Document:

Certificate of Designations (Series B)

Certificate of Designations (Series B)

 

REVOLUTIONARY CONCEPTS INC.

 

CERTIFICATE OF DESIGNATION OF PREFERENCES,

RIGHTS AND LIMITATIONS

OF

10.5% SERIES B CONVERTIBLE PREFERRED STOCK

 

PURSUANT TO SECTION 78.1955 OF THE

NEVADA REVISED STATUTES

 

The undersigned, Ronald Carter, does hereby certify that:

 

1. He is the President and Chief Executive Officer of Revolutionary Concepts Inc. (REVO), a Nevada corporation (the “Corporation”). 

 

2. The Corporation is authorized to issue up to twenty million (20,000,000) shares of its preferred stock, of which, the Company plans to issue up to four and a half (4,500,000); three million (3,000,000) of Series A-1 and SeriesvA-2 and one and a half (1,500,000) of Series B. The Company reserves the right to designate various classes of the preferred shares in accordance with its bylaws and intended use.  Series A1 and A2 of Preferred Stock shall not in the first 3 years exceed 20,000 shares each, unless voted on and approved by the Series A.   

 

3. The following resolutions were duly adopted by the Board of Directors of the Corporation (the “Board of Directors “) 

 

WHEREAS, the certificate of incorporation of the Corporation provides for a class of its authorized stock known as the “ Preferred Stock ,” consisting of up to twenty million (20,000,000) shares, $0.000777 par value per share, issuable from time to time in one or more series;

 

WHEREAS, the Board of Directors is authorized to fix the dividend rights, dividend rate, voting rights, conversion rights, rights and terms of redemption and liquidation preferences of any wholly unissued series of the Preferred Stock and the number of shares constituting any series and the designation thereof, of any of them; and

 

WHEREAS, it is the intent of the Board of Directors to resolve outstanding debt to creditors via newly-created preferred shares. The Board of Directors have agreed and elected to make available to the creditors a preferred class of Series B shares which pays a dividend.

 

WHEREAS, it is the intent of the Board of Directors also agreed to use the preferred shares for various purposes such as; the purchasing of the company’s common shares, resolving outstanding debts to creditors, and/or for allowing  the creditors or debtors to purchase the preferred class of shares from the company.

 

WHEREAS, it is the intent of the Board of Directors to allow shareholders of common stock the new class of preferred shares in exchange for their common stock.

 

WHEREAS, it is the desire of the Board of Directors, pursuant to its authority as aforesaid, to fix the rights, preferences, restrictions and other matters relating to a series of the Preferred Stock which shall consist of up to 1,500,000 shares of the Preferred Stock which the Corporation has the authority to issue to be designated as “10.5% Series B Convertible Preferred Stock, and subsequent classes as may become necessary.

 

NOW, THEREFORE, BE IT RESOLVED, that the Board of Directors does hereby provide for the issuance of a series of Preferred Stock for the resolution of debt to be used for various purposes as previously stated.

REVOPage 1 

 

 

TERMS OF 10 1⁄2% SERIES B CONVERTIBLE PREFERRED STOCK

 

Section 1.  Definitions.  

 

For the purposes hereof, the following terms shall have the following meanings:

 

“Additional Dividend” shall have the meaning set forth in Section 3(b).

 

“Additional Shares of Common Stock” shall have the meaning set forth in Section 7(b).

 

“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 of the Securities Act.

 

“Aggregate Consideration” received by the Corporation with respect to any issuance of Additional Shares of Common Stock shall: 

 

(a) to the extent it consists of cash, be computed at the gross amount of cash received by the Corporation before deduction of any underwriting or similar commissions, compensation or concessions paid or allowed by the Corporation in connection with such issuance and without deduction of any expenses payable by the Corporation,  

(b)  to the extent it consists of property other than cash, be computed at the fair value of that property as determined in good faith by the Board of Directors, and  

(c) with respect to Common Stock Equivalents, the purchase price or other consideration received by the Corporation in connection with the issuance of such Common Stock Equivalents, together with the amount of any exercise price or other additional consideration payable to the Corporation in connection with the exercise or conversion (as applicable) of such Common Stock Equivalents. 

 

“Alternate Consideration” shall have the meaning set forth in Section 7(d).

 

“Asset” means where the Company acknowledges in its books and records the value, any item of economic value, owned by an individual or corporation, especially that which could be converted to cash. 

“Best efforts” means an agreement in which a company or underwriter promises to make a full-fledged attempt to sell as much of direct public offering or an initial public offering as possible to the public, with no guarantee of success.

 

“Bankruptcy Proceeding” means 

 

(a) (a) a voluntary case, action, proceeding or petition or  

(b) the consent to the institution of, or failure to contest in a timely and appropriate manner, any involuntary case, action, proceeding or petition seeking the liquidation, reorganization or other relief in respect of the Corporation, or of a substantial part of its assets, under any Federal or state bankruptcy, insolvency, receivership or similar law now or hereafter in effect or  

 

(ii) the application or consent to the appointment of a receiver, interim receiver, receiver manager, trustee,   custodian, sequestrator, conservator or similar official for the Corporation or for a substantial part of its assets and, in any such case, such case, action, proceeding or petition shall continue un-dismissed for 60 days or an order or decree approving or ordering any of the foregoing shall be entered. 

 

“Base Conversion Price” shall have the meaning set forth in Section 7(b)ii.

“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.

REVOPage 2 

 

 

 

“Cash Equivalent” (CE) means investment securities that are short term (usual 3 months or less), have high credit quality, and highly liquid investments (where there are buyers and sellers in the market place both readily convertible to know amounts of cash and  that they represent insignificant risk of changes in value.  Cash Equivalent includes the U.S. Government Treasury bills, bank certificates of deposit, bankers acceptances, corporate commercial paper (preferred shares, common stock, membership interest, convertible notes), and  other money market instruments.

 

“Change of Control Transaction” means the occurrence after the date hereof of any of 

 

(a) an acquisition after the date hereof by any Person or “group” (as described in Rule 13d-5(b)(1) promulgated under the Exchange Act) of effective control (whether through legal or beneficial ownership of capital stock of the Corporation, by contract or otherwise) of a majority of the voting securities of the Corporation (other than by means of conversion or exercise of Series B Preferred Stock and the Parity Securities or upon conversion of any currently outstanding convertible securities in accordance with the terms thereof as in effect on the date hereof),  

 

(b) the Corporation merges into or consolidates with any other Person, or any Person merges into or consolidates with the Corporation and, after giving effect to such transaction, the stockholders of the Corporation as of immediately prior to such transaction do not own a majority of the aggregate voting power of the Corporation or the successor entity of such transaction,  

 

(c) the Corporation sells or transfers all or substantially all of its assets to another Person and the stockholders of the Corporation as of immediately prior to such transaction do not  own a majority of the aggregate voting power of the acquiring entity immediately after the transaction,  

 

(d) the Corporation, directly or indirectly, transfers a majority of the asset value and/or enterprise value of the Corporation (whichever is lower) to another Person and the stockholders of the Corporation as of immediately prior to such transaction do not own a majority of the aggregate voting power of the acquiring entity immediately after the transaction, or  

 

(e) a replacement at one time or within a one year period of more than one-half of the members of the Board of Directors which is not approved by the Group or a majority of those individuals who are members of the Board of Directors on the Closing Date (or by those individuals who are serving as members of the Board of Directors on any date whose nomination to the Board of Directors was approved by the Group or a majority of the members of the Board of Directors who are members on the Closing Date), in each case that has been approved by the stockholders of the Corporation as required under:  

 

(i) the Nevada corporate law,  

(ii) the Corporation’s certificate of incorporation,  

(iii) this Certificate of Designation or  

(iv) any other agreement to which the Corporation is a party, as applicable.  Notwithstanding the foregoing, none of the following shall constitute a Change of Control Transaction:  

 

(a) any pledge, mortgage, grant of security interest, sale-leaseback or similar transaction (excluding any foreclosure sale),  

 

(b) any transaction or series of transactions principally for bona fide equity financing purposes in which cash is received by the Corporation or any successor to the Corporation and no acquiring Person or group acquires 20% or more of the outstanding voting securities of the Corporation in such transaction or transactions, or  

 

REVOPage 3 

 

 

(c) any transaction or series of transactions principally for the bona fide acquisition of another Person after which no Person or group acquires 20% or more of the outstanding voting securities of the Corporation. 

 

“Closing” means the closing of the purchase and sale of the Securities pursuant to Section 2.1 of the Securities Purchase Agreement.

 

“Closing Date” means the date on which the Closing occurs pursuant to Section 2.1 of the Securities Purchase Agreement.

 

“Common Stock” means the Corporation’s common stock, par value $0.000777 per share, and stock of any other class of securities into which such common stock may hereafter be reclassified or changed.

 

“Common Stock Equivalents” means any securities of the Corporation or the Subsidiary which would entitle the holder thereof to acquire at any time Common Stock, including, without limitation, any debt, preferred stock, rights, options, warrants 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.

 

“Confidential Information” means any non-public information regarding the Corporation or the Subsidiary (whether in oral or written form), including, but not limited to, business plans and business perspectives, financial information, sales, sales categories, operating methods, inventory, gross margin, profit, expense or other data, reports, surveys or similar information.

 

“Conversion Agreement” means the parties have executed a Member Interest Purchase Agreement (the “MIPA”) or the parties have executed a Securities Purchase agreement pursuant to the Certificate of Designations of a series of Convertible Preferred Stock filed by the Company with the State of Nevada. These agreements are subject to the terms and conditions set forth in this Agreement and are pursuant to Section 4(2) of the Securities Act of 1933 and Rule 506 promulgated thereunder, 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; and of the mutual covenants contained in this Agreement. And for the good and valuable consideration the receipt and adequacy of which are hereby acknowledged.

 

“Conversion Date” means the Elective Conversion Date or VWAP Automatic Conversion Date, as applicable.

 

“Conversion Price” shall have the meaning set forth in Section 6(c).

 

“Conversion Shares” means, collectively, the shares of Common Stock issuable upon conversion of the shares of Series B Preferred Stock in accordance with the terms hereof.

 

“Conversion Shares Registration Statement” means a registration statement that registers the resale of all Conversion Shares, so long as such Conversion Shares are Registrable Securities (as such term is defined in the Registration Rights Agreement) of the Holders, who shall be named as “selling stockholders” therein and meets the requirements of the Registration Rights Agreement.

 

“Dilutive Issuance” shall have the meaning set forth in Section 7(b).

 

“Dilutive Issuance Notice” shall have the meaning set forth in Section 7(b).

 

“Dividend Payment Date” shall have the meaning set forth in Section 3(a).

 

“Effective Date” has the meaning set forth in the Securities Purchase Agreement.

 

“Elective Conversion Date” shall have the meaning set forth in Section 6(a).

 

REVOPage 4 

 

 

“Equity Conditions” means, as of the date in question: 

 

(a) the Corporation shall have duly honored all conversions of Series B  Preferred Stock occurring pursuant to one or more Notices of Elective Conversion provided by the applicable Holder to the Corporation, if any;  

 

(b) the Corporation shall have paid all amounts owing to the applicable Holder under this Certificate of Designation in respect of its Series B Preferred Stock, if any;  

 

(c) the Common Stock is trading on a Trading Market (and the Corporation believes, in good faith, that trading of the Common Stock on a Trading Market will continue uninterrupted for the foreseeable future);  

 

(d) there is a sufficient number of authorized, but unissued and otherwise unreserved, shares of Common Stock for the issuance of all of the Conversion Shares;  

 

(e) there has been no public announcement of a pending or proposed Fundamental Transaction or Change of Control Transaction that has not been consummated;  

 

(f) the applicable Holder is not in possession of any information provided by the Corporation that constitutes, or may constitute, material non-public information; and  

 

(g) a Bankruptcy Proceeding shall not be pending against the Corporation 

 

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

 

“Exempt Issuance” shall have the meaning set forth in the Purchase Agreement.

 

“Face Value ” means both The Company and the Purchaser(s) acknowledges the stated value and the original value of promissory note(s), the face value of a loan refers to the principal of the loan, which is the original amount of the loan as detailed in the loan contract, promissory note, or debt instrument. The amount of the obligation or loan constitutes what is due to the promisee.  The promissory note itself has no face value.  It may or may not be considered legal tender, although it can be transferred from one obligee to another.  It does show the amount of the obligation or consideration due to the promisee by the promisor, which all parties have agreed on.

 

“Fundamental Transaction” shall have the meaning set forth in Section 7(d).

 

“GAAP” means United States Generally Accepted Accounting Principles.

 

“Holder” shall have the meaning given such term in Section 3(a).

 

“Indebtedness” means 

 

(a) any liabilities for borrowed money or amounts owed in excess of $50,000 (other than trade accounts payable incurred in the ordinary course of business),  

 

(b) all guaranties, endorsements and other contingent obligations in respect of indebtedness of others, whether or not the same are or should be reflected in the Corporation’s balance sheet (or the notes thereto), except guaranties by endorsement of negotiable instruments for deposit or collection or similar transactions in the ordinary course of business, and 

 

REVOPage 5 

 

 

(c) the present value of any lease payments in excess of $50,000 due under leases required to be capitalized in accordance with GAAP. 

 

“Junior Securities” means the Common Stock and all other Common Stock Equivalents of the Corporation other than those securities that are explicitly senior or pari passu to the Series B Preferred Stock in dividend rights or liquidation preference.

 

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

 

“Liquidation” shall have the meaning set forth in Section 5.

 

Listing  the Company presently intends to meet the listing requirements of the Toronto Stock Exchange Venture, NASDAQ and/or the American Stock Exchange within the next 24-36 months.  The company presently on a best effort basis intends to meet the listing requirements of a recognizable exchange, there is no guarantee that the company can or will achieve this; it is only being done on a best effort basis.

 

“Make-Whole Payment” shall have the meaning set forth in Section 3(a).

 

“Notice of COC (Change of Control)” shall have the meaning set forth in Section 5.

 

“Notice of Elective Conversion” shall have the meaning set forth in Section 6(a).

 

“Notice of VWAP Automatic Conversion” shall have the meaning set forth in Section 3(b).

 

“Originally Issued” means that number of shares of the Series B Preferred Stock issued on the date of the first issuance of such shares, regardless of the number of transfers of any particular shares of Series B-2  Preferred Stock thereafter and regardless of the number of certificates which may be issued to evidence such Series B Preferred Stock.

 

“Parity Securities” means the Series A Preferred Stock, the Series A-1 Preferred Stock, A-2 Preferred Stock and all other capital stock of the Corporation, whether now or hereafter authorized, that is explicitly stated to be pari passu with the Series A Preferred Stock and the Series A-1 Preferred Stock, A-2 Preferred Stock in dividend rights or liquidation preference.

 

“Participation Maximum” shall have the meaning set forth in Section 9(a).

 

“Permitted Indebtedness” means, with respect to the Corporation, any: 

 

(a) indebtedness and other obligations arising in the ordinary course of operations or business such as those in respect of business expense reimbursements, workers’ compensation claims, bid or performance bonds, surety bonds or letters of credit, option money for leases, businesses, or types of chattel, leases or deferred purchase price of equipment, trade credit, endorsement of checks, and completion guarantees,  

 

(b) indebtedness under a revolving credit facility from banks or similar financial institutions in a principal amount of up to $10,000,000,  

 

(c)  indebtedness incurred to finance the acquisition (purchase of equity, debentures) construction or improvement of any newly acquired business, property or asset so long as recourse with respect to such indebtedness is limited solely to such newly acquired business, property or asset; and  

 

(d)  indebtedness existing as of immediately after the Closing or in the future that is set forth on the Disclosure Schedule to the Purchase Agreement or that arises out of operations in the future, all of which must be approved by the Board and Mr. Ali, and/or the Group. 

 

REVOPage 6 

 

 

“Permitted Lien” means Liens incurred in connection with Permitted Indebtedness.

 

“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.

 

“Preferred A” shall have the meaning set forth in Section 7(b).

 

“Pre-Notice” shall have the meaning set forth in Section 9(b).

“Pro Rata Portion” shall have the meaning set forth in Section 9(e).

 

“Purchase Agreement” means Securities Purchase Agreement, dated on or about the Closing Date, among the Corporation and the original Holders, as amended, modified or supplemented from time to time in accordance with its terms.

 

“Registration Rights Agreement” means the Registration Rights Agreement, dated as of the date of the Purchase Agreement, among the Corporation and the original Holders, in the form of Exhibit B attached to the Purchase Agreement, as amended, modified or supplemented from time to time in accordance with its terms.

 

“Securities” has the meaning set forth in the Securities Purchase Agreement.

 

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

 

“Series A Preferred Stock”  means the Series A Convertible Preferred Stock of the Corporation, with the rights, preferences and privileges set forth in the Certificate of Designation of Preferences, Rights and Limitations of 10 1⁄2% Series A Convertible Preferred Stock, filed contemporaneously herewith in the Office of the Secretary of State of the State of Nevada.

 

“Series A-1 Preferred Stock”  means the Series A-1 Convertible Preferred Stock of the Corporation, with the rights, preferences and privileges set forth in the Certificate of Designation of Preferences, Rights and Limitations of 10 1⁄2% Series A-1 Convertible Preferred Stock, filed contemporaneously herewith in the Office of the Secretary of State of the State of Nevada.

 

“Series A-2 Preferred Stock” means the Series A-2 Convertible Preferred Stock of the Corporation, with the rights, preferences and privileges set forth in the Certificate of Designation of Preferences, Rights and Limitations of 10 1⁄2% Series A-2 Convertible Preferred Stock, filed contemporaneously herewith in the Office of the Secretary of State of the State of Nevada.

 

“Series B Preferred Stock” shall have the meaning set forth in Section 2.

 

“Stated Value” shall have the meaning set forth in Section 2.

 

“Subsequent Financing” shall have the meaning set forth in Section 9(a).

 

“Subsequent Financing Notice” shall have the meaning set forth in Section 9(b).

 

“Subsidiary” shall have the meaning set forth in the Securities Purchase Agreement.

 

“Successor Entity” shall have the meaning set forth in Section 7(d).

 

“Threshold Period” shall have the meaning set forth in Section 6(c)

 

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

 

REVOPage 7 

 

 

“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 American Stock Exchange, the Toronto Stock Exchange, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, the New York Stock Exchange, OTC Bulletin Board and the OTC Markets, or any other national or international exchange in which securities, commodities, derivatives and other financial instruments are traded, (or any successors to any of the foregoing).

 

“Transaction Documents” has the meaning set forth in the Securities Purchase Agreement.

 

“Volume Weighted Average Price (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 Holders of a majority in interest of the Securities then outstanding and reasonably acceptable to the Corporation, the fees and expenses of which shall be paid by the Corporation.

 

“The Group” means  Mr. Ernest Delong, Trustee and Ms. N. Singletary, Managing Partner, for disclosure purposes only, any person that, directly or indirectly, through one or more intermediaries, controls or is controlled by or is under common control with a Person, Legal entities, Controlling Persons, or Entities controlled by for various trust receiving preferred shares for the resolution of debt, of which, Mr. Solomon Ali, his heirs and/or assigns, personal representatives, and any Trusts in which Mr. Ali was the Settlor, (and may or may not be a beneficiary) including Deen Executive Trust, Falah Family Trust, Ghanimah Holdings Trust, Ibadah Life Trust, Patronus Capital Trust, Premier Executive Trust, and Rainco Holdings Trust.  Inclusive in “The Group” are any individual retirement accounts held by Mr. Ali.  Mr. Ali, may or may not, be an affiliate and controlling party of R.I. Holdings, Inc., NDR Energy Group, LLC (a Georgia Limited Liability Company), Rainco Industries, Inc., Rainco Management, Universal Bioenergy, Inc., Revolutionary Concepts (REVO), Eyetalk365, R.I. Technology, LLC, and Global Energy Group, LLC (a Georgia Limited Liability Company).  Members of “The Group”, may or may not, be considered affiliates, those that are recognized as non-affiliates should be determined by a legal opinion, keeping with security rules and regulations.

 

Section 2.  Designation, Amount and Par Value. 

The series of Preferred Stock designated by this Certificate of Designation shall be the Corporation’s 10.5% Series B Convertible Preferred Stock (the “Series B Preferred Stock”) and the authorized number of shares so designated shall be up to 1,500,000. Each share of Series A-1 Preferred Stock shall have a par value of $0.000777 per share and a stated value equal to $1,000 (the “Stated Value”).

 

Section 3. Dividends. 

 

(a) Dividends in Cash or in Kind. Subject to Section 3(f) below, Holders of Series B Preferred Stock (each, a “Holder” and collectively, the “Holders”) shall be entitled to receive, and the Corporation shall pay, cumulative dividends at the rate per share (as a percentage of the Stated Value per share) of 10.5% per annum, at time of closing and on each Conversion Date (with respect only to Series B Preferred Stock  

REVOPage 8 

 

 

being converted) (each such date, a “Dividend Payment Date”) (if any Dividend Payment Date is not a Trading Day, the applicable payment shall be due on the next succeeding Trading Day), as set forth below in this Section 3(a); provided, however , that in the event of the automatic conversion of Series B Preferred Stock into shares of Common Stock pursuant to Section 6(c), the Corporation shall also pay to the Holders of Series B Preferred Stock so converted an additional dividend, for each share of Series B Preferred Stock, equal to: 

 

(i) the net present value, as of the Conversion Date, of a payment equal to 22 1⁄2% of the Stated Value of one (1) share of Series B Preferred Stock (calculated assuming a discount rate of  10 1⁄2%), minus 

(ii) the aggregate amount of any quarterly dividends paid on one (1) share of Series B Preferred Stock before the Conversion Date (the ”Make-Whole Payment”).  The form of any quarterly dividend payments or any Make-Whole Payment to each Holder shall be, at the election of the Corporation: 

 

(A) if funds are legally available for the payment of dividends, in cash, 

 

(B) subject to the satisfaction of the Equity Conditions, in shares of Common Stock, which shall be valued solely for such purpose at the average of the VWAPs for the 5 consecutive Trading Days ending on the Trading Day that is immediately prior to: 

(1) the applicable Dividend Payment Date; or 

(2) with respect to dividends paid upon conversion of Series B Preferred Stock into Common Stock, the Conversion Date, 

 

(C) subject to the satisfaction of the Equity Conditions, in additional shares (including, without limitation, fractional shares) of Series B Preferred Stock, in an amount equal to the dollar amount of such dividend payment or Make-Whole Payment (as applicable) divided by the Stated Value per share, or 

 

(D) subject to the satisfaction of the Equity Conditions, in any combination of the property described in the foregoing clauses (A) , (B) , and (C) .

 

1. Corporation’s Payment of Dividends in Cash or in Additional Shares of Stock.  The Corporation shall promptly notify the Holders at any time the Corporation shall become unable to legally pay quarterly dividends or Make-Whole Payments in cash.  The Corporation shall provide the Holders with at least 20 Trading Days’ notice of its election to pay a quarterly dividend or Make-Whole Payment in shares of Common Stock or additional shares of Series B Preferred Stock (the Corporation may indicate, in any such notice relating to quarterly dividends, that the election contained in such notice shall continue for later periods until revised by a subsequent notice). 

 

2. Dividend Calculations  Dividends on the Series B Preferred Stock shall be calculated on the basis of a 360-day year, consisting of twelve 30 calendar day periods, and shall accrue daily commencing on the Closing Date, and shall be deemed to accrue from such date whether or not earned or declared and whether or not there are profits, surplus or other funds of the Corporation legally available for the payment of dividends.  Payment of dividends in shares of Common Stock or additional shares of Series B Preferred Stock (as applicable) shall be made in a manner consistent with Section6(d)(i) herein and, solely for purposes of the payment of dividends in shares, the Dividend Payment Date shall be deemed to be the Conversion Date.  Dividends shall cease to accrue with respect to any Series B Preferred Stock when converted.  Except as otherwise provided herein, if at any time the Corporation pays dividends partially in cash and partially in shares of Common Stock and/or Series B Preferred Stock, then such payment shall be distributed ratably among the Holders based upon the number of shares of Series B Preferred Stock held by each Holder on such Dividend Payment Date. 

 

REVOPage 9 

 

 

3. Other Securities   

 

 So long as any Series B Preferred Stock shall remain outstanding:  

 

(i) neither the Corporation nor any Subsidiary thereof shall redeem, purchase or otherwise acquire directly or indirectly any Junior Securities; and 

(ii) the Corporation and any Subsidiary thereof shall only redeem, repurchase or otherwise acquire, directly or indirectly, any Parity Securities ratably with the Series B Preferred Stock on a pari passu basis.

 

 

 So long as any Series B Preferred Stock shall remain outstanding:  

 

(i) neither the Corporation nor any Subsidiary thereof shall directly or indirectly pay or declare any dividend or make any distribution upon any Junior Securities (other than a dividend or distribution solely in additional shares of Junior Securities), in each case as long as any dividends due on the Series B Preferred Stock remain unpaid, nor shall any monies be set aside for or applied to the purchase or redemption (through a sinking fund or otherwise) of any Junior Securities; and 

(ii) the Corporation and any Subsidiary thereof shall only, directly or indirectly, pay or declare any dividend or make any distribution upon any Parity Securities, or set aside or apply any monies for the purchase or redemption (through a sinking fund or otherwise) of any Parity Securities, if it simultaneously, on a pari passu basis and ratably among the holders of the Series B Preferred Stock and the holders of all Parity Securities, pays or declares a dividend or distribution, or sets aside or applies monies for the purchase or redemption (through a sinking fund or otherwise), of the Series B Preferred Stock.

 

1. Payment of Dividends in Kind  During the period commencing on the Closing Date and ending on the eighteen (18) month anniversary of the Closing Date, in the event on any Dividend Payment Date the Registration Statement (as defined in the Registration Rights Agreement) has not been declared effective in accordance with Section 2(b) of the Registration Rights Agreement, any dividend payable in Common Stock or Series B Preferred Stock shall accrue and be payable to the Holders of the Series B Preferred Stock within five (5) business days following the date that such Registration Statement is declared effective.  In the event on any Dividend Payment Date following the eighteen (18) month anniversary of the Closing Date, the Registration Statement has not been declared effective or the Corporation has failed to maintain its effectiveness during the Effectiveness Period (as defined in the Registration Rights Agreement), all dividends payable to the Holders of the Series B Preferred Stock shall be payable, if funds are legally available for payment, in cash only. If such funds are not legally available for payment, any dividend payable shall accrue and be immediately payable to the Holders of the Series B Preferred Stock in cash, when such funds become legally available, or, at the option of the Corporation, subject to the effectiveness on such date of the Registration Statement, as otherwise provided for herein; provided however, that if such funds are not legally available and the Registration Statement is not effective, the Holders of the Series B Preferred Stock can waive the requirement that the Registration Statement be effective and elect to received dividend payments as otherwise provided for herein. 

 

Section 4. Voting Rights. 

 

(a) Except as otherwise provided herein or as otherwise required by law, each Holder of Series B Preferred Stock shall:

 

(i) be entitled to notice of any annual or special meeting of the stockholders of the Corporation, at the same time and in the same manner as of the holders of Common Stock in accordance with the by-laws of the Corporation; and 

REVOPage 10 

 

 

(ii). vote together with the Common Stock at any annual or special meeting of the stockholders of the Corporation, or in any action by written consent of stockholders of the Corporation in lieu of meeting, on an as-converted to Common Stock basis, with each share of Series A-2 Preferred Stock entitling its Holder to the number of votes of Series A-2 preferred stock that could be converted under the Certificate of Designation as of the close of business equal to seven (7) times the number of shares of Common Stock into which such shares on the record date fixed for such meeting or the effective date of such written consent; provided, however , that any share of Series A-2 Preferred Stock held by any Person other than a member of the Group shall instead only entitle its holder to the number of votes equal to the number of shares of Common Stock into which such share of Series A-2 Preferred Stock could be converted under this Certificate of Designation as of the close of business on the record date fixed for such meeting or the effective date of such written consent

 

 

(b) Each share of Series B Preferred Stock shall entitle its holder to one (1) vote in any matter submitted to vote of the holders of Preferred Stock, voting as a separate class (as opposed to voting with the holders of Common Stock as provided in Section 4(a).  Series B of Preferred Stock shall not in the first 3 years exceed 20,000 shares each, unless voted on and approved by the Series A.

 

Section 5.  Liquidation and Change of Control Transactions. 

 

Upon any liquidation, dissolution or winding-up of the Corporation, whether voluntary or involuntary (a “Liquidation”) or a Change of Control Transaction, the Holders shall be entitled to receive out of the assets, whether capital or surplus, of the Corporation in the case of a Liquidation, or out of the aggregate consideration received by the Corporation and its stockholders in the case of a Change of Control Transaction, an amount equal to:

 

(i) the Stated Value, plus any accrued and unpaid dividends on the Series B Preferred Stock, together with any other fees then due and owing thereon under this Certificate of Designation, for each share of Series B Preferred Stock, on a pari passu basis with any distribution or payment upon a Liquidation or Change of Control Transaction to the holders of Parity Securities and before any distribution or payment shall be made to the holders of any Junior Securities, plus,

 

(ii) the amount the Holders would have been entitled to receive as holders of the number of shares of Common Stock for which the shares of Series B Preferred Stock are convertible immediately prior to such Liquidation or Change of Control Transaction, on a pari passu basis with any distribution or payment upon a Liquidation or Change of Control Transaction to the holders of Parity Securities and Junior Securities combined. If the assets of the Corporation or aggregate consideration received shall be insufficient to pay in full the respective preference amounts to the Holders of Series B Preferred Stock and the holders of any Parity Securities described in this Section 5, then the entire assets of the Corporation or aggregate consideration shall be ratably distributed among the Holders of Series B Preferred Stock and the holders of any Parity Securities, in accordance with the respective amounts that would be payable on such shares if all amounts payable thereon were paid in full.  The Corporation shall mail written notice of any Liquidation, not less than 45 days prior to the payment date stated therein, to each Holder. The Corporation shall provide each Holder with reasonable advance notice (a “ Notice of COC ”) of the occurrence of a Change of Control Transaction or potential Change of Control Transaction, which shall specify, for each Holder, the number of shares of Series B Preferred Stock owned on the date of such Notice of COC, the number of shares of Common Stock issuable upon conversion of such Series B Preferred Stock and the date, if known, on which such Change of Control Transaction is to be effected, which date may not be prior to the date the Corporation delivers such Notice of COC to the Holders.  The calculations and entries set forth in the Notice of COC shall control in the absence of manifest or mathematical error.  Each Holder shall deliver the certificate(s) representing the shares of Series B Preferred Stock as instructed in the Notice of COC.

 

REVOPage 11 

 

 

Section 6.  Conversion. 

 

a) Conversions at Option of Holder.  Irrevocably, each share of Series B Preferred Stock shall be convertible, at any time and from time to time from and after the Closing Date at the option of the Holder thereof, into that number of shares of Common Stock determined by dividing the Stated Value of such share of Series B Preferred Stock by the Conversion Price then in effect.  Holders shall effect voluntary  conversions pursuant to this Section 6(a) by providing the Corporation with the form of conversion notice attached hereto as Annex A (a “Notice of Elective Conversion”).  Each Notice of Elective Conversion shall specify the number of shares of Series B Preferred Stock to be converted, the number of shares of Series B Preferred Stock owned prior to the conversion at issue, the number of shares of Series B Preferred Stock owned subsequent to the conversion at issue and the date on which such conversion is to be effected, which date may not be prior to the date the applicable Holder delivers such Notice of Conversion to the Corporation (such date, the “Elective Conversion Date”).  If no Elective Conversion Date is specified in a Notice of Elective Conversion, the Elective   Conversion Date shall be the date that such Notice of Elective Conversion is delivered hereunder.  The calculations and entries set forth in the Notice of Elective   Conversion shall control in the absence of manifest or mathematical error.  To effect elective conversions of shares of Series B Preferred Stock pursuant to this Section 6(a), a Holder shall not be required to surrender the certificate(s) representing the shares of Series B Preferred Stock to the Corporation unless all of the shares of Series B Preferred Stock represented thereby are so converted, in which case such Holder shall deliver the certificate representing such shares of Series B Preferred Stock promptly following the Elective Conversion Date at issue.  Any certificate representing shares of Series B Preferred Stock that have been converted in whole or part by such Holder shall be void and should be destroyed upon receipt of replacement certificate(s) from the Corporation.  Shares of Series B Preferred Stock converted into Common Stock pursuant to this Section 6(a) shall be canceled and shall not be reissued. 

 

b) [RESERVED] 

 

 

c)  Automatic Conversion Upon Sufficient VWAP.  If:  

 

(i) the VWAP for each of any twenty (20) Trading Days during any thirty (30) consecutive Trading Day period starting on or after the Effective Date (“ Threshold Period ”), exceeds $4.50 (subject to adjustment for forward and reverse stock splits, recapitalizations, stock dividends and the like after the Closing Date); and

(ii) all of the Equity Conditions have been met on each Trading Day during the applicable Threshold Period through and including the later of the VWAP Automatic Conversion Date and the Trading Day after the date that the Conversion Shares issuable pursuant to such conversion are actually delivered to the Holders pursuant to the Notice of VWAP Automatic Conversion, then all outstanding shares of Series B  Preferred Stock shall automatically be converted into shares of Common Stock, based on the then-effective Conversion Price.  The Corporation shall provide each Holder with notice (a “ Notice of VWAP Automatic Conversion ”) of the occurrence of an automatic conversion of the Series B  Preferred Stock pursuant to this Section 6(c) within one (1) Trading Day after the end of any such Threshold Period, which shall specify, for each Holder, the number of shares of Series B  Preferred Stock owned prior to the automatic conversion at issue, the number of shares of Common Stock issuable upon conversion of such Series B  Preferred Stock and the date on which such automatic conversion is to be effected, which shall be the third Trading Day following the date the Corporation delivers such Notice of VWAP Automatic Conversion to the Holders (such date, the “ VWAP Automatic Conversion Date ”).  The calculations and entries set forth in the Notice of VWAP Automatic Conversion shall control in the absence of manifest or mathematical error.  Each Holder shall deliver the certificate(s) representing all of its shares of Series B Preferred Stock to the Corporation promptly following the VWAP Automatic Conversion Date.  Shares of Series B Preferred Stock converted into Common Stock pursuant to this Section 6(c) shall be canceled and shall not be reissued.

 

REVOPage 12 

 

 

d)  Conversion Price.  The conversion price for the Series B Preferred Stock shall initially equal $1.912, subject to adjustment herein (the “Conversion Price”). 

 

e) Mechanics of Conversion 

 

1. Delivery of Certificate Upon Conversion.: Not later than three (3) Trading Days after each Conversion Date, the Corporation shall deliver, or cause to be delivered, to the converting Holder  

 

(A) a certificate or certificates representing the Conversion Shares which, on or after the earlier of: 

 

(1) the six (6) month anniversary of the Closing Date; or  

(2) the Effective Date, may or may not be free of restrictive legends and trading restrictions (other than those which may then be required by the Purchase Agreement) representing the number of Conversion Shares being acquired upon the conversion of the Series B Preferred Stock, and/or  

 

(B) a bank check in the amount of accrued and unpaid dividends and, if applicable, the Make-Whole Payment (to the extent that the Corporation has elected to pay accrued dividends or the Make-Whole Payment in cash).  On or after the earlier of: 

 

(1) the six (6) month anniversary of the Closing Date or 

(2) the Effective Date, the Corporation shall use commercially reasonable efforts to deliver any certificate or certificates required to be delivered by the Corporation under this Section 6 electronically through the Depository Trust Company or another established clearing corporation performing similar functions.

 

(ii) Obligation Absolute.  The Corporation’s obligation to issue and deliver the Conversion Shares irrevocable, upon conversion of Series B Preferred Stock in accordance with the terms hereof are absolute and unconditional, irrespective of any action or inaction by a Holder to enforce the same, any waiver or consent with respect to any other provision hereof, the recovery of any judgment against any Person or any action to enforce the same, or any setoff, counterclaim, recoupment, limitation or termination, or any breach or alleged breach by such Holder or any other Person of any obligation to the Corporation or any violation or alleged violation of law by such Holder or any other Person, and irrespective of any other circumstance which might otherwise limit such obligation of the Corporation to such Holder in connection with the issuance of such Conversion Shares; provided, however, that such delivery shall not operate as a waiver by the Corporation of any such action that the Corporation may have against such Holder or such other Person.  In the event a Holder shall elect to convert any or all of its Series B Preferred Stock, the Corporation may not refuse conversion based on any claim that such Holder or anyone associated or affiliated with such Holder has been engaged in any violation of law, agreement or for any other reason, unless an injunction from a court, on notice to Holder, restraining and/or enjoining conversion of all or part of the Series B Preferred Stock of such Holder shall have been sought and obtained.  In the absence of such injunction, the Corporation shall issue Conversion Shares and, if applicable, cash, upon a properly noticed conversion.  Nothing herein shall limit a Holder’s right to pursue actual damages or all other remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief.  The exercise of any such rights shall not prohibit a Holder from seeking to enforce damages pursuant to any other Section hereof or under applicable law.  Holders rights are irrevocable. 

 

(iii) Liquidated Damages.  If the Corporation fails to deliver to a Holder such certificate or certificates representing Conversion Shares within five (5) Trading Days after the Elective Conversion Date provided in a Notice of Elective Conversion pursuant to Section 6(a), the Corporation shall pay to such Holder, in cash, as liquidated damages and not as a penalty, for each share of Series B Preferred Stock elected to be converted, $50 per Trading Day for each Trading Day after such fifth (5th) Trading Day after the Elective Conversion Date until such certificates are delivered or such Holder is reimbursed in accordance with Section 6(d)(iv) . Nothing herein shall limit a Holder’s right to pursue actual damages for the Corporation’s failure to deliver Conversion Shares and such Holder shall have the right to pursue all remedies available to it hereunder, at  

REVOPage 13 

 

 

law or in equity including, without limitation, a decree of specific performance and/or injunctive relief.  The exercise of any such rights shall not prohibit a Holder from seeking to enforce damages pursuant to any other Section hereof or under applicable law.

 

(iv) Compensation for Buy-In on Failure to Timely Deliver Certificates Upon Conversion. If the Corporation fails to deliver to a Holder the applicable certificate or certificates within five (5) Trading Days after the Elective Conversion Date, and if after such date such Holder is required by its brokerage firm to purchase (in an open market transaction or otherwise), or the Holder’s brokerage firm purchases, shares of Common Stock to deliver in satisfaction of a sale by such Holder of the Conversion Shares which such Holder was entitled to receive upon the conversion relating to such Notice of Elective Conversion (a “ Buy-In ”), then the Corporation shall: 

 

(A) pay in cash to such Holder (in addition to any other remedies available to or elected by such Holder) the amount by which (x) such Holder’s total purchase price (including any brokerage commissions) for the shares of Common Stock so purchased exceeds (y) the product of

(1) the aggregate number of shares of Common Stock that such Holder was entitled to receive from the conversion at issue multiplied by 

(2) the actual sale price at which the sell order giving rise to such purchase obligation was executed (including any brokerage commissions) and 

 

(B) at the option of such Holder, either reissue (if surrendered) the shares of Series B Preferred Stock equal to the number of shares of Series B Preferred Stock submitted for conversion or deliver to such Holder the number of shares of Common Stock that would have been issued if the Corporation had timely complied with the Notice of Elective Conversion. For example, if a Holder purchases shares of Common Stock having a total purchase price of $11,000 to cover a Buy-In with respect to an attempted conversion of shares of Series B Preferred Stock with respect to which the actual sale price (including any brokerage commissions) giving rise to such purchase obligation was a total of $10,000 under clause (A) of the immediately preceding sentence, the Corporation shall be required to pay such Holder $1,000. The Holder shall provide the Corporation written notice indicating the amounts payable to such Holder in respect of the Buy-In and, upon request of the Corporation, evidence of the amount of such loss. Nothing herein shall limit a Holder’s right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Corporation’s failure to timely deliver certificates representing shares of Common Stock upon conversion of the shares of Series B Preferred Stock as required pursuant to the terms hereof.

 

(v) Reservation of Shares Issuable Upon Conversion.   

 

 The Corporation covenants that it will, at all times while any Series B Preferred Stock:  

(A) remains outstanding or 

(B) is reserved for issuance or otherwise issuable under any promissory note or agreement to which the Corporation is a party, reserve and keep available out of its authorized and unissued shares of Common Stock, for the sole purpose of issuance upon conversion of such Series B Preferred Stock, free from preemptive rights or any other purchase rights of Persons other than the Holder (and the other holders of the Series B Preferred Stock), not less than 150% of the aggregate number of shares of the Common Stock as shall be issuable (taking into account the adjustments and restrictions of Section 7) upon: 

(1) the conversion of such  Series B Preferred Stock; and 

(2) payment of dividends on such Series B Preferred Stock in shares of Common Stock hereunder.  

REVOPage 14 

 

 

 

 The Corporation covenants that it will, at all times while any Series B Preferred Stock:  

(A) remains outstanding or 

(B) is reserved for issuance or otherwise issuable under any promissory note or agreement to which the Corporation is a party, reserve and keep available out of its authorized and unissued shares of Preferred Stock, for the sole purpose of issuance upon payment of dividends on such Series B Preferred Stock in additional shares of Series B Preferred Stock as herein provided, free from preemptive rights or any other purchase rights of Persons other than the Holder (and the other holders of the Series B Preferred Stock), not less than 150% of the aggregate number of shares of the Series B Preferred Stock as shall (subject to the terms and conditions set forth in the Purchase Agreement) be issuable (taking into account the adjustments and restrictions of Section 7) upon the payment of dividends on such Series A-1 Preferred Stock in additional shares of Series B Preferred Stock hereunder.  

 

 The Corporation covenants that all shares of Common Stock and Series B Preferred Stock that shall be so issuable shall, upon issue, be duly authorized, validly issued, fully paid and  

non-assessable and, if the Conversion Shares Registration Statement is then effective under the Securities Act, shall be, with respect to such Common Stock and the Common Stock issuable upon conversion of such Series B Preferred Stock, registered for public resale in accordance with such Conversion Shares Registration Statement (subject to such Holder’s compliance with its obligations under the Registration Rights Agreement).

 

(vi). Fractional Shares.  No fractional shares or scrip representing fractional shares of Common Stock shall be issued upon the conversion of the Series B Preferred Stock.  As to any fraction of a share of Common Stock, which the Holder would otherwise be entitled to receive upon such conversion, the Corporation shall at its election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the Conversion Price or round up to the next whole share.  The Corporation may issue fractional shares of Series B Preferred Stock.

 

(vii) Transfer Taxes.  The issuance of certificates for shares of the Common Stock upon conversion of the Series B Preferred Stock shall be made without charge to any Holder for any documentary stamp or similar taxes that may be payable in respect of the issue or delivery of such certificates, provided that the Corporation shall not be required to pay any tax that may be payable in respect of any transfer involved in the issuance and delivery of any such certificate upon conversion in a name other than that of the Holders of such shares of Series B Preferred Stock and the Corporation shall not be required to issue or deliver such certificates unless or until the Person or Persons requesting the issuance thereof shall have paid to the Corporation the amount of such tax or shall have established to the satisfaction of the Corporation that such tax has been paid.

 

Section 7.  Certain Adjustments. 

 

(a). Stock Dividends and Stock Splits.  If the Corporation, at any time while any Series B Preferred Stock is outstanding: 

 

(i) pays a stock dividend or otherwise makes a distribution or distributions payable in shares of Common Stock on shares of Common Stock or any Common Stock Equivalents (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Corporation upon conversion of, or payment of a dividend on, the Series B Preferred Stock), 

(ii) subdivides outstanding shares of Common Stock into a larger number of shares, 

(iii) combines (including by way of a reverse stock split) outstanding shares of Common Stock into a smaller number of shares, or 

(iv) issues, in the event of a reclassification of shares of the Common Stock, any shares of capital stock of the Corporation, then the Conversion Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding any treasury shares of the Corporation) outstanding 

REVOPage 15 

 

 

immediately before such event, and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such event.  Any adjustment made pursuant to this Section 7(a) shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification.

 

(b) Subsequent Equity Sales.  If, at any time while any Series B Preferred Stock is outstanding, the Corporation or any Subsidiary, as applicable, sells or grants any option to purchase or sells or grants any right to reprice, or otherwise disposes of or issues (or announces any sale, grant or any option to purchase or reprice or other disposition), any Common Stock or Common Stock Equivalents (“Additional Shares of Common Stock”) at an effective price per share of Common Stock that is lower than the lower of: 

 

(i) 93% of the average of the VWAPs for the 10 consecutive Trading Days ending on the Trading Day that is immediately prior to the date of issuance of the Additional Shares of Common Stock; or 

 

(ii) the then effective Conversion Price (such lower price, the “Base Conversion Price” and such issuances, collectively, a “Dilutive Issuance”) (if the holder of the Additional Shares of Common Stock so issued shall at any time, whether by operation of purchase price adjustments, reset provisions, floating conversion, exercise or exchange  prices or otherwise, or due to warrants, options or rights per share which are issued in connection with such issuance, be entitled to receive shares of Common Stock or Common Stock Equivalents at an effective price per share that is lower than the Conversion Price, such issuance shall be deemed to have occurred for less than the Conversion Price on the date of the Dilutive Issuance), then the Conversion Price shall be reduced to equal the price determined by multiplying the Conversion Price in effect immediately prior to such issuance by a fraction:

 

 the numerator of which shall be:  

(A) the number of shares of Common Stock issuable upon the conversion of the Series B Preferred Stock immediately prior to such Dilutive Issuance, plus

(B) the number of shares of Common Stock or Common Stock Equivalents which the Aggregate Consideration received or deemed to be received by the Corporation for the total number of Additional Shares of Common Stock so issued would purchase at such then-existing Base Conversion Price; and

 

 the denominator of which shall be the number of shares of Common Stock issuable upon the conversion of the Series B Preferred Stock immediately prior to such Dilutive Issuance plus the total number of Additional Shares of Common Stock actually so issued. 

 

Such adjustment shall be made upon any issuance of Additional Shares of Common Stock; provided, however , that no adjustment will be made under this Section 7(b) in respect of an Exempt Issuance.  The Corporation shall notify the Holders in writing, no later than the Trading Day following the issuance of any Additional Shares of Common Stock subject to this Section 7(b), indicating therein the applicable issuance price, or applicable reset price, exchange price, conversion price and other pricing terms (such notice, the “Dilutive Issuance Notice”).  For purposes of clarification, whether or not the Corporation provides a Dilutive Issuance Notice pursuant to this Section 7(b), upon the occurrence of any Dilutive Issuance, the Holders are entitled to receive a number of Conversion Shares based upon the Base Conversion Price on or after the date of such Dilutive Issuance, regardless of whether a Holder accurately refers to the Base Conversion Price in the Notice of Conversion.

 

(c) Pro Rata Distributions.  If the Corporation, at any time while any Series B Preferred Stock is outstanding, distributes to all holders of Common Stock (and not to the Holders) evidences of its indebtedness or assets (including cash and cash dividends) or rights or warrants to subscribe for or purchase any security (other than the Common Stock, which shall be subject to Section 7(b), then in each such case the Conversion Price shall be adjusted by multiplying such Conversion Price in effect immediately prior to the record date fixed for 

REVOPage 16 

 

 

determination of stockholders entitled to receive such distribution by a fraction of which the denominator shall be the VWAP determined as of the record date mentioned above, and of which the numerator shall be such VWAP on such record date less the then fair market value at such record date of the portion of such assets or evidence of indebtedness or rights or warrants so distributed applicable to one outstanding share of Common Stock as determined by the Board of Directors of the Corporation in good faith.  In either case the adjustments shall be described in a statement delivered to the Holders describing the portion of assets or evidences of indebtedness so distributed or such subscription rights applicable to one share of Common Stock.  Such adjustment shall be made whenever any such distribution is made and shall become effective immediately after the record date mentioned above.

 

(d) Fundamental Transaction.  If, at any time while any Series B Preferred Stock is outstanding: 

 

(i) the Corporation, directly or indirectly, in one or more related transactions effects any merger or consolidation of the Corporation with or into another Person,  

(ii) the Corporation, directly or indirectly, effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially all of its assets in one or a series of related transactions,  

(iii) any, direct or indirect, purchase offer, tender offer or exchange offer (whether by the Corporation or another Person) is completed pursuant to which holders of Common Stock are permitted to sell, tender or exchange their shares for other securities, cash or property and has been accepted by the holders of 50% or more of the outstanding Common Stock,  

(iv) the Corporation, directly or indirectly, in one or more related transactions effects any reclassification, reorganization or recapitalization of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property,  

(v) the Corporation, directly or indirectly, in one or more related transactions consummates a stock or share purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with another Person whereby such other Person acquires more than 50% of the outstanding shares of Common Stock (not including any shares of Common Stock held by the other Person or other Persons making or party to, or associated or affiliated with the other Persons making or party to, such stock or share purchase agreement or other business combination), in each case other than a Change of Control Transaction (each, a “Fundamental Transaction”), then, upon any subsequent conversion of Series B Preferred Stock, the Holder shall have the right to receive, for each Conversion Share that would have been issuable upon such conversion immediately prior to the occurrence of such Fundamental Transaction, the number of shares of Common Stock of the successor or acquiring corporation or of the Corporation, if it is the surviving corporation, and any additional consideration (the “Alternate Consideration”) receivable as a result of such Fundamental Transaction by a holder of the number of shares of Common Stock for which Series B Preferred Stock is convertible immediately prior to such Fundamental Transaction.  For purposes of any such conversion, the determination of the Conversion Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one share of Common Stock in such Fundamental Transaction, and the Corporation shall apportion the Conversion Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration.  If holders of Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate Consideration it receives upon any conversion of Series A-1 Preferred Stock following such Fundamental Transaction.  To the extent necessary to effectuate the foregoing provisions, any successor to the Corporation or surviving entity in such Fundamental Transaction shall file a new Certificate of Designation with the same terms and conditions as those hereof, and issue to the Holders new Series B Preferred Stock consistent with the foregoing provisions and evidencing the Holders’ right to convert such Series B Preferred Stock into Alternate Consideration.  The Corporation shall cause any successor entity in a Fundamental Transaction in which the Corporation is not the survivor (the “Successor Entity”) to assume in writing all of the  

REVOPage 17 

 

 

obligations of the Corporation under this Certificate of Designation and the other Transaction Documents in accordance with the provisions of this Section 7( d ) , pursuant to written agreements in form and substance reasonably satisfactory to the Holders of a majority (with such majority to include the Group as long as the Group continues to hold Series B Preferred Stock) of the then outstanding shares of Series B Preferred Stock issued pursuant to the Purchase Agreement and approved by such Holders (without unreasonable delay) prior to such Fundamental Transaction, and shall deliver to each Holder in exchange for its Series B Preferred Stock a security of the Successor Entity evidenced by a written instrument substantially similar in form and substance to the Series B Preferred Stock which is convertible for a corresponding number of shares of capital stock of such Successor Entity (or its parent entity) equivalent to the shares of Common Stock acquirable and receivable upon conversion of the Series B Preferred Stock prior to such Fundamental Transaction, and with a conversion price which applies the conversion price hereunder to such shares of capital stock (but taking into account the relative value of the shares of Common Stock pursuant to such Fundamental Transaction and the value of such shares of capital stock, such number of shares of capital stock and such conversion price being for the purpose of protecting the economic value of the Series B Preferred Stock immediately prior to the consummation of such Fundamental Transaction), and which is reasonably satisfactory in form and substance to the Holders of a majority (with such majority to include the Group as long as the Group continues to hold Series B Preferred Stock) of the then outstanding shares of Series B Preferred Stock issued pursuant to the Purchase Agreement.  Upon the occurrence of any such Fundamental Transaction, the Successor Entity shall succeed to, and be substituted for (so that from and after the date of such Fundamental Transaction, the provisions of this Certificate of Designation and the other Transaction Documents referring to the “Corporation” shall refer instead to the Successor Entity), and may exercise every right and power of the Corporation and shall assume all of the obligations of the Corporation under this Certificate of Designation and the other Transaction Documents with the same effect as if such Successor Entity had been named as the Corporation herein.

 

(e) Calculations.  All calculations under this Section 7 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be.  For purposes of this Section 7 , the number of shares of Common Stock deemed to be issued and outstanding as of a given date shall be the sum of the number of shares of Common Stock (excluding any treasury shares of the Corporation) issued and outstanding.

 

(f) Notice to the Holders.

 

(i) Adjustment to Conversion Price.  Whenever the Conversion Price is adjusted pursuant to any provision of this Section 7, the Corporation shall promptly deliver to each Holder a notice setting forth the Conversion Price after such adjustment and setting forth a brief statement of the facts requiring such adjustment.

(ii) Notice to Allow Conversion by Holder.  If:

 

(A) the Corporation shall declare a dividend (or any other distribution in whatever form) on the Common Stock,  

(B) the Corporation shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock,  

(C) the Corporation shall authorize the granting to all holders of the Common Stock of rights or warrants to subscribe for or purchase any shares of capital stock of any class or of any rights,  

(D) the approval of any stockholders of the Corporation shall be required in connection with any reclassification of the Common Stock, any consolidation or merger to which the Corporation is a party, any sale or transfer of all or substantially all of the assets of the Corporation, or any compulsory share exchange whereby the Common Stock is converted into other securities, cash or property or  

(E) the Corporation shall authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Corporation, then, in each case, the Corporation shall cause to be filed at each office or agency maintained for the purpose of conversion of the Series B Preferred Stock, and shall cause to be delivered to each Holder at its last address as it shall appear upon the stock books of the  

REVOPage 18 

 

 

Corporation, at least twenty (20) calendar days prior to the applicable record or effective date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution, redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders of the Common Stock of record to be entitled to such dividend, distributions, redemption, rights or warrants are to be determined or (y) the date on which such reclassification, consolidation, merger, sale, transfer or share exchange is expected to become effective or close, and the date as of which it is expected that holders of the Common Stock of record shall be entitled to exchange their shares of the Common Stock for securities, cash or other property deliverable upon such reclassification, consolidation, merger, sale, transfer or share exchange, provided that the failure to deliver such notice or any defect therein or in the delivery thereof shall not affect the validity of the corporate action required to be specified in such notice.  To the extent that any notice provided hereunder constitutes, or contains, material, non-public information regarding the Corporation or any of the Subsidiary, the Corporation shall, as required by applicable federal securities law, file such notice with the Commission pursuant to a Current Report on Form 8-K.  The Holder shall remain entitled to irrevocably convert the Series B Preferred Stock during the 20-day period commencing on the date of such notice through the effective date of the event triggering such notice, except as may otherwise be expressly set forth herein.

 

Section 8. Negative Covenants. 

 

(A)  As long as at least 25% of the Parity Securities that were Originally Issued are still outstanding, the Corporation shall not, and shall not permit any of the Subsidiary to, directly or indirectly, without the affirmative vote of the holders of a majority of the then outstanding Parity Securities (which shall, as long as the Group still holds at least 25% of the Parity Securities that were Originally Issued, include the Group):

 

(i) Other than Permitted Indebtedness, enter into, create, incur, assume, guarantee or suffer to exist any Indebtedness for borrowed money; 

(ii) other than Permitted Liens, grant, assume or allow to exist any Liens of any kind, on or with respect to any of its property or assets now owned or hereafter acquired or any interest therein or any income or profits therefrom; 

(iii) repay, repurchase or offer to repay, repurchase or otherwise acquire Common Stock constituting more than 5% of the outstanding shares of Common Stock (measured as of immediately after the Closing), other than as to  

(a) the Conversion Shares as permitted or required under this Certificate of Designation or any other Transaction Documents and 

(b) repurchases of Common Stock or Common Stock Equivalents of departing officers and directors of the Corporation, provided that such repurchases shall not exceed an aggregate of $100,000 for all officers and directors for so long as the Parity Securities are outstanding;

(vi) enter into any transaction with any Affiliate of the Corporation which would be required to be disclosed in any public filing with the Commission, unless such transaction is made on an arm’s-length basis and expressly   approved by a majority of the disinterested directors of the Corporation (even if less than a quorum otherwise required for board approval);  

(i) Enter into any transaction with any Affiliate of an Officer or Director of the Corporation, if such transaction provides for the payment of services in Securities of the Corporation; 

(vi) amend the Corporation’s certificate of incorporation, by-laws or the Certificate of Designation of any of the Parity Securities in any manner that materially adversely affects any of the   rights, preferences or privileges of the Holders of such Parity Securities; 

(vii) approve the issuance of any Preferred Stock, other than the Series A Preferred Stock, Series A-1 Preferred Stock, the Series A-2 Preferred Stock and the Series B Preferred Stock issued in connection with the transactions contemplated under the Transaction Documents; 

(viii) pay any dividends or make any distributions on any Junior Securities (except in additional shares of Junior Securities); 

REVOPage 19 

 

 

(ix) adopt an executive equity incentive plan which provides for the issuance of greater than 6.0% of the fully diluted equity of the Corporation after taking into account the transactions contemplated under the Transaction Documents; 

(x) enter into any transaction for the sale or pledge of a material asset of the Corporation; 

(xi) approve or consent to the initiation of a Bankruptcy Proceeding; 

(xii) issue any securities of the Corporation in exchange for services to a consultant; or 

(xiii) enter into any agreement with respect to any of the foregoing. 

 

(B)  As long as at least 25% of the Parity Securities that were Originally Issued are still outstanding, and as long as “The Group” still holds at least 25% of the Parity Securities that were Originally Issued, the Corporation shall not, and shall not permit any of the Subsidiary to, directly or indirectly, without the affirmative vote of “The Group” and in the event “The Group” is dissolved, Mr. Ali.

 

(i) enter into any transaction for the acquisition of any business, property or asset pursuant to which the Corporation will incur Indebtedness to finance such acquisition in principal amount in excess of $500,000; 

(ii) pay any dividends pursuant to Section 3(a) hereof in cash in an amount to exceed $500,000; 

(iii) engage in a private placement of any Common Stock or Common Stock Equivalents of the Corporation; 

(iv) enter into any transaction that would constitute a Change of Control Transaction; 

(v) enter into any transaction that would constitute a Fundamental Transaction; or 

(vi) engage in a registered offering of any Common Stock or Common Stock Equivalents of the Corporation. 

 

(C)  If the Corporation defaults in complying with the covenants set out in subsection (a) or (b) above, the Corporation shall have thirty (30) days following notice by the holders of the Parity Securities, “The Group” and/or Mr. Ali respectively, specifying the nature of such default, to remedy such default by:

 

(i) taking all necessary corporate action to void the action that is the subject of such default;

(ii) obtaining the requisite approval of the holders of the Parity Securities, “The Group” and/or Mr. Ali, respectively, for such action consistent with the provisions of this Section 8; or 

(iii) obtaining a waiver of such default from the holders of the Parity Securities “The Group” and/or Mr. Ali, respectively.

 

 

 

Section 9. Preemptive Rights.

 

a) From the date hereof until such time as all Holders no longer hold any shares of Series B Preferred Stock, upon any issuance by the Corporation or any of its Subsidiary of Common Stock, Common Stock Equivalents for cash consideration, or a combination of units hereof (a “Subsequent Financing”), each Holder, collectively with all holders of Parity Securities, shall have the right to participate in up to an amount of the Subsequent Financing equal to 100% of the Subsequent Financing (the “Participation Maximum”) on the same terms, conditions and price provided for in the Subsequent Financing.

 

b) At least five (5) Trading Days prior to the closing of the Subsequent Financing, the Corporation shall deliver to each Holder a written notice of its intention to effect a Subsequent Financing (“Pre-Notice”), which Pre-Notice shall ask such Holder if it wants to review the details of such financing (such additional notice, a “Subsequent Financing Notice”).  Upon the request of a Holder, and only upon a request by such Holder, for a Subsequent Financing Notice, the Corporation shall promptly, but no later than one (1) Trading Day after such request, deliver a Subsequent Financing Notice to such Holder.  The Subsequent Financing Notice shall describe in reasonable detail the proposed terms of such 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.

REVOPage 20 

 

 

 

c) Any Holder desiring to participate in such Subsequent Financing must provide written notice to the Corporation by not later than 5:30 p.m. (EST) on the fourth (4th) Trading Day after all of the Holders have received the Pre-Notice that the Holder is willing to participate in the Subsequent Financing, the amount of the Holder’s participation, and representing and warranting that the Holder has such funds ready, willing, and available for investment on the terms set forth in the Subsequent Financing Notice.  If the Corporation receives no such notice from a Holder as of such fourth (4th) Trading Day, such Holder shall be deemed to have notified the Corporation that it does not elect to participate.

 

d) If by 5:30 p.m. (EST) on the fourth (4th) Trading Day after all of the Holders have received the Pre-Notice, notifications by the Holders and holders of Parity Securities 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 Corporation may affect the remaining portion of such Subsequent Financing on the terms and with the Persons set forth in the Subsequent Financing Notice.

 

e) If by 5:30 p.m. (EST) on the fourth (4th) Trading Day after all of the Holders have received the Pre-Notice, the Corporation receives responses to a Subsequent Financing Notice from Holders and holders of Parity Securities seeking to purchase more than the aggregate amount of the Participation Maximum, each such Holder shall have the right to purchase its Pro Rata Portion (as defined below) of the Participation Maximum. “Pro Rata Portion” of a Holder means the ratio of: (x) the aggregate Stated Value of the Parity Securities issued to such Holder on the Closing Date; and (y) the aggregate Stated Value of the Parity Securities issued to all holders of Parity Securities participating in such Subsequent Financing under this Section 9.

 

f) The Corporation must provide the Holders with a second Subsequent Financing Notice, and the Holders will again have the right of participation set forth above in this Section 9, 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) Notwithstanding the foregoing, this Section 9 shall not apply in respect of:

(i) an Exempt Issuance or 

(ii) an underwritten public offering of Common Stock.

 

h) Contemplated hereby and further, both parties acknowledge the Company, reserves the right to modify, correct, amend, or abort any part of this Agreement in whole or in part, without any further notice to the Purchaser(s), except for the parts that are irrevocable between the Company and the Purchaser(s).

 

Section 10.  Miscellaneous. 

 

a) Notices. Any and all notices or other communications or deliveries to be provided by the Holders hereunder including, without limitation, any Notice of Conversion, shall be in writing and delivered personally, or sent by a nationally recognized overnight courier service, addressed to the Corporation, at 4822  Albemarle Road, Suite 209, Charlotte, NC 28205 or such other address as the Corporation may specify for such purposes by notice to the Holders delivered in accordance with this Section 10(a).  Any and all notices or other communications or deliveries to be provided by the Corporation hereunder shall be in writing and delivered personally, or sent by a nationally recognized overnight courier service addressed to each Holder at the address of such Holder appearing on the books of the Corporation, or if no such address appears on the books of the Corporation, at the principal place of business of such Holder, as set forth in the Purchase Agreement.  Any notice or other communication or deliveries hereunder shall be deemed given and effective on the earliest of:

  

(i) the second Trading Day following the date of mailing, if sent by U.S. nationally recognized overnight courier service, or 

(ii) upon actual receipt by the party to whom such notice is required to be given.

 

REVOPage 21 

 

 

b) Absolute Obligation.  Except as expressly provided herein, no provision of this Certificate of Designation shall alter or impair the obligation of the Corporation, which is absolute and unconditional, to pay accrued dividends on the shares of Series B  Preferred Stock at the time, place, and rate, and in the coin, currency or shares (as applicable), herein prescribed.

 

c) Lost or Mutilated Series B Preferred Stock Certificate.  If a Holder’s Series B Preferred Stock certificate shall be mutilated, lost, stolen or destroyed, the Corporation shall execute and deliver, in exchange and substitution for and upon cancellation of a mutilated certificate, or in lieu of or in substitution for a lost, stolen or destroyed certificate, a new certificate for the shares of Series B Preferred Stock so mutilated, lost, stolen or destroyed, but only upon receipt of evidence of such loss, theft or destruction of such certificate, and of the ownership hereof reasonably satisfactory to the Corporation.

 

d) Governing Law.  All questions concerning the construction, validity, enforcement and interpretation of this Certificate of Designation shall be governed by and construed and enforced in accordance with the internal laws of the State of Nevada, without regard to the principles of conflict of laws thereof.  The Corporation and each Holder agrees that all legal proceedings concerning the interpretation, enforcement and defense of the transactions contemplated by any of the Transaction Documents (whether brought against a party hereto or its respective Affiliates, directors, officers, shareholders, employees or agents) shall be commenced in the state and federal courts of Nevada.  The Corporation and each Holder hereby irrevocably submits to the exclusive jurisdiction of the Nevada Courts 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 such Nevada Courts, or such Nevada Courts are improper or inconvenient venue for such proceeding.  The Corporation and each Holder 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 it at the address in effect for notices to it under this Certificate of Designation 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 applicable law. The Corporation and each Holder hereby irrevocably waives, to the fullest extent permitted by applicable law, any and all right to trial by jury in any legal proceeding arising out of or relating to this Certificate of Designation or the transactions contemplated hereby.  If the Corporation or any Holder shall commence an action or proceeding to enforce any provisions of this Certificate of Designation, then the prevailing party in such action or proceeding shall be reimbursed by the other party for its attorneys’ fees and other costs and expenses incurred in the investigation, preparation and prosecution of such action or proceeding.

 

e) Waiver.  Any waiver by the Corporation or a Holder of a breach of any provision of this Certificate of Designation shall not operate as or be construed to be a waiver of any other breach of such provision or of any breach of any other provision of this Certificate of Designation or a waiver by any other Holders.  The failure of the Corporation or a Holder to insist upon strict adherence to any term of this Certificate of Designation on one or more occasions shall not be considered a waiver or deprive that party (or any other Holder) of the right thereafter to insist upon strict adherence to that term or any other term of this Certificate of Designation on any other occasion.  Any waiver by the Corporation or a Holder must be in writing.

 

f) Severability.  If any provision of this Certificate of Designation is invalid, illegal or unenforceable, the balance of this Certificate of Designation shall remain in effect, and if any provision is inapplicable to any Person or circumstance, it shall nevertheless remain applicable to all other Persons and circumstances.  If it shall be found that any interest or other amount deemed interest due hereunder violates the applicable law governing usury, the applicable rate of interest due hereunder shall automatically be lowered to equal the maximum rate of interest permitted under applicable law.

 

g) Next Business Day.  Whenever any payment or other obligation hereunder shall be due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day

 

REVOPage 22 

 

 

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

 

i) Status of Converted or Redeemed Series B Preferred Stock.  Shares of Series B Preferred Stock may only be issued pursuant to the Transaction Documents.  If any shares of Series B Preferred Stock shall be converted, redeemed or reacquired by the Corporation, such shares shall resume the status of authorized but unissued shares of Preferred Stock and shall no longer be designated as 10 1⁄2% Series

 

 

IN WITNESS WHEREOF, the Corporation has caused this Certificate to be duly executed on its behalf by its undersigned Chairman and Chief Executive Officer as of March 31, 2016.

 

 

                                                                                            By: ____________________________________ 

     Name: Ronald Carter  

                                                                                           Title: President and Chief Executive Officer 

 

 

REVOPage 23SECURITIES PURCHASE AGREEMENT (SERIES A)

SECURITIES PURCHASE AGREEMENT (SERIES A)

 

SECURITIES PURCHASE AGREEMENT

SERIES A

 

This Securities Purchase Agreement (this “Agreement”) is dated as of March 31, 2016 between Revolutionary Concepts, Inc.(REVO), a Nevada corporation (the “Company”), and each Purchaser identified on Schedule A 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(2) of the Securities Act of 1933, as amended (the “Securities Act”), and Rule 506 promulgated thereunder, 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; and

 

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 1

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 other Transaction Documents (as applicable), and 

(b) the following terms have the meanings set forth in this Section 1.1:

 

“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.

 

“Asset” means where the Company acknowledges in its books and records the value, any item of economic value, owned by an individual or corporation, especially that which could be converted to cash. 

“Best efforts” means an agreement in which a company or underwriter promises to make a full-fledged attempt to sell as much of in a direct public offering or an initial public offering as possible to the public, with no guarantee of success. 

 

“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.

 

“Cash Equivalent” (CE) means investment securities that are short term (usual 3 months or less), have high credit quality, and highly liquid investments (where there are buyers and sellers in the market place both readily convertible to know amounts of cash and  that they represent insignificant risk of changes in value.  Cash Equivalent includes the U.S. Government Treasury bills, bank certificates of deposit, bankers acceptances, corporate commercial paper (preferred shares, common stock, membership interest, convertible notes), and  other instruments.

 

“Closing” means the closing of the purchase and sale of the Securities pursuant to Section 2.1.

 

“Closing Date” has the meaning set forth in Section 2.1.

REVOPage 1 

 

 

 

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

 

“Common Stock” means the common stock of the Company, par value $0.0001 per share, and any other class of securities into which such common stock may hereafter be reclassified or changed.

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

 

“Company Counsel” means legal representation for the Company.

 

“Conversion” means the transformation of loans or debt into shares of stock or equity. 

 

“Conversion Date” means an Elective Conversion Date.

 

“Conversion Shares” means, collectively, the shares of Common Stock issuable upon conversion of the shares of Series “A”, “A-1”, “A-2” and “B” Preferred Stock in accordance with the terms of the Certificate of Designation

 

“Cross-Receipt” means the cross receipts executed by the Purchasers and the Company, each in the form of    Exhibit F hereto.

 

“Disclosure Schedules” shall have the meaning set forth in Section 3.1.

 

 “Effective Date” means the earlier of the date that 

 

(a) all of the Registrable Securities (as defined in the Registration Rights Agreement) have been registered for resale by the holders thereof pursuant to a registration statement(s) declared effective by the Commission or 

(b) all of the Registrable Securities have been sold pursuant to Rule 144 or may be sold pursuant to Rule 144 without volume or manner-of-sale restrictions, so long as the Company is current with the public information requirements under Rule 144.

 

“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 

 

(i) duly adopted for such purpose, by a majority of the non-employee members of the Board of Directors or a majority of the members of a committee of non-employee directors established for such purpose, and  

(ii) (ii) approved pursuant to the provisions of Section 8 of the Series A-1 Certificate of Designation and the Series A-2 Certificate of Designation,  

 

(b) securities upon the exercise or exchange of or conversion of any Securities issued hereunder (including, without limitation, any Underlying Shares) and/or other securities exercisable or exchangeable for or convertible into shares of Common Stock issued and outstanding on the date of this Agreement or as disclosed in the Company’s Disclosure Schedules, provided that such securities have not been amended on or after the date of this Agreement to increase the number of such securities or to decrease the exercise price, exchange price or conversion price of such securities (it being understood that such securities may be adjusted for anti-dilution purposes in connection with this Agreement), 

 

REVOPage 2 

 

 

(c) securities issued pursuant to acquisitions or strategic transactions approved by 

 

(i) a majority of the disinterested directors of the Company, and  

(ii) pursuant to the provisions of Section 8 of the Series A-1 Certificate of Designation and the Series A-2 Certificate of Designation, and (d) securities issued as consideration for  

(d) securities issue as consideration for:

(i) dividends to the Purchasers of the Preferred Stock under the Series A Certificate of Designation, the Series A-1 Certificate of Designation, the Series A-2 Certificates of Designation, the Series B Certificate of Designation  and to purchasers of any other Parity Securities (including, solely with respect to the Series A-2 Preferred Stock and any other Parity Securities, as the case may be, any and all shares of Common Stock issuable in lieu of cash payments pursuant to the Make-Whole Payment and including, solely with respect to the Series A-1 Preferred Stock, any and all shares of Common Stock issuable in lieu of cash payments pursuant to the Additional Dividend payment (as defined in the Series A-1 Certificate of Designation)); or  

(ii) capital contributions to Revolutionary Concepts Inc. 

 

“Existing Debt Amount” means, with respect to each Purchaser, the amount owed by the Company to such Purchaser under such Purchaser’s Existing Promissory Note as of the Closing, as set forth on Schedule A hereto.

 

“Existing Promissory Notes” means whereas both the seller and the purchaser(s) recognize/acknowledge the promissory notes of the company or convertible promissory notes used as cash equivalent by Purchaser(s).

 

“Face Value ” means both The Company and the Purchaser(s) acknowledges the stated value and the original value of promissory note(s), the face value of a loan refers to the principal of the loan, which is the original amount of the loan as detailed in the loan contract, promissory note, or debt instrument. The amount of the obligation or loan constitutes what is due to the promisee.  The promissory note itself has no face value.  It may or may not be considered legal tender, although it can be transferred from one obligee to another.  It does show the amount of the obligation or consideration due to the promisee by the promisor, which all parties have agreed on.

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

 

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

 

“Limited Liability Company (LLC)” means a limited liability company other formation (under the Nevada statues or other) created by the company to conduct related business transactions or operate as a management entity when opportunities arise..

 

“Lost Note Affidavit and Indemnity Agreement” If necessary, means a Lost Note Affidavit and Indemnity Agreement in a form reasonably acceptable to the Company in the form attached hereto as Exhibit E.

 

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

 

“Participation Maximum” shall have the meaning ascribed to such term in Section 4.8(a).

 

“Payoff Letter” If required, means the payoff letters executed by the Purchasers in favor of the Company, each in the form of Exhibit A hereto, providing for termination and release of all obligations under the applicable Existing Promissory Note and related Loan Documents (as defined in such Payoff Letter).

“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.

 

“Placement Agents” mean the agents of the Company in the private offer and sale of Series A-1, if applicable.

 

REVOPage 3 

 

 

“Preferred Stock” means shares of Series A Preferred Stock, Series A-1 Preferred Stock and shares of Series A-2 Preferred Stock issued to the Purchasers hereunder.

“Pre-Notice” shall have the meaning ascribed to such term in Section 4.8(b).

 

“Pro Rata Portion” shall have the meaning ascribed to such term in Section 4.8(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.

 

“Purchaser Party” shall have the meaning ascribed to such term in Section 4.6.

 

“Registration Rights Agreement” means the Registration Rights Agreement, in the form of Exhibit B hereto, by and among the Company and the Purchasers, providing registration rights with respect to the Underlying Shares held by the Purchasers on the terms and conditions set forth therein.

 

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

 

 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, ignoring any conversion or exercise limits set forth therein and assuming that any previously unconverted shares of Preferred Stock are held until the third anniversary of the Closing Date and all dividends are paid in shares of Common Stock or Preferred Stock until such third anniversary.

 

“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.

 

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

 

“Securities” means the Preferred Stock and the Underlying Shares.

 

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

 

“Series A Certificate of Designation” means the 101⁄2% Series A Convertible Preferred Stock Certificate of Designation to be filed prior to the Closing by the Company with the Secretary of State of Nevada, in the form of Exhibit G attached hereto.

 

“Series A Preferred Stock” means the Company’s 101⁄2% Series A Convertible Preferred Stock issued hereunder having the rights, preferences and privileges set forth in the Series A Certificate of Designation.

 

“Series A-1 Certificate of Designation” means the 101⁄2% Series A-1 Convertible Preferred Stock Certificate of Designation to be filed prior to the Closing by the Company with the Secretary of State of Nevada, in the form of Exhibit C attached hereto.

 

“Series A-1 Preferred Stock” means the Company’s 101⁄2% Series A-1 Convertible Preferred Stock issued hereunder having the rights, preferences and privileges set forth in the Series A-1 Certificate of Designation.

 

“Series A-2 Certificate of Designation” means the 101⁄2% Series A-2 Convertible Preferred Stock Certificate of Designation to be filed prior to the Closing by the Company with the Secretary of State of Nevada, in the form of Exhibit D attached hereto.

 

“Series A-2 Preferred Stock” means the Company’s 101⁄2% Series A-2 Convertible Preferred Stock issued hereunder having the rights, preferences and privileges set forth in the Series A-2 Certificate of Designation.

 

REVOPage 4 

 

 

“Series B Certificate of Designation” means the 10 1⁄2% Series B Convertible Preferred Stock Certificate of Designation to be filed prior to the Closing by the Company with the Secretary of State of Nevada, in the form of Exhibit A attached hereto.

 

“Series B Preferred Stock” means the Company’s 10 1⁄2% Series B Convertible Preferred Stock issued hereunder having the rights, preferences and privileges set forth in the Series B Certificate of Designation.

 

“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).

 

“Stated Value” means Series A Preferred at $0.06 or  Series A1 and A2 Preferred at $1,000 per share, subject to adjustment as provided in the Certificate of Designation of Series A, Series A-1 Certificate of Designation or the Series A-2 Certificate of Designation (as applicable).

 

“Subsequent Financing” shall have the meaning ascribed to such term in Section 4.8(a).

 

“Subsequent Financing Notice” shall have the meaning ascribed to such term in Section 4.8(b).

 

“Subsidiary” shall have the meaning ascribed to such term in Section 3.1(a) and shall, where applicable, also include any direct or indirect subsidiary of the Company formed or acquired after the date hereof.

 

“The Group” refers to Certification of Designation, Section 1.

 

“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 American Stock Exchange, the Toronto Stock Exchange, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, the New York Stock Exchange, OTC Bulletin Board and the OTC Markets, or any other national or international exchange in which securities, commodities, derivatives and other financial instruments are traded, (or any successors to any of the foregoing).

 

“Transaction Documents” means this Agreement, the Series A, the Series A-1 Certificate of Designation, the Series A-2 Certificate of Designation, the Registration Rights Agreement, all exhibits and schedules thereto and hereto, and any other documents (agreements, amendments, addendums) or agreements executed in connection with the transactions contemplated hereunder (including, without limitation, the documents referenced in Section 2.2(c)(ii).

 

“Transfer Agent” means RCI, the Company or Island Stock Transfer, the current transfer agent of the Company, with a mailing address of 15500 Roosevelt Blvd. Clearwater, FL. 33760, and any successor transfer agent of the Company

 

“Underlying Shares” means the shares of Common Stock that are:

 

(a) issued and issuable upon conversion of the Series A Preferred Stock, Series A-1 Preferred Stock or Series A-2 Preferred Stock or Series B Preferred Stock issued to the Purchasers hereunder; and

 

(b) issued or issuable in lieu of cash payment of dividends on the Preferred Stock referenced in clause (A) in accordance with the terms of the Series A Certificate of Designation, Series A-1 Certificate of Designation and the Series A-2 Certificate of Designation, as applicable (including, solely with respect to the Series A-2 Preferred Stock, any and all shares of Common Stock issuable in lieu of cash payments pursuant to the Make-Whole Payment (as defined in the Series A-2 Certificate of Designation) and including, solely with respect to the Series A-1 Preferred Stock, any and all shares of Common Stock issuable in lieu of cash payments pursuant to the Additional Dividend payment (as defined in the Series A-1 Certificate of Designation).

 

 

ARTICLE 2

REVOPage 5 

 

 

PURCHASE AND SALE

 

2.1 Closing.

 

(a) On the date hereof (the “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 the Purchasers, severally and not jointly, each agree to purchase, the number of shares of Series A Preferred Stock, Series A-1 Preferred Stock or Series A-2 Preferred Stock (as applicable), as set forth on Schedule A hereto, determined by dividing such Purchaser’s Existing Debt Amount, Promissory Note, 3rd party convertible notes, as set forth on Schedule A hereto, by the Stated Value of one (1) share of Series A Preferred Stock, Series A-1 Preferred Stock or Series A-2 Preferred Stock (as applicable)

 

(b) The Company and each Purchaser shall each deliver the items set forth in Section 2.2 deliverable at the Closing.  Upon satisfaction of the covenants and conditions set forth in Sections 2.2 and 2.3, the Closing shall occur at the offices of Company Counsel or such other location as the parties shall mutually agree.

 

2.2. Deliveries. (refer to Exhibit Deliveries):

 

(a) On or prior to the Closing Date, the Company shall deliver or cause to be delivered to each Purchaser the following:

 

(i) this Agreement and the Registration Rights Agreement, and such Purchaser’s Payoff Letter and Cross-Receipt, each duly executed by the Company, and  

(ii) evidence of the filing and acceptance of the Series A Certificate of Designation, Series A-1 Certificate of Designation or the Series A-2 Certificate of Designation (as applicable), from the Secretary of State of Nevada. 

 

(b) Within five (5) Business Days after the Closing Date, the Company shall deliver or cause to be delivered to each Purchaser a certificate evidencing the number of shares of Preferred Stock issued to such Purchaser, determined as provided herein, registered in the name of such Purchaser.

 

(c) On or prior to the Closing Date, each Purchaser shall deliver or cause to be delivered to the Company the following:

 

(i) this Agreement, the Registration Rights Agreement and such Purchaser’s Payoff Letter, each duly executed by such Purchaser, and  

(ii) (ii) such Purchaser’s original Existing Promissory Note or a Lost Note Affidavit and Indemnity Agreement, duly executed by such Purchaser. 

(iii) and supporting documents for 3rd Party Convertible Notes, and Promissory Notes . 

 

(d) Upon receipt of the certificate identified in subsection (b) above, the Purchaser shall deliver or cause to be delivered to the Company such Purchaser’s Cross-Receipt, duly executed by such Purchaser.

 

2.3 Closing Conditions.

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

 

(i) the accuracy in all material respects on the Closing Date of the representations and warranties of the Purchasers contained herein (unless as of a specific date therein); 

(i) all obligations, covenants and agreements of each Purchaser required to be performed at or prior to the Closing Date shall have been performed; and 

(ii) the delivery by each Purchaser of the items set forth in Sections 2.2(c) and (d) of this Agreement  

 

REVOPage 6 

 

 

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

 

(i) the accuracy in all material respects when made and on the 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 the Closing Date shall have been performed; and 

(iii) the delivery by the Company of the items set forth in Sections 2.2(a) and (b) of this Agreement. 

 

ARTICLE 3

REPRESENTATIONS AND WARRANTIES

 

3.1Representations 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 otherwise made herein to the extent of the disclosure contained in the corresponding section of the Disclosure Schedules, the Company hereby makes the following representations and warranties to each Purchaser:

 

     (a) Subsidiary.  The Company intends to create Subsidiaries with varying related objectives of the Company.

 

(b) Organization and Qualification.  The Company and each of its Subsidiaries when formed will be 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.  The Company is not in violation or default of any of the material provisions of its respective certificate or articles of incorporation, bylaws or other organizational or charter documents.  The Company is duly qualified to conduct business and is in good standing 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, 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 each of the Transaction Documents and otherwise to carry out its obligations hereunder and thereunder.  The execution and delivery of each of the 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 therewith.  Each 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  

REVOPage 7 

 

 

(iii) insofar as indemnification and contribution provisions may be limited by applicable law. 

 

(d) No Conflicts.  The execution, delivery, and performance by the Company of the Transaction Documents, the issuance and sale of the Securities and the consummation by it of the transactions contemplated hereby and thereby to which it is a party do not and will not: 

 

(i) conflict with or violate any provision of the Company’s  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 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 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 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 is subject (including federal and state securities laws and regulations), or by which any property or asset of the Company 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 4.5 of this Agreement,  

(ii) the filings with the Commission pursuant to the Registration Rights Agreement,  

(iii) the notice and/or application(s) to each applicable Trading Market for the issuance and sale of the Preferred Stock and the listing of the Underlying Shares for trading thereon in the time and manner required thereby, and  

(iv) 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 applicable Transaction Documents, will be duly and validly issued, fully paid and non-assessable, free and clear of all Liens imposed by the Company other than restrictions on transfer provided for in the Transaction Documents.  The Underlying Shares, when issued in accordance with the terms of the Transaction Documents, will be irrevocably issued, fully paid, and non-assessable, free and clear of all Liens imposed by the Company other than restrictions on transfer provided for in the Transaction Documents.  The Company has reserved from its duly authorized capital stock a number of shares of Common Stock for issuance of the Underlying Shares at least equal to 150 % of the shares of Common Stock initially issuable upon conversion of the Preferred Stock issuable hereunder.

 

(g) Capitalization.  The capitalization of the Company is as set forth on Schedule 3.1(g) , which Schedule 3.1(g) also includes the number of shares of Common Stock owned beneficially, and of record, by Affiliates of the Company as of the date hereof.  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 or as set forth in Schedule 3.1(g) or in the SEC Reports, 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 

REVOPage 8 

 

 

additional shares of Common Stock or Common Stock Equivalents.  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 validly issued, fully paid, and non-assessable, 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.  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.  The Company is in the process of restating its financials for several quarters and yearend statements to bring current. All quarterly and annual reports required to be filed by the Company under the Exchange Act for the three (3) years preceding the date hereof (the foregoing materials, including the exhibits thereto and documents incorporated by reference therein, being collectively referred to herein as the “SEC Reports”) are under review in an effort to restate and correct various statements and financial filings. The company has not requested an extension for such filings; however the company has engaged a new accountant and identified a new auditing firm to assist in the restated filings. 

 

The company is currently cooperating in an SEC inquiry and various restatements of previous filings have been requested. To the best of the companies and managements knowledge and in accordance with GAAP, all previous statements are true and accurate. The company relies heavily on accounting and auditing professionals to assure the accuracy of related financial reports however previously filed financial statements of the Company included in the SEC Reports were not in compliance 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.  To the best of the Company’s knowledge, such financial statements were 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, however the financial statements fairly present in all material respects the financial position of the Company 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.

 

(i) Material Changes; Undisclosed Events, Liabilities or Developments. Except as set forth on Schedule 3.1(i) or the SEC Reports, since the date of the latest audited financial statements included within the SEC Reports: 

(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) he 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,  

(iii) the Company has not altered its method of accounting,  

(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), no 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 Subsidiary or their respective business, properties, operations, assets or financial condition, that would be required to be disclosed by the Company under applicable securities laws at the  

REVOPage 9 

 

 

time this representation is made or deemed made that has not been publicly disclosed at least one (1) Trading Day prior to the date that this representation is made.

 

(j) 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.

 

(k) No Integrated Offering. To the best of the companys knowledge, assuming the accuracy of the Purchasers(s) 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 stockholder approval provisions of any Trading Market on which any of the securities of the Company are listed or designated.

 

(l) No General Solicitation.  To the best of the companys knowledge, 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.

 

(m) Litigation.  To the best of the companys knowledge, the Company is currently responding to an SEC inquiry and is confident that the SEC inquiry will validate its appropriate and effective measures of business development. To the knowledge of the Company and as of the date of this transaction, there is no action, legal procedure, demand against the Company or any action affecting the Company before or by any court, arbitrator, governmental or administrative agency or regulatory authority (federal, state, county, local or foreign) (collectively, an “Action”) other than the SEC inquiry as provided. The Company believes the result of the inquiry will not (i) adversely affect or challenge the legality, validity or enforceability of any of the Transaction Documents or the Securities or (ii) if there were an unfavorable decision, have or reasonably be expected to result in a Material Adverse Effect.  The Commission issued a 10 day suspension of the Company’s trading beginning @ 9:30am on June 17, 2015 and ending @ 11:59pm on June 30, 2015. The Company has engaged a new accounting firm and has identified a new auditing firm to assist in restating previous filings. The company will remain on the gray sheets until these objectives are completed. 

 

(n) Compliance.  The Company has been notified by its creditors that is it in default on its loans and credit agreements. Said default is being resolved via the conversion of debt to preferred Series A or Series A-1 Securities. The Company has disclosed and accounted for all debt obligations that it is aware of in its SEC reports. The restatement of the Company’s financials will also include all known debt obligations as well as any new debt including but not limited to 

 

(i) any judgment, decree or order of any court, arbitrator or governmental body or  

(ii) 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. 

 

(o) Title to Assets.  Except as set forth in the SEC Reports, the Company and the Subsidiary 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 Subsidiary, in each case, may or may not be,  free and clear of all Liens, except for Liens as do not materially affect the value of such property and 

REVOPage 10 

 

 

do not materially interfere with the use made and proposed to be made of such property by the Company and the Subsidiary and Liens for the payment of federal, state, or other taxes, the payment of which is neither delinquent nor subject to penalties.  Any real property and facilities held under lease by the Company and the Subsidiary are held by them under valid, subsisting and enforceable leases with which the Company and the Subsidiary are in compliance.

 

     (p) Sarbanes-Oxley; Internal Accounting Controls.  The Company is not in compliance with any and all requirements   of the Sarbanes-Oxley Act of 2002 applicable to smaller reporting companies 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 Closing Date.  The company is seeking and will be adding an individual to its Board of Directors with an accounting back ground to satisfy the Sarbanes-Oxley requirement. To the best of the Company’s knowledge, this is the only matter affecting full compliance with Sarbanes-Oxley Act of 2002. The Company maintains a system of internal accounting controls sufficient to provide reasonable assurance that: 

 

(i) transactions are executed in accordance with management’s general or specific authorizations,  

(ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP and to maintain asset accountability,  

(iii)  access to assets is permitted only in accordance with management’s general or specific authorization, and  

(iv) the recorded balances of assets are compared with the actual assets of the Company at reasonable intervals and appropriate action is taken with respect to any differences.  The Company has established disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and designed such disclosure controls and procedures to ensure that information required to be disclosed by the Company in the reports it files or submits under the Exchange Act is recorded, processed, summarized, and reported, within the time periods specified in the Commission’s rules and forms.  The Company’s certifying officers have evaluated the effectiveness of the Company’s disclosure controls and procedures as of the end of the period covered by the Company’s most recently filed periodic report under the Exchange Act (such date, the “Evaluation Date”).  The Company presented in its most recently filed periodic report under the Exchange Act the conclusions of the certifying officers about the effectiveness of the disclosure controls and procedures based on their evaluations as of the Evaluation Date.  Since the Evaluation Date, the company has engaged a new accounting firm in an effort to improve the Company’s internal control over financial reporting. 

 

(q) Tax Status.  Except for matters that would not, individually or in the aggregate, have or reasonably be expected to result in a Material Adverse Effect, the Company:

(i) has made or filed all required United States federal and state income and all foreign income and franchise tax returns (or extension requests related thereto), 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.

 

(r) Listing The Company presently intends to meet the listing requirements of the Toronto Stock Exchange Venture, NASDAQ and/or the American Stock Exchange within the next 24-36 months.  The company presently on a best effort basis intends to meet the listing requirements of a recognizable exchange, there is no guarantee that the company can or will achieve this; it is only being done on a best effort basis.

 

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3.2 Representations and Warranties of the Purchasers.  Each Purchaser, for itself and for no other Purchaser, severally and not jointly, hereby represents and warrants as of the date hereof and as of the 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 organized, validly existing and in good standing under the laws of the jurisdiction of its organization with full right, corporate or other 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.  If the Purchaser(s) is a corporation, trust, partnership or other entity that is not an individual person, it has not been organized for the specific purpose of purchasing the Securities and is not prohibited from doing so. 

 

(a) 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 pursuant to the Registration Statement or otherwise in compliance with applicable federal and state securities laws).  Such Purchaser is acquiring the Securities hereunder in the ordinary course of its business. 

 

(b) 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 shares of Preferred Stock, it will be either:  

(i) an “accredited investor” as defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7) or (a)(8) under the Securities Act or  

(ii) a “qualified institutional buyer” as defined in Rule 144A under the Securities Act.  Such Purchaser is not required to be registered as a broker-dealer under Section 15 of the Exchange Act. 

 

(a) 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. 

 

(b) Reliance on Exemptions.  Each Purchaser understands that the Securities are being offered and sold to it in reliance on specific exemptions from the registration requirements of United States federal  

REVOPage 12 

 

 

and state securities laws and that the Company is relying in part 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.  Each Purchaser understands that no United States federal or state agency or any other government or governmental agency has passed on or made any recommendation or endorsement of the Securities, or the fairness or suitability of the investment in the Securities, nor have such authorities passed upon or endorsed the merits of the offering of the Securities.

 

(c)  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. 

 

(d) Representations of Purchasers.  Each Purchaser solely owns all right, title and interest in and to its respective Existing Promissory Note(s) and has not conveyed any interest or other right in any such Existing Promissory Note to any other Person or otherwise subjected, or allowed to be subjected, such Existing Promissory Note to any lien or other encumbrance.  The transactions contemplated by this Agreement will result in the full and complete release and satisfaction of any and all obligations of the Company with respect to each Purchaser’s Existing Promissory Note(s).  The Existing Promissory Note(s) being tendered by each Purchaser to the Company pursuant to this Agreement are the only promissory notes or other debt obligations of the Company to such Purchaser. 

 

(e) No Legal Advice From the Company; Sole Representations in Agreement.  Each Purchaser acknowledges that it had the opportunity to review this Agreement and the transactions contemplated by this Agreement with his or its own legal counsel and investment and tax advisors.  Each Purchaser is relying solely on such counsel and advisors and not on any statements or representations of the Company or any of its representatives or agents for legal, tax or investment advice with respect to this investment, the transactions contemplated by this Agreement or the securities laws of any jurisdiction.  Each Purchaser acknowledges that the only representations being made by the Company in connection with the transactions contemplated by this Agreement are set forth in this Article III and that in connection with its decision to enter into the transactions contemplated by this Agreement, it is relying only on such representations in this Article III and the SEC Reports, and not on any other statements or representations of the Company or any of its representatives or agents. 

 

(f) Both the Company and Purchaser(s) acknowledge, by its execution of this Agreement, that its obligations are irrevocable.  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.  Contemplated hereby and further, both parties acknowledge the Company, reserves the right to modify, correct, amend, or abort any part of this Agreement in whole or in part, without any further notice to the Purchaser(s), except for the parts that are irrevocable between the Company and the Purchaser(s). 

 

ARTICLE 4

OTHER AGREEMENTS OF THE PARTIES

 

4.1 Transfer Restrictions.

 

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(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 and reasonably acceptable to the Company, 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 CONVERTIBLE HAS 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. THIS SECURITY AND THE SECURITIES ISSUABLE UPON CONVERSION OF THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT WITH A REGISTERED BROKER-DEALER OR OTHER LOAN WITH A FINANCIAL INSTITUTION THAT IS AN “ACCREDITED INVESTOR” AS DEFINED IN RULE 501(a) UNDER THE SECURITIES ACT OR OTHER LOAN SECURED BY SUCH SECURITIES.

 

The Company acknowledges and agrees that a Purchaser (s) may from time to time pledge pursuant to a bona fide margin agreement with a registered broker-dealer or grant a security interest in some or all of the Securities to a financial institution that is an “accredited investor” as defined in Rule 501(a) under the Securities Act and who agrees to be bound by the provisions of this Agreement and, if required under the terms of such arrangement, such Purchaser(s) may transfer pledged or secured Securities to the pledgees or secured parties.  Such a pledge or transfer would not be subject to approval of the Company and no legal opinion of legal counsel of the pledgee, secured party or pledgor shall be required in connection therewith.  Further, no notice shall be required of such pledge.

 

(c) Certificates evidencing the Underlying Shares shall not contain any legend (including the legend set forth in Section 4.1(b) hereof):  

 

(i) while a registration statement covering the resale of such security is effective under the Securities Act,  

(ii) following any sale of such Underlying Shares pursuant to Rule 144,  

(iii)  if such Underlying Shares are eligible for sale under Rule 144, without the requirement for the Company to be in compliance with the current public information required under Rule 144 as to such Underlying Shares and without volume or manner-of-sale restrictions or  

(iv)  if such legend is not required under applicable requirements of the Securities Act (including judicial interpretations and pronouncements issued by the staff of the Commission).  The Company shall cause its counsel to issue a legal opinion to the Transfer Agent promptly after the Effective Date if required by the Transfer Agent to effect the removal of the legend hereunder.  If all or any shares of Preferred Stock are converted at a time when there is an effective registration statement to cover the resale of the Underlying Shares, or if such Underlying Shares may be sold under Rule 144 and the Company is then in compliance with the current public information required under Rule 144, or if  

REVOPage 14 

 

 

the Underlying Shares may be sold under Rule 144 without the requirement for the Company to be in compliance with the current public information required under Rule 144 as to such Underlying Shares and without volume or manner-of-sale restrictions or if 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 irrevocably, 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 delivery by a Purchaser to the Company or the Transfer Agent, irrevocable, of a certificate representing Underlying Shares, as applicable, issued with a restrictive legend, 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 4.1(c) .  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(s), irrevocable.

 

(d) Each Purchaser, severally and not jointly with the other Purchasers, agrees with the Company that such Purchaser will only sell any Securities pursuant to either the registration requirements of the Securities Act, including any applicable prospectus delivery requirements, or an exemption therefrom, and acknowledges that the removal of the restrictive legend from certificates representing Securities as set forth in this Section 4.1 is predicated upon the Company’s reliance upon this understanding. 

 

4.2 Furnishing of Information.  Until the time that no Purchaser owns any 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 even if the Company is not then subject to the reporting requirements of the Exchange Act.  As long as any Purchaser owns any Securities, if the Company is not required to file reports pursuant to the Exchange Act, it will prepare and furnish to the Purchasers and make publicly available in accordance with Rule 144(c) such information as is required for the Purchasers to sell the Securities, including without limitation, under Rule 144.  The Company further covenants that it will take such further action as any holder of Securities may reasonably request, to the extent required from time to time to enable such Person to sell such Securities without registration under the Securities Act, including without limitation, within the requirements of the exemption provided by Rule 144.

 

4.3 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 stockholder approval prior to the closing of such other transaction unless stockholder approval is obtained before the closing of such subsequent transaction.

 

4.4 Conversion Procedure.  The form of Notice of Conversion included in the Series A Certificate of Designation, the Series A-1 Certificate of Designation or the Series A-2 Certificate of Designation (as applicable) sets forth the totality of the procedures required of the Purchasers in order to convert the Preferred Stock.  No additional legal opinion, other information or instructions shall be required of the Purchasers to convert their Preferred Stock.  The Company shall honor conversions of the Preferred Stock, irrevocable, and shall deliver, irrevocably, Underlying Shares in accordance with the terms, conditions and time periods set forth in the Transaction Documents.  Series A1 and A2 of Preferred Stock shall not in the first 3 years exceed 20,000 shares each, unless voted on and approved by the Series A.  

 

4.5 Securities Laws Disclosure; Publicity.  The Company shall, in accordance with applicable federal securities law, issue a Current Report on Form 8-K and press release disclosing the material terms of the transactions contemplated hereby, and including the Transaction Documents as exhibits thereto.  From and after the issuance of such press release, the Company shall have publicly disclosed all material, non-public information delivered to any of the Purchasers by the Company or any of its subsidiary, or any of their respective officers, directors, employees or agents 

REVOPage 15 

 

 

in connection with the transactions contemplated by the Transaction Documents.  The Company and each Purchaser shall consult with each other in issuing any other press releases with respect to the transactions contemplated hereby, and neither the Company nor any Purchaser shall issue any such press release nor otherwise make any such public statement without the prior consent of the Company, with respect to any press release of any Purchaser, or without the prior consent of Company, with respect to any press release of any Purchaser(s), or without the prior consent of each Purchaser, with respect to any press release of any Purchaser, or without the prior consent of each Purchaser, with respect to any press release of the Company, which consent shall not unreasonably be withheld, or delayed, except if such disclosure is required by law, in which case the disclosing party shall promptly provide the other party with prior notice of such public statement or communication.  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 in connection with 

(i) any registration statement contemplated by the Registration Rights Agreement and 

(ii) the filing of final Transaction Documents (including signature pages thereto) with the Commission; 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 Section 4.5 

 

1.6 Indemnification of Purchasers.   Subject to the provisions of this Section 4.6 , 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”) 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 any breach of any of the representations, warranties, covenants or agreements made by the Company in this Agreement or in the other Transaction Documents.  The indemnification required by this Section 4.6 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. 

 

1.7 Reservation and Listing of Securities. 

 

(a) The Company shall maintain a reserve from its duly authorized shares of Common Stock for issuance pursuant to the Transaction Documents in such amount as may then be required to fulfill its obligations in full under the Transaction Documents. 

 

(b) If, on any date, the number of authorized but unissued (and otherwise unreserved) shares of Common Stock and/or Preferred Stock is less than 150% of  

(i) the Required Minimum on such date, minus  

(ii)  the number of shares of Common Stock or Preferred Stock (as applicable) previously issued pursuant to the Transaction Documents, 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 and/or Preferred Stock (as applicable) to at least the Required Minimum at such time (minus the number of shares of Common Stock and/or Preferred Stock (as applicable) previously issued pursuant to the Transaction Documents), as soon as possible and in any event not later than the 120th day after such date; provided that the Company will not be required at any time to authorize a number of shares of Common Stock and/or Preferred Stock (as applicable) greater than the maximum remaining number of shares of Common  

REVOPage 16 

 

 

Stock or Preferred Stock (as applicable) that could possibly be issued after such time pursuant to the Transaction Documents.

 

(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)  on a best effort basis, 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 possible thereafter,  

(iii) provide to the Purchasers evidence of such listing or quotation and  

(iv)  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. 

 

1.1 Participation in Future Financing. 

 

(a) From the date hereof until such time as the Purchasers no longer hold any shares of Preferred Stock, upon any issuance by the Company or any of its Subsidiary of Common Stock, Common Stock Equivalents for cash consideration, or a combination of units hereof (a “Subsequent Financing”), each Purchaser shall have the right to participate in up to an amount of the Subsequent Financing equal to 100% of the Subsequent Financing (the “Participation Maximum”) on the same terms, conditions and price provided for in the Subsequent Financing. 

 

(a) At least five (5) Trading Days prior to the closing of the Subsequent Financing, the Company shall deliver to each Purchaser a written notice of its intention to effect a Subsequent Financing (“ Pre-Notice ”), which Pre-Notice shall ask such Purchaser if it wants to review the details of such financing (such additional notice, a “Subsequent Financing Notice”).  Upon the request of a Purchaser, and only upon a request by such Purchaser, for a Subsequent Financing Notice, the Company shall promptly, but no later than one (1) Trading Day after such request, deliver a Subsequent Financing Notice to such Purchaser.  The Subsequent Financing Notice shall describe in reasonable detail the proposed terms of such 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. 

 

(b) Any Purchaser desiring to participate in such Subsequent Financing must provide written notice to the Company by not later than 5:30 p.m. (New York City time) on the fourth (4th ) Trading Day after all of the Purchasers have received the Pre-Notice that the Purchaser is willing to participate in the Subsequent Financing, the amount of the Purchaser’s participation, and representing and warranting that the Purchaser has such funds ready, willing, and available for investment on the terms set forth in the Subsequent Financing Notice.  If the Company receives no such notice from a Purchaser as of such fourth (4th) Trading Day, such Purchaser shall be deemed to have notified the Company that it does not elect to participate. 

 

(c)  If by 5:30 p.m. (New York City time) on the fourth (4th)  Trading Day after all of the Purchasers have received the Pre-Notice, 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 affect the remaining portion of such Subsequent Financing on the terms and with the Persons set forth in the Subsequent Financing Notice. 

 

(d)  If by 5:30 p.m. (New York City time) on the fourth (4th) Trading Day after all of the Purchasers have received the Pre-Notice, the Company receives responses to a Subsequent Financing Notice from 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” of a Purchaser means the ratio of: (x) the aggregate Stated Value of the Preferred Stock issued to such Purchaser on the Closing Date; and (y) the aggregate Stated Value of the Preferred Stock issued to all Purchasers participating in such Subsequent Financing under this Section 4.8. 

REVOPage 17 

 

 

 

(e) 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 4.8, 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. 

 

(f) Notwithstanding the foregoing, this Section 4.8 shall not apply in respect of  

(i) an Exempt Issuance or  

(ii) an underwritten public offering of Common Stock. 

 

1.6 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 any of the Transaction Documents unless the same consideration is also offered to all of the parties to the Transaction Documents.  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.

 

1.7  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 purchases or sales, including Short Sales, of any of the Company’s securities during the period commencing with the execution of this Agreement and ending at such time that the transactions contemplated by this Agreement are first publicly announced pursuant to the initial press release as described in Section 4.5  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 pursuant to the initial press release as described in Section 4.5, 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.  Notwithstanding the foregoing, and notwithstanding anything contained in this Agreement to the contrary, the Company expressly acknowledges and agrees that 

 

(i) no Purchaser makes any representation, warranty or covenant hereby that it will not engage in effecting transactions in any securities of the Company after the time that the transactions contemplated by this Agreement are first publicly announced pursuant to the initial press release as described in Section 4.5 ,  

(ii) no Purchaser shall be restricted or prohibited from effecting any transactions in any securities of the Company in accordance with applicable securities laws from and after the time that the transactions contemplated by this Agreement are first publicly announced pursuant to the initial press release as described in Section 4.5 ; and  

(iii) no Purchaser shall have any duty of confidentiality to the Company or its Subsidiary after the issuance of the initial press release as described in Section 4.5.  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 covenant 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. 

 

4.11 Form D; Blue Sky Filings.   

 

REVOPage 18 

 

 

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 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.

 

ARTICLE 5

MISCELLANEOUS

 

5.1 Fees and Expenses.  Except as expressly set forth in the Transaction Documents to the contrary, each party shall pay the fees and expenses of its 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, stamp taxes and other taxes and duties levied in connection with the delivery of any Securities to the Purchasers. 

 

5.2 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 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. 

 

5.3 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 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.

 

5.4  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 Purchaser(s) holding Existing Promissory Note(s) representing at least a majority of the aggregate Existing Debt Amount for all Existing Promissory Notes 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.  The parties agree and acknowledge that this Section 5.4 relates solely to waivers, modifications, supplements and amendments to this Agreement, and not to any other Transaction Document. 

 

5.5 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. 

 

5.6 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.” 

REVOPage 19 

 

 

 

5.7 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 4.9. 

 

5.8 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, 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 OR PROCEEDING TO ENFORCE ANY PROVISIONS OF THE TRANSACTION DOCUMENTS, THEN, IN ADDITION TO THE OBLIGATIONS OF THE COMPANY UNDER SECTION 4.6, THE PREVAILING PARTY IN SUCH ACTION 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. 

5.9 Survival.  The representations and warranties contained herein shall survive the Closing and the delivery of the Securities. 

 

5.10 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 the other party, it being understood that both 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. 

 

5.11 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  

REVOPage 20 

 

 

terms, provisions, covenants and restrictions without including any of such that may be hereafter declared invalid, illegal, void or unenforceable.

 

5.12  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 therefore, 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. 

 

5.13 Remedies.  

 

(a) 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. 

 

(b) If the Company defaults in complying with the covenants set out in Section 4.2 hereof and the Company fails to remedy such default within 30 days after notice by Purchasers specifying the nature of the default, the Company shall, at its cost and in the manner described in the Registration Rights Agreement, as promptly as practicable file with the Commission and thereafter cause to be declared effective (unless it becomes effective automatically upon filing) on or prior to the 90th day after the expiration of such 30 day cure period, a registration statement on an appropriate form under the Securities Act relating to the offer and sale of the Underlying Shares; provided, that if the Commission comments on such registration statement, then the Company shall cause such registration statement to be declared effective on or prior to the 120th day after the expiration of such 30 day cure period. 

 

5.14 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 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.  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. 

 

5.15 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. 

 

5.16 Construction. The parties agree that each of them and/or their respective counsel has reviewed and had an opportunity to revise the Transaction Documents and, therefore, the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of the Transaction Documents or any amendments hereto. 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. 

 

REVOPage 21 

 

 

5.17 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 PAGE FOLLOWS]

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

 

COMPANY                                                                                                                                                                                      

REVOLUTIONARY CONCEPTS INC. (REVO)

 

 

By: 

Ronald Carter  

Its: President & CEO

 

 

PURCHASER

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PURCHASER

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REVOPage 22 

 

 

 

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REVOPage 23

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