Document:

phrx_ex42.htm

EXHIBIT 4.2

 

CERTIFICATE OF DESIGNATION

OF THE RIGHTS, PREFERENCES, PRIVILEGES

AND RESTRICTIONS, WHICH HAVE NOT BEEN SET

FORTH IN THE CERTIFICATE OF INCORPORATION

OR IN ANY AMENDMENT THERETO,

OF THE

SERIES C CONVERTIBLE PREFERRED STOCK

OF

PHARMAGEN, INC.

 

The undersigned, Mackie Barch, does hereby certify that:

A. He is the President and Secretary of Pharmagen, Inc., a Nevada corporation (the “Corporation”).

 

WHEREAS, the Certificate of Incorporation of the Corporation authorizes a class of stock designated as Preferred Stock, with a par value of $0.001 per share (the “Preferred Class”), comprising Fifty Million (50,000,000) shares, and provides that the Board of Directors of the Corporation may fix the terms, including any dividend rights, dividend rates, conversion rights, voting rights, rights and terms of any redemption, redemption, redemption price or prices, and liquidation preferences, if any, of the Preferred Class, with no further approval by the shareholders of the Corporation necessary;

WHEREAS, the Corporation has previously designated Five Million One Hundred Thousand (5,100,000) shares of the Preferred Class as Series B “Management-Class” Convertible Preferred Stock, all of which are issued and outstanding as of the date hereof (the “Series B Preferred Stock”);

WHEREAS, the Board of Directors believes it in the best interests of the Corporation to create a new series of preferred stock consisting of Five Hundred Thousand (500,000) shares and designated as the “Series C Convertible Preferred Stock” having certain rights, preferences, privileges, restrictions and other matters relating to the Series C Convertible Preferred Stock;

NOW, THEREFORE, BE IT RESOLVED, that the Board of Directors does hereby fix and determine the rights, preferences, privileges, restrictions and other matters relating do the Series C Convertible Preferred Stock as follows:

1. Definitions. For purposes of this Certificate of Designation, the following definitions shall apply:

 

1.1 “Board” shall mean the Board of Directors of the Corporation.

 

1.2 “Corporation” shall mean Pharmagen, Inc., a Nevada corporation.

 

  

1

  

 

1.3 “Common Stock” shall mean the common stock, $0.001 par value per share, of the Corporation.

 

1.4 “Common Stock Dividend” shall mean a stock dividend declared and paid on the Common Stock that is payable in shares of Common Stock.

 

1.5 “Conversion Date” shall have the meaning set forth in Section 4(c).

 

1.6 “Distribution” shall mean the transfer of cash or property by the Corporation to one or more of its stockholders without consideration, whether by dividend or otherwise (except a dividend in shares of Corporation’s stock).

 

1.7 “Holder” shall mean a holder of the Series C Convertible Preferred Stock.

 

1.8 “Original Issue Date” shall mean the date on which the first share of Series C Convertible Preferred Stock is issued by the Corporation.

 

1.9 “Original Issue Price” shall mean $1.00 per share for the Series C Convertible Preferred Stock.

 

1.10 “Person” shall mean an individual, a corporation, a partnership, an association, a limited liability company, an unincorporated business organization, a trust or other entity or organization, and any government or political subdivision or any agency or instrumentality thereof.

 

1.11 “Series C Convertible Preferred Stock” shall mean the Series C Convertible Preferred Stock, $0.001 par value per share, of the Corporation.

 

1.12 “Subsidiary” shall mean any corporation or limited liability company or corporation of which at least fifty percent (50%) of the outstanding voting stock or membership interests, as the case may be, is at the time owned directly or indirectly by the Corporation or by one or more of such subsidiary corporations.

2. Dividend Rights.

 

2.1 In each calendar year, the holders of the then outstanding Series C Convertible Preferred Stock shall be entitled to receive, when, as and if declared by the Board, out of any funds and assets of the Corporation legally available therefore, noncumulative dividends in an amount equal to any dividends or other Distribution on the Common Stock in such calendar year (other than a Common Stock Dividend). No dividends (other than a Common Stock Dividend) shall be paid, and no Distribution shall be made, with respect to the Common Stock unless dividends in such amount shall have been paid or declared and set apart for payment to the holders of the Series C Convertible Preferred Stock simultaneously. Dividends on the Series C Convertible Preferred Stock shall not be mandatory or cumulative, and no rights or interest shall accrue to the holders of the Series C Convertible Preferred Stock by reason of the fact that the Corporation shall fail to declare or pay dividends on the Series C Convertible Preferred Stock, except for such rights or interest that may arise as a result of the Corporation paying a dividend or making a Distribution on the Common Stock in violation of the terms of this Section 2.

 

  

2

  

 

2.2 Participation Rights. Dividends shall be declared pro rata on the Common Stock and the Series C Convertible Preferred Stock on a pari passu basis according to the number of shares of Common Stock held by such holders, where each holder of shares of Series C Preferred Stock is to be treated for this purpose as holding the number of shares of Common Stock to which the holders thereof would be entitled if they converted their shares of Series C Convertible Preferred Stock at the time of such dividend in accordance with Section 4 hereof.

 

2.3 Non-Cash Dividends. Whenever a dividend or Distribution provided for in this Section 2 shall be payable in property other than cash (other than a Common Stock Dividend), the value of such dividend or Distribution shall be deemed to be the fair market value of such property as determined in good faith by the Board.

 

3. Liquidation Rights. In the event of any liquidation, dissolution or winding up of the Corporation; whether voluntary or involuntary, the funds and assets of the Corporation that may be legally distributed to the Corporation's shareholders (the “Available Funds and Assets”) shall be distributed to shareholders in the following manner:

 

3.1 Series C Convertible Preferred Stock. The holders of each share of Series C Preferred Stock then outstanding shall be entitled to be paid, out of the Available Funds and Assets, and prior and in preference to any payment or distribution (or any setting apart of any payment or distribution) of any Available Funds and Assets on any shares of Common Stock or subsequent series of preferred stock, an amount per share equal to the Original Issue Price of the Series C Convertible Preferred Stock plus all declared but unpaid dividends on the Series C Convertible Preferred Stock. If upon any liquidation, dissolution or winding up of the Corporation, the Available Funds and Assets shall be insufficient to permit the payment to holders of the Series C Convertible Preferred Stock of their full preferential amount as described in this subsection, then all of the remaining Available Funds and Assets shall be distributed among the holders of the then outstanding Series C Convertible Preferred Stock pro rata, according to the number of outstanding shares of Series C Convertible Preferred Stock held by each holder thereof.

 

3.2 Participation Rights. If there are any Available Funds and Assets remaining after the payment or distribution (or the setting aside for payment or distribution) to the holders of the Series C Convertible Preferred Stock of their full preferential amounts described above in this Section 3, then all such remaining Available Funds and Assets shall be distributed among the holders of the then outstanding Common Stock and Preferred Stock pro rata according to the number and preferences of the shares of Common Stock and Preferred Stock (as converted to Common Stock) held by such holders.

 

  

3

  

 

3.3 Merger or Sale of Assets. A reorganization or any other consolidation or merger of the Corporation with or into any other corporation, or any other sale of all or substantially all of the assets of the Corporation, shall not be deemed to be a liquidation, dissolution or winding up of the Corporation within the meaning of this Section 3, and the Series C Convertible Preferred Stock shall be entitled only to (i) the right provided in any agreement or plan governing the reorganization or other consolidation, merger or sale of assets transaction, (ii) the rights contained in the General Corporation Law of the State of Nevada and (iii) the rights contained in other Sections hereof.

 

3.4 Non-Cash Consideration. If any assets of the Corporation distributed to shareholders in connection with any liquidation, dissolution or winding up of the Corporation are other than cash, then the value of such assets shall be their fair market value as determined by the Board.

 

4. Conversion Rights. The holders of Series C Convertible Preferred Stock shall have the right, but not the obligation, from time to time and in whole or in part, to convert the Series C Convertible Preferred Stock into shares of Common Stock based on one of the formulas set forth in Section 4(a) or 4(b) hereof (the selection of which formula to be used to be at the sole discretion of the holder, made at the time of each applicable conversion):

(a) Fixed Percentage Conversion of Preferred Stock. Each Fifty Thousand (50,000) shares of Series C Convertible Preferred Stock, or pro-rata portion thereof, shall be convertible into that number of fully paid and nonassessable shares of Common Stock of the Company equal to one and one one-half percent (1.5%) of the outstanding shares of Common Stock of the Company then outstanding after giving effect to the shares issued as a result of the conversion. The effect of this Section 4(a) is that the holders of the Series C Convertible Preferred Stock can acquire upon conversion, in the aggregate, fifteen percent (15%) of the then-outstanding shares of common stock of the Company.

 

(b) Variable Conversion of Preferred Stock. Each share of Series C Convertible Preferred Stock shall be convertible into that number of shares of Common Stock determined by dividing the Original Issue Price by the Conversion Price. The “Conversion Price” shall mean 33.33% multiplied by the Market Price (defined below). “Market Price” means the average of the lowest five (5) Trading Prices (defined below) for the Company’s common stock during the ten (10) Trading Day period ending on the last complete Trading Day prior to the Conversion Date. “Trading Price” means, for any security as of any date, the closing bid price on the Over-the-Counter Bulletin Board, or applicable trading market (the “OTCBB”) as reported by a reliable reporting service (“Reporting Service”) designated by the Company or, if the OTCBB is not the principal trading market for such security, the closing bid price of such security on the principal securities exchange or trading market where such security is listed or traded or, if no closing bid price of such security is available in any of the foregoing manners, the average of the closing bid prices of any market makers for such security that are listed in the “pink sheets” by OTC Markets Group, Inc. If the Trading Price cannot be calculated for such security on such date in the manner provided above, the Trading Price shall be the fair market value as mutually determined by the Company and holder. “Trading Day” shall mean any day on which the Company’s common stock is tradable for any period on the OTCBB, or on the principal securities exchange or other securities market on which the common stock is then being traded.

 

  

4

  

Notwithstanding the foregoing, in no event shall any single holder of shares of Series C Convertible Preferred Stock be entitled to convert any shares of Series C Convertible Preferred Stock if the number of shares of Common Stock issuable upon the conversion would result in beneficial ownership by the holder and its affiliates of more than 9.99% of the outstanding shares of Common Stock. For purposes hereof, beneficial ownership shall be determined in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and Regulations 13D-G thereunder, provided, further, however, that the limitations on conversion may be waived by any holder upon, at the election of holder, not less than 61 days’ prior notice to the Company.

 

(c) Procedures for Exercise of Conversion Rights. The holders of shares of Series C Convertible Preferred Stock may exercise their conversion rights as to all such shares or any party thereof by delivering to the Company during regular business hours, at the office of any transfer agent of the Company for the Series C Convertible Preferred Stock, or at the principal office of the Company or at such other place as may be designated by the Company, the certificate or certificates for the shares to be converted, duly endorsed for transfer to the Company (if required by the Company), accompanied by written notice stating that the holder elects to convert such shares. Conversion shall be deemed to have been effected on the date when such delivery is made, and such date is referred to herein as the “Conversion Date.” As promptly as practicable after the Conversion Date, but not later than ten (10) business days thereafter, the Company shall issue and deliver to or upon the written order of such holder, at such office or other place designated by the Company, a certificate or certificates for the number of full shares of Common Stock to which such holder is entitled and a check for cash with respect to any fractional interest in a share of Common Stock as provided in section 4(d) below. The holder shall be deemed to have become a shareholder of record on the Conversion Date. Upon conversion of only a portion of the number of shares of Series C Convertible Preferred Stock represented by a certificate surrendered for conversion, the Company shall issue and deliver to or upon the written order of the holder of the certificate so surrendered for conversion, at the expense of the Company, a new certificate covering the number of shares of Series C Convertible Preferred Stock representing the unconverted portion of the certificate so surrendered.

 

  

5

  

 

(d) No Fractional Shares. No fractional shares of Common Stock or scrip shall be issued upon conversion of shares of Series C Convertible Preferred Stock. If more than one share of Series C Convertible Preferred Stock shall be surrendered for conversion at any one time by the same holder, the number of full shares of Common Stock issuable upon conversion thereof shall be computed on the basis of the aggregate number of shares of Series C Convertible Preferred Stock so surrendered. Instead of any fractional shares of Common Stock which would otherwise be issuable upon conversion of any shares of Series C Convertible Preferred Stock, the Company shall pay a cash adjustment in respect of such fractional interest equal to the fair market value of such fractional interest as determined by the Company’s Board of Directors.

 

(e) Payment of Taxes for Conversions. The Company shall pay any and all issue and other taxes that may be payable in respect of any issue or delivery of shares of Common Stock on conversion pursuant hereto of Series C Convertible Preferred Stock. The Company shall not, however, be required to pay any tax which may be payable in respect of any transfer involved in the issue and delivery of shares of Common Stock in a name other than that in which the shares of Series C Convertible Preferred Stock so converted were registered, and no such issue or delivery shall be made unless and until the person requesting such issue has paid to the Company the amount of any such tax, or has established, to the satisfaction of the Company, that such tax has been paid.

 

(f) Reservation of Common Stock. The Company shall at all times reserve and keep available, out of its authorized but unissued Common Stock, solely for the purpose of effecting the conversion of the Series C Convertible Preferred Stock, the full number of shares of Common Stock deliverable upon the conversion of all shares of all series of preferred stock from time to time outstanding.

 

(g) Registration or Listing of Shares of Common Stock. If any shares of Common Stock to be reserved for the purpose of conversion of shares of Series C Convertible Preferred Stock require registration or listing with, or approval of, any governmental authority, stock exchange or other regulatory body under any federal or state law or regulation or otherwise, before such shares may be validly issued or delivered upon conversion, the Company will in good faith and as expeditiously as possible endeavor to secure such registration, listing or approval, as the case may be.

 

(h) Status of Common Stock Issued Upon Conversion. All shares of Common Stock which may be issued upon conversion of the shares of Series C Convertible Preferred Stock will upon issuance by the Company be validly issued, fully paid and nonassessable and free from all taxes, liens and charges with respect to the issuance thereof.

 

(i) Status of Converted Preferred Stock. In case any shares of Series C Convertible Preferred Stock shall be converted pursuant to this Section 4, the shares so converted shall be canceled and shall not be issuable by the Company.

 

  

6

  

 

5. Redemption. The Series C Convertible Preferred Stock may be redeemed by the Company on the following terms:

 

5.1 Redemption Right; Notice. At any time after the Issuance Date, the Company may, as determined by the Board of Directors at its sole discretion, redeem any or all of the Series C Convertible Preferred Stock by providing ten (10) Trading Days advance written notice to the holders whose shares shall be redeemed.

 

5.2 Redemption Price. For purposes of this Section 5, the redemption price of the Series C Convertible Preferred Stock shall be equal to Two Hundred Percent (200%) of the Original Issue Price.

 

5.3 Redemption Procedures.

 

(a) Any redemption of the Series C Convertible Preferred Stock pursuant to Section 5.1 above shall be deemed to be effective and consummated (for purposes of determining the Redemption Price and the time at which the holders shall thereafter not be entitled to deliver a Notice of Conversion for the Preferred Shares) on the Redemption Date set forth in the notice of redemption (which shall be at least thirty (30) days after the delivery of the notice of redemption, on a date chosen by the Corporation).

 

(b) On the effective date of a redemption of the Series C Convertible Preferred Stock as specified above, the Corporation shall deliver by wire transfer of funds the Redemption Price to the holders of the Series C Convertible Preferred Stock subject to redemption.

 

(c) Should any Series C Convertible Preferred Stock required to be redeemed under the terms hereof not be redeemed solely by reason of limitations imposed by law, the applicable Series C Convertible Preferred Stock shall be redeemed on the earliest possible dates thereafter to the maximum extent permitted by law.

 

(d) Any Notice of Conversion delivered by a holder (including delivery via facsimile) to the Company prior to the Redemption Date pursuant to Section 5.1 shall be honored by the Company and the conversion of the Series C Convertible Preferred Stock shall be deemed effected on the Conversion Date. In addition, between the effective date of a redemption pursuant to Section 5.1 above and the date the Company is required to deliver the redemption proceeds in full to the applicable holder(s), the holder may deliver a Notice of Conversion to the Company.

 

6. Voting Provisions. Each outstanding share of Series C Convertible Preferred Stock shall be entitled to one (1) vote per share on all matters to which the shareholders of the Company are entitled or required to vote.

 

  

7

  

 

Further, the holders of the outstanding Series C Convertible Preferred Stock shall have the right to appoint one (1) member to the Company’s Board of Directors, the determination of which shall be made by the holders of a majority of the outstanding shares of Series C Convertible Preferred Stock.

 

7. Protective Provisions. The Corporation may not take any of the following actions without the approval of a majority of the holders of the outstanding Series C Convertible Preferred Stock: (i) effect a sale of all or substantially all of the Corporation’s assets or which results in the holders of the Corporation’s capital stock prior to the transaction owning less than fifty percent (50%) of the voting power of the Corporation’s capital stock after the transaction, (ii) alter or change the rights, preferences, or privileges of the Series C Convertible Preferred Stock, (iii) increase or decrease the number of authorized shares of Series C Convertible Preferred Stock, or (iv) authorize the issuance of securities having a preference over or on par with the Series C Convertible Preferred Stock.

 

IN WITNESS WHEREOF, the Corporation has caused this Certificate of Designation of Series C Convertible Preferred Stock to be duly executed by its President and Secretary on December 16, 2013.

	
/s/ Mackie Barch 

	 
	By: 	
Mackie Barch

	 
	Its: 	
President and Secretary

	 

 

 

 

 

 

 

 

 

 

8phrx_ex101.htm

EXHIBIT 10.1

 

PHARMAGEN, INC.

CONSULTING SERVICES AGREEMENT

 

This Consulting Services Agreement (this “Agreement”) is entered into on December 9, 2013 (the “Effective Date”) by and between Pharmagen, Inc., a Nevada corporation (the “Company”), and Bagel Boy Equity Group II, LLC, a Nevada limited liability company (the “Consultant”). Each of the Company and the Consultant shall be referred to individually as a “Party” and collectively as the “Parties.”

 

RECITALS

 

WHEREAS, the Company desires to add members to its management team, specifically an Interim-Chief Operations Officer and Chairman of its Board of Directors;

 

WHEREAS, in addition, the Company desires to identify prospective acquisition candidates that fulfill its strategic plan;

 

WHEREAS, the Consultant, through individuals acting on its behalf, namely Richard A. Wolpow, has commercial experience in a variety of business segments related to the business of the Company, including operations and knowledge of and relationships with prospective acquisition candidates;

 

WHEREAS, the Company wishes to engage the Consultant on the terms and subject to the conditions set forth herein; and

 

WHEREAS, Consultant wishes to provide the Company with consulting services.

 

NOW, THEREFORE, for good and adequate consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereto hereby agree as follows:

 

1. CONSULTING SERVICES

The Company hereby authorizes, appoints and engages the Consultant to perform the following services in accordance with the terms and conditions set forth in this Agreement:

A. The Company agrees to designate Richard A. Wolpow (“Wolpow”) as the Company’s Interim-Chief Operations Officer (COO), a position that is not considered to be an executive officer position for purposes of reporting to the Securities and Exchange Commission, and Consultant agrees to make Wolpow available to serve as the Company’s Interim-COO during the term of this Agreement.

 

  

1

  

 

B. Consultant will make introductions (whether by written, oral, data, or other forms of communication) to potential acquisition targets of the Company (“Acquisition Targets”) and/or make introductions to persons and entities that may provide the Company with capital financing (“Capital Financing”) (completed Capital Financing transactions or transactions with Acquisition Targets that were originated through introductions provided by Consultant are generally referred to collectively as a “Consultant Transaction” or “Consultant Transactions”).

 

For purposes of this agreement, “capital financing” shall be defined to include all financing that provides funding for the Company’s business operations, regardless of whether such funding is secured or unsecured, or involves an equity or debt interest in the Company.

 

C. The Company agrees to make available, and Consultant agrees to fill, one (1) seat on the Company’s board of directors (“Board of Directors”), as Chairman of the Board, during the term of this Agreement. The Company agrees to elect Wolpow to fill this seat and Consultant agrees to make Wolpow available to serve on the Board of Directors during the term of this Agreement.

 

D. Consultant will work as many hours as Consultant deems necessary.

 

E. Consultant will primarily perform the foregoing services from Consultant’s home or office but may be required to travel, including travel to the Company’s office.

 

F. Consultant will generally provide the services during normal business hours from Monday through Friday.

 

G. Consultant’s day-to-day activities will be determined by Consultant using best efforts to ensure activities are related to business priorities set by the Company.

 

H. Consultant will submit to the Company, when requested or on a regular periodic basis, complete and accurate reports of the status of Consultant’s efforts.

 

2. TERM OF AGREEMENT

A. This Agreement shall be in full force and effect for one (1) year beginning on the date hereof (the “Initial Term”). Following the Initial Term, this Agreement will automatically renew for successive one (1) year terms (each a “Renewal Term”) unless terminated by either Party as set forth below. The Initial Term and any Renewal Term may be referred to herein as the term of the Agreement.

 

B. Subject to subsection C, below, during the Initial Term and any Renewal Term, either Party may terminate this Agreement at any time, with or without cause, with at least ninety (90) days advance notice.

 

  

2

  

 

C. Notwithstanding the foregoing, the Company may not exercise its right to terminate the Agreement if there are any “Outstanding Transactions” (defined below).

For purposes of this Agreement, an Outstanding Transaction is defined as any transaction with an Acquisition Target, or a Capital Financing that was contingent on Consultant continuing to work for the Company, that is closed by the Company but the parties have not realized their full liquidation. A party to a transaction is deemed to have “realized their full liquidation” when: (a) in the event of an acquisition, the Company has paid the full cash consideration (not including promissory notes or earn-out provisions) due under the agreement for the acquisition target and the target or the target owners and affiliates have had the opportunity (without respect to holding periods and lock-up agreements) to fully liquidate all stock or other equity consideration received in the acquisition; or (b) in the event of Capital Financing, the investors or lenders have been fully repaid and have had the opportunity (without respect to holding periods and lock-up agreements) to fully liquidate (or otherwise cancelled or terminated) all stock or other equity consideration received as part of the financing.

D. Notwithstanding the foregoing, the Company may terminate this Agreement at any time for Cause. For purposes of this Agreement, “Cause” shall mean (a) the misconduct or neglect on the part of Consultant in the performance of any duties that may be reasonably required; (b) the occurrence of circumstances that make it impossible for the business of the Company to be continued; (c) the sale, merger or other disposition of the Company; or (d) the commission by Consultant of an act of fraud, misappropriation, embezzlement, dishonesty or any crime of moral turpitude. Any compensation owed to Consultant, as set forth in Section 3 below, shall be paid to Consultant within five (5) business days should the Company elect to terminate the Agreement pursuant to this provision.

3. COMPENSATION TO CONSULTANT

The Consultant shall be paid compensation under this Agreement as follows:

A. On the Effective Date, the Company shall issue to Consultant, as a “Commencement Bonus”, warrants to purchase up to three percent (3%) of the outstanding shares of common stock of the Company, the form of which is attached hereto as Exhibit A (the “Commencement Warrants”). The calculation of the number of shares which may be purchased upon exercise of the Commencement Warrants shall be done at the time of exercise, and shall be adjusted for any stock splits or other restructuring. Further, the exercise of the Commencement Warrants shall be subject to two (2) separate milestones, as set forth therein, each of which shall apply to one-half (1/2) of the warrants thereunder, and which must be satisfied prior to their exercise. The Parties understand and agree that Consultant has foregone significant opportunities to accept this engagement and that the Company derives substantial benefits from the execution of this Agreement and the ability to announce its relationship with Consultant. Accordingly, the Commencement Bonus constitutes payment for Consultant’s agreement to provide the services contemplated by the Agreement and is a nonrefundable, non-apportionable, and non-ratable retainer and is not a prepayment for future services.

 

  

3

  

 

B. During the term of this Agreement, the Company shall pay Consultant fifteen thousand dollars ($15,000.00) per month (“Consulting Fee”) beginning on the first day of the first full calendar month following the execution of this Agreement by the Parties. The Consulting Fee shall be paid by the Company, on a quarterly basis, by executing and delivering a Warrant Agreement to Consultant. The Warrant Agreement, the form of which is attached hereto as Exhibit B (the “Consulting Warrants” and, together with the Commencement Warrants, the “Warrants”), shall provide Consultant with cashless warrants exercisable into the Company’s common stock. The number of shares to be issued shall be based on any Consulting Fee that is then due and owing and calculated using the Conversion Price on the date the warrants are exercised, except that the Warrants cannot be exercised within six (6) months of the date hereof (“Exercise Date”).

The “Conversion Price” shall be the greater of: (i) the Variable Conversion Price (defined below) and (ii) the Fixed Conversion Price (defined below) (subject, in each case, to equitable adjustments for stock splits, stock dividends or rights offerings by the Company relating to the Company’s securities or the securities of any subsidiary, combinations, recapitalization, reclassifications, extraordinary distributions and similar events). The “Variable Conversion Price” shall mean 50% multiplied by the Market Price (defined below). “Market Price” means the average of the lowest five (5) Trading Prices (defined below) for the Company’s common stock during the ten (10) Trading Day period ending on the last complete Trading Day prior to the Exercise Date. “Trading Price” means, for any security as of any date, the closing bid price on the Over-the-Counter Bulletin Board, or applicable trading market (the “OTCBB”) as reported by a reliable reporting service (“Reporting Service”) designated by Consultant (i.e. Bloomberg) or, if the OTCBB is not the principal trading market for such security, the closing bid price of such security on the principal securities exchange or trading market where such security is listed or traded or, if no closing bid price of such security is available in any of the foregoing manners, the average of the closing bid prices of any market makers for such security that are listed in the “pink sheets” by OTC Markets Group, Inc. If the Trading Price cannot be calculated for such security on such date in the manner provided above, the Trading Price shall be the fair market value as mutually determined by the Company and Consultant. “Trading Day” shall mean any day on which the Company’s common stock is tradable for any period on the OTCBB, or on the principal securities exchange or other securities market on which the common stock is then being traded. The “Fixed Conversion Price” shall mean $0.05.

The Consulting Fee may be paid in cash if both Parties so agree. The Company shall receive a twenty five percent (25%) discount on any Consulting Fees paid in cash.

 

  

4

  

C. Notwithstanding the foregoing, in no event shall Consultant be entitled to exercise any portion of the Warrants if the number of shares of Common Stock issuable upon the exercise of the portion of the Warrants with respect to which the determination of this proviso is being made, would result in beneficial ownership by the Consultant and its affiliates of more than 9.99% of the outstanding shares of Common Stock. For purposes hereof, beneficial ownership shall be determined in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and Regulations 13D-G thereunder, provided, further, however, that the limitations on conversion may be waived by Consultant upon, at the election of Consultant, not less than 61 days’ prior notice to the Company.

 

If the Company enters into an agreement for the sale of all or substantially all of its assets, or a transaction that will result in the voting control of the Company changing from one party or group of affiliated parties to another party or group of affiliated parties, then the Company agrees to give Consultant sufficient advance notice to exercise his waiver rights hereunder.

 

D. During the term of this Agreement, the Company shall compensate Consultant for making Wolpow available to serve on the Board of Directors, as contemplated in Section 1(C) above (“Director’s Fee”). The Director’s Fee shall accrue and be payable on the same terms and in the same amount as the Company compensates other members of the Board of Directors for the services provided by them to the Company in their capacity as members of the Board of Directors.

 

E. During the term of this Agreement, the Company shall compensate Consultant for any closed Consultant Transactions or Non-Consultant Transactions (the “Commission Fee”). The Commission Fee, for each transaction contemplated herein, shall be equal to three percent (3%) of the “Aggregate Consideration” (defined below) for all Non-Consultant Transactions and five percent (5%) of the Aggregate Consideration for all Consultant Transactions.

For purposes of this Agreement, the Aggregate Consideration is defined as: (a) in the event of an acquisition, the total fair market value on the date of payment of all sale proceeds and other consideration contributed, paid or payable directly and indirectly by Company in connection with the acquisition, including cash, notes, options, warrants, securities or other property, consulting arrangements and covenants not to compete, debt and other obligations assumed, and any other form of consideration, including contingent consideration, and (b) in the event of Capital Financing, the total capital received by the Company, its beneficiaries, or designees.

To the extent the Aggregate Consideration consists of contingent payment obligations (whether or not related to future earnings or operations), for purposes of measuring the Commission Fee, the Aggregate Consideration deemed paid at closing will include One Hundred Percent (100%) of the face value of such contingent payments, without regard to whether the conditions for payment of such contingent amounts will be satisfied.

 

  

5

  

 

The Commission Fee shall be paid by Company when the Aggregate Consideration is (a) paid to an acquisition target or (b) received by the Company in the event of Capital Financing, whichever is applicable. The Commission Fee shall be payable in cash or the Company’s common stock, or a combination thereof, based on the agreement of the Parties. If the Company’s common stock is used to pay any portion of a Commission Fee, the number of shares owed shall be calculated using the same price as the applicable transaction.

 

F. During the term of this Agreement, Consultant shall participate in any bonus programs in which other members of the Company’s management team participate, and at similar compensation levels.

 

G. Consultant shall be reimbursed for pre-approved, actual authorized business and travel expenses. Consultant will submit expense reports with supporting receipts for reimbursement, and the Company shall remit reimbursement payments within fifteen (15) days of receipt of Consultant’s expense reports.

4. REPRESENTATIONS AND WARRANTIES OF CONSULTANT

Consultant represents and warrants to and agrees with the Company that:

 

A. This Agreement has been duly authorized, executed and delivered by Consultant. This Agreement constitutes the valid, legal and binding obligation of Consultant, enforceable in accordance with its terms, except as rights to indemnity hereunder may be limited by applicable federal or state securities laws, and except as such enforceability may be limited by bankruptcy, insolvency, reorganization or similar laws affecting creditor's rights generally;

 

B. The consummation of the transactions contemplated hereby will not result in any breach of the terms or conditions of, or constitute a default under, any agreement or other instrument to which Consultant is a party, or violate any order, applicable to Consultant, of any court or federal or state regulatory body or administrative agency having jurisdiction over Consultant or over any of its property, and will not conflict with or violate the terms of Consultant's current employment or any consulting agreements to which Consultant is a party; and

 

C. Consultant will promptly disclose to the Company any third party with which Consultant may have a potential or actual conflict of interest, and will further disclose to any such third party reasonably requested by the Company, the existence of Consultant’s relationship with the Company pursuant to this Agreement. Consultant shall provide copies of all such disclosure to the Company.

 

  

6

  

5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY

The Company hereby represents, warrants, covenants to and agrees with Consultant that:

A. This Agreement has been duly authorized, and executed by the Company and is a binding obligation of the Company, enforceable in accordance with its terms, except as rights to indemnity hereunder may be limited by applicable federal or state securities laws, except in each case as such enforceability may be limited by bankruptcy, insolvency, reorganization or similar laws affecting creditor's rights generally.

6. INDEPENDENT CONTRACTOR

 

Both the Company and the Consultant agree that the Consultant will act as an independent contractor in the performance of its duties under this Agreement. Nothing contained in this Agreement shall be construed to imply that Consultant, or any employee, agent or other authorized representative of Consultant, is a partner, joint venturer, agent, officer or employee of the Company. Neither party hereto shall have any authority to bind the other in any respect vis a vis any third party, it being intended that each shall remain an independent contractor and responsible only for its own actions.

Consultant shall pay all costs of sub-contractors and Consultant’s employees incurred in connection with this Agreement.

7. NOTICES

Any notice, request, demand, or other communication given pursuant to the terms of this Agreement shall be deemed given upon delivery, if hand delivered or sent via facsimile, or any other method of traceable delivery (including Federal Express), correctly addressed to the addresses of the Parties indicated below or at such other address as such Party shall in writing have advised the other Party.

	
If to the Company:

	
Pharmagen, Inc. 

9337 Fraser Avenue

Silver Spring, MD 20910

Facsimile: (___)___________

Attn: Mackie A. Barch, CEO

 

	
If to Consultant:

	
Bagel Boy Equity Group II, LLC 

408 40th Street

Newport Beach, CA 92663

Facsimile: (949) 631-1981

 

8. ASSIGNMENT

 

This contract shall inure to the benefit of the Parties hereto, their heirs, administrators and successors in interest. This Agreement shall not be assignable by either Party hereto without the prior written consent of the other.

 

  

7

  

10. CHOICE OF LAW AND VENUE

 

This Agreement and the rights of the Parties hereunder shall be governed by and construed in accordance with the laws of the State of California including all matters of construction, validity, performance, and enforcement and without giving effect to the principles of conflict of laws. Any action brought by any Party hereto shall be brought within the State of California, County of Orange.

11. ENTIRE AGREEMENT

 

Except as provided herein, this Agreement, including exhibits, contains the entire agreement of the Parties, and supersedes all existing negotiations, representations, or agreements and all other oral, written, or other communications between them concerning the subject matter of this Agreement. There are no representations, agreements, arrangements, or understandings, oral or written, between and among the Parties hereto relating to the subject matter of this Agreement that are not fully expressed herein.

12. SEVERABILITY

 

If any provision of this Agreement is unenforceable, invalid, or violates applicable law, such provision, or unenforceable portion of such provision, shall be deemed stricken and shall not affect the enforceability of any other provisions of this Agreement.

13. CAPTIONS

 

The captions in this Agreement are inserted only as a matter of convenience and for reference and shall not be deemed to define, limit, enlarge, or describe the scope of this Agreement or the relationship of the Parties, and shall not affect this Agreement or the construction of any provisions herein.

14. COUNTERPARTS

 

This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which shall together constitute one and the same instrument.

15. MODIFICATION

 

No change, modification, addition, or amendment to this Agreement shall be valid unless in writing and signed by all Parties hereto.

16. ATTORNEYS FEES

 

Except as otherwise provided herein, if a dispute should arise between the Parties including, but not limited to arbitration, the prevailing Party shall be reimbursed by the non-prevailing Party for all reasonable expenses incurred in resolving such dispute, including reasonable attorneys' fees.

 

  

8

  

 

17. NON-COMPETE AND CONFIDENTIALITY

 

A. Consultant shall not, during the term of this Agreement, for any reason, without the express written consent of the Company, either directly or indirectly: (i) become associated with, render services to, invest in, represent, advise or otherwise participate in as an officer, employee, director, stockholder, partner, promoter, agent of, consultant for or otherwise, any business which is competitive with the business of the Company or any of its subsidiaries; (ii) for its own account or for the account of any other person or entity, interfere with the Company’s relationship with any of its suppliers, material customers, accounts, brokers, representatives or agents; (iii) call on, solicit, or take away any of Company’s customers or potential customers, either for Consultant or for any other person or entity; or (iv) solicit or take away or attempt to solicit or take away any of Company’s employees or contractors either for Consultant or for any other person or entity.

 

B. For purposes of this Agreement, “Confidential Information” shall mean any and all information, in any form or medium, concerning or relating in any way to the Company or any of its affiliates or subsidiaries, or any of their businesses, operations, technology or financial affairs or the services to be provided hereunder, including, but not limited to, technical or non-technical data, formulas, patterns, compilations, programs, devices, methods, techniques, drawings, processes, financial data, and lists of or identifying information about actual or potential customers or suppliers, whether or not reduced to writing, certain unpatented information relating to the research and development, manufacture or serving of the Company's products, information concerning proposed new products, market feasibility studies and proposed or existing marketing techniques or plans and any other information of the Company or its affiliates or its subsidiaries that is confidential, special, unique, proprietary, or gives the Company, its affiliates or subsidiaries a competitive advantage and/or significantly enhances any of their goodwill, whether designated confidential or not, and/or whether written, oral or obtained by viewing the Company’s or any of its affiliate’s or subsidiary’s premises, data and/or information.

 

Confidential Information is the sole property of the Company and constitutes confidential trade secrets of the Company, to be held by the Consultant in trust and solely for the Company’s benefit. The Consultant agrees that, except as required under this Agreement, it will not publish, reproduce, disclose or make any use of any such Confidential Information unless (i) the Company authorizes the publication or disclosure of such information in writing; or (ii) the Consultant is required by law to disclose, but the Consultant shall first give notice to the Company so that the Company may seek a protective order requiring that the information and/or documents to be disclosed be used only for the purposes for which the order was issued.

 

  

9

  

 

The Consultant agrees to take at least the same precautions to ensure the protection, confidentiality, and security of the Confidential Information entrusted to it as it would to protect its own confidential information, but in no event less than a reasonable standard. The Consultant shall also limit the access to such Confidential Information to only those persons having a need to know, and such persons shall be instructed concerning their obligations to maintain confidentiality. The Consultant shall return to the Company all Confidential Information, or destroy and certify such destruction of all Confidential Information, promptly upon the Company’s request. The Consultant acknowledges that monetary damages may not alone be a sufficient remedy for unauthorized disclosure of Confidential Information. The Consultant further agrees that the Company shall be entitled, without waiving any other rights or remedies, to such injunctive or equitable relief as may be deemed proper by a court of competent jurisdiction. Further, the Consultant acknowledges and agrees that if there is a breach or threatened breach of the provisions of this section, then the Company will be irrevocably harmed and entitled to a temporary restraining order, injunction, and/or other equitable relief against the commencement or continuance of such breach without the requirement of posting a bond or proving injury as a condition of relief.

18. REPRESENTATION.

 

The Parties acknowledge that this agreement was prepared by the law firm of Clyde Snow & Sessions, which represents both parties in their general corporate and securities matters. The Parties further acknowledge and agree that the terms and conditions of the agreement was reached between them, and that Clyde Snow & Sessions acted only as a drafter of this Agreement and did not represent either party in connection herewith. Any conflict of interest in acting as a drafter of this Agreement is hereby waived by the Parties.

[remainder of page intentionally left blank; signature page to follow]

 

  

10

  

IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be duly executed as of the date first set forth above.

	
“Company”

	 	
“Consultant”

	 
	 	 	 	 
	
Pharmagen, Inc.,

	 	
Bagel Boy Equity Group II, LLC,

	 
	
a Nevada corporation

	 	
a Nevada limited liability company

	 
	 	 	 	 
	 	 	 	 
	
/s/ Mackie A. Barch 

	 	
/s/ Richard A. Wolpow 

	 
	By:	
Mackie A. Barch

	 	By: 	
Richard A. Wolpow

	 
	Its:	Chief Executive Officer	 	Its:	Manager	 

 

  

11

  

 

Exhibit A

Commencement Warrants

 

 

 

 

  

12

  

 

Exhibit B

 

Consulting Warrants

 

 

 

 

 

13

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00224-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00224-of-00352.parquet"}]]