Document:

EX-10.1

Ex. 10.1

NEITHER THE ISSUANCE AND SALE OF THIS NOTE NOR THE SECURITIES INTO WHICH THIS NOTE IS CONVERTIBLE
HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES
LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE
OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933 OR
(B) AN OPINION OF COUNSEL, IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER
SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144, RULE 144A OR OTHER EXEMPTION UNDER SAID ACT.

THE TRANSFER OF THE SECURITIES REPRESENTED HEREBY IS PROHIBITED EXCEPT IN ACCORDANCE WITH THE
SECURITIES ACT OF 1933, OR PURSUANT TO AN AVAILABLE EXEMPTION FROM REGISTRATION.

VIASPACE INC.

SENIOR SECURED CONVERTIBLE PROMISSORY NOTE

$39,000.00 November 9, 2016

FOR VALUE RECEIVED, VIASPACE INC., a Nevada corporation (“Company”), promises to pay to Kevin
Schewe (“Holder”), or its registered assigns, in lawful money of the United States of America the
principal sum of THIRTY NINE THOUSAND Dollars ($39,000.00), or such other amount as shall equal the
outstanding principal amount hereof, together with interest from the date of this Note on the
unpaid principal balance at a rate equal to eight percent (8.0%) per annum, computed on the basis
of the actual number of days elapsed and a year of 365 days. Unless converted into Common Stock of
Company as set forth in Section 3 and/or Section 8 below, all unpaid principal, together with any
then unpaid and accrued interest, shall be due and payable on the earlier of (i) November 9, 2017
(the “Maturity Date”), (ii) upon prepayment of all amounts due and payable under this Note in
accordance with the terms hereof, or (iii) when, upon or after the occurrence of an Event of
Default (as defined below), such amounts are declared due and payable by Holder or made
automatically due and payable in accordance with the terms hereof. Immediately prior to the
issuance of this Note by Company, Holder acknowledges that it has delivered to Company the sum of
THIRTY NINE THOUSAND Dollars ($39,000.00) reflecting the principal amount under this Note.

This Note is one of a series of notes (the “Notes”) having like tenor and effect (except for
variations necessary to express the name of the holder, the principal amount of each of the Notes
and the date on which each Note is funded) in an aggregate principal amount of up to $300,000
issued or to be issued by Company on or about the period from January 2016 to January 2017 (or such
other period as agreed upon by the Company and the Holder) pursuant to the terms of a Loan
Agreement, dated as of January 25, 2016, by and between Company and the Holder (or his designees)
of the Notes (the “Loan Agreement”). The Notes shall rank equally without preference or priority
of any kind over one another, and all payments on account of principal and interest with respect to
any of the Notes shall be applied ratably and proportionately on the outstanding Notes on the basis
of the principal amount of the outstanding indebtedness represented thereby.

The following is a statement of the rights of Holder and the conditions to which this Note is
subject, and to which Company by issuance of this Note, and Holder by the acceptance of this Note,
agree:

1. Definitions. As used in this Note, the following capitalized terms have the
following meanings:

(a) “Common Stock” shall mean the Company’s Common Stock, par value $0.0001.

(b) “Collateral” has the meaning given in Section 4 hereof.

(c) “Company” includes the corporation initially executing this Note and any Person which
shall succeed to or assume the obligations of Company under this Note.

(d) “Conversion Notice” has the meaning given in Section 8(e) hereof.

(e) “Conversion Period” shall mean the period from the date of the Note and ending on the
Maturity Date.

(f) “Conversion Price” has the meaning given in Section 8(b) hereof

(g) “Event of Default” has the meaning given in Section 6 hereof.

(h) “Holder” shall mean the Person specified in the introductory paragraph of this Note or any
Person who shall at the time be the registered holder of this Note. “Holders” shall mean the
Persons collectively specified in the introductory paragraph of this Note and the other Notes or
any Persons who shall at the time be the registered holders of this Note and the other Notes.

(i) “Majority Holders” shall mean Holders holding a majority of the aggregate principal amount
of the Notes then outstanding.

(j) “Note” shall mean this Senior Secured Convertible Promissory Note.

(k) “Obligations” shall mean and include all loans, advances, debts, liabilities and
obligations owed by Company to Holder of every kind and description, now existing or hereafter
arising under or pursuant to the terms of this Note including, all interest, fees, charges,
expenses, attorneys’ fees and costs and accountants’ fees and costs chargeable to and payable by
Company hereunder.

(l) “Person” shall mean and include an individual, a partnership, a corporation (including a
business trust), a joint stock company, a limited liability company, an unincorporated association,
a joint venture or other entity or a governmental authority.

(m) “Prepayment Amount” has the meaning given in Section 3 hereof

(n) “Prepayment Notice” has the meaning given in Section 3 hereof.

(o) “Sale Transaction” shall mean a transaction or series of related transactions involving
(i) the consolidation or merger of Company with another Person, (ii) a sale of all or substantially
all of the assets of Company, (iii) a purchase, tender or exchange offer that is accepted by the
holders of more than the 50% of the outstanding shares of capital stock of Company, (iv) the
consummation of a stock purchase agreement or other business combination with another Person
whereby such other Person acquires more than the 50% of the outstanding capital stock of Company.

(p) “Securities Act” has the meaning given in Section 5(b) hereof.

(q) “Loan Agreement” has the meaning in the second introductory paragraph of this Note.

(r) “Successor Entity” has the meaning given in Section 10 hereof.

Capitalized term not otherwise defined shall have the meaning set forth in the Loan Agreement.

2. Interest. Unless converted into Common Stock of Company as set forth in Section 8
below, or unless prepaid or converted as set forth in Section 3 below, accrued interest on this
Note shall be payable on the Maturity Date.

3. Prepayment. During the Conversion Period, Company may, at any time and from time
to time, prepay all or any portion of the principal due under this Note, together with accrued
interest, without penalty. Company shall effect such prepayment by providing Holder twenty (20)
days written notice prior to the date of such prepayment (such notice, a “Prepayment Notice”)
indicating the amount of principal and accrued interest Company desires to prepay (the “Prepayment
Amount”). Notwithstanding the foregoing, Holder shall have 10 days following receipt of such
Prepayment Notice to notify Company in writing of its election to convert the Prepayment Amount
into shares of Common Stock, in which case such Prepayment Amount shall be converted into shares of
Common Stock in accordance with the conversion procedures set forth in Section 8(e) hereof
(provided that, with respect to conversions effected pursuant to this Section 3, any references to
the Conversion Amount in Section 8(e) shall refer to the Prepayment Amount). Should Holder elect
to convert the Prepayment Amount into shares of Common Stock, the number of shares of Common Stock
into which such Prepayment Amount will be converted shall be determined by dividing the Prepayment
Amount by the then applicable Conversion Price.

4. Security Interest. As security for the payment and performance of the Obligations
under this Note and the other Notes, Company hereby grants to the holder of this Note and of the
other Notes a first lien security interest in all of Company’s right, title and interest in, to and
under all of its personal property, wherever located and whether now existing or owned or hereafter
acquired or arising, including all accounts, chattel paper, commercial tort claims, deposit
accounts, documents, equipment (including all fixtures), general intangibles, intellectual property
(including all patents and patent applications, all copyrights and applications for copyright, all
state (including common law), federal and foreign trademarks, service marks and trade names, and
applications for registration of such trademarks, service marks and trade names, and all trade
secrets), instruments, inventory, investment property, letter-of-credit rights, money and all
products, proceeds and supporting obligations of any and all of the foregoing (collectively, the
“Collateral”). Notwithstanding the foregoing, the security interest granted herein shall not
extend to any property, rights or licenses to the extent the granting of a security interest
therein would be contrary to applicable law.

5. Representations and Warranties of Holder. Holder represents and warrants to Company
as follows:

(a) Binding Obligation. Holder has full legal capacity, power and authority to execute
and deliver this Note and to perform his obligations hereunder. This Note is a valid and binding
obligation of Holder, enforceable in accordance with its terms, except as limited by bankruptcy,
insolvency or other laws of general application relating to or affecting the enforcement of
creditors’ rights generally and general principles of equity.

(b) Securities Law Compliance. Holder has been advised that this Note has not been
registered under the Securities Act of 1933, as amended (the “Securities Act”), or any state
securities laws and, therefore, cannot be resold unless they are registered under the Securities
Act and applicable state securities laws or unless an exemption from such registration requirements
is available. Holder is aware that Company is under no obligation to effect any such registration
with respect to this Note, or the Common Stock issuable or issued pursuant to the conversion of
this Note, or to file for or comply with any exemption from registration. Holder has not been
formed solely for the purpose of making this investment and is purchasing this Note for its own
account for investment, not as a nominee or agent, and not with a view to, or for resale in
connection with, the distribution thereof. Holder has such knowledge and experience in financial
and business matters that Holder is capable of evaluating the merits and risks of such investment,
is able to incur a complete loss of such investment and is able to bear the economic risk of such
investment for an indefinite period of time.

(c) Accredited Investor. Holder is an “accredited investor” within the meaning of SEC
Rule 501 of Regulation D of the Securities Act, as presently in effect.

(d) Restricted Securities. Holder understands that this Note is a “restricted
security” under the federal securities laws inasmuch as it is being acquired from Company in a
transaction not involving a public offering and that under such laws and applicable regulations
such Note may be resold without registration under the Securities Act only in certain limited
circumstances. In the absence of an effective registration statement covering the Note or an
available exemption from registration under the Securities Act, the Note must be held indefinitely.
Holder represents that it is familiar with SEC Rule 144, and understands the resale limitations
imposed thereby and by the Securities Act.

(e) Access to Information. Holder acknowledges that Company has given Holder access
to the corporate records and accounts of Company and to all information in its possession relating
to Company, has made its officers and representatives available for interview by Holder, and has
furnished Holder with all documents and other information required for Holder to make an informed
decision with respect to the purchase of this Note.

6. Events of Default. The occurrence of any of the following shall constitute an
“Event of Default” under this Note:

(a) Failure to Pay. Company shall fail to pay (i) when due any principal or interest
payment on the due date hereunder or (ii) any other payment required under the terms of this Note
on the date due, and (in either case) such payment shall not have been made within twenty (20) days
of Company’s receipt of Holder’s written notice to Company of such failure to pay;

(b) Failure to Perform. Company fails to perform any obligation under this Note and
does not cure that failure within twenty (20) days of Company’s receipt of Holder’s written notice
to Company of such failure to perform; or

(c) Voluntary Bankruptcy or Insolvency Proceedings. Company shall (i) apply for or
consent to the appointment of a receiver, trustee, liquidator or custodian of itself or of all or a
substantial part of its property, (ii) be unable, or admit in writing its inability, to pay its
debts generally as they mature, (iii) make a general assignment for the benefit of its or any of
its creditors, (iv) be dissolved or liquidated, (v) become insolvent (as such term may be defined
or interpreted under any applicable statute), (vi) commence a voluntary case or other proceeding
seeking liquidation, reorganization or other relief with respect to itself or its debts under any
bankruptcy, insolvency or other similar law now or hereafter in effect or consent to any such
relief or to the appointment of or taking possession of its property by any official in an
involuntary case or other proceeding commenced against it, or (vii) take any action for the purpose
of effecting any of the foregoing; or

(d) Involuntary Bankruptcy or Insolvency Proceedings. Proceedings for the appointment
of a receiver, trustee, liquidator or custodian of Company or of all or a substantial part of the
property thereof, or an involuntary case or other proceedings seeking liquidation, reorganization
or other relief with respect to Company or the debts thereof under any bankruptcy, insolvency or
other similar law now or hereafter in effect shall be commenced and an order for relief entered or
such proceeding shall not be dismissed or discharged within thirty (30) days of commencement.

7. Rights of Holder upon Default. Upon the occurrence or existence of any Event of
Default (other than an Event of Default referred to in Sections 6(c) and 6(d)) and at any time
thereafter during the continuance of such Event of Default, the Majority Holders may, by written
notice to Company, declare all outstanding Obligations payable by Company under the Notes to be
immediately due and payable without presentment, demand, protest or any other notice of any kind,
all of which are hereby expressly waived. Upon the occurrence or existence of any Event of Default
described in Sections 6(c) and 6(d), immediately and without notice, all outstanding Obligations
payable by Company under the Notes shall automatically become immediately due and payable, without
presentment, demand, protest or any other notice of any kind, all of which are hereby expressly
waived. In addition to the foregoing remedies, upon the occurrence or existence of any Event of
Default, Holder may exercise any other right power or remedy permitted to him by law, either by
suit in equity or by action at law, or both.

8. Conversion.

(a) Conversion. Holder shall have the right to convert, at any time during the
Conversion Period, all or any portion of the principal amount, together with any unpaid and accrued
interest, then outstanding under this Note into fully paid and non-assessable shares of Common
Stock at a conversion price per share equal to the Conversion Price (as defined below). The number
of shares of Common Stock into which such principal and interest then outstanding under this Note
will be converted shall be determined by dividing the amount of principal, together with all unpaid
and accrued interest, then outstanding under this Note to be converted (the “Conversion Amount”) by
the Conversion Price. The holder will not convert the note into a number of common shares that
would exceed the number of available authorized common shares calculated as of the date of
conversion as follows: the number of authorized shares of common stock less the number of issued
and outstanding shares of common stock less the number of shares of common stock issuable under all
other outstanding convertible instruments of the Company.

(b) Conversion Price. Subject to Section 8(c), the “Conversion Price” shall be equal
to twenty per cent (20%) of the Average Closing Price as reported by the principal trading exchange
on which the Company’s Common Stock is traded for the twenty (20) trading days preceding the date
of the Note.

(c) Adjustments to Conversion Price. The Conversion Price shall be subject to
proportional adjustments for stock splits, stock dividends, combinations, consolidations,
reclassifications and the like.

(d) Conversion Procedure. Before Holder shall be entitled to convert the Conversion
Amount then outstanding under this Note into shares of Common Stock, Holder shall surrender this
Note at the office of this Company, and shall give written notice (a form of which is attached to
this Note, the “Conversion Notice”) to Company at its principal corporate office, of the election
to convert the same and shall state therein the total Conversion Amount. Company shall not be
obligated to issue certificates evidencing the shares of Common Stock issuable upon such conversion
unless (i) Holder executes and delivers to Company the Conversion Notice for the converted shares
and (ii) this Note is delivered to Company. Company shall, as soon as practicable after such
delivery, issue and deliver certificates (bearing such legends as are required by applicable state
and federal securities laws in the opinion of counsel to Company and required by this Note and the
Loan Agreement), representing the number of fully paid and non-assessable shares of the Common
Stock into which the Conversion Amount will be converted in accordance with the provisions herein,
and a new promissory note having like tenor as this Note for the principal amount and interest then
outstanding under this Note that are not being so converted. Any conversion pursuant to this
Section 8 shall be deemed to have been made immediately prior to the close of business on the date
of Company’s receipt of the Conversion Notice, so that the rights of Holder under this Note to the
extent of the Conversion Amount shall cease at such time and Holder shall be treated for all
purposes as having become the record holder of such shares of Common Stock at such time.

(e) Fractional Shares; Effect of Conversion. No fractional shares shall be issued
upon conversion of this Note. In lieu of Company issuing any fractional shares to Holder upon the
conversion of this Note, Company shall pay to Holder an amount equal to the product obtained by
multiplying the Conversion Price by the fraction of a share not issued pursuant to the previous
sentence. Upon conversion of this Note in full and the payment of the amounts specified in this
Section 9(f), Company shall be forever released from all its obligations and liabilities under this
Note.

(f) Reservation of Stock Issuable Upon Conversion. Company shall at all times reserve
and keep available out of its authorized but unissued shares of Common Stock solely for the purpose
of effecting the conversion of this Note such number of its shares of Common Stock as shall from
time to time be sufficient to effect the conversion of this Note.

9. Reserved

10. Effect of Sale Transaction. Upon the occurrence of any Sale Transaction, the
Successor Entity (as defined below) shall succeed to, and be substituted for the Company (so that
from and after the date of such Sale Transaction, the provisions of this Note referring to the
“Company” shall refer instead to the Successor Entity), and may exercise every right and power of
the Company and shall assume all of the obligations of the Company under this Note with the same
effect as if such Successor Entity had been named as the Company herein. Upon consummation of the
Sale Transaction, the Successor Entity shall deliver to the Holder confirmation that there shall be
issued upon conversion of this Note at any time after the consummation of the Sale Transaction, in
lieu of the shares of the Common Stock purchasable upon the conversion of the Notes prior to such
Sale Transaction, such shares of common stock (or other securities, cash, assets or other property)
of the Successor Entity. The provisions of this Section shall apply similarly and equally to
successive Sale Transactions and shall be applied without regard to any limitations on the
conversion of this Note. As used in this Section 10, “Successor Entity” means the Person, which
may be the Company, formed by, resulting from or surviving any Sale Transaction, or the parent
entity of such Person, as applicable.

11. Successors and Assigns. Subject to the restrictions on transfer described in
Sections 12 and 13 below, the rights and obligations of Company and Holder of this Note shall be
binding upon and benefit the successors, assigns, heirs, administrators and transferees of the
parties.

12. Waiver and Amendment. Any term of this Note may be amended or waived only with
the written consent of Company and the Majority Holders; provided, however, that any such amendment
or modification which by its terms would not apply equally to all holders of the Notes shall not be
applicable to any holder whose rights under the Notes would be adversely affected by such amendment
or modification in a different manner than other holders thereof without such adversely affected
holder’s written consent.

13. Transfer of this Note or Securities Issuable on Conversion Hereof. With respect
to any offer, sale or other disposition of this Note or securities into which such Note may be
converted, Holder will give written notice to Company prior thereto, describing briefly the manner
thereof, together with a written opinion of Holder’s counsel, or other evidence if reasonably
satisfactory to Company, to the effect that such offer, sale or other distribution may be effected
without registration or qualification (under any federal or state law then in effect). Upon
receiving such written notice and reasonably satisfactory opinion, if so requested, or other
evidence, Company, as promptly as practicable, shall notify Holder that Holder may sell or
otherwise dispose of this Note or such securities, all in accordance with the terms of the notice
delivered to Company. If a determination has been made pursuant to this Section 12 that the
opinion of counsel for Holder, or other evidence, is not reasonably satisfactory to Company,
Company shall so notify Holder promptly after such determination has been made. Each Note thus
transferred and each certificate representing the securities thus transferred shall bear a legend
as to the applicable restrictions on transferability in order to ensure compliance with the
Securities Act, unless in the opinion of counsel for Company such legend is not required in order
to ensure compliance with the Securities Act. Company may issue stop transfer instructions to its
transfer agent in connection with such restrictions. Subject to the foregoing, transfers of this
Note shall be registered upon registration books maintained for such purpose by or on behalf of
Company. Prior to presentation of this Note for registration of transfer, Company shall treat the
registered Holder hereof as the owner and Holder of this Note for the purpose of receiving all
payments of principal and interest hereon and for all other purposes whatsoever, whether or not
this Note shall be overdue and Company shall not be affected by notice to the contrary.

14. Notices. Any notices, consents, waivers or other communications required or
permitted to be given under the terms of this Agreement must be in writing and will be deemed to
have been delivered: (i) upon receipt, when delivered personally; (ii) upon receipt, when sent by
facsimile (provided confirmation of transmission is mechanically or electronically generated and
kept on file by the sending party); or (iii) one business day after deposit with an overnight
courier service, in each case properly addressed to the party to receive the same. The addresses
and facsimile numbers for such communications shall be to the respective addresses or facsimile
numbers of the parties as set forth in the Loan Agreement, or at such other address or facsimile
number as such parties shall have furnished in writing.

15. Usury. In the event any interest is paid on this Note which is deemed to be in
excess of the then legal maximum rate, then that portion of the interest payment representing an
amount in excess of the then legal maximum rate shall be deemed a payment of principal and applied
against the principal of this Note.

16. Waivers. Company hereby waives notice of default, presentment or demand for
payment, protest or notice of nonpayment or dishonor and all other notices or demands relative to
this instrument.

17. Governing Law and Forum. This Note and all actions arising out of or in
connection with this Note shall be governed by and construed in accordance with the laws of the
State of Colorado, United States of America, without regard to the conflicts of law provisions of
the State of Colorado, or of any other state. All disputes or controversies relating to or arising
from this Note shall be adjudicated in the state and federal courts located in the state of
Colorado. EACH OF THE PARTIES HERETO WAIVES ANY RIGHT TO REQUEST A TRIAL BY JURY IN ANY LITIGATION
WITH RESPECT TO THIS NOTE AND REPRESENTS THAT COUNSEL HAS BEEN CONSULTED SPECIFICALLY AS TO THIS
WAIVER. The Convention on Contracts for the International Sale of Goods shall not apply to this
Note.

[Remainder of Page Intentionally Left Blank]

1

IN WITNESS WHEREOF, Company has caused this Note to be issued as of the date first written
above and Holder agrees to the terms and conditions of this Note.

VIASPACE INC.

By:/S/ HARIS BASIT

Name: HARIS BASIT

Its: CEO

KEVIN SCHEWE

/S/ KEVIN SCHEWE

NOTICE OF CONVERSION

(To be executed by the Registered Holder in order to convert the Note)

The undersigned hereby elects to convert $39,000.00 of the principal and $0 of the interest
due on the Note issued by VIASPACE Inc. on November 9, 2016 into Shares of Common Stock of VIASPACE
Inc. (the “Borrower”) according to the conditions set forth in such Note, as of the date written
below.

Date of Conversion:       November 9, 2016      

Conversion Price:      $0.0003      

Shares To Be Delivered:      130,000,000      

Signature:      /S/ KEVIN L. SCHEWE—

Print Name:       Kevin L. Schewe—

Address:      400 Indiana St., Suite 220, Golden, CO 80401      

2securitiespurchaseagreement-.htm - Generated by SEC Publisher for SEC Filing

 

SECURITIES
PURCHASE AGREEMENT

 

This SECURITIES PURCHASE AGREEMENT (the
“Agreement”), dated as of November 9, 2016, by and between HPIL Holding,
a Nevada corporation, with headquarters located at 3738 Coach Cove, Sanford, MI
48657 (the “Company”), and GPL Ventures LLC, a Delaware limited
liability company, with its address at One Penn Plaza, Suite 6196, New York, NY
10119 (the “Buyer”).

 

WHEREAS:

 

A.        Buyer desires to purchase
and the Company desires to issue and sell, upon the terms and conditions set
forth in this Agreement up to Five Million Six Hundred Thousand Dollars ($5,600,000.00)
of the Company’s common stock (the “Securities” or “Shares”), $0.0001 par value
per share, of the Company (the “Common Stock”), upon the terms and subject to
the limitations and conditions set forth in this Agreement.

 

B.        The
Buyer wishes to purchase, upon the terms and conditions stated in this
Agreement, such principal amount of Securities as is set forth immediately
below its name on the signature pages hereto; and

 

NOW THEREFORE, the Company and
the Buyer severally (and not jointly) hereby agree as follows:

 

1.         Purchase
and Sale of Securities.

 

            a.         Purchase
of Securities, Draw Down.  During the term of this Agreement, the Company
may request a “Draw Down”, whereby the Company shall deliver to Buyer written
notice (a “Draw Down Notice”) to purchase shares of common stock for a certain
dollar amount (a “Draw Down Amount”).  In no event may any Draw Down Amount be
in an amount that would reasonably be expected result in the beneficial
ownership of more than 9.99% of the outstanding stock of the Company by Buyer. 
The date on which the Company delivers a Draw Down Notice shall be known as a
“Draw Down Notice Date.”  Notwithstanding any provision to the contrary, the
Company shall in no event be required to draw down the entire amount available
under this Agreement.

 

            b.         Maximum
Draw Down.  With respect to each Draw Down Notice, the maximum Draw Down
Amount shall be equal to the lesser of (i) One Hundred Seventy-Five Thousand
Dollars ($175,000.00) or (ii) 200% of the average daily trading volume for the
ten (10) days on which the Shares are tradable for any period on the OTC
MARKETS, or on the principal securities exchange or other securities market on
which the Shares are then being traded (each a “Trading Day”) immediately
preceding the Draw Down Notice Date, multiplied by the lowest trading price for
the Company’s common stock over the ten (10) Trading Days immediately preceding
the Draw Down Notice Date.  In no event, shall the Company request a draw down
less than $100,000.00.

 

c.         Draw Down Request Intervals.  The Company may deliver
its first Draw Down Notice to Buyer ten (10) Trading Days from the
effectiveness of the Company’s S-1 Registration Statement, by which it shall
register all shares underlying this Agreement.  All subsequent
Draw Down Notices may be submitted to Buyer no sooner than the later of one (1)
day after the end of the Valuation Period from the preceding Draw Down Notice.

Page

1 of 37

 

 

 

            d.         Form
of Payment, Purchase Price.  The purchase price per Share for each Draw
Down Notice shall be equal to 80% of the lowest trading price (or if there are
no recorded trades, the lowest closing price) during the Valuation Period.  On
the date that a Draw Down Notice is delivered to Buyer, the Company shall
deliver an estimated amount of shares to Buyer’s brokerage account equal to the
Draw Down Amount indicated in the Draw Down Notice divided by 80% of the lowest
trading price (or if there are no recorded trades, the lowest closing price) in
the ten (10) Trading Days immediately prior to the date of the Draw Down Notice
(the “Estimated Shares”).  Upon deposit of the Estimated Shares to Buyer’s
brokerage account, Buyer shall deliver to Company immediately available funds
in the amount of the Draw Down Amount in accordance with Company’s instructions.

 

            e.         Valuation Period,
Issuance of Additional Shares.  The “Valuation Period” shall mean ten (10)
Trading Days, commencing on the first (1st) Trading Day following
delivery and clearing of the Draw Down Shares in Buyer’s brokerage account.  If
at the end of any Valuation Period, the number of Estimated Shares delivered is
greater than the shares issuable pursuant to a Draw Down Notice, the Buyer
shall return to the Company the difference between the Estimated Shares and the
actual number of shares issuable pursuant to the Draw Down Notice.  If at the
end of any Valuation Period, the number of Estimated Shares delivered is less
than the shares issuable pursuant to a Draw Down Notice, then the Company shall
issue additional shares to Buyer equal to the difference.

 

            f.          Commitment
Fee.  Upon the execution of this Agreement, the Company shall issue to
Buyer a Commitment Fee in the form of a Convertible Promissory Note in the
amount of Two Hundred Fifty Thousand Dollars ($250,000.00), (the “Note
Commitment”).  For the avoidance of doubt, the Commitment Note shall be fully
earned as of the Closing Date, regardless of whether any Draw Downs are issued
by the Company or settled hereunder.

 

            g.         Closing Date.
 The initial Closing Date shall be the date of execution of this Agreement, at
which time the Commitment Fee shall become due and payable, regardless of
whether and Draw Downs are issued by the Company or settled hereunder.  All
Draw Down Notice Dates shall be considered subsequent Closing Dates.

 

            h.         Term. 
The Term of this Agreement shall expire two (2) years from the date on
which the Company’s S-1 Registration Statement becomes effective.

 

            i.          Registration
of Securities.  Buyer shall have registration rights with respect to all
Securities underlying this Agreement, which are issuable upon the Draw Down of
all Five Million Six Hundred Thousand Dollars ($5,600,000.00) of the Company’s
Common Stock.  The Company shall file a Form S-1 Registration Statement, which
shall become effective within eleven (11) months of the execution of this
Agreement, in order to register all Common Shares underlying this Agreement. 
If such S-1 Registration Statement is not filed and does not become effective within
eleven (11) months of the execution of this Agreement, Buyer, in its sole
discretion, may terminate this Agreement.  There shall be no cost or expense on
behalf of Buyer related to the registration of the shares underlying this Agreement.  The Company must ensure that the Registration
Statement, once effective, remains effective at all times, not subject to any
actual or threatened stop order or suspension.  If the effectiveness of the
Registration Statement lapses for any reason at any time, Buyer, in its sole
discretion, may terminate this Agreement. Irrespective of the Company filing a
Form S-1, or such Form S-1 becoming effective, or any other provisions in this
Agreement, the Company is obligated to issue to Buyer the Commitment Fee
pursuant to Section 1(f) of this Agreement upon execution of this Agreement. 

Page

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2.         Buyer’s
Representations and Warranties.  The Buyer represents and warrants to the
Company that:

 

            a.         General. 

 

i.  The Buyer has all requisite authority to purchase the Securities,
enter into this Agreement and to perform all the obligations required to be
performed by the Buyer hereunder, and such purchase will not contravene any
law, rule or regulation binding on the undersigned or any investment guideline
or restriction applicable to the Buyer.

 

                        ii. 
The Buyer is a limited liability compnay duly organized, validly existing and
in good standing under the laws of the state of Delaware, with full power and
authority (corporate and other) to own, lease, use and operate its properties
and to carry on its business as and where now owned, leased, used, operated and
conducted.

 

                        iii. 
The Buyer will comply with all applicable laws and regulations in effect in any
jurisdiction in which the Buyer purchases or sells Securities and obtain any
consent, approval or permission required for such purchases or sales under the
laws and regulations of any jurisdiction to which the Buyer is subject or in
which the Buyer makes such purchases or sales, and the Company shall have no
responsibility therefor.

 

                        iv. 
The execution, delivery and performance of this Agreement by the Buyer and the
consummation by the Buyer of the transactions contemplated hereby and thereby
will not (i) conflict with or result in a violation of any provision of the
Certificate of Formation or Operating Agreement, or (ii) violate or conflict
with, or result in a breach of any provision of, or constitute a default (or an
event which with notice or lapse of time or both could become a default) under,
or give to others any rights of termination, amendment, acceleration or cancellation
of, any agreement, indenture, patent, patent license or instrument to which the
Buyer is a party, or (iii) result in a violation of any law, rule, regulation,
order, judgment or decree (including federal and state securities laws and
regulations and regulations of any self-regulatory organizations to which the
Buyer is subject) applicable to the Buyer or by which any property or asset of
the Buyer is bound or affected (except for such conflicts, defaults,
terminations, amendments, accelerations, cancellations and violations as would
not, individually or in the aggregate, have a Material Adverse Effect).

 

b.         Investment Purpose.  As of the date hereof, the Buyer
is purchasing the Securities for its own account and not with a present view
towards the public sale or distribution thereof, except pursuant to sales
registered or exempted from registration under the 1933 Act; provided ,
however, that by making the representations herein, the Buyer does not agree to
hold any of the Securities for any minimum or other specific term and reserves the right to dispose of the Securities at any time in
accordance with or pursuant to a registration statement or an exemption under
the 1933 Act.

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            c.         Accredited
Investor Status.  The Buyer is an “accredited investor” as that term is
defined in Rule 501(a) of Regulation D (an “Accredited Investor”).  The Buyer
agrees to furnish any additional information requested by the Company or any of
its affiliates to assure compliance with applicable U.S. federal and state
securities laws in connection with the purchase and sale of the Securities. 
The Buyer has such knowledge, skill and experience in business, financial and
investment matters that the undersigned is capable of evaluating the merits and
risks of an investment in the Securities. With the assistance of the Buyer’s
own professional advisors, to the extent that the Buyer has deemed appropriate,
the Buyer has made its own legal, tax, accounting and financial evaluation of
the merits and risks of an investment in the Securities and the consequences of
this Agreement. The Buyer has considered the suitability of the Securities as
an investment in light of its own circumstances and financial condition and the
Buyer is able to bear the risks associated with an investment in the Securities
and its authority to invest in the Securities.

 

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

 

            e.         Information. 
 The Buyer and its advisors, if any, have been furnished with all materials
relating to the business, finances and operations of the Company and materials
relating to the offer and sale of the Securities which have been requested by
the Buyer or its advisors. The Buyer and its advisors, if any, have been
afforded the opportunity to ask questions of the Company. Notwithstanding the
foregoing, the Company has not disclosed to the Buyer any material nonpublic
information and will not disclose such information unless such information is
disclosed to the public prior to or promptly following such disclosure to the
Buyer. The Buyer understands that its investment in the Securities involves a
significant degree of risk. The Buyer is not aware of any facts that may
constitute a breach of any of the Company’s representations and warranties made
herein.  The Buyer is familiar with the business and financial condition and
operations of the Company. The Buyer has had access to such information
concerning the Company and the Securities as it deems necessary to enable it to
make an informed investment decision concerning the purchase of the Securities.

 

            f.          Governmental
Review.  The Buyer understands that no United States federal or state
agency or any other government or governmental agency has passed upon or made
any recommendation or endorsement of the Securities.

 

            g.         Transfer
or Re-sale.  The Buyer understands that (i) the sale or re-sale of the
Securities has not been, at the time of execution of this Agreement, registered
under the 1933 Act or any applicable state securities laws, and the Securities
may not be transferred unless (a) the Securities are sold pursuant to an
effective registration statement under the 1933 Act, (b) the Buyer shall have
delivered to the Company , at the cost of the Buyer, an opinion of counsel that shall be in form, substance and scope
customary for opinions of counsel in comparable transactions to the effect that
the Securities to be sold or transferred may be sold or transferred pursuant to
an exemption from such registration, which opinion shall be accepted by the
Company, (c) the Securities are sold or transferred to an "affiliate"
(as defined in Rule 144 promulgated under the 1933 Act (or a successor rule)
("Rule 144")) of the Buyer who agrees to sell or otherwise transfer
the Securities only in accordance with this Section 2(g) and who is an
Accredited Investor, (d) the Securities are sold pursuant to Rule 144, or (e)
the Securities are sold pursuant to Regulation S under the 1933 Act (or a
successor rule) ("Regulation S"), and the Buyer shall have delivered
to the Company, at the cost of the Buyer, an opinion of counsel that shall be
in form, substance and scope customary for opinions of counsel in corporate
transactions, which opinion shall be accepted by the Company; (ii) any sale of
such Securities made in reliance on Rule 144 may be made only in accordance
with the terms of said Rule and further, if said Rule is not applicable , any
re-sale of such Securities under circumstances in which the seller (or the
person through whom the sale is made) may be deemed to be an underwriter (as
that term is defined in the 1933 Act) may require compliance with some other
exemption under the 1933 Act or the rules and regulations of the SEC thereunder
; and (iii) neither the Company nor any other person is under any obligation to
register such Securities  under the 1933 Act or any state securities laws or to
comply with the terms and conditions of any exemption thereunder (in each
case). Notwithstanding the foregoing or anything else contained herein to the
contrary, the Securities may be pledged as collateral in connection with a bona
fide margin account or other lending arrangement.

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            h.         Legends. 
 The Buyer understands that the Securities and, until such time as the Shares
have been registered under the 1933 Act may be sold pursuant to Rule 144 or
Regulation S without any restriction as to the number of securities as of a
particular date that can then be immediately sold, the Shares may bear a
restrictive legend in substantially the following form (and a stop-transfer
order may be placed against transfer of the certificates for such Securities):

 

“NEITHER THE ISSUANCE AND SALE OF THE
SECURITIES REPRESENTED BY THIS CERTIFICATE NOR  THE SECURITIES INTO WHICH THESE
SECURITIES ARE EXERCISABLE HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS.  THE SECURITIES MAY NOT
BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE
ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL (WHICH COUNSEL
SHALL BE SELECTED BY THE HOLDER), IN A GENERALLY ACCEPTABLE FORM, THAT
REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO
RULE 144 OR RULE 144A UNDER SAID ACT.  NOTWITHSTANDING THE FOREGOING, THE
SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR
OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.”

 

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

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            i.          Authorization;
Enforcement. This Agreement has been duly and validly authorized. This
Agreement has been duly executed and delivered on behalf of the Buyer, and this
Agreement constitutes a valid and binding agreement of the Buyer enforceable in
accordance with its terms.

 

            l.          Residency. 
 The Buyer is a resident of the jurisdiction set forth immediately below the
Buyer’s name on the signature pages hereto.

 

            m.        Non-Reliance.  
The Buyer represents that it is not relying on (and will not at any time rely
on) any communication (written or oral) of the Company, as investment advice or
as a recommendation to purchase the Securities, it being understood that
information and explanations related to the terms and conditions of the
Securities and any relaterd transaction documents shall not be considered
investment advice or a recommendation to purchase the Securities. The Buyer
confirms that the Company has not (A) given any guarantee or representation as
to the potential success, return, effect or benefit (either legal, regulatory,
tax, financial, accounting or otherwise) of an investment in the Securities or
(B) made any representation to the undersigned regarding the legality of an investment
in the Securities under applicable legal investment or similar laws or
regulations.  In deciding to purchase the Securities, the Buyer is not relying
on the advice or recommendations of the Company and the Buyer has made its own
independent decision that the investment in the Securities is suitable and
appropriate for the Buyer.

 

3.         Representations
and Warranties of the Company.  The Company represents and warrants to the
Buyer that:

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

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            b.         Authorization;
Enforcement.  (i) The Company has all requisite corporate power and
authority to enter into and perform this Agreement, the Securities and to
consummate the transactions contemplated hereby and thereby and to issue the
Securities, in accordance with the terms hereof and thereof, (ii) the execution
and delivery of this Agreement, the Securities by the Company and the consummation
by it of the transactions contemplated hereby and thereby have been duly
authorized by the Company’s Board of Directors and no further  consent  or
authorization of the Company, its Board of Directors, or its shareholders is
required, (iii) this Agreement has been duly executed and delivered by the
Company by its authorized representative, and such authorized representative is
the true and official representative with authority to sign this Agreement and
the other documents executed in connection herewith and bind the Company
accordingly, and (iv) this Agreement constitutes, and upon execution and
delivery by the Company of the Securities, each of such instruments will
constitute, a legal, valid and binding obligation of the Company enforceable against
the Company in accordance with its terms.

 

            c.         Capitalization.  
As of the date hereof, the authorized capital stock of the Company consists of:
(i) 400,000,000 shares of Common Stock, $0.0001 par value per share, of which
47,308,000 shares were issued and outstanding as of November 9, 2016. All of
such outstanding shares of capital stock are, or upon issuance will be, duly
authorized, validly issued, fully paid and non-assessable. No shares of capital
stock of the Company are subject to preemptive rights or any other similar
rights of the shareholders of the Company or any liens or encumbrances imposed
through the actions or failure to act of the Company. As of the effective date
of this Agreement, (i) there are no outstanding options, scrip, rights to
subscribe for, puts, calls, rights of first refusal, agreements,
understandings, claims or other commitments or rights of any character
whatsoever relating to, or securities or rights convertible into or
exchangeable for any shares of capital stock of the Company or any of its
Subsidiaries, or arrangements by which the Company or any of its Subsidiaries
is or may become bound to issue additional shares of capital stock of the
Company or any of its Subsidiaries, (ii) there are no agreements or arrangements
under which the Company or any of its Subsidiaries is obligated to register the
sale of any of its or their securities under the 1933 Act and (iii) there are
no anti-dilution or price adjustment provisions contained in any security
issued by the Company (or in any agreement providing rights to security
holders) that will be triggered by the issuance of the Securities. The Company
has furnished to the Buyer true and correct copies of the Company’s Certificate
of Incorporation as in effect on the date hereof (“Certificate of Incorporation”),
the Company’s By-laws, as in effect on the date hereof (the “By-laws”), and the
terms of all securities convertible into or exercisable for Common Stock of the
Company and the material rights of the holders thereof in respect thereto. The
Company shall provide the Buyer with a written update of this representation
signed by the Company’s Chief Financial Officer on behalf of the Company as of
the Closing Date.

 

            d.         Issuance
of Shares.  The Shares are duly authorized and reserved for issuance and,
will be validly issued, fully paid and non-assessable, and free from all taxes,
liens, claims and encumbrances with respect to the issue thereof and shall not
be subject to preemptive rights or other similar rights of shareholders of the
Company and will not impose personal liability upon the
holder thereof.

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            e.         Acknowledgment
of Dilution.  The Company understands and acknowledges the potentially
dilutive effect to the Common Stock upon the issuance of the Shares. The
Company further acknowledges that its obligation to issue the Shares in
accordance with this Agreement, and the issuance of such Shares is absolute and
unconditional regardless of the dilutive effect that such issuance may have on
the ownership interests of other shareholders of the Company.

 

            f.          No
Conflicts.  The execution, delivery and performance of this Agreement by
the Company and the consummation by the Company of the transaction s
contemplated hereby and thereby will not (i) conflict with or result in a
violation of any provision of the Certificate of Incorporation or By-laws, or
(ii) violate or conflict with, or result in a breach of any provision of, or
constitute a default (or an event which with notice or lapse of time or both
could become a default) under , or give to others any rights of termination ,
amendment, acceleration or cancellation of, any agreement , indenture, patent,
patent license or instrument to which the Company or any of its Subsidiaries is
a party, or (iii) result in a violation of any law, rule, regulation, order,
judgment or decree (including federal and state securities laws and regulations
and regulations of any self-regulatory organizations to which the Company or
its securities are subject) applicable to the Company or any of its Subsidiaries
or by which any property or asset of the Company or any of its Subsidiaries is
bound or affected (except for such conflicts, defaults, terminations ,
amendments , accelerations,  cancellations  and violations as would not,
individually or in the aggregate, have a Material Adverse Effect). Neither the
Company nor any of its Subsidiaries is in violation of its Certificate of
Incorporation , By-laws or other organizational documents and neither the
Company nor any of its Subsidiaries is in default (and no event has occurred
which with notice or lapse of time or both could put the Company or any of its
Subsidiaries in default) under, and neither the Company nor any of its
Subsidiaries has taken any action or failed to take any action that would give
to others any rights of termination, amendment, acceleration or cancellation
of, any agreement, indenture or instrument to which the Company or any of its
Subsidiaries is a party or by which any property or assets of the Company or
any of its Subsidiaries is bound or affected , except for possible defaults as
would not, individually or in the aggregate, have a Material Adverse Effect.
The businesses of the Company and its Subsidiaries, if any, are not being
conducted, and shall not be conducted so long as the Buyer owns any of the
Securities, in violation of any law, ordinance or regulation of any
governmental entity. Except as specifically contemplated by this Agreement and
as required under the 1933 Act and any applicable state securities laws, the
Company is not required to obtain any consent, authorization or order of, or
make any filing or registration with, any court, governmental agency,
regulatory agency, self regulatory organization or stock market or any third
party in order for it to execute, deliver or perform any of its obligations
under this Agreement, the Securities in accordance with the terms hereof or
thereof or to issue and sell the Securities in accordance with the terms hereof
and to issue the Shares. All consents, authorizations, orders, filings and
registrations which the Company is required to obtain pursuant to the preceding
sentence have been obtained or effected on or prior to the date hereof. The
Company is not in violation of the listing requirements of the Over-the-Counter
Bulletin Board (the “OTC MARKETS”) and does not reasonably anticipate that the
Common Stock will be delisted by the OTC MARKETS in the foreseeable future. The
Company and its Subsidiaries are unaware of any facts or circumstances which
might give rise to any of the foregoing.  If any Material
Adverse Event takes place during the term of this Agreement, no Draw Down
Notice may be delivered by Company to Buyer, and Buyer may, in its sole
discretion, terminate this Agreement.

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            g.         SEC
Documents; Financial Statements. The Company has, or once it becomes a
public entity will, timely file all reports, schedules, forms, statements and
other documents required to be filed by it with the SEC pursuant to the
reporting requirements of the Securities Exchange Act of 1934, as amended (the “1934
Act”) (all of the foregoing filed prior to the date hereof and all exhibits
included therein and financial statements and schedules thereto and documents
(other than exhibits to such documents) incorporated by reference therein,
being hereinafter referred to herein as the “SEC Documents”). Upon written
request the Company will deliver to the Buyer true and complete copies of the
SEC Documents, except for such exhibits and incorporated documents. As of their
respective dates, the SEC Documents complied in all material respects with the
requirements of the 1934 Act and the rules and regulations of the SEC
promulgated thereunder applicable to the SEC Documents, and none of the SEC
Documents, at the time they were filed with the SEC, contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light
of the circumstances under which they were made, not misleading. None of the
statements made in any such SEC Documents is, or has been, required to be
amended or updated under applicable law (except for such statements as have
been amended or updated in subsequent filings prior the date hereof). As of
their respective dates, the financial statements of the Company included in the
SEC Documents complied as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC with
respect thereto. Such financial statements have been prepared in accordance
with United States generally accepted accounting principles, consistently
applied, during the periods involved and fairly present in all material
respects the consolidated financial position of the Company and its
consolidated Subsidiaries as of the dates thereof and the consolidated results
of their operations and cash flows for the periods then ended (subject, in the
case of unaudited statements, to normal year-end audit adjustments). Except as
set forth in the financial statements of the Company included in the SEC
Documents, the Company has no liabilities, contingent or otherwise , other than
(i) liabilities incurred in the ordinary course of business subsequent to November
9, 2016, and (ii) obligations under contracts and commitments incurred in the
ordinary course of business and not required under generally accepted
accounting principles to be reflected in such financial statements, which,
individually or in the aggregate, are not material to the financial condition
or operating results of the Company. The Company is subject to the reporting
requirements of the 1934 Act.

 

            h.         Absence
of Certain Changes.  Since November 9, 2016, there have been no material
adverse change and no material adverse development in the assets, liabilities,
business, properties, operations, financial condition, results of operations,
prospects or 1934 Act reporting status of the Company or any of its
Subsidiaries.

 

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

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

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

 

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

 

            m.        Certain Transactions. 
None of the officers, directors, or employees of the Company is presently a
party to any transaction with the Company or any of its Subsidiaries (other
than for services as employees, officers and directors), including any
contract, agreement or other arrangement providing for the furnishing of services
to or by, providing for rental of real or personal
property to or from, or otherwise requiring payments to or from any officer,
director or such employee or, to the knowledge of the Company, any corporation,
partnership, trust or other entity in which any officer, director, or any such
employee has a substantial interest or is an officer, director, trustee or
partner.  In addition, Company agrees that during the term of this Agreement,
it shall not enter into a similar financing arrangement with any other
individual or entity.

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            n.         Disclosure. 
 All information relating to or concerning the Company or any of its
Subsidiaries set forth in this Agreement and provided to the Buyer pursuant to
Section 2(e) hereof and otherwise in connection with the transactions
contemplated hereby is true and correct in all material respects and the
Company has not omitted to state any material fact necessary in order to make
the statements made herein or therein, in light of the circumstances under
which they were made, not misleading. No event or circumstance has occurred or
exists with respect to the Company or any of its Subsidiaries or its or their
business, properties , prospects, operations or financial conditions, which ,
under applicable law, rule or regulation, requires public disclosure or
announcement by the Company but which has not been so publicly announced or
disclosed (assuming for this purpose that the Company’s reports filed under the
1934 Act are being incorporated into an effective registration statement filed
by the Company under the 1933 Act).

 

            o.         Acknowledgment
Regarding Buyer’s Purchase of Securities.  The Company acknowledges and
agrees that the Buyer is acting solely in the capacity of arm’s length
purchasers with respect to this Agreement and the transactions contemplated
hereby.  The Company further acknowledges that the Buyer is not acting as a
financial advisor or fiduciary of the Company (or in any similar capacity) with
respect to this Agreement and the transactions contemplated hereby and any
statement made by the Buyer or any of its respective representatives or agents
in connection with this Agreement and the transactions contemplated hereby is
not advice or a recommendation and is merely incidental to the Buyer’s purchase
of the Securities. The Company further represents to the Buyer that the Company’s
decision to enter into this Agreement has been based solely on the independent
evaluation of the Company and its representatives.

 

            p.         No
Integrated Offering.  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 in any security or solicited any offers to buy any security
under circumstances that would require registration under the 1933 Act of the
issuance of the Securities to the Buyer. The issuance of the Securities to the
Buyer will not be integrated with any other issuance of the Company’s
securities (past, current or future) for purposes of any shareholder approval
provisions applicable to the Company or its securities.

 

            q.         No
Brokers.  The Company has taken no action which would give rise to any
claim by any person for brokerage commissions, transaction fees or similar
payments relating to this Agreement or the transactions contemplated hereby.

 

            r.          Permits;
Compliance. The Company and each of its Subsidiaries is in possession of
all franchises, grants, authorizations, licenses, permits, easements,
variances, exemptions, consents, certificates, approvals and orders necessary
to own, lease and operate its properties and to carry on its business as it is
now being conducted (collectively, the “Company
Permits”), and there is no action pending or, to the knowledge of the Company,
threatened regarding suspension or cancellation of any of the Company Permits.
Neither the Company nor any of its Subsidiaries is in conflict with, or in
default or violation of, any of the Company Permits, except for any such
conflicts, defaults or violations which, individually or in the aggregate,
would not reasonably be expected to have a Material Adverse Effect. Since November
9, 2013, neither the Company nor any of its Subsidiaries has received any
notification with respect to possible conflicts, defaults or violations of
applicable laws, except for notices relating to possible conflicts, defaults or
violations, which conflicts, defaults or violations would not have a Material
Adverse Effect.

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            s.         Environmental
Matters.

 

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

 

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

 

iii. There are no underground storage tanks on or under any real
property owned, leased or used by the Company or any of its Subsidiaries that
are not in compliance with applicable law.

 

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

Page

12 of 37

 

 

 

            u.         Insurance. 
 Currently we have no insurance.

 

            v.         Internal
Accounting Controls.  The results of the Company’s assessment of its system
of internal accounting controls is accurately described in the SEC Documents.

 

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

 

            x.         Solvency. 
 The Company (after giving effect to the transactions contemplated by this
Agreement) is solvent (i.e., its assets have a fair market value in excess of
the amount required to pay its probable liabilities on its existing debts as
they become absolute and matured) and currently the Company has no information
that would lead it to reasonably conclude that the Company would not, after
giving effect to the transaction contemplated by this Agreement, have the
ability to, nor does it intend to take any action that would impair its ability
to, pay its debts from time to time incurred in connection therewith as such
debts mature.  The Company did not receive a qualified opinion from its
auditors with respect to its most recent fiscal year end and, after giving
effect to the transactions contemplated by this Agreement, does not anticipate
or know of any basis upon which its auditors might issue a qualified opinion in
respect of its current fiscal year.

 

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

 

            z.         Breach
of Representations and Warranties by the Company.  If the Company breaches
any of the representations or warranties set forth in this Section 3, and in
addition to any other remedies available to the Buyer pursuant to this
Agreement, it will be considered an Event of default.

 

4.         Covenants.

 

            a.         Best
Efforts.  The parties shall use their best efforts to satisfy timely each
of the conditions described in Section 4(l) and 4(m) of this Agreement.

 

            b.         Use of
Proceeds.  The Company shall use the proceeds for general working capital purposes.

Page

13 of 37

 

 

 

            c.         Expenses. 
 At each Closing, the Company shall reimburse Buyer for expenses incurred by
them in connection with the negotiation, preparation, execution, delivery and
performance of this Agreement and the other agreements to be executed in
connection herewith (“Documents”), including, without limitation, reasonable
attorneys’ and consultants’ fees and expenses, transfer agent fees, fees for
stock quotation services, fees relating to any amendments or modifications of
the Documents or any consents or waivers of provisions in the Documents, fees
for the preparation of opinions of counsel, escrow fees, and costs of
restructuring the transactions contemplated by the Documents.  When possible,
the Company must pay these fees directly, otherwise the Company must make
immediate payment for reimbursement to the Buyer for all fees and expenses
immediately upon written notice by the Buyer or the submission of an invoice by
the Buyer. In respect of this Transaction, the Company shall reimburse Buyer
for Buyer’s expenses at each Closing, which shall be listed in the disbursement
authorization and shall be included in the total funding amount. 

 

            d.         Financial
Information.  Upon written request the Company agrees to make available the
following reports to the Buyer until the Buyer transfers, assigns, or sells all
of the Securities: (i) within ten (10) days after the filing with the SEC, a
copy of its Annual Report on Form 10-K its Quarterly Reports on Form 10-Q and
any Current Reports on Form 8-K; (ii) within two (2) days after release, copies
of all press releases issued by the Company or any of its Subsidiaries; and
(iii) contemporaneously with the making available or giving to the shareholders
of the Company, copies of any notices or other information the Company makes
available or gives to such shareholders.

 

            e.         Listing.  
The Company shall promptly secure the listing of the Shares upon each national
securities exchange or automated quotation system, if any, upon which shares of
Common Stock are then listed (subject to official notice of issuance) and, so
long as the Buyer owns any of the Securities, shall maintain, so long as any
other shares of Common Stock shall be so listed, such listing of all Shares
from time  to time issuable upon future Closings.  The Company will obtain and,
so long as the Buyer owns any of the Securities, maintain the listing and
trading of its Common  Stock on the OTC MARKETS or any equivalent replacement
quotation service, the Nasdaq National Market (“Nasdaq”), the Nasdaq SmallCap
Market (“Nasdaq SmallCap”), the New York Stock Exchange (“NYSE”), or the
American Stock Exchange (“AMEX”) and will comply in all respects with the
Company’s reporting , filing and other obligations under the bylaws or rules of
the Financial Industry Regulatory Authority (“FINRA”) and such exchanges, as
applicable.  The Company shall promptly provide to the Buyer copies of any
notices it receives from the OTC MARKETS and any other exchanges or quotation
systems on which the Common Stock is then listed regarding the continued
eligibility of the Common Stock for listing on such exchanges and quotation
systems.

 

            f.          Corporate
Existence.  So long as the Buyer beneficially owns any Securities, the
Company shall maintain its corporate existence and shall not sell all or
substantially all of the Company’s assets, except in the event of a merger or
consolidation or sale of all or substantially all of the Company’s assets,
where the surviving or successor entity in such transaction (i) assumes the
Company’s obligations hereunder and under the agreements and instruments entered into in connection herewith and (ii)
is a publicly traded corporation whose Common Stock is listed for trading on
the OTC MARKETS or any equivalent replacement quotation service, Nasdaq, Nasdaq
SmallCap, NYSE or AMEX .

Page

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

 

            h.         Breach
of Covenants.  If the Company breaches any of the covenants set forth in
this Section 4, and in addition to any other remedies available to the Buyer
pursuant to this Agreement, it will be considered an event of default.

 

            i.          Failure
to Comply with the 1934 Act.  So long as the Buyer beneficially owns the
Securities, the Company shall comply with the reporting requirements of the
1934 Act; and the Company shall continue to be subject to the reporting
requirements of the 1934 Act.

 

            j.          Trading
Activities.  Neither the Buyer nor its affiliates has an open short
position in the common stock of the Company and the Buyer agree that it shall
not, and that it will cause its affiliates not to, engage in any short sales of
or hedging transactions with respect to the common stock of the Company.

 

            k.         Transfer
Agent Instructions. The Company shall issue irrevocable instructions to its
transfer agent to issue certificates, registered in the name of the Buyer or
its nominee, for the Shares in such amounts as specified from time to time by
the Buyer to the Company (the “Irrevocable Transfer Agent Instructions”).  In
the event that the Borrower proposes to replace its transfer agent, the
Borrower shall provide, prior to the effective date of such replacement, a
fully executed Irrevocable Transfer Agent Instructions in a form as initially delivered
pursuant to the Purchase Agreement (including but not limited to the provision
to irrevocably reserve shares of Common Stock in the Reserved Amount) signed by
the successor transfer agent to Borrower and the Borrower. The Company warrants
that: (i) no instruction other than the Irrevocable Transfer Agent Instructions
referred to in this Section 4, and stop transfer instructions to give effect to
Section 2(g) hereof, will be given by the Company to its transfer agent and
that the Securities shall otherwise be freely transferable on the books and
records of the Company as and to the extent provided in this Agreement; (ii) it
will not direct its transfer agent not to transfer or delay, impair, and/or
hinder its transfer agent in transferring (or issuing)(electronically or in
certificated form) any certificate for Shares to be issued to the Buyer
pursuant to this Agreement; and (iii) it will not fail to remove (or directs
its transfer agent not to remove or impairs, delays, and/or hinders its
transfer agent from removing) any restrictive legend (or to withdraw any stop
transfer instructions in respect thereof) on any certificate for any Shares
issued to the Buyer pursuant to this Agreement.  Nothing in this Section shall
affect in any way the Buyer’s obligations and agreement set forth in Section 2(h)
hereof to comply with all applicable prospectus delivery requirements, if any,
upon re-sale of the Securities. If the Buyer provides the Company, at the cost
of the Buyer, with (i) an opinion of counsel in form, substance and scope
customary for opinions in comparable transactions, to the effect that a public
sale or transfer of such Securities may be made without registration under the
1933 Act and such sale or transfer is effected or (ii)
the Buyer provides reasonable assurances that the Securities can be sold
pursuant to Rule 144, the Company shall permit the transfer, promptly instruct
its transfer agent to issue one or more certificates, free from restrictive
legend, in such name and in such denominations as specified by the Buyer. The
Company acknowledges that a breach by it of its obligations hereunder will
cause irreparable harm to the Buyer, by vitiating the intent and purpose of the
transactions contemplated hereby. Accordingly, the Company acknowledges that
the remedy at law for a breach of its obligations under this Section 4 may be
inadequate and agrees, in the event of a breach or threatened breach by the
Company of the provisions of this Section, that the Buyer shall be entitled, in
addition to all other available remedies, to an injunction restraining any
breach and requiring immediate transfer, without the necessity of showing
economic loss and without any bond or other security being required.

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            l.          Conditions
to the Company’s Obligation to Sell.  The obligation of the Company
hereunder to issue and sell the Shares to the Buyer at each Closing is subject
to the satisfaction, at or before each Closing Date of each of the following
conditions thereto, provided that these conditions are for the Company’s sole
benefit and may be waived by the Company at any time in its sole discretion:

 

                        i. 
 The Buyer shall have executed this Agreement and delivered the same to the
Company.

 

                        ii. 
 The Company  shall have requested a Draw Down Amount of Securities to be
purchased.

 

                        iii. 
The Buyer shall have delivered the Purchase Price upon the deposit of the
shares in Buyer’s brokerage account.  

 

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

 

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

 

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

 

                        i. 
 The Company shall have executed this Agreement and delivered same to the Buyer.

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                        ii. 
 The Company shall have delivered to the Buyer a Draw Down Notice.

 

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

 

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

 

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

 

                        vi.
The Shares shall have been authorized for quotation on the OTC MARKETS (or any
equivalent replacement quotation service) and trading in the Common Stock on
the OTC MARKETS shall not have been suspended by the SEC or the OTC MARKETS.

 

                        vii. 
The Buyer shall have received an officer’s certificate described in Section
3(c) above, dated as of the initial Closing Date.

 

5.         Governing
Law; Miscellaneous.

 

            a.         Governing
Law.  This Agreement shall be governed by and construed in accordance with
the laws of the State of New York without regard to principles of conflicts of
laws.  Any action brought by either party against the other concerning the
transactions contemplated by this Agreement shall be brought only in the state
courts of New York or in the federal courts located in the state of New York.
The parties to this Agreement hereby irrevocably waive any objection to
jurisdiction and venue of any action instituted hereunder and shall not assert
any defense based on lack of jurisdiction or venue or based uponforum non
conveniens.  The Company and Buyer waive trial by jury.  The prevailing
party shall be entitled to recover from the other party its reasonable attorney’s
fees and costs.  In the event that any provision of this Agreement or any other
agreement delivered in connection herewith is invalid or unenforceable under
any applicable statute or rule of law, then such provision
shall be deemed inoperative to the extent that it may conflict therewith and
shall be deemed modified to conform with such statute or rule of law.  Any such
provision which may prove invalid or unenforceable under any law shall not
affect the validity or enforceability of any other provision of any agreement.  Each
party hereby irrevocably waives personal service of process and consents to
process being served in any suit, action or proceeding in connection with this
Agreement or any other Transaction Document 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.

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            b.         Counterparts. 
This Agreement may be executed in one or more counterparts, each of which shall
be deemed an original but all of which shall constitute one and the same
agreement and shall become effective when counterparts have been signed by each
party and delivered to the other party.

 

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

 

            d.         Severability. 
 In the event that any provision of this Agreement is invalid or unenforceable
under any applicable statute or rule of law, then such provision shall be
deemed inoperative to the extent that it may conflict therewith and shall be
deemed modified to conform with such statute or rule of law. Any provision
hereof which may prove invalid or unenforceable under any law shall not affect
the validity or enforceability of any other provision hereof.

 

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

 

            f.          Notices.   All
notices, demands, requests, consents, approvals, and other communications
required or permitted hereunder shall be in writing and, unless otherwise
specified herein, shall be (i) personally served, (ii) deposited in the mail,
registered or certified, return receipt requested, postage prepaid, (iii)
delivered by reputable air courier service with charges prepaid, or (iv)
transmitted by hand delivery, telegram, or facsimile, addressed as set forth
below or to such other address as such party shall have specified most recently
by written notice.  Any notice or other communication required or permitted to
be given hereunder shall be deemed effective (a) upon hand delivery or delivery
by facsimile, with accurate confirmation generated by the transmitting
facsimile machine, at the address or number designated below (if delivered on a
business day during normal business hours where such notice is to be received),
or the first (1st) business day following such delivery (if
delivered other than on a business day during normal business hours where such
notice is to be received) or (b) on the second (2nd) business day
following the date of mailing by express courier service, fully prepaid,
addressed to such address, or upon actual receipt of such mailing,
whichever shall first occur.  The addresses for such communications shall be:

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If to the
Company, to:

 

HPIL Holding

3738 Coach Cove

Sanford, MI 48657

 

If to the
Buyer:

 

GPL Ventures LLC

One Penn Plaza,
Suite 6196

New York, NY
10119

 

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

 

            g.         Successors
and Assigns.  This Agreement shall be binding upon and inure to the benefit
of the parties and their successors and assigns. Neither the Company nor the
Buyer shall assign this Agreement or any rights or obligations hereunder
without the prior written consent of the other. Notwithstanding the foregoing,
subject to Section 2(g), the Buyer may assign its rights hereunder to any
person that purchases Securities in a private transaction from the Buyer or to
any of its “affiliates,” as that term is defined under the 1934 Act, without
the consent of the Company.

 

            h.         Third
Party Beneficiaries.  This Agreement is intended for the benefit of the
parties hereto and their respective permitted successors and assigns, and is
not for the benefit of, nor may any provision hereof be enforced by, any other
person.

 

            i.          Survival. 
The representations and warranties of the Company and the agreements and
covenants set forth in this Agreement shall survive the closing hereunder
notwithstanding any due diligence investigation conducted by or on behalf of
the Buyer. The Company agrees to indemnify and hold harmless the Buyer and all
their officers, directors, employees and agents for loss or damage arising as a
result of or related to any breach or alleged breach by the Company of any of
its representations, warranties and covenants set forth in this Agreement or
any of its covenants and obligations under this Agreement, including
advancement of expenses as they are incurred.

 

            j.          Publicity.  
The Company, and the Buyer shall have the right to review a reasonable period
of time before issuance of any press releases, SEC, OTC MARKETS or FINRA
filings, or any other public statements with respect to the transactions
contemplated hereby provided, however, that the Company shall be entitled,
without the prior approval of the Buyer, to make any press release or SEC, OTC
MARKETS (or other applicable  trading market) or FINRA filings with respect to
such transactions as is required by applicable law and regulations (although
the Buyer shall be consulted by the Company in connection with any such press
release prior to its release and shall be provided with a copy thereof and be
given an opportunity to comment thereon).

 

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

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

 

            m.        Remedies.  
The Company acknowledges that a breach by it of its obligations hereunder will
cause irreparable harm to the Buyer by vitiating the intent and purpose of the
transaction contemplated hereby. Accordingly, the Company acknowledges that 
the remedy at law for a breach of its obligations under this Agreement will be
inadequate and agrees, in the event of a breach or threatened breach by the
Company of the provisions of this Agreement, that the Buyer shall be entitled,
in addition to all other available remedies at law or in equity, and in
addition to the penalties assessable herein, to an injunction or injunctions
restraining, preventing or curing any breach of this Agreement and to enforce
specifically the terms and provisions hereof, without the necessity of showing
economic loss and without any bond or other security being required.

 

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

 

 

HPIL Holding

 

 /S/
Nitin Amersey                                             

By: Nitin
Amersey 

Title: CFO /
Director

 

 

 

GPL Ventures
LLC

 

 

 /S/ Alexander
Dillon                                        

By: Alexander
Dillon

Title: Managing
Partner

 

 

 

 

 

 

 

 

 

 

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CORPORATE
RESOLUTION

OF THE BOARD OF
DIRECTORS 

OF HPIL Holding

 

We, the undersigned, do hereby
certify that at a meeting of the Board of Directors of HPIL Holding, a Nevada  corporation organized under the laws
of the State of Nevada  (the “Corporation”), duly held on November 9, 2016 at the offices of the Corporation, which said meeting no
less than two directors were present and voting throughout, the following
resolution, upon motions made, seconded and carried, was duly adopted and is
now in full force and effect:

 

WHEREAS, the Board of Directors of the
Corporation deem it in the best interests of the Corporation to enter into the
Securities Purchase Agreement on November 9, 2016 (the “Agreement”), in
connection with the EzPAS Facility and the issuance of a convertible note of
the Corporation, in the aggregate principal amount of Two Hundred Fifty
Thousand Dollars ($250,000.00)  (the “Note”), convertible into
shares of common stock, par value $0.0001 per share, of the Company (the
“Common Stock”), upon the terms and subject to the limitations and conditions
set forth in such Note, along with an irrevocable letter agreement with VStock Transfer LLC, the Corporation’s transfer agent, with respect to the
reserve of shares of common stock of the Corporation to be issued upon any
conversion of the Note; the issuance of such shares of common stock in
connection with a conversion of the Note; and the indemnification of VStock Transfer LLC for all loss, liability, or expense in carrying out the
authority and direction contained in the irrevocable letter agreement (the
“Letter Agreement”);

 

NOW, THEREFORE, BE IT:

 

RESOLVED, that the Corporation is hereby
authorized to enter into the Agreement, the Note and the Letter Agreement which
provides in pertinent part: (i) reserve shares of common stock of the
Corporation to be issued upon any conversion of the Note; (ii) issue such
shares of common stock in connection with a conversion of the Note (issuance
upon receipt of a notice of conversion of the holder of the Note) without any
further action or confirmation by the Corporation; (iii) hereby authorizes the
issuance of such number of shares as will be necessary to fully convert the
note under its terms and any such shares shall be considered fully paid and
non-assessable at the time of their issuance and (iv) the Corporation
indemnifies VStock Transfer LLC for all loss, liability, or expense
in carrying out the authority and direction contained in the Letter Agreement:

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21 of 37

 

 

 

RESOLVED, that any executive officer of the
Corporation be, and hereby is, authorized, empowered and directed, from time to
time, to take such additional action and to execute, certify and deliver to the
transfer agent of the Corporation, as any appropriate or proper to implement
the provisions of the foregoing resolutions:

 

The undersigned, do hereby certify
that we are members of the Board of Directors of the Corporation; that the
attached is a true and correct copy of resolutions duly adopted and ratified at
a meeting of the Board of Directors of the Corporation duly convened and held
in accordance with its by-laws and the laws of the State of Nevada,
as transcribed by us from the minutes; and that the same have not in any way been
modified, repealed or rescinded and are in full force and effect.

 

IN WITNESS WHEREOF, We have hereunto set our hands as Director/CFO
and Members of the Board of Directors of the Corporation.

 

Dated: 11/09/2016                                            

 

Members of the Board:

	
   

   

   

   /S/ Louis
  Bertoli                                  

  Louis
  Bertoli

  Chairman and
  Director

  	
   

   

   

   /S/ Nitin
  Amersey                                 

  Nitin
  Amersey

  Director/CFO

  
	
   

   

   

   /S/ John
  Mitchell                                 

  John
  Mitchell

  Director

  	
   

   

   

   /S/ John
  Dunlap                                  

  John
  Dunlap

  Director

  

Page

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NEITHER THIS
NOTE NOR THE SECURITIES INTO WHICH THIS NOTE IS CONVERTIBLE HAVE BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”) OR ANY
STATE SECURITIES LAWS AND NEITHER THIS NOTE NOR ANY INTEREST THEREIN NOR THE
SECURITIES INTO WHICH THIS NOTE IS CONVERTIBLE MAY BE OFFERED, SOLD,
TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER SUCH ACT AND SUCH LAWS OR AN EXEMPTION FROM
REGISTRATION UNDER SUCH ACT AND SUCH LAWS.

 
CONVERTIBLE PROMISSORY NOTE
 

	Principal Amount:  $250,000.00
	Issue Date:  November 9, 2016

	 
	Maturity Date:  July 30, 2017

 

For good and valuable consideration, HPIL
Holding a Nevada corporation (“Maker”), hereby makes and delivers
this Promissory Note (this “Note”) in favor of GPL Ventures LLC,
or its assigns (“Holder”), and hereby agrees as follows:

 
ARTICLE I.
PRINCIPAL AND INTEREST
 

Section 1.1.     For value
received,  Maker promises to pay to Holder at such place as Holder or its
assigns may designate in writing, in currently available funds of the United
States, the principal sum of Two-Hundred Fifty Thousand Dollars
($250,000.00). Maker’s obligation under this Note shall accrue interest at
the rate of Five percent (5.0%) per annum from the date hereof until
paid in full.  Interest shall be computed on the basis of a 365-day year or
366-day year, as applicable, and actual days lapsed. Accrual of interest shall
commence on the first (1st) business day
to occur after the Issue Date and continue until payment in full of the
principal sum has been made or duly provided for.

                             

Section 1.2.      

 

a.               
All
payments shall be applied first to interest, then to principal and shall be credited
to the Maker’s account on the date that such payment is physically received by
the Holder.

 

b.              
All
principal and accrued interest then outstanding shall be due and payable by the
Maker to the Holder on or before July 30, 2017 (the “Maturity Date”).

 

c.               
Maker
shall have no right to prepay all or any part of the principal under this Note.

 

d.              
This
Note is free from all taxes, liens, claims and encumbrances with respect to the
issue thereof and shall not be subject to preemptive rights or other similar
rights of shareholders of the Maker and will not impose personal liability upon
the holder thereof.

 

Section 1.3.     This Note
is issued as the Commitment Fee pursuant to Section 1.f of Securities Purchase
Agreement dated November 9, 2016, and attached below. 

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ARTICLE II.
CONVERSION RIGHTS; CONVERSION PRICE
 
Section 2.1.     Conversion. The Holder or its assigns shall have the right, from time to time, commencing on the Issuance Date of this Note, to convert any part of the outstanding interest or Principal Amount of this Note into fully paid and non-assessable shares of Common Stock of the Maker (the “Conversion Stock”) at the Conversion Price determined as provided herein. Promptly after delivery to Maker of a Notice of Conversion of Convertible Note in the form attached hereto as Exhibit 1, properly completed and duly executed by the Holder or its assigns (a “Conversion Notice”), the Maker shall issue and deliver to or upon the order of the Holder that number of shares of Common Stock for the that portion of this Note to be converted as shall be determined in accordance herewith.  No fraction of a share or scrip representing a fraction of a share will be issued on conversion, but the number of shares issuable shall be rounded to the nearest whole share.  The date on which Notice of Conversion is given (the “Conversion Date”) shall be deemed to be the date on which the Holder faxes or emails the Notice of Conversion duly executed to the Maker.  Certificates representing Common Stock upon conversion will be delivered to the Holder within two (2) Trading Days from the date the Notice of Conversion is delivered to the Maker.  Delivery of shares upon conversion shall be made to the address specified by the Holder or its assigns in the Notice of Conversion.
 
Section 2.2.     Conversion Price.  Upon any conversion of this Note, the Conversion Price shall equal to Seventy-Five percent (75%) of the lowest Trading Price (defined below) during the Valuation Period (defined below), and the Conversion Amount shall be the amount of principal or interest electively converted in the Conversion Notice. The total number of shares due under any conversion notice (“Notice Shares”) will be equal to the Conversion Amount divided by the Conversion Price.  On the date that a Conversion Notice is delivered to Holder, the Company shall deliver an estimated number of shares (“Estimated Shares”) to Holder’s brokerage account equal to the Conversion Amount divided by the product of (i) Seventy-Five percent (75%) and (ii) the lowest Trading Price in the twenty (20) Trading Days prior to the day the Holder requests conversion.
 
The “Valuation Period” shall mean twenty (20) Trading Days, commencing on the first (1st) Trading Day following delivery and clearing of the Notice Shares in Holder’s brokerage account, as reported by Holder (“Valuation Start Date”). If at the end of the Valuation Period the sum of Estimated Shares delivered to Holder is less than the Notice Shares, the Company must immediately deliver enough shares equal to the difference (“Additional Shares”). A Conversion Amount will not be considered fully converted until the end of the Valuation Period for that Conversion Amount, as decreases in the Conversion Price would require the issuance of more Additional Shares, and thereby the issuance of more Notice Shares.
 
“Trading Price” means, for any security as of any date, any trading price on the OTC Bulletin Board, or other applicable trading market (the “OTC MARKETS”) as reported by a reliable reporting service (“Reporting Service”) mutually acceptable to Maker and Holder (i.e. Bloomberg) or, if the OTC MARKETS is not the principal trading market for such security, the price of such security on the principal securities exchange or trading market where such security is listed or traded. “Trading Day” shall mean any day on which the Common Stock is tradable for any period on the OTC MARKETS, or on the principal securities exchange or other securities market on which the Common Stock is then being traded.

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Section 2.3.     Reorganization, Reclassification, Merger, Consolidation or Disposition of Assets.  In case the Maker shall reorganize its capital, reclassify its capital stock, consolidate or merge with or into another corporation (where the Maker is not the surviving corporation or where there is a change in or distribution with respect to the Common Stock of the Maker), or sell, transfer or otherwise dispose of all or substantially all its property, assets or business to another corporation and, pursuant to the terms of such reorganization, reclassification, merger, consolidation or disposition of assets, shares of common stock of the successor or acquiring corporation, or any cash, shares of stock or other securities or property of any nature whatsoever (including warrants or other subscription or purchase rights) in addition to or in lieu of common stock of the successor or acquiring corporation (“Other Property”), are to be received by or distributed to the holders of Common Stock of the Maker, then Holder shall have the right thereafter to receive, upon conversion of this Note, the number of shares of common stock of the successor or acquiring corporation or of the Maker, if it is the surviving corporation, and Other Property receivable upon or as a result of such reorganization, reclassification, merger, consolidation or disposition of assets by a holder of the number of shares of Common Stock into which this Note is convertible immediately prior to such event.  In case of any such reorganization, reclassification, merger, consolidation or disposition of assets, the successor or acquiring corporation (if other than the Maker) shall expressly assume the due and punctual observance and performance of each and every covenant and condition of this Note to be performed and observed by the Maker and all the obligations and liabilities hereunder, subject to such modifications as may be deemed appropriate (as determined in good faith by resolution of the Board of Directors of the Maker) in order to provide for adjustments of the number of shares of common stock into which this Note is convertible which shall be as nearly equivalent as practicable to the adjustments provided for in this Section 2.3. For purposes of this Section 2.3, “common stock of the successor or acquiring corporation” shall include stock of such corporation of any class which is not preferred as to dividends or assets over any other class of stock of such corporation and which is not subject to redemption and shall also include any evidences of indebtedness, shares of stock or other securities which are convertible into or exchangeable for any such stock, either immediately or upon the arrival of a specified date or the happening of a specified event and any warrants or other rights to subscribe for or purchase any such stock.  The foregoing provisions of this Section 2.3 shall similarly apply to successive reorganizations, reclassifications, mergers, consolidations or disposition of assets.
 
Section 2.4.     Restrictions on Securities. This Note has been issued by the Maker pursuant to the exemption from registration under the Securities Act of 1933, as amended (the “Act”). None of this Note or the shares of Common Stock issuable upon conversion of this Note may be offered, sold or otherwise transferred unless (i) they first shall have been registered under the Act and applicable state securities laws or (ii) the Maker shall have been furnished with an opinion of legal counsel (in form, substance and scope reasonably acceptable to Maker) to the effect that such sale or transfer is exempt from the registration requirements of the Act. Each certificate for shares of Common Stock issuable upon conversion of this Note that have not been so registered and that have not been sold pursuant to an exemption that permits removal of the applicable legend, shall bear a legend substantially in the following form, as appropriate:
 

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THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE “ACT”). THE SECURITIES REPRESENTED HEREBY MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED UNLESS THEY ARE REGISTERED UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS, OR SUCH OFFERS, SALES AND TRANSFERS ARE MADE PURSUANT TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THOSE LAWS.
 
Upon the request of a holder of a certificate representing any shares of Common Stock issuable upon conversion of this Note, the Maker shall remove the foregoing legend from the certificate or issue to such Holder a new certificate free of any transfer legend, if (a) with such request, the Maker shall have received an opinion of counsel, reasonably satisfactory to the Maker in form, substance and scope, to the effect that any such legend may be removed from such certificate or (b) a registration statement under the Act covering such securities is in effect.
 

Section 2.5.     Reservation
of Common Stock. 

 

a.         The Maker covenants that during the period
the Note is outstanding, it will reserve from its authorized and unissued
Common Stock a sufficient number of shares to provide for the issuance of
Common Stock of the Maker upon the Conversion of the Note.  The Maker further
covenants that its issuance of this Note shall constitute full authority to its
officers who are charged with the duty of executing stock certificates to
execute and issue the necessary certificates for shares of Common Stock of the
Maker issuable upon the conversion of this Note.  The Maker will take all such
reasonable action as may be necessary to assure that such shares of Common
Stock may be issued as provided herein without violation of any applicable law
or regulation, or of any requirements of the OTC Bulletin Board (or such other
principal market upon which the Common Stock of the Maker may be listed or
quoted).

 

b.         The Maker shall not by any action,
including, without limitation, amending its certificate of incorporation or
through any reorganization, transfer of assets, consolidation, merger,
dissolution, issue or sale of securities or any other voluntary action, avoid
or seek to avoid the observance or performance of any of the terms of this
Note, but will at all times in good faith assist in the carrying out of all
such terms and in the taking of all such actions as may be necessary or appropriate
to protect the rights of Holder against impairment.  Without limiting the
generality of the foregoing, the Maker will (a) not increase the par value of
any shares of Common Stock issuable upon the conversion of this Note above the
amount payable therefor upon such conversion immediately prior to such increase
in par value, (b) take all such action as may be necessary or appropriate in
order that the Maker may validly and legally issue fully paid and
non-assessable shares of Common Stock upon the conversion of this Note, and (c)
use its best efforts to obtain all such authorizations, exemptions or consents
from any public regulatory body having jurisdiction thereof as may be necessary
to enable the Maker to perform its obligations under this Note.

 

c.         Upon the request of Holder, the Maker will
at any time during the period this Note is outstanding acknowledge in writing,
in form reasonably satisfactory to Holder, the continuing validity of this Note
and the obligations of the Maker hereunder.

 

d.         Before taking any action which would cause
an adjustment reducing 

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the current Conversion Price
below the then par value, if any, of the shares of Common Stock issuable upon
conversion of the Notes, the Maker shall take any corporate action which may be
necessary in order that the Maker may validly and legally issue fully paid and
non-assessable shares of such Common Stock at such adjusted Conversion Price.

 

e.         Before taking any action which would result
in an adjustment in the number of shares of Common Stock into which this Note
is convertible or in the Conversion Price, the Maker shall obtain all such
authorizations or exemptions thereof, or consents thereto, as may be necessary
from any public regulatory body or bodies having jurisdiction thereof.

 

f.          If at any time the Maker does not have a
sufficient number of authorized and available shares of Common Stock for
issuance upon conversion of the Note, then the Maker shall call and hold a
special meeting of its stockholders within forty-five (45) days of that time
for the sole purpose of increasing the number of authorized shares of Common
Stock.

 
Section 2.6.     Maximum Conversion. 
The Holder shall not be entitled to convert on a Conversion Date that amount of the Notes in connection with that number of shares of Common Stock which would be in excess of the sum of (i) the number of shares of Common Stock beneficially owned by the Holder and its affiliates on Conversation Date, and (ii) the number of shares of Common Stock issuable upon the conversion of the Notes with respect to which the determination of this provision is being made on a Conversion Date, which would result in beneficial ownership by the Holder and its Affiliates of more than 9.99% of the outstanding shares of Common Stock of the Company on such Conversion Date. For the purposes of the provision to the immediately preceding sentence, beneficial ownership shall be determined in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended, and Regulation 13d-3 thereunder.
 
ARTICLE III.
REPRESENTATIONS AND WARRANTIES
 
Section 3.1.     The Holder represents and warrants to the Maker:
 

a.         The Holder of this Note, by acceptance
hereof, agrees that this Note is being acquired for investment and that such
Holder will not offer, sell or otherwise dispose of this Note or the Common
Stock issuable upon conversion hereof except under circumstances that will not
result in a violation of the Act or any application state securities laws or
similar laws relating to the sale of securities;

 

b.         That Holder understands that none of this
Note or the Common Stock issuable upon conversion hereof have been registered
under the Securities Act of 1933, as amended (the “Act”), in reliance upon the
exemptions from the registration provisions of the Act and any continued
reliance on such exemption is predicated on the representations of the Holder
set forth herein;

 

c.         Holder (i) has adequate means of providing
for his current needs and possible contingencies, (ii) has no need for
liquidity in this investment, (iii) is able to bear the substantial economic
risks of an investment in this Note for an indefinite period, (iv) at the 

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present time, can afford a complete loss of such
investment, and (v) does not have an overall commitment to investments which
are not readily marketable that is disproportionate to Holder’s net worth, and
Holder’s investment in this Note will not cause such overall commitment to
become excessive;

 

d.         Holder is an “accredited investor” (as
defined in Regulation D promulgated under the Act) and  the Holder’s
total investment in this Note does not exceed 10% of the Holder’s net worth;
and

 

e.         Holder recognizes that an investment in the
Maker involves significant risks and only investors who can afford the loss of
their entire investment should consider investing in the Maker and this Note.  

 
Section 3.2.     The Maker represents and warrants to Holder:
 

a.         Organization and Qualification.  The
Maker and each of its Subsidiaries (as defined below), if any, is a corporation
duly organized, validly existing and in good standing under the laws of the
jurisdiction in which it is incorporated, with full power and authority
(corporate and other) to own, lease, use and operate its properties and to
carry on its business as and where now owned, leased, used, operated and
conducted.  The Maker and each of its Subsidiaries is duly qualified as a
foreign corporation to do business and is in good standing in every
jurisdiction in which its ownership or use of property or the nature of the
business conducted by it makes such qualification necessary except where the
failure to be so qualified or in good standing would not have a Material
Adverse Effect.  “Material Adverse Effect” means any material adverse effect on
the business, operations, assets, financial condition or prospects of the Maker
or its Subsidiaries, if any, taken as a whole, or on the transactions
contemplated hereby or by the agreements or instruments to be entered into in
connection herewith. “Subsidiaries” means any corporation or other
organization, whether incorporated or unincorporated, in which the Maker owns,
directly or indirectly, any equity or other ownership interest.

 

b.         Authorization; Enforcement.  (i) The
Maker has all requisite corporate power and authority to enter into and perform
this Note and to consummate the transactions contemplated hereby and thereby
and to issue the Common Stock, in accordance with the terms hereof, (ii) the
execution and delivery of this Note by the Maker and the consummation by it of
the transactions contemplated hereby and thereby (including without limitation,
the issuance of the Note and the issuance and reservation for issuance of the
Common Stock issuable upon conversion or exercise hereof) have been duly
authorized by the Maker’s Board of Directors and no further consent or
authorization of the Maker, its Board of Directors, or its shareholders is
required, (iii) this Note has been duly executed and delivered by the Maker by
its authorized representative, and such authorized representative is the true
and official representative with authority to sign this Note and the other
documents executed in connection herewith and bind the Maker accordingly, and
(iv) this Note constitutes, a legal, valid and binding obligation of the Maker
enforceable against the Maker in accordance with its terms.

 

c.         Issuance of Shares.  The Conversion
Shares are duly authorized and reserved for issuance and, upon conversion of
the Note in accordance with its respective terms, will be validly issued, fully
paid and non-assessable, and free from all taxes, liens, 

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claims
and encumbrances with respect to the issue thereof and shall not be subject to
preemptive rights or other similar rights of shareholders of the Maker and will
not impose personal liability upon the holder thereof.

 

d.         Acknowledgment of Dilution. The
Maker understands and acknowledges the potentially dilutive effect to the
Common Stock upon the issuance of the Conversion Shares upon conversion of this
Note.  The Maker further acknowledges that its obligation to issue Conversion
Shares upon conversion of this Note is absolute and unconditional regardless of
the dilutive effect that such issuance may have on the ownership interests of
other shareholders of the Maker.

 

ARTICLE IV.
EVENTS OF DEFAULT
 

Section 4.1.     Default. 
The following events shall be defaults under this Note: (“Events of Default”):

a.         default in the due and punctual payment of
all or any part of any payment of interest or the Principal Amount as and when
such amount or such part thereof shall become due and payable hereunder; or

 

b.         failure on the part of the Maker duly to
observe or perform in all material respects any of the covenants or agreements
on the part of the Maker contained herein (other than those covered by clause
(a) above) for a period of five (5) business days after the date on which
written notice specifying such failure, stating that such notice is a “Notice
of Default” hereunder and demanding that the Maker remedy the same, shall have
been given by the Holder by registered or certified mail, return receipt
requested, to the Maker; or

 

c.         any representation, warranty or statement
of fact made by the Maker herein when made or deemed to have been made, false
or misleading in any material respect; provided, however, that
such failure shall not result in an Event of Default to the extent it is
corrected by the Maker within a period of five (5) business days after the date
on which written notice specifying such failure, stating that such notice is a
“Notice of Default” hereunder and demanding that the Maker remedy same, shall
have been given by the Holder by registered or certified mail, return receipt
requested; or

 

d.         any of the following actions by the Maker
pursuant to or within the meaning title 11, U.S. Code or any similar federal or
state law for the relief of debtors (collectively, the “Bankruptcy Law”): (A)
commencement of a voluntary case or proceeding, (B) consent to the entry of an
order for relief against it in an involuntary case or proceeding, (C) consents
to the appointment of a receiver, trustee, assignee, liquidator or similar
official under any Bankruptcy Law (each, a “Custodian”), of it or for all or
substantially all of its property, (D) a general assignment for the benefit of
its creditors, or (E) admission in writing its inability to pay its debts as the
same become due; or

 

e.         entry by a court of competent jurisdiction
of an order or decree under any Bankruptcy Law that: (A) is for relief against
the Maker in an involuntary case, (B) appoints a Custodian of the Maker or for
all or substantially all of the property of the Maker, or (C) orders the
liquidation of the Maker, and such order or decree remains unstayed and in 

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effect for sixty (60) days.

 

Section 4.2.     Remedies
Upon Default.  Upon the occurrence of an event of default by Maker under
this Note or at any time before default when the Holder reasonably feels
insecure, then, in addition to all other rights and remedies at law or in
equity, Holder may exercise any one or more of the following rights and
remedies:

 

a.         Accelerate
the time for payment of all amounts payable under this Note by written notice
thereof to Maker, whereupon all such amounts shall be immediately due and
payable.

 

b.         Pursue
any other rights or remedies available to Holder at law or in equity.

 

c.         Receive
Liquidated Damages of Five Hundred Dollars ($500.00) per day per Event of
Default the Maker is in Default pursuant to this Note.

Section
4.3.     Payment of Costs.  
The Maker shall reimburse the Holder, on demand, for any and all reasonable
costs and expenses, including reasonable attorneys’ fees and disbursement and
court costs, incurred by the Holder in collecting or otherwise enforcing this
Note or in attempting to collect or enforce this Note.

 

Section
4.4.     Powers and Remedies Cumulative; Delay or Omission Not
Waiver of Default.  No right or
remedy herein conferred upon or reserved to the Holder is intended to be
exclusive of any other right or remedy available to Holder under applicable
law, and every such right and remedy shall, to the extent permitted by law, be
cumulative and in addition to every other right and remedy given hereunder or
now or hereafter existing at law or in equity or otherwise.  The assertion or
employment of any right or remedy hereunder, or otherwise, shall not prevent
the concurrent assertion or employment of any other appropriate right or
remedy.  No delay or omission of the Holder to exercise any right or power
accruing upon any Default occurring and continuing as aforesaid shall impair
any such right or power or shall be construed to be a waiver of any such
Default or an acquiescence therein; and every power and remedy given by this
Note or by law may be exercised from time to time, and as often as shall be
deemed expedient, by the Holder.

 

Section
4.5.     Waiver of Past Defaults. 
The Holder may waive any past default or Event of Default hereunder and its
consequences but no such waiver shall extend to any subsequent or other default
or Event of Default or impair any right consequent thereon.

 

Section 4.6.     Waiver
of Presentment etc.  The Maker hereby waives presentment, demand, notice,
protest and all other demands and notices in connection with the delivery,
acceptance, performance and enforcement of this Note, except as specifically
provided herein.

 
ARTICLE V.
MISCELLANEOUS
 

Section 5.1.     Notices.
 Any notice herein required or permitted to be given shall be in writing and
may be personally served or delivered by courier or sent by United States mail
and shall be deemed to have been given upon receipt if personally served (which
shall include telephone line facsimile transmission)
or sent by courier or three (3) days after being deposited in the United States
mail, certified, with postage pre-paid and properly addressed, if sent by
mail.  For the purposes hereof, the address of the Holder shall be One Penn
Plaza. Suite 6196, New York, NY 10119, and the address of the Maker shall be 3738
Coach Cove, Sanford, MI 48657. Both the Holder or its assigns and the Maker may
change the address for service by delivery of written notice to the other as
herein provided.

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Section 5.2.     Amendment.  This Note and any provision hereof may be amended only by an instrument in writing signed by the Maker and the Holder.
 
Section 5.3.     Assignability. This Note shall be binding upon the Maker and its successors and assigns and shall inure to be the benefit of the Holder and its successors and assigns; provided, however, that so long as no Event of Default has occurred, this Note shall only be transferable in whole subject to the restrictions contained in the restrictive legend on the first page of this Note.
 
Section 5.4.     Governing Law.  This Note shall be governed by the internal laws of the State of New York, without regard to conflicts of laws principles.
 

Section
5.5.     Replacement of Note.
The Maker covenants that upon receipt by the Maker of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of this Note,
and in case of loss, theft or destruction, of indemnity or security reasonably
satisfactory to it (which shall not include the posting of any bond), and upon
surrender and cancellation of such Note, if mutilated, the Maker will make and
deliver a new Note of like tenor.

 
Section 5.6.     This Note shall not entitle the Holder to any of the rights of a stockholder of the Maker, including without limitation, the right to vote, to receive dividends and other distributions, or to receive any notice of, or to attend, meetings of stockholder or any other proceedings of the Maker, unless and to the extent converted into shares of Common Stock in accordance with the terms hereof.
 
Section 5.7.     Severability.  In case any provision of this Note is held by a court of competent jurisdiction to be excessive in scope or otherwise invalid or unenforceable, such provision shall be adjusted rather than voided, if possible, so that it is enforceable to the maximum extent possible, and the validity and enforceability of the remaining provisions of this Note will not in any way be affected or impaired thereby.
 
Section 5.8.     Headings.  The headings of the sections of this Note are inserted for convenience only and do not affect the meaning of such section.
 
Section 5.9.     Counterparts.  This Note may be executed in multiple counterparts, each of which shall be an original, but all of which shall be deemed to constitute one instrument.
 

SPACE INTENTIONALLY LEFT IN BLANK

SIGNATURES APPEARS ON THE FOLLOWING
PAGE

 
 
 
 

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IN WITNESS WHEREOF, with the intent to be legally bound hereby, the Maker as executed this Note as of the date first written above.
 
 

	
  
  HPIL Holding

   

   /S/
  Nitin Amersey                           

  

  By:  Nitin Amersey

  Its:  CFO

  

 
 

	
  Acknowledged and Agreed:

   

  GPL Ventures LLC.

  
   

   /S/
  Alexander Dillon                       

  

  By:  Alexander Dillon

  Its:  Managing Partner 

  

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EXHIBIT 1
 
CONVERSION NOTICE
________________________________________________________________________
(To be executed by the Holder in order to Convert the Note)
 
TO:
_________
_________
_________
 
The undersigned hereby irrevocably elects to convert US$________________________ of the Principal Amount of the above Note into Shares of Common Stock of HPIL Holding, according to the conditions stated therein, as of the Conversion Date written below. If shares are to be issued in the name of a person other than the undersigned, the undersigned will pay all transfer taxes payable with respect thereto and is delivering herewith such certificates and opinions as reasonably requested by the Maker in accordance therewith.  No fee will be charged to the Holder for any conversion, except for such transfer taxes, if any.
 

	Conversion Date:
	 

	Applicable Conversion Price:
	US$

	Signature:
	 

	Name:
	 

	Address:
	 

	Tax I.D. or Soc. Sec. No:
	 

	Principal Amount to be converted:
	US$

	Amount of Note unconverted:
	US$

	Number of shares of Common Stock to be issued:
	 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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Attach Equity
Purchase Agreement Here

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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HPIL Holding

3738 Coach Cove

Sanford, MI  48657 

 

The undersigned,
Nitin Amersey, is the duly elected Chief Financial Officer of HPIL
Holding, a Nevada corporation (the “Company”).

 

I hereby warrant
and represent that I have undertaken a complete and thorough review of the
Company’s corporate and financial books and records including, but not limited
to the Company’s records relating to the following:

 

(A)       the
certain convertible note (“Original Note”) dated November 9, 2016 (the
“Original Note Issuance Date”) to GPL Ventures LLC (the “Investor”) by the
Company in the original principal amount of Two Hundred Fifty Thousand, Dollars
($250,000.00) is a valid debt and current outstanding obligation of the Company

 

(B)       the
Company’s Board of Directors duly approved the issuance of the Original Note to
the GPL Ventures LLC.

 

(C)       the
Company’s Board of Directors duly approved the terms of the Securities Purchase
Agreement between HPIL Holding and GPL Ventures LLC, dated November 9, 2016,
and of the Original Note that is a fee of that agreement

 

(D)       The
Company’s officers and directors have not entered into or given any commitment
contemplating the receipt or acceptance of any said consideration arising out
of or relating to the issuance of the Original Note.

 

(E)       To
my best knowledge and after completing the aforementioned review of the
Company’s shareholder and corporate records, I am able to certify that GPL
Ventures LLC and its partners and management are not officers, directors, or
directly or indirectly, ten percent (10.00%) or more stockholders of the
Company and none of said persons have had any such status in the one hundred
fifty (150) days immediately preceding the date of this Certificate.

 

(F)       I
understand the constraints imposed under Rule 144 on those persons who are or
may be deemed to be “affiliates,” as that term is defined in Rule 144(a)(1) of
the 1933 Act.

 

(G)       I
understand that all of the representations set forth in this Certificate will
be relied upon by counsel to GPL Ventures LLC in connection with the
preparation of a legal opinion claiming the exemption provided by Rule 144 of
the Securities Act of 1933, as amended.

 

I hereby affix
my signature to this Notarized Certificate and hereby confirm the accuracy of
the statements made herein.

 

Signed:   /S/
Nitin Amersey                              Date:  11/09/2016                                

Name:     Nitin
Amersey

Page

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Title:
      CFO

UNANIMOUS
WRITTEN CONSENT 

OF THE BOARD OF DIRECTORS

OF HPIL Holding

 

THE UNDERSIGNED, being all the
members of the Board of Directors of HPIL Holding, a Nevada corporation (the
“Corporation”), in order to obviate the necessity of holding a meeting, hereby
waive the calling and holding of a meeting of the Board of Directors of the
Corporation and approve the following resolutions by unanimous vote of all the
members of the Board of Directors of the Corporation, and direct that the same
be filed with the records of the Corporation:

 

WHEREAS, the
Corporation is and will be in the future in need of funds and it is in the best
interests of this Corporation to allow the Company to enter into the Securities
Purchase Agreement (the “Agreement”), which includes the EzPAS facility and the
issuance of a Convertible Note as described herein;

 

NOW, THEREFORE, BE IT RESOLVED, that the
Corporation is authorized to execute the $250,000.00 Convertible Note, that
come with registration rights and will be registered in the S-1 registration
statement as a fee for the Security Purchase Agreement between HPIL Holding and
Blackbridge Capital LLC.

 

FURTHER RESOLVED, that the
Officer of this Corporation be and hereby is authorized and directed to
execute, and to issue a Convertible Promissory Note to GPL Ventures LLC in the
principal amount of Two Hundred Fifty Thousand Dollars ($250,000.00) in such
form, substance and content as may be necessary, said Officer’s execution and
delivery thereof on behalf of this Corporation to be conclusive evidence of
said Officer’s approval; and 

 

FURTHER RESOLVED, that the
Officer is hereby authorized to do such further acts and things and execute any
and all documents and instruments, both original and amendatory, of every kind
and character on behalf of the Corporation as may be necessary or appropriate,
in said Officer’s judgment, to carry out the terms of the aforementioned
Agreements and carry out the purpose of these Resolutions; and 

 

FURTHER RESOLVED, that any
indebtedness heretofore contracted and any contracts, agreements or notes
heretofore made with the Purchaser on behalf of this Corporation and all acts
of the Officer or of other officers or agents of this Corporation in connection
with such indebtedness or such contracts, agreements or notes are hereby
ratified and confirmed; and 

 

FURTHER RESOLVED, that the
shares of common stock underlying the Note when issued upon conversion of the
Note, shall be fully paid, validly issued and non-assessable. 

 

This Unanimous Written Consent of Board of Directors
may be executed in any number of counterparts, and it shall not be necessary
that the signatures of all Directors be contained on any one counterpart
hereof, each counterpart shall be deemed an original, but all of which when
taken together shall constitute one and the same instrument. 

 

SPACE INTENTIONALLY LEFT IN BLANK

SIGNATURES APPEARS ON THE FOLLOWING
PAGE

Page

36 of 37

 

 

 

IN WITNESS WHEREOF, we have caused
this instrument to be duly executed this 9th day of November, 2016. 

 

	
   

   

   

  /S/ Louis
  Bertoli                                   

  Louis
  Bertoli

  Chairman and
  Director

  	
   

   

   

  /S/ Nitin
  Amersey                                  

  Nitin
  Amersey

  Director/CFO

  
	
   

   

   

  /S/ John
  Mitchell                                  

  John
  Mitchell

  Director

  	
   

   

   

  /S/ John
  Dunlap                                   

  John
  Dunlap

  Director

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