Document:

ex_179888.htm

Exhibit 10.5

 

 

FORM OF RESTRICTED STOCK UNIT AGREEMENT

FOR NON-EMPLOYEE DIRECTORS

 

H.B. FULLER COMPANY

 

RESTRICTED STOCK UNIT AWARD AGREEMENT

(Under the H.B. Fuller Company 2020 Master Incentive Plan)

 

THIS AGREEMENT, dated as of _______________, 20___, is entered into between H.B. Fuller Company, a Minnesota corporation (the “Company”), and ____________________, a non-employee director of the Company (the “Participant”).

 

WHEREAS, the Company, pursuant to the H.B. Fuller Company 2020 Master Incentive Plan (the “Plan”), wishes to award to the Participant Restricted Stock Units, representing the right to receive shares of common stock, par value $1.00 per share, of the Company (“Common Stock”), subject to certain restrictions and on the terms and conditions contained in this Agreement and the Plan;

 

WHEREAS, the Participant’s rights to receive Shares of Common Stock hereunder are sometimes referred to as “Restricted Stock Units” in this Agreement.

 

NOW, THEREFORE, in consideration of the premises and agreements set forth herein, the parties hereto hereby agree as follows:

 

1.     Award of Restricted Stock Units. The Company, effective as of the date of this Agreement, hereby grants to the Participant an award of ______ Restricted Stock Units, each Restricted Stock Unit representing the right to receive one share of Common Stock on such date as set forth herein, plus an additional amount pursuant to Section 2(b) hereof, subject to the terms and conditions set forth in this Agreement.

 

2.     Rights of the Participant with Respect to the Restricted Stock Units.

 

(a)     No Shareholder Rights. The Restricted Stock Units granted pursuant to this Agreement do not and shall not entitle the Participant to any rights of a shareholder of Common Stock. The rights of the Participant with respect to the Restricted Stock Units shall remain forfeitable at all times prior to the date on which such rights become vested, and the restrictions with respect to the Restricted Stock Units lapse, in accordance with Section 3 hereof.

 

(b)     Dividend Equivalents. As long as the Participant holds Restricted Stock Units granted pursuant to this Agreement on the applicable record date, the Company shall credit to the Participant, on each date that the Company pays a cash dividend to holders of Common Stock generally, an additional number of Restricted Stock Units (“Additional Restricted Stock Units”) equal to the total number of whole Restricted Stock Units and Additional Restricted Stock Units previously credited to the Participant under this Agreement multiplied by the dollar amount of the cash dividend paid per share of Common Stock by the Company on such date, divided by the Fair Market Value of a share of Common Stock on such date. Any fractional Restricted Stock Unit resulting from such calculation shall be included in the Additional Restricted Stock Units. The Additional Restricted Stock Units so credited shall be subject to the same terms and conditions as the Restricted Stock Units granted pursuant to this Agreement and the Additional Restricted Stock Units shall be forfeited in the event that the Restricted Stock Units with respect to which the dividend equivalents were credited are forfeited.

 

 

 

 

 

(c)     Issuance of Shares; Conversion of Restricted Stock Units. No shares of Common Stock shall be issued to the Participant prior to the date on which the Restricted Stock Units vest, and the restrictions with respect to the Restricted Stock Units lapse, in accordance with Section 3 hereof. Neither this Section 2(c) nor any action taken pursuant to or in accordance with this Section 2(c) shall be construed to create a trust of any kind. After any Restricted Stock Units vest pursuant to Section 3 hereof, the Company shall promptly cause to be issued, in either certificated or uncertificated form, shares of Common Stock registered in the Participant’s name or in the name of the Participant’s legal representatives, beneficiaries or heirs, as the case may be, in payment of such vested whole Restricted Stock Units and any Additional Restricted Stock Units and shall cause such certificated or uncertificated shares to be delivered to the Participant or the Participant’s legal representatives, beneficiaries or heirs, as the case may be. In no event shall issuance of shares occur more than ninety (90) days after the applicable vesting date. The value of any fractional Restricted Stock Unit shall be cancelled at the time certificated or uncertificated shares are delivered to the Participant in payment of the Restricted Stock Units and any Additional Restricted Stock Units.

 

3.     Vesting; Forfeiture.

 

(a)     Vesting. Subject to the terms and conditions of this Agreement, the Restricted Stock Units shall vest in full, and the restrictions with respect to the Restricted Stock Units shall lapse, on the earlier of (i) _____________, or (ii) the date on which the director reaches the mandatory retirement age under the Company’s policy with respect to directors’ retirement from the Board of Directors, provided, in each case, that the Participant continuously serves as a director of the Company until the earliest of such dates.

 

(b)     Early Vesting. Notwithstanding the vesting provision contained in Section 3(a) above, but subject to the other terms and conditions set forth herein, upon the occurrence of a “Change in Control” (as defined below) or in the event of the Participant’s death or permanent disability (within the meaning of Section 409A(a)(2)(C)(i) of the Code), the Participant or the Participant’s legal representatives, beneficiaries or heirs, as the case may be, shall become immediately vested in all of the Restricted Stock Units, and the restrictions with respect to the Restricted Stock Units shall lapse, as of the date of such Change in Control, death or permanent disability. Issuance of the shares shall be made as soon as administratively feasible (but in no event more than ninety (90) days) following the Participant’s death or permanent disability, as applicable. Such payment shall be made promptly following the date of the Change in Control.

 

(c)     Change in Control. For the purposes of this Agreement, a “Change in Control” shall be deemed to have occurred upon any of the following events:

 

	 	
			(i)

				
			a public announcement (which, for purposes hereof, shall include, without limitation, a report filed pursuant to Section 13(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) that any individual, corporation, partnership, association, trust or other entity becomes the beneficial owner (as defined in Rule 13(d)(3) promulgated under the Exchange Act), directly or indirectly, of securities of the Company representing 30% or more of the voting power of the Company then outstanding;

			

 

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			(ii)

				
			the individuals who, as of the date of this Agreement, are members of the Board of Directors of the Company (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board (provided, however, that if the election or nomination for election by the Company’s shareholders of any new director was approved by a vote of at least a majority of the Incumbent Board, such new director shall be considered to be a member of the Incumbent Board);

			

 

	 	
			(iii)

				
			the approval of the shareholders of the Company, and consummation, of (i) any consolidation, merger or statutory share exchange of the Company with any person in which the surviving entity would not have as its directors at least 60% of the Incumbent Board and as a result of which those persons who were shareholders of the Company immediately prior to such transaction would not hold, immediately after such transaction, at least 60% of the voting power of the Company then outstanding or the combined voting power of the surviving entity’s then outstanding voting securities; (ii) any sale, lease, exchange or other transfer in one transaction or series of related transactions substantially all of the assets of the Company; or (iii) the adoption of any plan or proposal for the complete or partial liquidation or dissolution of the Company; or

			

 

	 	
			(iv)

				
			a determination by a majority of the members of the Incumbent Board, in their sole and absolute discretion, that there has been a Change in Control of the Company; and

			

 

	 	
			(v)

				
			the Participant incurs a Qualifying Termination of his/her position as director of the Company during the Protected Period.

			

 

For purposes of this Section 3(c), “voting power” when used with reference to the Company shall mean the voting power of all classes and series of capital stock of the Company now or hereafter authorized.

 

(d)     For the purposes of this Agreement, a “Qualifying Termination” shall mean a resignation of the Participant’s position as director of the Company.

 

(e)     For purposes of this Agreement, “Protected Period” means the 24-month period beginning on and immediately following each and every Change in Control.

 

(f)     Forfeiture. If the Participant ceases to serve as a director of the Company for any reason other than those set forth in Section 3(b) hereof prior to the vesting of the Restricted Stock Units pursuant to Section 3(b) hereof, the Participant’s rights to all of the unvested Restricted Stock Units shall be immediately and irrevocably forfeited, including the right to receive any Additional Restricted Stock Units.

 

4.     Restrictions on Transfer. The Restricted Stock Units shall not be transferable other than by will or by the laws of descent and distribution. Notwithstanding the foregoing, the Participant may, in the manner established by the Committee, designate a beneficiary or beneficiaries to exercise the rights of the Participant and receive any property distributable with respect to the Restricted Stock Units upon the death of the Participant. Each right under this Agreement shall be exercisable during the Participant’s lifetime only by the Participant or, if permissible under applicable law, by the Participant’s legal representative. The Restricted Stock Units and any rights under this Agreement may not be sold, assigned, transferred, pledged, alienated, attached or otherwise encumbered and any purported sale, assignment, transfer, pledge, alienation, attachment or encumbrance shall be void and unenforceable against the Company or any Affiliate.

 

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5.     Income Tax Matters. The Participant understands and agrees that the Company has not advised the Participant regarding the Participant's income tax liability in connection with the grant of Restricted Stock Units pursuant to this Agreement. The Participant further understands and agrees that he or she is responsible for consulting his or her own tax counsel on questions regarding his or her tax liability in connection with the grant of the Shares and upon the vesting of the Shares and any subsequent disposition of the Shares, and that the Participant is solely responsible for such tax liability.

 

6.     Securities Matters. No shares of Common Stock shall be issued pursuant to this Agreement prior to such time as counsel to the Company shall have determined that the issuance of such shares will not violate any securities or other laws, rules or regulations. The Company shall not be required to deliver any shares of Common Stock until the requirements of any applicable securities or other laws, rules or regulations (including the rules of any securities exchange) as may be determined by the Company to be applicable are satisfied. In addition, the grant of these Restricted Stock Units and/or the delivery of any shares of Common Stock under this Agreement are subject to the Company’s Executive and Key Manager Compensation Clawback Policy and any other clawback policies the Company may adopt in the future to conform to the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (or any other applicable law) and any applicable rules and regulations of the Securities and Exchange Commission or applicable stock exchange.

 

7.     Tax Consequences. The Participant agrees that the Company does not have a duty to design or administer the Plan or its other compensation programs in a manner that minimize the Participant’s tax liabilities. The Participant will not make any claim against the Company, or any of its officers, directors, employees or affiliates related to tax liabilities arising from the Restricted Stock Units or the Participant’s other compensation.

 

8.     Adjustments. In the event that the Committee shall determine that any dividend or other distribution (whether in the form of cash, shares, other securities or other property), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase or exchange of shares or other securities of the Company, issuance of warrants or other rights to purchase shares or other securities of the Company or other similar corporate transaction or event affects the Common Stock such that an adjustment is necessary in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under this Agreement, then the Committee shall, in such manner as it may deem equitable, in its sole discretion, adjust any or all of the number and type of shares subject to the Restricted Stock Units.

 

9.     General Provisions.

 

(a)     Interpretations. This Agreement is subject in all respects to the terms of the Plan. Terms used herein which are defined in the Plan shall have the respective meanings ascribed to such terms in the Plan, unless otherwise defined herein. In the event that any provision of this Agreement is inconsistent with the terms of the Plan, the terms of the Plan shall govern. Any question of administration or interpretation arising under this Agreement shall be determined by the Committee, and such determination shall be final and conclusive upon all parties in interest.

 

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(b)     Headings. Headings are given to the sections and subsections of this Agreement solely as a convenience to facilitate reference. Such headings shall not be deemed in any way material or relevant to the construction or interpretation of this Agreement or any provision hereof.

 

(c)     Severability. If any provision of this Agreement is or becomes or is deemed to be invalid, illegal or unenforceable in any jurisdiction under any law deemed to be applicable by the Committee, such provision shall be construed or deemed amended to conform to the applicable law, or if it cannot be so construed or amended without, in the determination of the Committee, materially altering the purpose or intent of this Agreement, such provision shall be stricken as to such jurisdiction or this Agreement, and the remainder of this Agreement shall remain in full force and effect.

 

(d)     Venue and Governing Law. The internal law, and not the law of conflicts, of the State of Minnesota will govern all questions concerning the validity, construction and effect of this Agreement. For purposes of any action, lawsuit or other proceedings brought to enforce the Agreement, relating to it, or arising from it, the parties hereby submit to and consent to the sole and exclusive jurisdiction of the courts of Ramsey County, Minnesota, or the federal courts for the United States for the District of Minnesota, and no other courts, where this grant is made and/or to be performed.

 

(e)     Consent to Collection/Processing/Transfer of Personal Data.  Pursuant to applicable personal data protection laws, the Company hereby notifies the Participant of the following in relation to the Participant’s personal Data (as defined below) and the collection, use, processing and transfer of such Data in relation to the Company’s grant of this award and the Participant’s participation in the Plan.  The collection, use, processing and transfer of the Participant’s Data is necessary for the Company’s administration of the Plan and the Participant’s participation in the Plan, and the Participant’s denial and/or objection to the collection, use, processing and transfer of Data may affect the Participant’s participation in the Plan.  As such, the Participant hereby voluntarily acknowledges and consents (where required under applicable law) to the collection, use, processing and transfer of Data as described in this paragraph.

 

	 	
			(i)

				
			The Company and the Participant hold certain personal information about the Participant, including the Participant’s name, home address, email address and telephone number, date of birth, social security number, passport number or other employee identification number, salary, nationality, job title, any shares of Common Stock or directorships held in the Company, details of all stock awards or any other entitlement to shares of Common Stock awarded, canceled, purchased, vested, unvested or outstanding in the Participant’s favor, for the purpose of managing and administering the Plan (“Data”). Data may be provided by the Participant or collected, where lawful, from third parties, and Company will process Data for the exclusive purpose of implementing, administering and managing the Participant’s participation in the Plan. Data processing will take place through electronic and non-electronic means according to logics and procedures strictly correlated to the purposes for which Data are collected and with confidentiality and security provisions as set forth by applicable laws and regulations in the Participant’s country of residence. Data processing operations will be performed minimizing the use of personal and identification data when such operations are unnecessary for the processing purposes sought. Data will be accessible within Company’s organization only by those persons requiring access for purposes of the implementation, administration and operation of the Plan and for the Participant’s participation in the Plan.

			

 

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			(ii)

				
			Company and the Participant’s employer (if the Participant’s employer is not the Company) “Employer” will transfer Data amongst themselves as necessary for the purpose of implementation, administration and management of the Participant’s participation in the Plan, and Company and the Employer may each further transfer Data to any third parties assisting Company in the implementation, administration and management of the Plan. As permitted by applicable personal data protection laws, if Company or the Employer becomes involved in a merger, acquisition, sale of assets, joint venture, securities offering, bankruptcy, reorganization, liquidation, dissolution, or other transaction or if the ownership of all or substantially all of Company or the Employer otherwise changes, Company or the Employer may transfer Data to a third party or parties in connection therewith.  These recipients may be located in the European Economic Area, or elsewhere throughout the world, such as the United States. The Participant hereby authorizes (where required under applicable law) them to receive, possess, use, retain and transfer Data, in electronic or other form, for purposes of implementing, administering and managing the Participant’s participation in the Plan, including any requisite transfer of such Data as may be required for the administration of the Plan and/or the subsequent holding of shares of Common Stock on the Participant’s behalf to a broker or other third party with whom the Participant may elect to deposit any shares of Common Stock acquired pursuant to the Plan.

			

 

	 	
			(iii)

				
			The Participant may, at any time, exercise his or her rights provided under applicable personal data protection laws, which may include the right to (a) obtain confirmation as to the existence of Data, (b) verify the content, origin and accuracy of Data, (c) request the integration, update, amendment, deletion, or blockage (for breach of applicable laws) of Data, and (d) to oppose, for legal reasons, the collection, processing or transfer of Data which is not necessary or required for the implementation, administration and/or operation of the Plan and the Participant’s participation in the Plan. The Participant may seek to exercise these rights by contacting the Employer’s local HR manager or Company’s Human Resources Department. The Participant understands that he or she is providing the consent herein on a purely voluntary basis. If the Participant does not consent or later seeks to remove his or her consent, the Participant’s salary from or employment with the Employer will not be affected; the only consequence of refusing or withdrawing his or her consent is that Company would not be able to grant the Participant Restricted Stock Units or other equity awards or participate in the Plan.

			

 

	 	
			(iv)

				
			Finally, the Participant understands that Company may rely on a different legal basis for the processing and/or transfer of Data in the future and/or request that the Participant provide another data privacy consent or acknowledgment. If applicable and upon request of Company or the Employer, the Participant agrees to provide an executed acknowledgment or data privacy consent form (or any other acknowledgment, agreement or consent) to Company or the Employer that Company and/or the Employer may deem necessary to obtain under the data privacy laws in the Participant’s country, either now or in the future. The Participant understands that he or she will not be able to participate in the Plan if the Participant fails to execute any such acknowledgment or consent requested by Company or the Employer.

			

 

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(f)     Addendum. Notwithstanding the provisions of this Agreement, the award shall be subject to any special terms and conditions for the Participant’s country set forth in the Addendum to this Agreement. To the extent any provision in the Addendum is inconsistent with a provision in the body of this Agreement, the provision in the Addendum shall prevail. Moreover, if the Participant relocates to one of the countries included in the Addendum, the terms and conditions for such country will apply to the Participant to the extent the Company determines that the application of such terms and conditions is necessary or advisable for legal or administrative reasons.

 

 

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

 

H.B. FULLER COMPANY

By:                                                                     

                                                                            

Participant

Date:                                                                    

 

 

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Addendum

 

 

This Addendum intentionally left blank.

 

 

 

 

8SECURITIES PURCHASE AGREEMENT

 

THIS SECURITIES PURCHASE AGREEMENT (“Agreement”) is made effective as of April 3, 2020, by and between CynergisTek, Inc., a Delaware corporation (the “Company”), and Horton Capital Management, LLC (“HCM”), a Delaware limited liability company, and its Designees (as defined in Section 4.2) (collectively with HCM, the “Purchaser”).

RECITALS

WHEREAS, Purchaser wishes to purchase from the Company, and the Company wishes to issue and sell to Purchaser, upon the terms and conditions stated in this Agreement, up to $2,500,000 in shares (the “Shares”) of the Company’s common stock, par value $0.001 per share (“Common Stock”); 

WHEREAS, contemporaneous with the execution of this Agreement, the parties hereto will execute and deliver a Registration Rights Agreement in the form attached hereto as Exhibit A (the “Registration Rights Agreement”), pursuant to which the Company will agree to provide certain registration rights under the Securities Act of 1933, as amended (the “Securities Act”), and the rules and regulations promulgated thereunder, and applicable state securities laws; and

WHEREAS, contemporaneous with the execution of this Agreement, the Company will issue to Purchaser the Initial Warrant (as defined herein) in the form attached hereto as Exhibit B and, in connection with the purchase and sale of the Shares, the Company will also issue a Funding Warrant (as defined herein) to purchase shares of Common Stock in the form attached hereto as Exhibit C (this Agreement, the Registration Rights Agreement, the Initial Warrant and the Funding Warrant are collectively referred to herein as the “Transaction Documents”). 

AGREEMENT

NOW, THEREFORE, in consideration of the mutual promises made herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

1.Certain Definitions.  In addition to the terms defined elsewhere in this Agreement, as used in this Agreement, the following terms shall have the following meanings: 

“Business Day” means a day, other than a Saturday, Sunday, or legal holiday, on which banks in New York City are open for the general transaction of business.

 

“Commitment Amount” means the aggregate amount of up to Two Million Five Hundred Thousand Dollars ($2,500,000) which Purchaser has agreed to provide to the Company as consideration for the purchase of Shares, pursuant to the terms and conditions of this Agreement; provided, however, that the Commitment Amount shall be reduced by the amount of proceeds received by the Company from the raising of capital through equity or equity-linked securities during the Commitment Period (as defined below). 

 

“Commitment Period” means the period commencing on the date hereof and expiring on the earliest to occur of: (i) the date on which Purchaser shall have purchased Shares in an amount equal to the Commitment Amount, and (ii) March 31, 2021. 

 

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

“Fundamental Transaction” means a (i) consolidation or merger of the Company with or into another Person, (ii) sale of all or substantially all of the Company’s assets to another Person or (iii) other similar transaction, in each case which entitles the holders of Common Stock to receive (either directly or upon subsequent liquidation) stock, securities, cash or other assets with respect to or in exchange for Common Stock.

“Funding Amount” means the portion of the Commitment Amount requested by the Company in the Funding Notice and paid by Purchaser for the purchase of Shares. 

 

“Funding Date” means the date the Company is in receipt of the Funding Amount from Purchaser. No Funding Date shall be less than eleven (11) Trading Days after a Funding Notice Date. 

 

“Funding Notice” means a written notice to Purchaser in the form attached hereto as Exhibit D setting forth the Funding Amount that the Company requests from Purchaser and the Funding Date. 

 

“Funding Notice Date” means each date the Company delivers to Purchaser a Funding Notice requiring Purchaser to advance funds to the Company, subject to the terms of this Agreement. 

 

“Funding Warrant” means a warrant to purchase shares of the Company’s Common Stock with an exercise price equal to 125% multiplied by the Purchase Price, with a ten (10) year term, and in substantially the form set forth on Exhibit C hereto.

 

“Governmental Authority” means any government or any state, department or other political subdivision thereof, or any governmental body, agency, authority or instrumentality in any jurisdiction exercising executive, legislative, regulatory or administrative functions of or pertaining to government. 

 

“Initial Warrant” means a warrant to purchase 500,000 shares of the Company’s Common Stock with an exercise price of $2.50 per share, with a ten (10) year term, and in substantially the form set forth on Exhibit B hereto.

 

“Person” means an individual, a corporation, limited liability company, a general or limited partnership, an association, a trust or other entity or organization, including any Governmental Authority. 

 

“Principal Market” means the NYSE American or such other securities exchange on which Company’s Common Stock is then listed. 

 

“Purchase Price” means a per-Share amount and shall be equal to eighty-five percent (85%) multiplied by the lower of (a) the closing market price per share of the Common Stock, as reported by the Principal Market, on the Funding Notice Date, or (b) the volume weighted average closing market price per share of the Common Stock, as reported by the Principal Market, for the ten (10) consecutive Trading Days immediately preceding or following such Funding Notice Date, whichever (preceding or following) is lowest.

 

“SEC” means the Securities and Exchange Commission. 

 

“Securities” means the Shares, the Warrants and/or the shares of Common Stock issuable upon exercise of the Warrants, as applicable. 

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“Trading Day” means any day on which the Company’s Common Stock is traded on the Principal Market. 

 

“Warrants” shall mean the Initial Warrant and the Funding Warrant(s). 

 

2.Share Purchases.   

2.1.General.  Upon the terms and conditions set forth in this Agreement, on any Funding Notice Date, the Company may request a Funding Amount by the delivery of a Funding Notice. The number of Shares that Purchaser shall receive for each Funding Amount shall be determined by dividing the Funding Amount by the Purchase Price. Provided that the Funding Notice complies with the terms and requirements of this Agreement, Purchaser shall have no right to refuse such request for funding and purchase of the Shares. No fractional shares shall be issued. Fractional shares shall be rounded to the next higher whole number of shares. The aggregate maximum amount of all Funding Amounts that Purchaser shall be obligated to make under this Agreement shall not exceed the Commitment Amount. For the avoidance of doubt, upon the expiration of the Commitment Period, the Purchaser shall not be obligated to make any additional Funding Amounts.  

2.2.Mechanics.   

(a)Funding Notice.  At any time during the Commitment Period, the Company may deliver a Funding Notice to Purchaser, subject to the conditions set forth in this Agreement. Each individual Funding Amount made pursuant to this Agreement shall not be less than $500,000. 

(b)Date of Delivery of Funding Notice.  A Funding Notice shall be deemed delivered on the Business Day it is received by facsimile or email by Purchaser if such notice is received prior to 5:00 p.m. Eastern Time or the immediately succeeding Business Day if it is received by facsimile or email after 5:00 p.m. Eastern Time on a Business Day or at any time on a day which is not a Business Day. 

(c)Funding; Delivery of Shares.  On a Funding Date, Purchaser shall deliver the applicable Funding Amount to the Company by wire transfer of immediately available funds. Within eleven (11) Trading Days of each such Funding Date, the Company shall deliver or cause to be delivered to Purchaser the applicable number of Shares (registered in the name of Purchaser by certificate or book entry or otherwise as may be agreed to by the Company and Purchaser) equal to the Funding Amount paid by Purchaser divided by the Purchase Price,. In addition, on or prior to the Funding Date, each of the Company and Purchaser shall deliver to each other all documents, instruments and writings required to be delivered by either of them pursuant to this Agreement in order to implement and effect the transactions contemplated herein. Purchaser acknowledges and agrees that the sale or resale of the Shares so delivered shall not be registered with the SEC, except as provided for in the Registration Rights Agreement.  

(d)Initial Warrant; Warrant Coverage for Fundings. 

(i)Purchaser acknowledges that, contemporaneous with the execution of this Agreement, the Company will issue to Purchaser the Initial Warrant, and by signing below, Purchaser acknowledges receipt of the Initial Warrant. 

(ii)Additionally, on the Funding Date or the first Business Day thereafter, the Company shall grant to Purchaser a Funding Warrant, with the number of  

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shares exercisable pursuant to such Funding Warrant equal to the number of Shares purchased by Purchaser on such Funding Date.

(iii)By signing below, Purchaser acknowledges and agrees that the sale or resale of the shares delivered upon exercise of the Initial Warrant and any Funding Warrant shall not be registered with the SEC, except as provided for in the Registration Rights Agreement. 

(e)Conditions to Fundings. Purchaser agrees to advance to the Company the Funding Amount specified in any Funding Notice subject to the following conditions precedent and the other terms and conditions set forth in this Agreement, each of which may be waived in the sole discretion of Purchaser: 

(i)the Warrants shall have been duly authorized and, when executed and delivered as contemplated hereby, will constitute a valid and legally binding obligation of the Company in accordance with their terms;  

(ii)the shares of Common Stock issuable upon the exercise of the Initial Warrant and each Funding Warrant shall have been duly authorized and reserved for issuance upon exercise of such Warrants and, when so issued, will be validly issued, fully paid and non-assessable; 

(iii)the Company shall have obtained all material permits and qualifications required by any applicable state for the offer and sale of the Securities or shall have the availability of exemptions therefrom; 

(iv)the Company shall have timely filed with the SEC all reports, notices and other documents required to be filed by it under the Securities Act and the Exchange Act and the rules and regulations promulgated by the SEC thereunder (or, if the Company is not required to file such reports, it will, upon the request of the Purchaser, make publicly available such information as necessary to permit sales pursuant to Rule 144 under the Securities Act), and it will use reasonable best efforts to take such further action as the Purchaser may reasonably request, in each case to the extent required from time to time to enable the Purchaser to sell the Warrants without registration under the Securities Act within the limitation of the exemptions provided by (A) Rule 144 under the Securities Act, as such rules may be amended from time to time, or (B) any successor rule or regulation hereafter adopted by the SEC. Upon the written request of the Purchaser, the Company will deliver to such Purchaser a written statement that it has complied with such requirements; and 

(v)each of the representations and warranties made by the Company pursuant to this Agreement (or in any amendment, modification or supplement hereto) shall, except to the extent that they relate to a particular date, be true and correct in all material respects on and as of such date as if made on and as of the applicable Funding Date. 

3.Representations and Warranties of the Company.  The Company hereby represents and warrants to Purchaser that, as of the date hereof and as of each Funding Date, that: 

3.1.Organization, Good Standing and Qualification.  The Company is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its  

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incorporation and has all requisite corporate power and authority to carry on its business as now conducted and to own its properties.    

3.2.Authorization.  The Company has full power and authority and has taken all requisite action on the part of the Company, its officers, directors and stockholders necessary for (i) the authorization, execution and delivery of the Transaction Documents, (ii) the authorization of the performance of all obligations of the Company under the Transaction Documents, and (iii) the authorization, issuance (or reservation for issuance) and delivery of the Securities.  The Transaction Documents constitute the legal, valid and binding obligations of the Company, enforceable against the Company in accordance with their terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability, relating to or affecting creditors’ rights generally.  

3.3.Valid Issuance.  The Securities and the transactions contemplated hereby have each been duly and validly authorized. When issued and delivered pursuant to this Agreement, all Common Stock will be duly and validly issued and fully paid and non-assessable.   

3.4.Consents.  The execution, delivery and performance by the Company of the Transaction Documents and the offer, issuance and sale of the Securities require no consent of, action by or in respect of, or filing with, any Person or official, other than filings that have been or will be made pursuant to the rules and regulations of the Exchange Act and applicable state securities laws and post-sale filings pursuant to applicable state and federal securities laws which the Company undertakes to file within the applicable time periods.  Subject to the accuracy of the representations and warranties of Purchaser set forth in Section 4 hereof, the Company has taken and will take all action necessary to exempt (i) the issuance and sale of the Securities and (ii) the other transactions contemplated by the Transaction Documents from any provision of the Company’s Certificate of Incorporation or Bylaws and any amendments to either (collectively, the “Governing Documents”) that is or could reasonably be expected to become applicable to Purchaser as a result of the transactions contemplated hereby.   

3.5.Delivery of SEC Filings; Business.  The Company has made available to Purchaser through the EDGAR system maintained by the SEC, true and complete copies of the Company’s (i) most recent Annual Report on Form 10-K for the fiscal year ended December 31, 2018, and (ii) all other reports filed by the Company pursuant to the Exchange Act (collectively, the “SEC Filings”).  At the time of filing thereof, the SEC Filings complied as to form in all material respects with the requirements of the Exchange Act and did not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading. 

3.6.No Conflict, Breach, Violation or Default.  The execution, delivery and performance of the Transaction Documents by the Company and the issuance and sale of the Securities will not conflict with or result in a breach or violation of any of the terms and provisions of, or constitute a default under (i) the Company’s Governing Documents as in effect on the date hereof (true and complete copies of which have been made available to Purchaser through the EDGAR system), or (ii) any statute, rule, regulation or order of any governmental agency or body or any court, domestic or foreign, having jurisdiction over the Company or any of its assets or properties, or (iii) any agreement or instrument to which the Company is a party or by which the Company is bound. 

3.7.Financial Statements.  The consolidated financial statements of the Company and its consolidated subsidiaries included or incorporated by reference in the SEC Filings present fairly, in all material respects, the consolidated financial position of the Company and its consolidated subsidiaries as of the dates indicated therein and the consolidated results of operations and cash flows for the periods  

5

specified therein, and such financial statements have been prepared in conformity with United States generally accepted accounting principles applied on a consistent basis (except as may be disclosed therein or in the notes thereto).

3.8.No Material Adverse Effect.  Except as set forth on Schedule 3.8 hereto, since the Company’s most recent SEC Filing, no fact, circumstance, event, change, occurrence, condition or development has occurred that, individually or in the aggregate, has had or would be reasonably likely to have a material adverse effect on (i) the business, results of operation or financial condition of the Company and its consolidated subsidiaries.  

3.9.No Directed Selling Efforts or General Solicitation.  Neither the Company nor any Person acting on its behalf has conducted any general solicitation or general advertising (as those terms are used in Regulation D of the Securities Act) in connection with the offer or sale of any of the Securities. 

4.Representations, Warranties and Acknowledgements of Purchaser.  Purchaser hereby represents and warrants to the Company, and acknowledges that: 

4.1.Authorization.  Purchaser is duly organized and validly existing in the jurisdiction of its organization and has all requisite power and authority to purchase and hold the Securities issuable hereunder. The decision to invest and the execution and delivery of this Agreement by Purchaser, the performance by Purchaser of its obligations hereunder and the consummation by Purchaser of the transactions contemplated hereby have been duly authorized and requires no other proceedings on the part of Purchaser. Purchaser has the right, power and authority to execute and deliver this Agreement and all related instruments. This Agreement has been duly executed and delivered by Purchaser and, assuming the execution and delivery hereof and acceptance thereof by the Company, will constitute the legal, valid and binding obligations of Purchaser, enforceable against Purchaser in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors’ rights generally and except as enforceability may be subject to general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law). 

4.2.Purchase Entirely for Own Account.  HCM is an SEC registered investment adviser authorized to serve as a fiduciary and act on behalf of each of its advisory clients pursuant to an advisory agreement. Accordingly, HCM may acquire the Securities on behalf of one or more designated advisory clients (the “Designees”) and may allocate the Securities to the Designees as determined in HCM’s sole discretion. Further, the Securities to be received by Purchaser hereunder will be acquired for Purchaser’s own account, not as nominee or agent, and not with a view to the resale or distribution of any part thereof in violation of the Securities Act, and Purchaser has no present intention of selling, granting any participation in, or otherwise distributing the same in violation of the Securities Act without prejudice, however, to Purchaser’s right at all times to sell or otherwise dispose of all or any part of Securities in compliance with applicable federal and state securities laws.  Nothing contained herein shall be deemed a representation or warranty by Purchaser to hold the Securities for any period of time.  Purchaser is not a broker-dealer registered with the SEC or an entity engaged in a business that would require it to be so registered. 

4.3.Investment Experience.  Purchaser acknowledges that it can bear the economic risk and complete loss of its investment in the Securities and has such knowledge and experience in financial or business matters that it is capable of evaluating the merits and risks of the investment contemplated hereby. 

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4.4.Disclosure and Review of Information.  Purchaser has had an opportunity to receive all information related to the Company requested by it and to ask questions of and receive answers from the Company regarding the Company, its business and the terms and conditions of the offering of the Securities.  Purchaser acknowledges receipt of copies of the SEC Filings via the EDGAR system maintained by the SEC (www.sec.gov).  Neither such inquiries nor any other due diligence investigation conducted by Purchaser shall modify, amend or affect Purchaser’s right to rely on the Company’s representations and warranties contained in this Agreement; provided, Purchaser shall not rely on representations except those expressly set forth in this Agreement.  Purchaser represents and warrants to the Company that Purchaser has carefully reviewed the SEC Filings, including the specific Risk Factors set forth therein, a reasonable period of time prior to making the investment contemplated by this Agreement. 

4.5.Restricted Securities.  Except as provided for in the Registration Rights Agreement, none of the Securities to be purchased hereunder will be registered and shall be characterized as “restricted securities” under the federal securities laws. Under such laws such securities may be resold without registration under the Securities Act only in certain limited circumstances.  Each certificate evidencing Shares or shares issued upon exercise of the Warrants to be issued hereunder shall bear a legend in substantially the following form: 

 

THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR QUALIFIED UNDER ANY STATE OR FOREIGN SECURITIES LAWS AND MAY NOT BE OFFERED FOR SALE, SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED OR ASSIGNED UNLESS (I) A REGISTRATION STATEMENT COVERING SUCH SHARES IS EFFECTIVE UNDER THE ACT AND IS QUALIFIED UNDER APPLICABLE STATE AND FOREIGN LAW OR (II) THE TRANSACTION IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS UNDER THE ACT AND THE QUALIFICATION REQUIREMENTS UNDER APPLICABLE STATE AND FOREIGN LAW AND, IF THE COMPANY REQUESTS, AN OPINION SATISFACTORY TO THE COMPANY TO SUCH EFFECT HAS BEEN RENDERED BY COUNSEL.

 

 

Purchaser acknowledges and agrees that, as “restricted securities,” the Securities to be purchased by it may not be transferred, hypothecated, sold or otherwise disposed of until (i) a registration statement with respect to such securities is declared effective under the Securities Act, or (ii) the Company receives an opinion of counsel for the holder(s) of such Securities, reasonably satisfactory to counsel for the Company, that an exemption from the registration requirements of the Securities Act is available.  

 

4.6.Accredited and Sophisticated Investor.  Purchaser is an accredited investor as defined in Rule 501(a) of Regulation D promulgated under the Securities Act. Purchaser acknowledges that Purchaser is able to fend for itself, can bear the economic risk of its investment, and has such knowledge and experience in financial or business matters that it is capable of evaluating the merits and risks of the investment in the Securities.   

4.7.No General Advertisement.  Purchaser did not learn of the investment in the Securities as a result of any public advertisement, article, notice or other communication regarding the Securities published in any newspaper, magazine or similar media or broadcast over television, radio or internet or presented at any seminar or other general advertisement.  Rather, Purchaser learned of the investment in the Securities through its prior contact with the Company, its agents and/or its affiliates.   

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4.8.No Disqualification Events.  Neither Purchaser nor, to the extent it has them, any of Purchaser’s stockholders, members, managers, general or limited partners, directors, affiliates or executive officers (collectively with Purchaser, the “Purchaser Covered Persons”), are subject to any of the “Bad Actor” disqualifications described in Rule 506(d)(1)(i) to (viii) under the Securities Act (a “Disqualification Event”), except for a Disqualification Event covered by Rule 506(d)(2) or (d)(3). Purchaser has exercised reasonable care to determine whether any Purchaser Covered Person is subject to a Disqualification Event. The purchase of the Securities by Purchaser will not subject the Company to any Disqualification Event. 

4.9.Prohibited Transactions.  During the last thirty (30) days prior to the date hereof, neither Purchaser nor any affiliate of Purchaser which (x) had knowledge of the transactions contemplated hereby, (y) has or shares discretion relating to Purchaser’s investments or trading or information concerning Purchaser’s investments, including in respect of the Securities, or (z) is subject to Purchaser’s review or input concerning such affiliate’s investments or trading (collectively, “Trading Affiliates”) has, directly or indirectly, effected or agreed to effect any short sale, whether or not against the box, established any “put equivalent position” (as defined in Rule 16a-1(h) under the Exchange Act) with respect to the Securities, granted any other right (including, without limitation, any put or call option) with respect to the Securities or with respect to any security that includes, relates to or derived any significant part of its value from the Securities or otherwise sought to hedge its position in the Securities (each, a “Prohibited Transaction”).  Prior to the earliest to occur of (i) the date that the Registration Statement (as defined in the Registration Rights Agreement) is declared effective by the SEC or (ii) the date on which the Registration Statement is required to be declared effective by the SEC under the terms of the Registration Rights Agreement, Purchaser shall not, and shall cause its Trading Affiliates not to, engage, directly or indirectly, in a Prohibited Transaction. 

4.10.Residence.  The office or offices of HCM in which its principal place of business is located is identified in the address or addresses of HCM set forth on the signature page hereof. 

5.Right of Participation.  The Company agrees that, during the Commitment Period, the Company will not participate in any offer or sale of equity or equity-linked  securities made for the purpose of raising capital for the Company (a “Subsequent Financing”) without offering to Purchaser the opportunity to purchase up to $2,500,000 of the same securities offered (but not included) in such Subsequent Financing on the same terms, conditions, and net price provided to the participants in the Subsequent Financing. The Commitment Amount shall be reduced by the amount of proceeds received by the Company in each Subsequent Financing. 

6.Survival and Indemnification. 

6.1.Survival.  The representations, warranties, covenants, indemnifications, and agreements contained in this Agreement shall survive the closing of the transactions contemplated by this Agreement. 

6.2.Indemnification.   

(a)By the Company.  The Company agrees to indemnify and hold harmless Purchaser and its affiliates and their respective directors, officers, employees and agents from and against any and all losses, claims, damages, liabilities and expenses (including without limitation reasonable attorney fees and disbursements and other expenses incurred in connection with investigating, preparing or defending any action, claim or proceeding, pending or threatened and the costs of enforcement thereof) to which such Person may become subject as a result of any breach of representation, warranty, covenant or agreement made by or to be performed on the part  

8

of the Company under the Transaction Documents or arising out of or based upon any untrue or alleged untrue statement of a material fact contained in any SEC filing by the Company or arising out of or based upon any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein not misleading, which affects Purchaser’s rights under the Transaction Documents or with respect to the Securities purchased hereunder, and will advance or reimburse any such Person for all such amounts as they are incurred by such Person.  Furthermore, the Company shall only be liable to Purchaser due to a direct result of the Company’s breach of its obligations contained in this Agreement should Purchaser make a claim against it for diminution in stock as a loss for which indemnification is sought.  

(b)By Purchaser.  Purchaser agrees to indemnify and hold harmless the Company and its affiliates and their respective directors, officers, employees and agents from and against any and all losses, claims, damages, liabilities and expenses (including without limitation reasonable attorney fees and disbursements and other expenses incurred in connection with investigating, preparing or defending any action, claim or proceeding, pending or threatened and the costs of enforcement thereof) to which the Company may become subject as a result of any breach of representation, warranty, covenant or agreement made by or to be performed on the part of Purchaser under the Transaction Documents, and will reimburse the Company for all such amounts as they are incurred by the Company.   

7.Miscellaneous. 

7.1.Successors and Assigns.  This Agreement may not be assigned by a party hereto without the prior written consent of the Company or Purchaser, as applicable, provided, however, that Purchaser may assign its rights and delegate its duties hereunder in whole or in part to an affiliate or to a third party acquiring some or all of its Securities in a private transaction without the prior written consent of the Company, after notice duly given by Purchaser to the Company, provided, that no such assignment or obligation shall affect the obligations of Purchaser hereunder.  The provisions of this Agreement shall inure to the benefit of and be binding upon the respective permitted successors and assigns of the parties.  Nothing in this Agreement, express or implied, is intended to confer upon any party other than the parties hereto or their respective successors and assigns any rights, remedies, obligations, or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement. 

7.2.Counterparts.  This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.  This Agreement may also be executed and transmitted via electronic transmission, which shall be deemed an original. 

7.3.Titles and Subtitles.  The titles and subtitles used in this Agreement are used for convenience only and are not to be considered in construing or interpreting this Agreement. 

7.4.Notices.  All notices and other communications required or permitted hereunder shall be in writing and shall be deemed effectively given: (a) upon personal delivery to the party to be notified; (b) when sent by confirmed electronic mail or facsimile if sent during normal business hours of the recipient, if not, then on the next Business Day; (c) five (5) days after having been sent by registered or certified mail, return receipt requested, postage prepaid; or (d) one (1) Business Day after deposit with a nationally recognized overnight courier, specifying next day delivery, with written verification of receipt. Notwithstanding the preceding sentence, if notice is given to Purchaser in a form other than electronic mail, the Company shall also provide a copy of the same notice by electronic mail. All communications shall be sent to Purchaser at its address as set forth on the signature page hereof, or to such address or facsimile number as subsequently modified by written notice given in accordance with  

9

this Section 7.4. If notice is given to the Company, it shall be sent to 11940 Jollyville Road, Suite 300-N, Austin, TX 78759, Attention: Chief Financial Officer; and a copy (which shall not constitute notice) shall also be sent to Kirton McConkie, PC, 50 E. South Temple, Suite 400, Salt Lake City, Utah 84111, Attention: Alexander N. Pearson, apearson@kmclaw.com.

7.5.Expenses.  The Company shall reimburse Purchaser for all of Purchaser’s costs and expenses incurred in connection herewith, up to a maximum amount of $15,000.  In the event that legal proceedings are commenced by any party to this Agreement against another party to this Agreement in connection with this Agreement or the other Transaction Documents, the party which does not prevail in such proceedings shall pay the reasonable attorneys’ fees and other reasonable out-of-pocket costs and expenses incurred by the prevailing party in such proceedings. 

7.6.Sufficiency of Authorized Common Stock. Prior to the expiration of any of the Warrants, the Company shall at all times have reserved for issuance, free of preemptive or similar rights, a sufficient number of shares of authorized and unissued shares of Common Stock to effectuate such exercise. 

7.7.Information Rights. At the request of the Purchaser, from time to time upon reasonable notice, the Company shall make the Chief Financial Officer of the Company available to meet with the Purchaser for the purpose of discussing with the Purchaser the financial condition, business and results of operations of the Company.  Nothing in this Section 7.7 shall obligate the Company or the Chief Financial Officer to disclose any material, nonpublic information.   

7.8.Termination.  This Agreement may be terminated at any time upon the mutual written consent of the Purchaser and the Company. Notwithstanding the foregoing, the Purchaser may terminate this Agreement in its sole discretion effective as of the closing of a Fundamental Transaction.  

7.9.Amendments and Waivers.  Any term of this Agreement may be amended and the observance of any term of this Agreement may be waived (either generally or in a particular instance and either retroactively or prospectively), only with the written consent of the Company and Purchaser.  

7.10.Severability.  Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof but shall be interpreted as if it were written so as to be enforceable to the maximum extent permitted by applicable law, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.  To the extent permitted by applicable law, the parties hereby waive any provision of law which renders any provision hereof prohibited or unenforceable in any respect. 

7.11.Entire Agreement.  This Agreement, including the other Transaction Documents, constitutes the entire agreement among the parties hereof with respect to the subject matter hereof and thereof and supersedes all prior agreements and understandings, both oral and written, between the parties with respect to the subject matter hereof and thereof. 

7.12.Further Assurances.  The parties shall execute and deliver all such further instruments and documents and take all such other actions as may reasonably be required to carry out the transactions contemplated hereby and to evidence the fulfillment of the agreements herein contained.  

7.13.Specific Performance.  Each party acknowledges that the other party would be damaged irreparably and would have no adequate remedy of law if any provision of this Agreement is not  

10

performed in accordance with its specific terms or otherwise is breached.  Accordingly, each party agrees that the other party will be entitled to an injunction to prevent any breach of any provision of this Agreement and to enforce specifically any provision of this Agreement, in addition to any other remedy to which they may be entitled and without having to prove the inadequacy of any other remedy they may have at law or in equity and without being required to post bond or other security.

7.14.Governing Law; Consent to Jurisdiction; Waiver of Jury Trial.  This Agreement shall be governed by, and construed in accordance with, the internal laws of the State of Delaware without regard to the choice of law principles thereof.  Each of the parties hereto irrevocably submits to the exclusive jurisdiction of the state and federal courts located in Kent County, Delaware for the purpose of any suit, action, proceeding or judgment relating to or arising out of this Agreement and the transactions contemplated hereby.  Service of process in connection with any such suit, action or proceeding may be served on each party hereto anywhere in the world by the same methods as are specified for the giving of notices under this Agreement.  Each of the parties hereto irrevocably consents to the jurisdiction of any such court in any such suit, action or proceeding and to the laying of venue in such court.  Each party hereto irrevocably waives any objection to the laying of venue of any such suit, action or proceeding brought in such courts and irrevocably waives any claim that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum.  EACH OF THE PARTIES HERETO WAIVES ANY RIGHT TO REQUEST A TRIAL BY JURY IN ANY LITIGATION WITH RESPECT TO THIS AGREEMENT AND REPRESENTS THAT COUNSEL HAS BEEN CONSULTED SPECIFICALLY AS TO THIS WAIVER. 

7.15.Company Acceptance.  This Agreement is not binding on the Company unless and until the Company executes the signature page set forth below. 

 [signature page follows]

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The undersigned has executed this Securities Purchase Agreement on this 3rd day of April                              2020. 

 

 

PURCHASER:

 

 

	HORTON CAPITAL MANAGEMENT, LLC

(and on behalf of the Designees)

 

By: /s/ Joseph Manko, Jr. 

Name: Joseph Manko, Jr.

Title: Sr. Principal

   

 

1717 Arch St., Ste. 3920

 

Philadelphia, PA 19103

Address

 

 

Federal Identification or Social Security No.

 

Delaware 

State of Domicile/Organization/Incorporation

 

	 

 

	Additional Information for Notice:

	Facsimile:  

	 

	 

	Email:  

	jmanko@thehortonfund.com

	 

	 

	 

	 

	 

	 

	 

	Copy to: 

	 

	 

	 

	 

IN WITNESS WHEREOF, the Company has executed this Securities Purchase Agreement as of the date set forth below.

 

THE COMPANY:CYNERGISTEK, INC. 

 

 

 

By:/s/ Paul Anthony 

Name: Paul T. Anthony 

Title: CFO 

 

Date of Execution: April 3, 2020 

1

EXHIBIT A

Form of Registration Rights Agreement

2

EXHIBIT B

Form of Initial Warrant

3

EXHIBIT C

Form of Funding Warrant

4

EXHIBIT D

Form of Funding Notice

5

SCHEDULE 3.8

In December 2019, a novel strain of coronavirus was reported to have surfaced in Wuhan, China. In January 2020, this coronavirus spread to other countries, including the United States, and efforts to contain the spread of this coronavirus intensified. The outbreak and any preventative or protective actions that governments or we may take in respect of this coronavirus may result in a period of business disruption, reduced customer traffic and reduced operations. Any resulting financial impact cannot be reasonably estimated at this time but may materially affect the Company’s business, financial condition and results of operations. The extent to which the coronavirus impacts the Company’s results will depend on future developments, which are highly uncertain and cannot be predicted, including new information which may emerge concerning the severity of the coronavirus and the actions to contain the coronavirus or treat its impact, among others. Moreover, the coronavirus outbreak has begun to have indeterminable adverse effects on general commercial activity and the world economy, and the Company’s business and results of operations could be adversely affected to the extent that this coronavirus or any other epidemic harms the global economy generally.

 

Further the uncertain nature of its spread globally may impact the Company’s business operations resulting from quarantines of employees, customers, and third-party service providers. At this time, the Company is unable to estimate the impact of this event on its operations.  

 

The market price for the Company’s common stock has been, and is likely to continue to be, volatile.  Due in part to the outbreak of Covid-19, the Company’s common stock, and the stock market as a whole, has recently experienced substantial volatility.  

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