Transfer Agent Instruction Letter duly executed by the Company and the Transfer Agent; 

 

(vi) As to the First Closing, the Purchasers’ UCC-1, with proof of filing thereof with the Secretary of State of the applicable jurisdiction and each jurisdiction where the Real Property of the Company is located and secured, which shall be in form and substantially satisfactory to the Purchasers; and 

 

(vii) A Note with a principal amount equal to the Principal Amount, registered in the name of the Purchasers, and delivered to Agent (as defined below). 

 

(b) On or prior to the applicable Closing Date (except as noted), each Purchaser (except as noted) shall deliver or cause to be delivered to the Company, as applicable, the following: 

 

(i) As to the First Closing, this Agreement duly executed by such Purchaser; 

 

(ii) As to the First Closing, the Security Agreement duly executed by the Agent (as defined in the Note);

 

(iii) As to the First Closing, the Intellectual Property Security Agreement duly executed by the agent (as defined in the Note); and

 

(iv) Such Purchaser’s Subscription Amount), by wire transfer to the account specified in writing by the Company (except for the rollover amounts described in Section 2(b) and Annex B).

 

2.4 Closing Conditions. 

 

(a) The obligations of the Company hereunder in connection with each Closing are subject to the following conditions being met:

 

(i) The accuracy in all material respects on each applicable Closing Date of the representations and warranties of the Purchasers contained herein (unless as of a specific date therein in which case they shall be accurate as of such date);

 

(ii) All obligations, covenants and agreements of each Purchaser required to be performed at or prior to each applicable Closing Date shall have been performed in all material respects; and

 
	 
	10

	

	 

 

(iii) The delivery by each Purchaser of the items set forth in Section 2.3(b) of this Agreement (except as noted).

 

(b) The respective obligations of each Purchaser hereunder in connection with each Closing are subject to the following conditions being met:

 

(i) The accuracy in all material respects when made and on each applicable Closing Date of the representations and warranties of the Company contained herein (unless as of a specific date therein);

 

(ii) All obligations, covenants and agreements of the Company required to be performed at or prior to each applicable Closing Date shall have been performed in all material respects; 

 

(iii) The delivery by the Company of the items set forth in Section 2.3(a) of this Agreement (except as noted); 

 

(iv) There is no existing Event of Default (as defined in the Notes) or any other existing event which, with the passage of time or the giving of notice, would constitute an Event of Default;

 

(v) There shall have been no Material Adverse Effect with respect to the Company since the date hereof; 

 

(vi) Trading in the Common Stock shall not have been suspended by the Commission or the Company’s principal Trading Market and, at any time prior to the Closing Date, trading in securities generally as reported by Bloomberg L.P. shall not have been suspended or limited, or minimum prices shall not have been established on securities whose trades are reported by such service, or on any Trading Market, nor shall a banking moratorium have been declared either by the United States or New York State authorities nor shall there have occurred any material outbreak or escalation of hostilities or other national or international calamity of such magnitude in its effect on, or any material adverse change in, any financial market which, in each case, in the reasonable judgment of such Purchaser, makes it impracticable or inadvisable to purchase the Securities at the applicable Closing; and

 

(vii) Each Purchaser and its advisors, if any, shall be furnished with all materials relating to the business, finances and operations of the Company and materials relating to the offer and sale of the Securities which have been requested by such Purchaser or its advisors. Each Purchaser and its advisors, if any, shall be afforded the opportunity to ask questions of the Company regarding its business and affairs.

 
	 
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ARTICLE III.

REPRESENTATIONS AND WARRANTIES

 

3.1 Representations and Warranties of the Company. Except as set forth in the Disclosure Schedules, which Disclosure Schedules shall be deemed a part hereof and shall qualify any representation or otherwise made herein to the extent of the disclosure contained in the corresponding section of the Disclosure Schedules, the Company (which for purposes of this Section means the Company and all of its Subsidiaries) hereby makes the following representations and warranties to each Purchaser as of the date hereof: 

 

(a) Subsidiaries. All of the direct and indirect subsidiaries of the Company are set forth on Schedule 3.1(a). Except as set forth on Schedule 3.1(a), the Company owns, directly or indirectly, all of the capital stock or other equity interests of each Subsidiary free and clear of any Liens, and all of the issued and outstanding shares of capital stock of each Subsidiary are validly issued and are fully paid, non-assessable and free of preemptive and similar rights to subscribe for or purchase securities.

 

(b) Organization and Qualification. Except as set forth on Schedule 3.1(b), the Company and each of the Subsidiaries is an entity duly incorporated or otherwise organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization, with the requisite power and authority to own and use its properties and assets and to carry on its business as currently conducted. Neither the Company nor any Subsidiary is in violation nor default of any of the provisions of its respective certificate or articles of incorporation, bylaws or other organizational or charter documents. Each of the Company and the Subsidiaries is duly qualified to conduct business and is in good standing as a foreign corporation or other entity in each jurisdiction in which the nature of the business conducted or property owned by it makes such qualification necessary, except where the failure to be so qualified or in good standing, as the case may be, could not have or reasonably be expected to result in: (i) a material adverse effect on the legality, validity or enforceability of any Transaction Document, (ii) a material adverse effect on the results of operations, assets, business, prospects or condition (financial or otherwise) of the Company and the Subsidiaries, taken as a whole, or (iii) a material adverse effect on the Company’s ability to perform in any material respect on a timely basis its obligations under any Transaction Document (any of (i), (ii) or (iii), a “Material Adverse Effect”) and no Proceeding has been instituted in any such jurisdiction revoking, limiting or curtailing or seeking to revoke, limit or curtail such power and authority or qualification.

 

(c) Authorization; Enforcement. The Company has the requisite corporate power and authority to enter into and to consummate the transactions contemplated by this Agreement and each of the other Transaction Documents and otherwise to carry out its obligations hereunder and thereunder. The execution and delivery of this Agreement and each of the other Transaction Documents by the Company and the consummation by it of the transactions contemplated hereby and thereby have been duly authorized by all necessary action on the part of the Company and no further action is required by the Company, the Board of Directors or the Company’s stockholders in connection herewith or therewith other than in connection with the Required Approvals. This Agreement and each other Transaction Document to which it is a party has been (or upon delivery will have been) duly executed by the Company and, when delivered in accordance with the terms hereof and thereof, will constitute the valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except: (i) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally, (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies and (iii) insofar as indemnification and contribution provisions may be limited by applicable law.

 
	 
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(d) No Conflicts. The execution, delivery and performance by the Company of this Agreement and the other Transaction Documents to which it is a party, the issuance and sale of the Securities and the consummation by it of the transactions contemplated hereby and thereby do not and will not: (i) conflict with or violate any provision of the Company’s or any Subsidiary’s certificate or articles of incorporation, bylaws or other organizational or charter documents, (ii) conflict with, or constitute a default (or an event that with notice or lapse of time or both would become a default) under, result in the creation of any Lien upon any of the properties or assets of the Company or any Subsidiary, or give to others any rights of termination, amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, any agreement, credit facility, debt or other instrument (evidencing a Company or Subsidiary debt or otherwise) or other understanding to which the Company or any Subsidiary is a party or by which any property or asset of the Company or any Subsidiary is bound or affected, or (iii) subject to the Required Approvals, conflict with or result in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority to which the Company or a Subsidiary is subject (including federal and state securities laws and regulations), or by which any property or asset of the Company or a Subsidiary is bound or affected; except in the case of each of clauses (ii) and (iii), such as could not have or reasonably be expected to result in a Material Adverse Effect.

 

(e) Filings, Consents and Approvals. The Company is not required to obtain any consent, waiver, authorization or order of, give any notice to, or make any filing or registration with, any court or other federal, state, local or other governmental authority or other Person in connection with the execution, delivery and performance by the Company of the Transaction Documents, other than: (i) the filings required pursuant to Section 4.6 of this Agreement, (ii) the notice and/or application(s) to each applicable Trading Market for the issuance and sale of the Securities and the listing of the Conversion Shares for trading thereon in the time and manner required thereby, and (iii) the filing of Form D with the Commission and such filings as are required to be made under applicable state securities laws (collectively, the “Required Approvals”).

 

(f) Issuance of the Securities. The Securities are duly authorized and, when issued and paid for in accordance with the terms of the applicable Transaction Documents, will be duly and validly issued, fully paid and nonassessable, free and clear of all Liens imposed by the Company other than restrictions on transfer provided for in the Transaction Documents. The Company will reserve from its duly authorized capital stock a number of shares of Common Stock for issuance of the Underlying Shares at least equal to the Reserved Amount. 

 
	 
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(g) Capitalization. The capitalization of the Company is as set forth on Schedule 3.1(g), which Schedule 3.1(g) shall also include the number of shares of Common Stock owned beneficially, and of record, by Affiliates of the Company as of the date hereof. Except as set forth on Schedule 3.1(g), no Person has any right of first refusal, preemptive right, right of participation, or any similar right to participate in the transactions contemplated by the Transaction Documents. Except as a result of the purchase and sale of the Securities and as disclosed on Schedule 3.1(g), there are no outstanding options, warrants, scrip rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities, rights or obligations convertible into or exercisable or exchangeable for, or giving any Person any right to subscribe for or acquire any shares of Common Stock, or contracts, commitments, understandings or arrangements by which the Company or any Subsidiary is or may become bound to issue additional shares of Common Stock or Common Stock Equivalents. Except as set forth on Schedule 3.1(g), the issuance and sale of the Securities will not obligate the Company to issue shares of Common Stock or other securities to any Person (other than the Purchasers) and will not result in a right of any holder of Company securities to adjust the exercise, conversion, exchange or reset price under any of such securities. All of the outstanding shares of capital stock of the Company are duly authorized, validly issued, fully paid and nonassessable, have been issued in compliance with all federal and state securities laws, and none of such outstanding shares was issued in violation of any preemptive rights or similar rights to subscribe for or purchase securities. No further approval or authorization of any stockholder, the Board of Directors or others is required for the issuance and sale of the Securities. Except as set forth on Schedule 3.1(g), there are no stockholders agreements, voting agreements or other similar agreements with respect to the Company’s capital stock to which the Company is a party or, to the knowledge of the Company, between or among any of the Company’s stockholders.

 

(h) SEC Reports; Financial Statements. Except as set forth on Schedule 3.1(h), the Company has filed all reports, schedules, forms, statements and other documents required to be filed by the Company under the Securities Act and the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, for the two years preceding the date hereof (or such shorter period as the Company was required by law or regulation to file such material) (the foregoing materials, including the exhibits thereto and documents incorporated by reference therein, being collectively referred to herein as the “SEC Reports”) on a timely basis or has received a valid extension of such time of filing and has filed any such SEC Reports prior to the expiration of any such extension. As of their respective dates, the SEC Reports complied in all material respects with the requirements of the Securities Act and the Exchange Act, as applicable, and none of the SEC Reports, when filed, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. The financial statements of the Company included in the SEC Reports comply in all material respects with applicable accounting requirements and the rules and regulations of the Commission with respect thereto as in effect at the time of filing. Such financial statements have been prepared in accordance with United States generally accepted accounting principles applied on a consistent basis during the periods involved (“GAAP”), except as may be otherwise specified in such financial statements or the notes thereto and except that unaudited financial statements may not contain all footnotes required by GAAP, and fairly present in all material respects the financial position of the Company and its consolidated Subsidiaries as of and for 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, immaterial, year-end audit adjustments.

 
	 
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(i) Material Changes; Undisclosed Events, Liabilities or Developments. Except as set forth on Schedule 3.1(i), since the date of the latest audited financial statements included within the SEC Reports, except as specifically disclosed in a subsequent SEC Report filed prior to the date hereof: (i) there has been no event, occurrence or development that has had or that could reasonably be expected to result in a Material Adverse Effect, (ii) the Company has not altered its method of accounting, (iii) the Company has not incurred any liabilities (contingent or otherwise) other than (A) trade payables and accrued expenses incurred in the ordinary course of business consistent with past practice and (B) liabilities not required to be reflected in the Company’s financial statements pursuant to GAAP or disclosed in filings made with the Commission, (iv) the Company has not declared or made any dividend or distribution of cash or other property to its stockholders or purchased, redeemed or made any agreements to purchase or redeem any shares of its capital stock and (v) the Company has not issued any equity securities to any officer, director or Affiliate, except pursuant to existing Company stock option plans. The Company does not have pending before the Commission any request for confidential treatment of information. Except for the issuance of the Securities contemplated by this Agreement or as set forth on Schedule 3.1(i), to the best of the Company’s knowledge, no material event, liability, fact, circumstance, occurrence or development has occurred or exists or is reasonably expected to occur or exist with respect to the Company or its Subsidiaries or their respective businesses, properties, operations, assets or financial condition, that would be required to be disclosed by the Company under applicable securities laws at the time this representation is made or deemed made that has not been publicly disclosed at least 1 Trading Day prior to the date that this representation is made.

 

(j) Litigation. Except as set forth on Schedule 3.1(j), there is no action, suit, inquiry, notice of violation, proceeding or investigation pending or, to the knowledge of the Company, threatened against or affecting the Company, any Subsidiary or any of their respective properties, or against or affecting the Company’s current or former officers or directors in their capacity as such, before or by any court, arbitrator, governmental or administrative agency or regulatory authority (federal, state, county, local or foreign) (collectively, an “Action”) which (i) adversely affects or challenges the legality, validity or enforceability of any of the Transaction Documents or the Securities or (ii) could, if there were an unfavorable decision, have or reasonably be expected to result in a Material Adverse Effect. Neither the Company nor any Subsidiary, nor any director or officer thereof, is or has been the subject of any Action involving a claim of violation of or liability under federal or state securities laws or a claim of breach of fiduciary duty. There has not been, and to the knowledge of the Company, there is not pending or contemplated, any investigation by the Commission involving the Company or any current or former director or officer of the Company. The Commission has not issued any stop order or other order suspending the effectiveness of any registration statement filed by the Company or any Subsidiary under the Exchange Act or the Securities Act. 

 
	 
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(k) Labor Relations. No labor dispute exists or, to the knowledge of the Company, is imminent with respect to any of the employees of the Company, which could reasonably be expected to result in a Material Adverse Effect. None of the Company’s or its Subsidiaries’ employees is a member of a union that relates to such employee’s relationship with the Company or such Subsidiary, and neither the Company nor any of its Subsidiaries is a party to a collective bargaining agreement, and the Company and its Subsidiaries believe that their relationships with their employees are good. To the knowledge of the Company, no executive officer of the Company or any Subsidiary, is, or is now expected to be, in violation of any material term of any employment contract, confidentiality, disclosure or proprietary information agreement or non-competition agreement, or any other contract or agreement or any restrictive covenant in favor of any third party, and the continued employment of each such executive officer does not subject the Company or any of its Subsidiaries to any liability with respect to any of the foregoing matters. To the best of the Company’s knowledge, the Company and its Subsidiaries are in compliance with all U.S. federal, state, local and foreign laws and regulations relating to employment and employment practices, terms and conditions of employment and wages and hours, except where the failure to be in compliance could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

 

(l) Compliance. Except as set forth on Schedule 3.1(l), neither the Company nor any Subsidiary, to the best of the Company’s knowledge: (i) is in default under or in violation of (and no event has occurred that has not been waived that, with notice or lapse of time or both, would result in a default by the Company or any Subsidiary under), nor has the Company or any Subsidiary received notice of a claim that it is in default under or that it is in violation of, any indenture, loan or credit agreement or any other agreement or instrument to which it is a party or by which it or any of its properties is bound (whether or not such default or violation has been waived), (ii) is in violation of any judgment, decree or order of any court, arbitrator or other governmental authority or (iii) is or has been in violation of any statute, rule, ordinance or regulation of any governmental authority, including without limitation all foreign, federal, state and local laws relating to taxes, environmental protection, occupational health and safety, product quality and safety and employment and labor matters, except in each case as could not have or reasonably be expected to result in a Material Adverse Effect.

 

(m) Regulatory Permits. To the best of the Company’s knowledge, the Company and the Subsidiaries possess all certificates, authorizations and permits issued by the appropriate federal, state, local or foreign regulatory authorities necessary to conduct their respective businesses as described in the SEC Reports, except where the failure to possess such permits could not reasonably be expected to result in a Material Adverse Effect (“Material Permits”), and neither the Company nor any Subsidiary has received any notice of proceedings relating to the revocation or modification of any Material Permit.

 
	 
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(n) Title to Assets. The Company and the Subsidiaries have good and marketable title in fee simple to all real property owned by them and good and marketable title in all personal property owned by them that is material to the business of the Company and the Subsidiaries, in each case free and clear of all Liens, except for (i) Liens as do not materially affect the value of such property and do not materially interfere with the use made and proposed to be made of such property by the Company and the Subsidiaries and (ii) Liens for the payment of federal, state or other taxes, for which appropriate reserves have been made therefor in accordance with GAAP and, the payment of which is neither delinquent nor subject to penalties. Any real property and facilities held under lease by the Company and the Subsidiaries are held by them under valid, subsisting and enforceable leases with which the Company and the Subsidiaries are in compliance.

 

(o) Transactions with Affiliates and Employees. Except as set forth on Schedule 3.1(o), none of the officers or directors of the Company or any Subsidiary and, to the knowledge of the Company, none of the employees of the Company or any Subsidiary is presently a party to any transaction with the Company or any Subsidiary (other than for services as employees, officers and directors), including any contract, agreement or other arrangement providing for the furnishing of services to or by, providing for rental of real or personal property to or from providing for the borrowing of money from or lending of money to, or otherwise requiring payments to or from any officer, director or such employee or, to the knowledge of the Company, any entity in which any officer, director, or any such employee has a substantial interest or is an officer, director, trustee, stockholder, member or partner, in each case in excess of $120,000 other than for: (i) payment of salary or consulting fees for services rendered, (ii) reimbursement for expenses incurred on behalf of the Company and (iii) other employee benefits, including stock option agreements under any stock option plan of the Company.

 

(p) Sarbanes-Oxley; Internal Accounting Controls. Except as set forth on Schedule 3.1(p), Company and the Subsidiaries are in compliance with any and all applicable requirements of the Sarbanes-Oxley Act of 2002 that are effective as of the date hereof, and any and all applicable rules and regulations promulgated by the Commission thereunder that are effective as of the date hereof and as of the applicable Closing Date. 

 

(q) Certain Fees. Other than as set forth on Schedule 3.1(q), no brokerage or finder’s fees or commissions are or will be payable by the Company or any Subsidiaries to any broker, financial advisor or consultant, finder, placement agent, investment banker, bank or other Person with respect to the transactions contemplated by the Transaction Documents. The Purchasers shall have no obligation with respect to any fees or with respect to any claims made by or on behalf of other Persons for fees of a type contemplated in this Section that may be due in connection with the transactions contemplated by the Transaction Documents. 

 
	 
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(r) Private Placement. Assuming the accuracy of the Purchasers’ representations and warranties set forth in Section 3.2, no registration under the Securities Act is required for the offer and sale of the Securities by the Company to the Purchasers as contemplated hereby. The issuance and sale of the Securities hereunder does not contravene the rules and regulations of the Trading Market.

 

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

 

(t) Registration Rights. Except as set forth in this Agreement and on Schedule 3.1(t), no Person has the right to cause the Company to effect the registration under the Securities Act of any securities of the Company or any Subsidiaries. 

 

(u) Listing and Maintenance Requirements. The Common Stock is registered pursuant to Section 12(b) or 12(g) of the Exchange Act, and the Company has taken no action designed to, 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. Except with respect to the documents set forth on Schedule 3.1(h), the Company has not, in the 12 months preceding the date hereof, 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. The Company is, and has no reason to believe that it will not in the foreseeable future continue to be, in compliance with all such listing and maintenance requirements. 

 

(v) Application of Takeover Protections. The Company and the 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 certificate of incorporation (or similar charter documents) or the laws of its state of incorporation that is or could become applicable to the Purchasers as a result of the Purchasers and the Company fulfilling their obligations or exercising their rights under the Transaction Documents, including without limitation as a result of the Company’s issuance of the Securities and the Purchasers’ ownership of the Securities.

 

(w) Disclosure. Except with respect to the material terms and conditions of the transactions contemplated by the Transaction Documents, neither the Company nor any other Person acting on its behalf has provided any of the Purchasers or their agents or counsel with any information that it believes constitutes or might constitute material, non-public information. The Company understands and confirms that the Purchasers will rely on the foregoing representation in effecting transactions in securities of the Company. All of the disclosure furnished by or on behalf of the Company to the Purchasers regarding the Company and its Subsidiaries, their respective businesses and the transactions contemplated hereby, including the Disclosure Schedules to this Agreement, 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 light of the circumstances under which they were made, not misleading. The press releases disseminated by the Company during the twelve months preceding the date of this Agreement taken as a whole do 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 and when made, not misleading. The Company acknowledges and agrees that no Purchaser makes or has made any representations or warranties with respect to the transactions contemplated hereby other than those specifically set forth in Section 3.2 hereof.

 
	 
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(x) No Integrated Offering. Assuming the accuracy of the Purchasers’ representations and warranties set forth in Section 3.2, neither the Company, nor any of its Affiliates, nor any Person acting on its or their behalf has, directly or indirectly, made any offers or sales of any security or solicited any offers to buy any security, under circumstances that would cause this offering of the Securities to be integrated with prior offerings by the Company for purposes of (i) the Securities Act which would require the registration of any such securities under the Securities Act, or (ii) any applicable shareholder approval provisions of any Trading Market on which any of the securities of the Company are listed or designated. 

 

(y) Tax Status. Except as set forth on Schedule 3.1(y) and for matters that would not, individually or in the aggregate, have or reasonably be expected to result in a Material Adverse Effect, the Company and its Subsidiaries each (i) has made or filed all United States federal, state and local income and all foreign income and franchise tax returns, reports and declarations required by any jurisdiction to which it is subject, (ii) has paid all taxes and other governmental assessments and charges that are material in amount, shown or determined to be due on such returns, reports and declarations and (iii) has set aside on its books provision reasonably adequate for the payment of all material taxes for periods subsequent to the periods to which such returns, reports or declarations apply. There are no unpaid taxes in any material amount claimed to be due by the taxing authority of any jurisdiction, and the officers of the Company or of any Subsidiary know of no basis for any such claim.

 

(z) No General Solicitation. Neither the Company nor any person acting on behalf of the Company has offered or sold any of the Securities by any form of general solicitation or general advertising. The Company has offered the Securities for sale only to the Purchasers and certain other “accredited investors” within the meaning of Rule 501 under the Securities Act.

 

(aa) Foreign Corrupt Practices. Neither the Company nor any Subsidiary, nor to the knowledge of the Company or any Subsidiary, any agent or other person acting on behalf of the Company or any Subsidiary, has: (i) directly or indirectly, used any funds for unlawful contributions, gifts, entertainment or other unlawful expenses related to foreign or domestic political activity; (ii) made any unlawful payment to foreign or domestic government officials or employees or to any foreign or domestic political parties or campaigns from corporate funds; (iii) failed to disclose fully any contribution made by the Company or any Subsidiary (or made by any person acting on its behalf of which the Company is aware) which is in violation of law; or (iv) violated in any material respect any provision of FCPA.

 
	 
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(bb) Accountants. The Company’s accounting firm is set forth on Schedule 3.1(aa) of the Disclosure Schedules. To the knowledge and belief of the Company, such accounting firm: (i) is a registered public accounting firm as required by the Exchange Act and (ii) shall express its opinion with respect to the financial statements to be included in the Company’s Annual Report for the fiscal year ending October 31, 2016.

 

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

 

(dd) Acknowledgment Regarding Purchasers’ Purchase of Securities. The Company acknowledges and agrees that each of the Purchasers is acting solely in the capacity of an arm’s length purchaser with respect to the Transaction Documents and the transactions contemplated thereby. The Company further represents to each Purchaser that the Company’s decision to enter into this Agreement and the other Transaction Documents has been based solely on the independent evaluation of the transactions contemplated hereby by the Company and its representatives. 

 

(ee) No Bad Actors. Neither the Company nor any of its predecessors, predecessors in interest, any affiliated issuer, any director, executive officer, other officer of the Company participating in the offering hereunder, any beneficial owner of ten percent (10%) or more of the Company’s outstanding voting equity securities, calculated on the basis of voting power, or any promoter (as that term is defined in Rule 405 under the Securities Act) connected with the Company in any capacity at the time of sale is subject to any of the “Bad Actor” disqualifications described in Rule 506(d)(1)(i) to (viii) under the Securities Act.

 

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

 
	 
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(gg) Subsidiary Rights. Except as set forth on Schedule 3.1(ff), the Company has the unrestricted right to vote, and (subject to limitations imposed by applicable law) to receive dividends and distributions on, all capital securities of its Subsidiaries as owned by the Company or any Subsidiary.

 

(hh) Office of Foreign Assets Control. Neither the Company nor any Subsidiary nor, to the Company's knowledge, any director, officer, agent, employee or affiliate of the Company or any Subsidiary is currently subject to any U.S. sanctions administered by the Office of Foreign Assets Control of the U.S. Treasury Department (“OFAC”).

 

(ii) Money Laundering. To the best of the Company’s knowledge, the operations of the Company and its Subsidiaries are and have been conducted at all times in compliance with applicable financial record-keeping and reporting requirements of the Currency and Foreign Transactions Reporting Act of 1970, as amended, applicable money laundering statutes and applicable rules and regulations thereunder (collectively, the “Money Laundering Laws”), and no action, suit or proceeding by or before any court or governmental agency, authority or body or any arbitrator involving the Company or any Subsidiary with respect to the Money Laundering Laws is pending or, to the knowledge of the Company or any Subsidiary, threatened.

 

(jj) Anti-Dilution. Except as set forth on Schedule 3.1 (ii), no current holders of warrants of the Company have, as at the Closing, warrants containing anti-dilution or ratchet provisions.

 

Except where such representations conflict, each Purchaser acknowledges and agrees that the representations contained in Section 3.1 shall not modify, amend or affect the Company’s right to rely on such Purchaser’s representations and warranties contained in this Agreement or any representations and warranties contained in any other Transaction Document or any other document or instrument executed and/or delivered in connection with this Agreement or the consummation of the transaction contemplated hereby.

 

3.2 Representations and Warranties of the Purchasers. Each Purchaser, for itself and for no other Purchaser, hereby represents and warrants as of the date hereof and as of the applicable Closing Date to the Company as follows (unless as of a specific date therein):

 

(a) Organization; Authority. Such Purchaser is either an individual or an entity duly incorporated or formed, validly existing and in good standing under the laws of the jurisdiction of its incorporation or formation with full right, corporate, partnership, limited liability company or similar power and authority to enter into and to consummate the transactions contemplated by the Transaction Documents and otherwise to carry out its obligations hereunder and thereunder. The execution and delivery of the Transaction Documents and performance by such Purchaser of the transactions contemplated by the Transaction Documents have been duly authorized by all necessary corporate, partnership, limited liability company or similar action, as applicable, on the part of such Purchaser. Each Transaction Document to which it is a party has been duly executed by such Purchaser, and when delivered by such Purchaser in accordance with the terms hereof, will constitute the valid and legally binding obligation of such Purchaser, enforceable against it in accordance with its terms, except: (i) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally, (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies and (iii) insofar as indemnification and contribution provisions may be limited by applicable law.

 
	 
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(b) Own Account. Such Purchaser understands that the Securities are “restricted securities” and have not been registered under the Securities Act or any applicable state securities law and is acquiring the Securities as principal for its own account and not with a view to or for distributing or reselling such Securities or any part thereof in violation of the Securities Act or any applicable state securities law, has no present intention of distributing any of such Securities in violation of the Securities Act or any applicable state securities law and has no direct or indirect arrangement or understandings with any other persons to distribute or regarding the distribution of such Securities in violation of the Securities Act or any applicable state securities law (this representation and warranty not limiting such Purchaser’s right to sell the Securities in compliance with applicable federal and state securities laws). Such Purchaser is acquiring the Securities hereunder in the ordinary course of its business.

 

(c) Purchaser Status. At the time such Purchaser was offered the Securities, it was, and as of the date hereof it is, and on each date on which it converts any Notes it will be an “accredited investor” as defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7) or (a)(8) under the Securities Act.

 

(d) Experience of Such Purchaser. Such Purchaser, either alone or together with its representatives, has such knowledge, sophistication and experience in business and financial matters so as to be capable of evaluating the merits and risks of the prospective investment in the Securities, and has so evaluated the merits and risks of such investment. Such Purchaser is able to bear the economic risk of an investment in the Securities and, at the present time, is able to afford a complete loss of such investment.

 

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

 

(f) Certain Transactions and Confidentiality. Other than consummating the transactions contemplated hereunder, such Purchaser has not directly or indirectly, nor has any Person acting on behalf of or pursuant to any understanding with such Purchaser, executed any purchases or sales, including Short Sales, of the securities of the Company during the period commencing as of the time that such Purchaser first received a term sheet (written or oral) from the Company or any other Person representing the Company setting forth the material terms of the transactions contemplated hereunder and ending immediately prior to the execution hereof. Notwithstanding the foregoing, in the case of a Purchaser that is a multi-managed investment vehicle whereby separate portfolio managers manage separate portions of such Purchaser’s assets and the portfolio managers have no direct knowledge of the investment decisions made by the portfolio managers managing other portions of such Purchaser’s assets, the representation set forth above shall only apply with respect to the portion of assets managed by the portfolio manager that made the investment decision to purchase the Securities covered by this Agreement. Other than to other Persons party to this Agreement, such Purchaser has maintained the confidentiality of all disclosures made to it in connection with this transaction (including the existence and terms of this transaction). 

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

 

(h) Information. Each Purchaser and its advisors, if any, have been furnished with all materials relating to the business, finances and operations of the Company and materials relating to the offer and sale of the Securities which have been requested by such Purchaser or its advisors. Each Purchaser and its advisors, if any, have been afforded the opportunity to ask questions of the Company regarding its business and affairs. 

 

(i) Residency. Each Purchaser is a resident of the jurisdiction set forth immediately below such Purchaser’s name on the signature pages hereto.

 

(j) Transfer or Re-sale. Each Purchaser understands that (i) the sale or resale of the Securities has not been and is not being registered under the Securities Act or any applicable state securities laws, and the Securities may not be transferred unless (a) the Securities are sold pursuant to an effective registration statement under the Securities Act, (b) the Purchaser shall have delivered to the Company, at the cost of the Company, an opinion of counsel that shall be in form, substance and scope customary for opinions of counsel in comparable transactions to the effect that the Securities to be sold or transferred may be sold or transferred pursuant to an exemption from such registration, which opinion shall be reasonably acceptable by the Company, (c) the Securities are sold or transferred to an “affiliate” (as defined in Rule 144) of the Purchaser who agrees to sell or otherwise transfer the Securities only in accordance with this Section 2(f) and who is an Accredited Investor, (d) the Securities are sold pursuant to Rule 144, or (e) the Securities are sold pursuant to Regulation S under the Securities Act (or a successor rule) (“Regulation S”), and the Purchaser shall have delivered to the Company, at the cost of the Company, an opinion of counsel that shall be in form, substance and scope customary for opinions of counsel in corporate transactions, which opinion shall be reasonably acceptable by the Company; (ii) any sale of such Securities made in reliance on Rule 144 may be made only in accordance with the terms of said Rule and further, if said Rule is not applicable, any re-sale of such Securities under circumstances in which the seller (or the person through whom the sale is made) may be deemed to be an underwriter (as that term is defined in the Securities Act) may require compliance with some other exemption under the Securities Act or the rules and regulations of the Commission thereunder; and (iii) neither the Company nor any other person is under any obligation to register such Securities under the Securities Act or any state securities laws or to comply with the terms and conditions of any exemption thereunder (in each case). Notwithstanding the foregoing or anything else contained herein to the contrary, the Securities may be pledged in connection with a bona fide margin account or other lending arrangement secured by the Securities, and such pledge of Securities shall not be deemed to be a transfer, sale or assignment of the Securities hereunder, and the Purchaser in effecting such pledge of Securities shall be not required to provide the Company with any notice thereof or otherwise make any delivery to the Company pursuant to this Agreement or otherwise.

 

Except where such representations conflict, the Company acknowledges and agrees that the representations contained in Section 3.2 shall not modify, amend or affect such Purchaser’s right to rely on the Company’s representations and warranties contained in this Agreement or any representations and warranties contained in any other Transaction Document or any other document or instrument executed and/or delivered in connection with this Agreement or the consummation of the transaction contemplated hereby.

 
	 
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ARTICLE IV.

OTHER AGREEMENTS OF THE PARTIES

 

4.1 Transfer Restrictions.

 

(a) The Securities may only be disposed of in compliance with state and federal securities laws. In connection with any transfer of Securities other than pursuant to an effective registration statement or Rule 144, to the Company or to an Affiliate of a Purchaser or in connection with a pledge as contemplated in Section 4.1(b), the Company may require the transferor thereof to provide to the Company an opinion of counsel selected by the transferor, the form and substance of which opinion shall be reasonably satisfactory to the Company, to the effect that such transfer does not require registration of such transferred Securities under the Securities Act. As a condition of transfer, any such transferee shall agree in writing to be bound by the terms of this Agreement and shall have the rights and obligations of a Purchaser under this Agreement. 

 

(b) The Purchasers agree to the imprinting, so long as is required by this Section 4.1, of a legend on any of the Securities in the following form:

 

[NEITHER] THIS SECURITY [NOR THE SECURITIES INTO WHICH THIS SECURITY IS [EXERCISABLE] [CONVERTIBLE]] HAS [NOT] BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. 

 
	 
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(c) Certificates evidencing the Underlying Shares shall not contain any legend (including the legend set forth in Section 4.1(b) hereof): (i) following any sale of such Underlying Shares pursuant to Rule 144; or (ii) if such legend is not required under applicable requirements of the Securities Act (including judicial interpretations and pronouncements issued by the staff of the Commission). The Company shall use commercially reasonable efforts to cause counsel to issue a legal opinion to the Transfer Agent, at the cost of the Company, promptly after any of the events described in (i)-(ii) in the preceding sentence if required by the Transfer Agent to effect the removal of the legend hereunder (with a copy to the applicable Purchaser and its broker); provided that the Purchaser may (at the Company’s cost) secure another legal counsel to issue such legal opinion, and the Company will instruct the Transfer Agent to accept such opinion. If all or any portion of a Note is converted (as provided in a Note) at a time when such legend is not otherwise required under applicable requirements of the Securities Act (including judicial interpretations and pronouncements issued by the staff of the Commission) then such Underlying Shares shall be issued free of all legends. The Company agrees that following the Effective Date or at such time as such legend is no longer required under this Section 4.1(c), it will, no later than three Trading Days following the later of (x) the delivery by a Purchaser to the Company or the Transfer Agent of a certificate representing Underlying Shares, as applicable, issued with a restrictive legend, and (y) receipt by the Transfer Agent of a legal opinion covering the Underlying Shares, if required (such third Trading Day, the “Legend Removal Date”), deliver or cause to be delivered to such Purchaser a certificate representing such shares that is free from all restrictive and other legends. The Company may not make any notation on its records or give instructions to the Transfer Agent that enlarge the restrictions on transfer set forth in this Section 4. Certificates for Underlying Shares subject to legend removal hereunder shall be transmitted by the Transfer Agent to the Purchaser by crediting the account of the Purchaser’s prime broker with the Depository Trust Company System as directed by such Purchaser.

 

(d) In addition to such Purchaser’s other available remedies, the Company shall pay to a Purchaser, in cash, as partial liquidated damages and not as a penalty, for each $1,000 of Underlying Shares (based on the VWAP of the Common Stock on the date such Securities are submitted to the Transfer Agent) delivered for removal of the restrictive legend and subject to Section 4.1(c), $10 per Trading Day (increasing to $20 per Trading Day five (5) Trading Days after such damages have begun to accrue) for each Trading Day after the Legend Removal Date until such certificate is delivered without a legend. Nothing herein shall limit such Purchaser’s right to pursue actual damages for the Company’s failure to deliver certificates representing any Securities as required by the Transaction Documents, and such Purchaser shall have the right to pursue all remedies available to it at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief.

 

(e) The Company shall not change transfer agents without the prior written consent of the Holder.

 

(f) The Company shall be up to date with all of its filings with the Commission by July 15, 2017, including without limitation, all reports, schedules, forms, statements and other documents required to be filed by the Company under the Securities Act and the Exchange Act (including pursuant to Section 13(a) or 15(d) thereof).

 

4.2 Acknowledgment of Dilution. The Company acknowledges that the issuance of the Securities may result in dilution of the outstanding shares of Common Stock, which dilution may be substantial under certain market conditions. The Company further acknowledges that its obligations under the Transaction Documents, including, without limitation, its obligation to issue the Underlying Shares pursuant to the Transaction Documents, are unconditional and absolute and not subject to any right of set off, counterclaim, delay or reduction, regardless of the effect of any such dilution or any claim the Company may have against any Purchaser and regardless of the dilutive effect that such issuance may have on the ownership of the other stockholders of the Company.

 
	 
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4.3 Furnishing of Information; Public Information. 

 

(a) Until the earliest of the time that no Purchaser owns Securities, the Company covenants to maintain the registration of the Common Stock under Section 12(b) or 12(g) of the Exchange Act and to timely file (or obtain extensions in respect thereof and file within the applicable grace period) all reports required to be filed by the Company after the date hereof pursuant to the Exchange Act. 

  

(b) At any time during the period commencing from the six (6) month anniversary of the date hereof and ending at such time that all of the Securities may be sold without the requirement for the Company to be in compliance with Rule 144(c)(1) and otherwise without restriction or limitation pursuant to Rule 144, if the Company shall fail for any reason to satisfy the current public information requirement under Rule 144(c) (a “Public Information Failure”), Purchaser may provide written notice to the Company of the Public Information Failure (“PIF Notice”). If the Public Information Failure is not cured within three (3) Trading Days following the date that PIF Notice is received by the Company, then, in addition to such Purchaser’s other available remedies, the Company shall pay to a Purchaser, in cash, as partial liquidated damages and not as a penalty, by reason of any such delay in or reduction of its ability to sell the Securities, an amount in cash equal to two percent (2.0%) of the aggregate Subscription Amount of such Purchaser’s Securities on the 3rd (third) Trading Day following the date that PIF Notice is received by the Company and on every thirtieth (30th) day (prorated for periods totaling less than thirty days) thereafter until the earlier of (a) the date such Public Information Failure is cured and (b) such time that such public information is no longer required for the Purchasers to transfer the Underlying Shares pursuant to Rule 144. The payments to which a Purchaser shall be entitled pursuant to this Section 4.3(b) are referred to herein as “Public Information Failure Payments.” Public Information Failure Payments shall be paid on the earlier of (i) the last day of the calendar month during which such Public Information Failure Payments are incurred and (ii) the third (3rd) Business Day after the event or failure giving rise to the Public Information Failure Payments is cured. In the event the Company fails to make Public Information Failure Payments in a timely manner, such Public Information Failure Payments shall bear interest at the rate of 1% per month (prorated for partial months) until paid in full. Nothing herein shall limit such Purchaser’s right to pursue actual damages for the Public Information Failure, and such Purchaser shall have the right to pursue all remedies available to it at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief. Notwithstanding the foregoing, this Section 4.3(b) shall not apply to any Purchaser who is an executive officer or director of the Company.

 
	 
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4.4 Integration. The Company shall not sell, offer for sale or solicit offers to buy or otherwise negotiate in respect of any security (as defined in Section 2 of the Securities Act) that would be integrated with the offer or sale of the Securities in a manner that would require the registration under the Securities Act of the sale of the Securities or that would be integrated with the offer or sale of the Securities for purposes of the rules and regulations of any Trading Market such that it would require shareholder approval prior to the closing of such other transaction unless shareholder approval is obtained before the closing of such subsequent transaction.

 

4.5 Conversion and Exercise Procedures. The form of Notice of Conversion included in the Notes sets forth the totality of the procedures required of the Purchasers in order to convert the Notes. Without limiting the preceding sentences, no ink-original Notice of Conversion shall be required, nor shall any medallion guarantee (or other type of guarantee or notarization) of any Notice of Conversion form be required by the Company in order to convert the Note. No additional legal opinion, other information or instructions shall be required of the Purchasers to convert their Notes. The Company shall honor conversions of the Notes and shall deliver Underlying Shares in accordance with the terms, conditions and time periods set forth in the Transaction Documents.

 

4.6 Securities Laws Disclosure; Publicity. The Company shall file a Current Report on Form 8-K (if required by the Exchange Act), including the Transaction Documents as exhibits thereto, with the Commission within the time required by the Exchange Act. From and after the issuance of such 8-K, the Company represents to the Purchasers that it shall have publicly disclosed all material, non-public information delivered to any of the Purchasers by the Company or any of its Subsidiaries, or any of their respective officers, directors, employees or agents in connection with the transactions contemplated by the Transaction Documents). Notwithstanding the foregoing, the Company shall not publicly disclose the name of any Purchaser, or include the name of any Purchaser in any filing with the Commission or any regulatory agency or Trading Market, without the prior written consent of such Purchaser, except: (a) as required by federal securities law and (b) to the extent such disclosure is required by law or Trading Market regulations, in which case the Company shall provide the Purchasers with prior notice of such disclosure permitted under this clause (b).

 

4.7 Shareholder Rights Plan. No claim will be made or enforced by the Company or, with the consent of the Company, any other Person, that any Purchaser is an “Acquiring Person” under any control share acquisition, business combination, poison pill (including any distribution under a rights agreement) or similar anti-takeover plan or arrangement in effect or hereafter adopted by the Company, or that any Purchaser could be deemed to trigger the provisions of any such plan or arrangement, by virtue of receiving Securities under the Transaction Documents or under any other agreement between the Company and the Purchasers

 
	 
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4.8 Non-Public Information. Except with respect to the material terms and conditions of the transactions contemplated by the Transaction Documents, the Company covenants and agrees that neither it, nor any of its subsidiaries, nor any other Person acting on its behalf, will provide any Purchaser or its agents or counsel with any information that the Company believes constitutes material non-public information, unless prior thereto such information is disclosed to the public, or such Purchaser shall have entered into a written agreement with the Company regarding the confidentiality and use of such information. The Company understands and confirms that each Purchaser shall be relying on the foregoing covenant in effecting transactions in securities of the Company. Notwithstanding the foregoing, this Section 4.8 shall not apply to any Purchaser who is an executive officer or director of the Company.

 

4.9 Use of Proceeds. The Company shall use the net proceeds from the initial Tranche as set forth on Annex A. The Company shall use the net proceeds from any Tranches subsequent to the initial Tranche for general working capital purposes.

 

4.10 Indemnification of Purchasers. Subject to the provisions of this Section 4.10, the Company will indemnify and hold each Purchaser and its directors, officers, shareholders, members, partners, employees and agents (and any other Persons with a functionally equivalent role of a Person holding such titles notwithstanding a lack of such title or any other title), each Person who controls such Purchaser (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the directors, officers, shareholders, agents, members, partners or employees (and any other Persons with a functionally equivalent role of a Person holding such titles notwithstanding a lack of such title or any other title) of such controlling persons (each, a “Purchaser Party” and collectively the “Purchaser Parties”) harmless from any and all losses, liabilities, obligations, claims, contingencies, damages, costs and expenses, including all judgments, amounts paid in settlements, court costs and reasonable attorneys’ fees and costs of investigation that any such Purchaser 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 or (b) any third-party action instituted against the Purchaser Parties in any capacity, or any of them or their respective Affiliates, by any stockholder of the Company who is not an Affiliate of such Purchaser Party, with respect to any of the transactions contemplated by the Transaction Documents (unless such action is based upon a breach of such Purchaser Party’s representations, warranties or covenants under the Transaction Documents or any agreements or understandings such Purchaser Party may have with any such stockholder or any violations by such Purchaser Party of state or federal securities laws or any conduct by such Purchaser Party which constitutes fraud, gross negligence, willful misconduct or malfeasance). If any action shall be brought against any Purchaser Party in respect of which indemnity may be sought pursuant to this Agreement, such Purchaser Party shall promptly notify the Company in writing, and the Company shall have the right to assume the defense thereof with counsel of its own choosing reasonably acceptable to the Purchaser Party. Any Purchaser Party shall have the right to employ separate counsel in any such action and participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of such Purchaser Party except to the extent that (i) the employment thereof has been specifically authorized by the Company in writing, (ii) the Company has failed after a reasonable period of time to assume such defense and to employ counsel or (iii) in such action there is, in the reasonable opinion of counsel, a material conflict on any material issue between the position of the Company and the position of such Purchaser Party, in which case the Company shall be responsible for the reasonable fees and expenses of no more than one such separate counsel. The Company will not be liable to any Purchaser Party under this Agreement (y) for any settlement by a Purchaser Party effected without the Company’s prior written consent, which shall not be unreasonably withheld or delayed; or (z) to the extent, but only to the extent that a loss, claim, damage or liability is attributable to any Purchaser Party’s breach of any of the representations, warranties, covenants or agreements made by such Purchaser Party in this Agreement or in the other Transaction Documents. The indemnification required by this Section 4.10 shall be made by periodic payments of the amount thereof during the course of the investigation or defense, as and when bills are received or are incurred. The indemnity agreements contained herein shall be in addition to any cause of action or similar right of any Purchaser Party against the Company or others and any liabilities the Company may be subject to pursuant to law.

 
	 
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4.11 Reservation and Listing of Securities.

  

(a) The Company shall maintain a reserve from its duly authorized shares of Common Stock for issuance a sufficient number of shares of Common Stock at least equal to the following formula: 3 x (P/CP), where P equals the outstanding principal amount of the Note from time to time and CP equals the then-effective Conversion Price (the “Reserved Amount”). The Reserved Amount shall be recalculated each month and the Company shall notify the Transfer Agent by the first day of the following month of the new Reserved Amount.

  

(b) In the event that the Company is unable to reserve the entirety of the Reserved Amount in accordance with Section 4.11(a) above, then the Board of Directors shall use commercially reasonable efforts to amend the Company’s certificate or articles of incorporation to increase the number of authorized but unissued shares of Common Stock to at least such amount within 75 days after the date of calculation as required by Section 4.11(a) above. 

  

(c) The Company shall, if applicable: (i) in the time and manner required by the principal Trading Market, prepare and file with such Trading Market an additional shares listing application covering a number of shares of Common Stock at least equal to the Required Minimum on the date of such application, (ii) take all steps necessary to cause such shares of Common Stock to be approved for listing or quotation on such Trading Market as soon as reasonably practicable thereafter, (iii) provide to the Purchasers evidence of such listing or quotation and (iv) for so long as a Purchaser owns any of the Securities, maintain the listing or quotation of such Common Stock on any date at least equal to the Required Minimum on such date on such Trading Market or another Trading Market.

 

4.12 Participation in Future Financing.

 

(a) From the date hereof until the date that no principal amount under the Notes remains outstanding, upon any issuance by the Company or any of its Subsidiaries of Common Stock, Common Stock Equivalents or debt pursuant to Section 3(a)(9) of the Securities Act (a “Subsequent Financing”), the Purchasers shall, collectively, have the right to participate in the Subsequent Financing in an amount up to 100% of the outstanding balance of the Note (subject to the applicable Prepayment Multiplier) (the “Participation Maximum”) on the same terms, conditions and price provided for in the Subsequent Financing. 

  

(b) At least forty-eight (48) hours prior to the closing of the Subsequent Financing (the “Subsequent Financing Notice Period”), the Company shall deliver to each Purchaser a written notice of its intention to effect a Subsequent Financing (the “Subsequent Financing Notice”), which Subsequent Financing Notice shall describe in reasonable detail the proposed terms of such Subsequent Financing, the Persons as parties to the Subsequent Financing, the amount of proceeds intended to be raised thereunder and the Person or Persons through or with whom such Subsequent Financing is proposed to be effected, and shall include a term sheet or similar document relating thereto as an attachment.

 
	 
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(c) Any Purchaser desiring to participate in such Subsequent Financing must provide, before the expiration of the Subsequent Financing Notice Period, written notice to the Company that such Purchaser is willing to participate in the Subsequent Financing, the amount of such Purchaser’s participation, and represent and warrant that such Purchaser has such funds ready, willing, and available for investment on the terms set forth in the Subsequent Financing Notice. 

 

(d) If notifications by the Purchasers of their willingness to participate in the Subsequent Financing (or to cause their designees to participate) is, in the aggregate, less than the total amount of the Subsequent Financing, then the Company may effect the remaining portion of such Subsequent Financing on the terms and with the Persons set forth in the Subsequent Financing Notice. 

 

(e) If the Company receives responses to a Subsequent Financing Notice from any Purchasers seeking to purchase more than the aggregate amount of the Participation Maximum, each such Purchaser shall have the right to purchase its Pro Rata Portion (as defined below) of the Participation Maximum. “Pro Rata Portion” means the ratio of (x) the Subscription Amount of Securities purchased by a Purchaser participating under this Section 4.12 and (y) the sum of the aggregate Subscription Amounts of Securities purchased by all Purchasers participating under this Section 4.12.

 

(f) The Company must provide the Purchasers with a second Subsequent Financing Notice, and the Purchasers will again have the right of participation set forth above in this Section 4.12, if the Subsequent Financing subject to the initial Subsequent Financing Notice is not consummated for any reason on the terms set forth in such Subsequent Financing Notice within thirty (30) Trading Days after the date of the initial Subsequent Financing Notice.

 

(g) The Company and each Purchaser agree that if any Purchaser elects to participate in the Subsequent Financing, the transaction documents related to the Subsequent Financing shall not include any term or provision whereby such Purchaser shall be required to agree to any restrictions on trading as to any of the Securities purchased hereunder or be required to consent to any amendment to or termination of, or grant any waiver, release or the like under or in connection with, this Agreement, without the prior written consent of such Purchaser.

 

(h) Notwithstanding anything to the contrary in this Section 4.12 and unless otherwise agreed to by such Purchaser, the Company shall either confirm in writing to such Purchaser that the transaction with respect to the Subsequent Financing has been abandoned or shall publicly disclose its intention to issue the securities in the Subsequent Financing, in either case in such a manner such that such Purchaser will not be in possession of any material, non-public information, by the tenth (10th) Business Day following delivery of the Subsequent Financing Notice. If by such tenth (10th) Business Day, no public disclosure regarding a transaction with respect to the Subsequent Financing has been made, and no notice regarding the abandonment of such transaction has been received by such Purchaser, such transaction shall be deemed to have been abandoned and such Purchaser shall not be deemed to be in possession of any material, non-public information with respect to the Company or any of its Subsidiaries. 

 

(i) Notwithstanding the foregoing, this Section 4.12 shall not apply in respect of an Exempt Issuance. 

 
	 
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4.13 Form D; Blue Sky Filings. If required under Regulation D of the Securities Act, the Company agrees to timely file a Form D with respect to the Securities as required under Regulation D and to provide a copy thereof, promptly upon request of any Purchaser. The Company shall take such action as the Company shall reasonably determine is necessary in order to obtain an exemption for, or to qualify the Securities for, sale to the Purchasers at the applicable Closing under applicable securities or “Blue Sky” laws of the states of the United States, and shall provide evidence of such actions promptly upon request of any Purchaser.

 

4.14 Equal Treatment of Purchasers. No consideration (including any modification of any Transaction Document) shall be offered or paid to any Person to amend or consent to a waiver or modification of any provision of this Agreement unless the same consideration is also offered to all of the parties to this Agreement. Further, the Company shall not make any payment of principal or interest on the Notes in amounts which are disproportionate to the respective principal amounts outstanding on the Notes at any applicable time. For clarification purposes, this provision constitutes a separate right granted to each Purchaser by the Company and negotiated separately by each Purchaser, and is intended for the Company to treat the Purchasers as a class and shall not in any way be construed as the Purchasers acting in concert or as a group with respect to the purchase, disposition or voting of Securities or otherwise.

 

4.15 Certain Transactions and Confidentiality. Each Purchaser, severally and not jointly with the other Purchasers, covenants that neither it, nor any Affiliate acting on its behalf or pursuant to any understanding with it, will execute any Short Sales of any of the Company’s securities from the date hereof until the earlier of (x) the six (6) month anniversary of the date hereof and (y) the date that the Notes are no longer outstanding (provided that this provision shall not prohibit any sales made where a corresponding Notice of Conversion or Notice of Exercise is tendered to the Company and the shares received upon such conversion or exercise are used to close out such sale) (a “Prohibited Short Sale”). Each Purchaser, severally and not jointly with the other Purchasers, covenants that until such time as the transactions contemplated by this Agreement are publicly disclosed by the Company, such Purchaser will maintain the confidentiality of the existence and terms of this transaction and the information included in the Transaction Documents and the Disclosure Schedules. For sixty (60) days after the date of this Agreement, the Company shall not enter into any negotiations for, or accept or consummate any debt or equity financing transactions, without Agent’s (as defined below) express written consent, excluding the bridge financing previously discussed by the parties. The Company agrees that Agent’s (as defined below) damages for breach of the previous sentence shall be liquidated damages in an amount equal to $150,000 payable in cash.

 

4.16 Piggy-Back Registrations. If at any time prior to the conversion in full or repayment of the Note, the Company shall determine to prepare and file with the Commission a registration statement relating to an offering for the account of others under the Securities Act of any of its equity securities (a “Registration Statement”), other than on Form S-4 or Form S-8 (each as promulgated under the Securities Act) or their then equivalents relating to equity securities to be issued solely in connection with any merger with or acquisition of any entity or business or equity securities issuable in connection with the Company’s stock option or other employee benefit plans, then the Company shall deliver to each Purchaser a written notice of such determination and, if within fifteen (15) days after the date of the delivery of such notice, any such Purchaser shall so request in writing, the Company shall include in such registration statement all or any part of such Registrable Securities such Purchaser requests to be registered; provided, however, that the Company shall not be required to register any Registrable Securities pursuant to this Section 6(e) that are eligible for resale pursuant to Rule 144 (without volume restrictions or current public information requirements) promulgated by the Commission pursuant to the Securities Act or that are the subject of a then effective Registration Statement.

 
	 
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4.17 Exchange Transactions. During the period commencing on the date hereof and for so long as an aggregate of at least $100,000 in Principal Amount on the Note remains outstanding, neither the Company nor any of its affiliates or Subsidiaries, nor any of its or their respective officers, employees, directors, agents or other representatives, will, without the prior written consent of the Purchasers (which consent may be withheld, delayed or conditioned in the Purchasers’ sole discretion), directly or indirectly: (a) solicit, initiate, encourage or accept any other inquiries, proposals or offers from any Person (other than the Purchasers or the officers or directors of the Company) relating to any exchange (i) of any security of the Company or any of its Subsidiaries for any other security of the Company or any of its Subsidiaries or (ii) of any indebtedness or other securities of, or claim against, the Company or any of its Subsidiaries relying on the exemption provided by Section 3(a)(10) of the Securities Act (any such transaction described in clauses (i) or (ii), an “Exchange Transaction”); (b) enter into, effect, alter, amend, announce or recommend to its stockholders any Exchange Transaction with any Person (other than the Purchasers or the Company’s executive officers and directors); or (c) participate in any discussions, conversations, negotiations or other communications with any Person (other than the Purchasers or the Company’s executive officers and directors) regarding any Exchange Transaction, or furnish to any Person (other than the Purchasers or the Company’s executive officers and directors) any information with respect to any Exchange Transaction, or otherwise cooperate in any way, assist or participate in, facilitate or encourage any effort or attempt by any Person (other than the Purchasers or the Company’s executive officers and directors) to seek an Exchange Transaction involving the Company or any of its Subsidiaries. In addition, for so long as any Principal on the Note remains outstanding, neither the Company nor any of its affiliates or Subsidiaries, nor any of its or their respective officers, employees, directors, agents or other representatives, will, without the prior written consent of the Purchasers (which consent may be withheld, delayed or conditioned in the Purchasers’ sole discretion), directly or indirectly, cooperate in any way, assist or participate in, facilitate or encourage any effort or attempt by any Person (other than the Purchaser or the Company’s executive officers and directors) to effect any acquisition of securities or indebtedness of, or claim against, the Company by such Person from an existing holder of such securities, indebtedness or claim in connection with a proposed exchange of such securities or indebtedness of, or claim against, the Company (whether pursuant to Section 3(a)(9) or 3(a)(10) of the Securities Act or otherwise) (a “Third Party Exchange Transfer”). The Company, its affiliates and Subsidiaries, and each of its and their respective officers, employees, directors, agents or other representatives shall immediately cease and cause to be terminated all existing discussions, conversations, negotiations and other communications with any Persons (other than the Purchasers or the Company’s executive officers and directors) with respect to any of the foregoing. The Company shall promptly (and in no event later than 24 hours after receipt) notify (which notice shall be provided orally and in writing and shall identify the Person making the inquiry, request, proposal or offer and set forth the material terms thereof) the Purchasers after receipt of any inquiry, request, proposal or offer relating to any Exchange Transaction or Third Party Exchange Transfer, and shall promptly (and in no event later than 24 hours after receipt) provide copies to the Purchasers of any written inquiries, requests, proposals or offers relating thereto. The Company agrees that it and its affiliates and Subsidiaries, and each of its and their respective officers, employees, directors, agents or other representatives Subsidiaries will not enter into any agreement with any Person subsequent to the date hereof which prohibits the Company from providing any information to the Purchasers in accordance with this provision. For all purposes of this Agreement, violations of the restrictions set forth in this Section 4.17 by any Subsidiary or affiliate of the Company, or any officer, employee, director, agent or other representative of the Company or any of its Subsidiaries or affiliates shall be deemed a direct breach of this Section 4.17 by the Company.

 
	 
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4.18  No Variable Rate Transactions, Etc. For as long as any Notes remain outstanding, the Company shall not directly or indirectly (i)(A) consummate any exchange of any Indebtedness and/or securities of the Company for any other securities and/or Indebtedness of the Company, (B) cooperate with any person to effect any exchange of securities and/or Indebtedness of the Company in connection with a proposed sale of such securities from an existing holder of such securities to a third party), and/or (C) reduce and/or otherwise change the exercise price, conversion price and/or exchange price of any Common Stock Equivalent of the Company and/or amend any non-convertible Indebtedness of the Company to make it convertible into securities of the Company, (ii) issue or sell any of its securities either (A) at a conversion, exercise or exchange rate or price that is based upon and/or varies with the trading prices of, or quotations for, the shares of Common Stock, and/or (B) with a conversion, exercise or exchange rate and/or price that is subject to being reset on one or more occasions either (1) at some future date after the initial issuance of such securities or (2) upon the occurrence of specified or contingent events directly or indirectly related to the business of the Company or the market for the Common Stock, and/or (iii) enter into any agreement (including, without limitation, an “equity line of credit” or an “at-the-market offering”) whereby the Company may sell securities at a future determined price. Any transaction contemplated in this Section 4.18, shall be referred to as a “Variable Rate Transaction.” The Purchasers shall be entitled to obtain injunctive relief against the Company to preclude any Variable Rate Transaction (without the need for the posting of any bond or similar item, which the Company hereby expressly and irrevocably waives the requirement for), which remedy shall be in addition to any right of the Purchasers to collect damages.

 

4.19 Satisfaction of Third Party Debt. The Company shall satisfy the Third Party Debt and obtain the correlating release(s).

 

4.20 Executive Management’s Salaries. C-Level executives, which shall initially consist of Albert Mitrani, Ian Bothwell Dr. Bruce Werber, Mari Mitrani, Terrell Suddarth, and any similarly positioned C-Level executives (e.g., Chief Technology Officer) that are hired after the date hereof (collectively, the “Executives” and each an “Executive”) with the prior written consent (which such consent shall not be unreasonably withheld) of Purchaser Agent (“Agent”), shall be entitled to receive their monthly base contractual salary. Additionally, the currently hired Executives may only be compensated based on the pro-rata monthly salary set forth in the each of the Executives’ respective employment agreements in effect as of the Effective Date. In the event that the any of the Executives receive any such amounts, then Agent shall receive a simultaneous repayment equal to one-third (1/3) of the aggregate amounts paid to the Executives at the prepayment rates set forth in Section 4 of the Note. Such repayment shall reduce the principal amount due specifically to Agent under the Note, and such repayments shall continue until Agent is repaid all unpaid principal, fees, and accrued and unpaid interest due to it under the Note. Notwithstanding anything to the contrary contained in this Section 4.20, unless waived in writing by Agent, in no event shall past due salary due to any Executive be paid to such Executive until all unpaid principal, fees, and accrued and unpaid interest due under the Note to Agent is paid in full

 
	 
	33

	

	 

 

4.21 Subsequent Company Capital Raises. Subject to the Company’s prohibitions on future capital raises set forth in this Agreement, in the event that the Company raises above $500,000 from any other Person(s), all amounts raised above $500,000 shall be used towards the repayment of the Principal Amount, accrued and unpaid interest, and any other amounts or fees due to Agent under the Note (with such payments being applied first to accrued and unpaid interest, then the other amounts or fees due under the Note, and then the Principal Amount). 

 

4.22 Lien Searches. At any time after the date hereof, Agent, at its discretion, may cause a one-time full lien search (e.g., judgments, taxes, bankruptcy) to be conducted on the Company and its Subsidiaries, at the Company’s expense.

 

ARTICLE V.

MISCELLANEOUS

 

5.1 Termination. This Agreement may be terminated by any Purchaser, as to such Purchaser’s obligations hereunder only and without any effect whatsoever on the obligations between the Company and the other Purchasers, by written notice to the other parties, if the First Closing has not been consummated on or before March 31, 2017; provided, however, that such termination will not affect the right of any party to sue for any breach by any other party (or parties).

 

5.2 Fees and Expenses. At the Closing, the Company has agreed to reimburse Agent $25,000 for its legal, due diligence and broker review fees, less any fees related hereto which have been previously paid by the Company. Accordingly, no additional payments shall be made to any Purchaser at the Closing. The Company shall deliver to each Purchaser, prior to each Closing, a completed and executed copy of the Closing Statement, attached hereto as Annex A. Except as expressly set forth in the Transaction Documents to the contrary, each party shall pay the fees and expenses of its respective advisers, counsel, accountants and other experts, if any, and all other expenses incurred by such party incident to the negotiation, preparation, execution, delivery and performance of this Agreement. The Company shall pay all Transfer Agent fees (including, without limitation, any fees required for same-day processing of any instruction letter delivered by the Company and any conversion or exercise notice delivered by a Purchaser), stamp taxes and other taxes and duties levied in connection with the delivery of any Securities to the Purchasers.

 
	 
	34

	

	 

 

5.3 Entire Agreement. The Transaction Documents, together with the exhibits and schedules thereto, contain the entire understanding of the parties with respect to the subject matter hereof and thereof and supersede all prior agreements and understandings, oral or written, with respect to such matters, which the parties acknowledge have been merged into such documents, exhibits and schedules.

 

5.4 Notices. Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be in writing and shall be deemed given and effective on the earliest of: (a) the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number set forth on the signature pages attached hereto at or prior to 5:30 p.m. (New York City time) on a Trading Day, (b) the next Trading Day after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number set forth on the signature pages attached hereto on a day that is not a Trading Day or later than 5:30 p.m. (New York City time) on any Trading Day, (c) the second (2nd) Trading Day following the date of mailing, if sent by U.S. nationally recognized overnight courier service or (d) upon actual receipt by the party to whom such notice is required to be given. The address for such notices and communications shall be as set forth on the signature pages attached hereto.

 

5.5 Amendments; Waivers. No provision of this Agreement may be waived, modified, supplemented or amended except in a written instrument signed, in the case of an amendment, by the Company and Agent, LLC, or, in the case of a waiver, by the party against whom enforcement of any such waived provision is sought. No waiver of any default with respect to any provision, condition or requirement of this Agreement shall be deemed to be a continuing waiver in the future or a waiver of any subsequent default or a waiver of any other provision, condition or requirement hereof, nor shall any delay or omission of any party to exercise any right hereunder in any manner impair the exercise of any such right.

 

5.6 Headings. The headings herein are for convenience only, do not constitute a part of this Agreement and shall not be deemed to limit or affect any of the provisions hereof.

 

5.7 Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their successors and permitted assigns. The Company may not assign this Agreement or any rights or obligations hereunder without the prior written consent of each Purchaser (other than by merger). Any Purchaser may assign any or all of its rights under this Agreement to any Person to whom such Purchaser assigns or transfers any Securities, provided that such transferee agrees in writing to be bound, with respect to the transferred Securities, by the provisions of the Transaction Documents that apply to the “Purchasers.”

 

5.8 No Third-Party Beneficiaries. This Agreement is intended for the benefit of the parties hereto and their respective successors and permitted assigns and is not for the benefit of, nor may any provision hereof be enforced by, any other Person, except as otherwise set forth in Section 4.10.

 
	 
	35

	

	 

 

5.9 Governing Law. All questions concerning the construction, validity, enforcement and interpretation of the Transaction Documents shall be governed by and construed and enforced in accordance with the internal laws of the State of New York, without regard to the principles of conflicts of law thereof. Each party agrees that all legal proceedings concerning the interpretations, enforcement and defense of the transactions contemplated by this Agreement and any other Transaction Documents (whether brought against a party hereto or its respective affiliates, directors, officers, shareholders, partners, members, employees or agents) shall be commenced exclusively in the state and federal courts sitting in the City of New York. Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the City of New York, Borough of Manhattan for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (including with respect to the enforcement of any of the Transaction Documents), and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is improper or is an inconvenient venue for such proceeding. Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) 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 contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by law. If either party shall commence an action, suit or proceeding to enforce any provisions of the Transaction Documents, then, in addition to the obligations of the Company under Section 4.10, the prevailing party in such action, suit or proceeding shall be reimbursed by the other party for its reasonable attorneys’ fees and other costs and expenses incurred with the investigation, preparation and prosecution of such action or proceeding. The parties hereto acknowledge that this Agreement has been negotiated, executed, and delivered in the State of New York and is to be wholly performed within New York, and each party’s actions in connection with the negotiation, execution, and delivery of this Agreement constitutes transacting business in New York.

 

5.10 Survival. The representations and warranties contained herein shall survive the Closings and the delivery of the Securities.

 

5.11 Execution. This Agreement may be executed in two or more counterparts, all of which when taken together shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to each other party, it being understood that the parties need not sign the same counterpart. In the event that any signature is delivered by facsimile transmission or by e-mail delivery of a “.pdf” format data file, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile or “.pdf” signature page were an original thereof.

 
	 
	36

	

	 

 

5.12 Severability. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, illegal, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in full force and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use their commercially reasonable efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated by such term, provision, covenant or restriction. It is hereby stipulated and declared to be the intention of the parties that they would have executed the remaining terms, provisions, covenants and restrictions without including any of such that may be hereafter declared invalid, illegal, void or unenforceable.

 

5.13 Rescission and Withdrawal Right. Notwithstanding anything to the contrary contained in (and without limiting any similar provisions of) any of the other Transaction Documents, whenever any Purchaser exercises a right, election, demand or option under a Transaction Document and the Company does not timely perform its related obligations within the periods therein provided, then such Purchaser may rescind or withdraw, in its sole discretion from time to time upon written notice to the Company, any relevant notice, demand or election in whole or in part without prejudice to its future actions and rights; provided, however, that in the case of a rescission of a conversion of a Note, the applicable Purchaser shall be required to return any shares of Common Stock subject to any such rescinded conversion notice concurrently with the return to such Purchaser of the aggregate exercise price paid to the Company for such shares.

 

5.14 Replacement of Securities. If any certificate or instrument evidencing any Securities is mutilated, lost, stolen or destroyed, the Company shall issue or cause to be issued in exchange and substitution for and upon cancellation thereof (in the case of mutilation), or in lieu of and substitution therefor, a new certificate or instrument, but only upon receipt of evidence reasonably satisfactory to the Company of such loss, theft or destruction. The applicant for a new certificate or instrument under such circumstances shall also pay any reasonable third-party costs (including customary indemnity) associated with the issuance of such replacement Securities.

 

5.15 Remedies. In addition to being entitled to exercise all rights provided herein or granted by law, including recovery of damages, each of the Purchasers and the Company will be entitled to specific performance under the Transaction Documents. The parties agree that monetary damages may not be adequate compensation for any loss incurred by reason of any breach of obligations contained in the Transaction Documents and hereby agree to waive and not to assert in any action for specific performance of any such obligation the defense that a remedy at law would be adequate. 

 

5.16 Payment Set Aside. To the extent that the Company makes a payment or payments to any Purchaser pursuant to any Transaction Document or a Purchaser enforces or exercises its rights thereunder, and such payment or payments or the proceeds of such enforcement or exercise or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside, recovered from, disgorged by or are required to be refunded, repaid or otherwise restored to the Company, a trustee, receiver or any other Person under any law (including, without limitation, any bankruptcy law, state or federal law, common law or equitable cause of action), then to the extent of any such restoration the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such enforcement or setoff had not occurred.

 
	 
	37

	

	 

 

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

 

5.18 Independent Nature of Purchasers’ Obligations and Rights. The obligations of each Purchaser under any Transaction Document are several and not joint with the obligations of any other Purchaser, and no Purchaser shall be responsible in any way for the performance or non-performance of the obligations of any other Purchaser under any Transaction Document. Nothing contained herein or in any other Transaction Document, and no action taken by any Purchaser pursuant hereto or thereto, shall be deemed to constitute the Purchasers as a partnership, an association, a joint venture or any other kind of entity, or create a presumption that the Purchasers are in any way acting in concert or as a group with respect to such obligations or the transactions contemplated by the Transaction Documents. Each Purchaser shall be entitled to independently protect and enforce its rights, including, without limitation, the rights arising out of this Agreement or out of the other Transaction Documents, and it shall not be necessary for any other Purchaser to be joined as an additional party in any proceeding for such purpose. Each Purchaser has been represented or has had the opportunity to be represented by its own separate legal counsel in its review and negotiation of the Transaction Documents. For reasons of administrative convenience only, each Purchaser and its respective counsel have chosen to communicate with the Company through Robinson Brog. Robinson Brog does not represent any of the Purchasers other than Agent. The Company has elected to provide all Purchasers with the same terms and Transaction Documents for the convenience of the Company and not because it was required or requested to do so by any of the Purchasers.

 
	 
	38

	

	 

 

5.19 Liquidated Damages. The Company’s obligations to pay any partial liquidated damages or other amounts owing under the Transaction Documents is a continuing obligation of the Company and shall not terminate until all unpaid partial liquidated damages and other amounts have been paid notwithstanding the fact that the instrument or security pursuant to which such partial liquidated damages or other amounts are due and payable shall have been canceled.

 

5.20 Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall not be a Business Day, then such action may be taken or such right may be exercised on the next succeeding Business Day.

 

5.21 Construction. The parties agree that each of them and/or their respective counsel have 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 or any amendments thereto. In addition, each and every reference to share prices and shares of Common Stock in any Transaction Document shall be subject to adjustment for reverse and forward stock splits, stock dividends, stock combinations and other similar transactions of the Common Stock that occur after the date of this Agreement.

 

5.22 WAIVER OF JURY TRIAL. IN ANY ACTION, SUIT, OR PROCEEDING IN ANY JURISDICTION BROUGHT BY ANY PARTY AGAINST ANY OTHER PARTY, THE PARTIES EACH KNOWINGLY AND INTENTIONALLY, TO THE GREATEST EXTENT PERMITTED BY APPLICABLE LAW, HEREBY ABSOLUTELY, UNCONDITIONALLY, IRREVOCABLY AND EXPRESSLY WAIVES FOREVER TRIAL BY JURY. 

 

(Signature Pages Follow)

 
	 
	39

	

	 

 

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

 

	
Biotech Products Services and Research, Inc. 
		
Address for Notice:
	
	
 
	
 
	
 
	
	
By:
	
 
	
 
	
Fax:
	
 

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

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK

SIGNATURE PAGE FOR PURCHASER FOLLOWS]

 
	 
	40

	

	 

 

[PURCHASER SIGNATURE PAGES TO SECURITIES PURCHASE AGREEMENT]

 

IN WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement to be duly executed by their respective authorized signatories as of the date first indicated above.

 

Name of Purchaser: ______________________________________________________________

 

Signature of Authorized Signatory of Purchaser:  _______________________________________

 

Name of Authorized Signatory: _____________________________________________________

 

Title of Authorized Signatory: ______________________________________________________

 

Email Address of Authorized Signatory:_______________________________________________

 

Facsimile Number of Authorized Signatory: ____________________________________________

 

Address for Notice to Purchaser: ____________________________________________________

 

Address for Delivery of Securities to Purchaser (if not same as address for notice):_______________

 

First Closing Subscription Amount: __________________________________________________

 

First Closing Principal Amount: _____________________________________________________

 

EIN Number: ___________________________________________________________________

 

[SIGNATURE PAGES CONTINUE]

 

	 
	41

	

	 

 

Annex A 

 

CLOSING STATEMENT

 

Pursuant to the attached Securities Purchase Agreement, dated as of the date hereto, the purchasers shall purchase Notes from Biotech Products Services and Research, Inc. (the “Company”). All funds will be wired into an account maintained by the Company. All funds will be disbursed in accordance with this Closing Statement. 

 

Disbursement Date: March 29, 2017

 

	
I. PURCHASE PRICE
	
 
	
 

	 	
Gross Proceeds to be Received 
	
$175,000.00
	
 

		
 
	
 

	
II. DISBURSEMENTS
	
 
	
 

	 	
Purchaser’s legal fees

Repayment of Lender #1

Repayment of Lender #2

Lien Searches

Filing of UCC Financing Statements
	
$25,000.000

$71,585.21

$45,000.00

$1,500.00

$3,000.00
	
 

		
 
	
 

	
Total Amount Disbursed:
	
$28,914.79
	
		
 
	

	
WIRE INSTRUCTIONS:
	
 
	
	 	
 
	
	
Duly executed this 29th day of March, 2017:
	
 
	
 

	
  
	
 
	
 

	
BIOTECH PRODUCTS SERVICES AND RESEARCH, INC.
	
 
	
 

	
 
	
 
	
 

	
By:   __________________________________________

         Name: 

         Title:
	
 
	

 

	 
	
42

	

 
	 

 

Annex B

 

SCHEDULE OF PURCHASERS

 

	
Lender
	
 
	
First Tranche Subscription Amount (Upon Execution)
	
 
	
 
	
Second Tranche

Subscription Amount
	
 
	
 
	
Total

First Tranche through Second Tranche Subscription Amounts
	
 
	
 
	
Commitment Shares
	
 

	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 

	
Agent
	
 
	$	175,000	
 
	
 
	$	125,000	
 
	
 
	$	300,000	
 
	
 
	
 
	2,000,000	
 

	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 

	
Dr. Bruce Werber
	
 
	$	150,000	*	
 
	$	0	
 
	
 
	$	150,000	*	
 
	
 
	1,000,000	
 

	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 

	
Ian Bothwell
	
 
	$	150,000	*	
 
	$	0	
 
	
 
	$	150,000	*	
 
	
 
	1,000,000	
 

	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 
	
 

	
TOTAL
	
 
	$	475,000	
 
	
 
	$	125,000	
 
	
 
	$	600,000	*	
 
	
 
	4,000,000	
 

_____________

* Includes the rollover described in Section 2(b)

 

	 
	43

	

	 

 

EXHIBIT A

 

Form of Note

 

 

  

 

 

	 
	44

	

	 

 

EXHIBIT B

 

Form of Transfer Agent Instruction Letter

 

 

 

 

 

 

 

 

 

	 
	45

	

	 

 

EXHIBIT C

 

Intellectual Property Security Agreement

 

 

 

 

 

 

 

 

 

 

	 
	46

	

	 

 

EXHIBIT D

 

Subsidiary Guarantee

 

 

 

 

 

 

 

	 
	
47

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