Document:

FS Investment Corporation 8-K

Exhibit 10.1

EXECUTION VERSION

SIXTH AMENDMENT TO CREDIT AGREEMENT

THIS SIXTH AMENDMENT
TO CREDIT AGREEMENT, dated as of December 20, 2013 (together with all exhibits and schedules hereto, this “Sixth Amendment”),
is entered into by and between BROAD STREET FUNDING LLC, a Delaware limited liability company (the “Borrower”),
and DEUTSCHE BANK AG, NEW YORK BRANCH (“DBNY”) as Administrative Agent (in such capacity, the “Administrative
Agent”) and as a lender (DBNY and each other Lender party to the Credit Agreement from time to time, the “Lenders”
and each a “Lender”). Capitalized terms used herein and not otherwise defined herein have the meanings assigned
to such terms in the Credit Agreement described below.

RECITALS:

A.The Borrower
and DBNY are parties to a Credit Agreement dated as of March 10, 2010 by and among the Borrower and DBNY, as Administrative Agent
and as a Lender, as (i) amended pursuant to that First Amendment to Credit Agreement and to Security Agreement dated as of
July 13, 2010, (ii) further amended pursuant to that Second Amendment to Credit Agreement dated as of November 10, 2010, (iii) further
amended and restated pursuant to that Third Amendment to Credit Agreement dated as of January 28, 2011, (iv) amended pursuant
to that Fourth Amendment to Credit Agreement dated as of March 23, 2012, and (v) further amended pursuant to that Fifth Amendment
to Credit Agreement dated as of March 22, 2013 (the credit agreement, as amended and amended and restated prior to the date hereof,
the “Credit Agreement” and, the Credit Agreement, as amended by this Sixth Amendment, the “Amended
Credit Agreement”).

B.The parties
hereto desire, among other things, to (i) extend the Scheduled Commitment Termination Date, (ii) reduce the Maximum Commitment,
(iii) provide for certain termination rights and (iv) make certain other related amendments that are set forth herein.

NOW, THEREFORE, for
good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows:

Section 1.               
Amendment of Credit Agreement. Effective as of the date hereof, the Credit Agreement is hereby amended as follows:

(a)               
Section 2.02(a) of the Credit Agreement is hereby deleted and replaced in its entirety with the following:

“Each Lender’s
commitment to make Loans hereunder shall automatically terminate, and the Maximum Commitment shall be reduced to zero, upon the
Commitment Termination Date. The Borrower may voluntarily, from time to time, permanently reduce the amount of the Maximum Commitment
upon at least sixty (60) days’ prior written notice (subject to Clause (b) below) to the Administrative Agent specifying
the amount of such reduction, which notice shall be irrevocable once given; provided that (i) no reduction may reduce the

 

    	

    	 

    

Maximum Commitment below $25,000,000
unless the Maximum Commitment is reduced to zero; (ii) any partial reduction of the Maximum Commitment shall be in a minimum amount
of $10,000,000 and in an integral multiple of $1,000,000 for amounts in excess thereof; (iii) no such reduction shall reduce the
Maximum Commitment to an amount less than the sum of the then aggregate outstanding Loans and (iv) any such reduction shall be
applied to reduce (x) first, the Tranche C Commitment, if any, until such Tranche C Commitment is zero; (y) second, the Tranche
B Commitment, if any, until such Tranche B Commitment is zero; and (z) thereafter the Tranche A Commitment. The Administrative
Agent shall promptly notify each Lender of the receipt of any such notice and the pro rata reduction of such Lender’s Commitment.”

(b)              
Section 2.02(b) of the Credit Agreement is hereby deleted and replaced in its entirety with the following:

“Borrower
may reduce the Maximum Commitment in accordance with Section 2.02(a) in all respects (except for the notice period) on at least
ten (10) Business Days’ prior written notice to the Administrative Agent if Borrower, concurrently with or prior to the effectiveness
of any such reduction in the Maximum Commitment, pays (without duplication) to the Administrative Agent, for the account of the
Lenders, a fee equal to the difference between (x) the Commitment Fee that would have accrued on the amount of such reduction during
the sixty (60) day notice period pursuant to Section 2.02(a), or, if fewer, the number of days from (and including) the date of
such notice to (and excluding) the Scheduled Commitment Termination Date, and (y) the Commitment Fee that accrued on such amount
during the shortened notice period elected pursuant to this Section 2.02(b).”

(c)               
The following clauses (c) and (d) are hereby added to Section 2.02 of the Credit Agreement:

“(c)The
Lenders may voluntarily, from time to time, subject to Section 9.13(a), permanently reduce the amount of the Maximum Commitment
upon at least sixty (60) days’ (such 60-day period, the “OET Period”) prior written notice (subject to
Clause (d) below) to the Borrower specifying the amount of such reduction.

(d)If the
Lenders reduce the Maximum Commitment in accordance with Section 2.02(c), DBNY shall maintain its Commitment during the OET Period
in an amount equal to the least of: (i) the outstanding principal amount of the Loans as of the close of business on the day on
which the Lenders provided the notice of such reduction (such day, the “Termination Notice Day”), (ii) the average
outstanding principal amount of the Loans over the thirty (30) Business Days immediately preceding the Termination Notice Day,
(iii) the outstanding principal amount of the Loans as of the close of business on any Business Day following and including the
Termination Notice Day, and (iv) the Maximum Commitment.”

     

	2

 

    	 

    

(d)              
 Section 2.03(a) of the Credit Agreement is hereby deleted and replaced in its entirety with the following:

“(a)Setup
Fee. The Borrower shall pay to DBNY a Setup Fee in an amount and at the time as set forth in the fee letter between DBNY and
the Borrower dated as of December 20, 2013 (the “December 2013 Fee Letter”). The Borrower agrees that, once
paid, the fees or any part thereof payable hereunder are irrevocable and non-refundable under any circumstances. The December 2013
Fee Letter supersedes all prior fee letters, which remain valid and enforceable until the execution of the December 2013 Fee Letter.”

(e)               
Section 2.04 of the Credit Agreement is hereby amended by replacing the phrase “45 days” in the first sentence
with the phrase “60 days”.

(f)               
Section 9.03(b) of the Credit Agreement is hereby amended by deleting the table in clause (ii) thereof and replacing it
with the following:

	Name	Telephone Number	Email Address
	Gerald F. Stahlecker	(215) 495-1169	jerry.stahlecker@franklinsquare.com
	Michael C. Forman	(215) 495-1160	michael.forman@franklinsquare.com
	Stephen S. Sypherd	(215) 495-1185	stephen.sypherd@franklinsquare.com
	Ken Miller	(215) 495-1164	ken.miller@franklinsquare.com
	Angelina Perkovic	(212) 503-2146	angelina.perkovic@gsocap.com
	Sal Aloia	(212) 503-6982	sal.aloia@gsocap.com
	Andrew Jordan	(212) 503-2118	andrew.jordan@gsocap.com

(g)              
Section 9.13(a) of the Credit Agreement is hereby deleted and replaced in its entirety with the following:

“(a)waive
any condition set forth in Section 4.01 (other than Section 4.01(l)) or reduce the Maximum Commitment pursuant to Section 2.02(c)
without the written consent of each Lender with a Commitment or outstanding Loan, in each case, greater than zero;”

(h)              
The following definitions are hereby added to Annex I to the Credit Agreement in the applicable alphabetical location:

“December
2013 Fee Letter” has the meaning set forth in Section 2.03(a).

(i)                
The following definitions in Annex I to the Credit Agreement are hereby replaced in their entirety with the following:

“Commitment
Fee” means zero.

“Maximum
Commitment” means, (a) at any date of determination prior to the Commitment Termination Date, the lesser of (x) $125,000,000
or (y) such lesser

 

    	3

 

    	 

    

amount remaining following any reduction
of the Maximum Commitment in accordance with Section 2.02 (Voluntary Reductions or Termination of the Maximum Commitment)
or Section 2.04 (Lender Commitment Reduction, Applicable Margin Adjustments and Margin Requirement Changes) and (b) on and
after the Commitment Termination Date, zero.

“Scheduled
Commitment Termination Date” means December 20, 2014.

“Tranche
A Commitment” means $125,000,000 (as adjusted for any reductions of the Tranche A Commitment due to a corresponding reduction
of the Maximum Commitment pursuant to Section 2.02 (Voluntary Reductions or Termination of the Maximum Commitment); provided
that on and after the Commitment Termination Date the Tranche A Commitment shall be zero.

(j)                
The definition of “March 2013 Fee Letter” in Annex I to the Credit Agreement is hereby deleted in its
entirety.

(k)              
The definition of “Additional Margin Requirement” in Section 1(a) of Annex II to the Credit Agreement
is hereby amended by replacing the value “40%” in subclause (iv)(y)(D) thereof with the value “25%”.

(l)                
The definition of “Excluded Investments” in Section 2 of Annex II to the Credit Agreement is hereby amended
by:

                                                                         
(i)               
inserting the following at the end of clause (viii) thereof:

“provided,
however, that no Bank Loan shall constitute an Excluded Investment on the basis of this clause (viii) for a period of three
weeks after the closing date with respect to such Bank Loan if such Bank Loan has been arranged by two or more Approved Banks;”

                                                                       
(ii)               
deleting the word “and” at the end of clause (xxvi) thereof;

                                                              
        (iii)                replacing
“.” at the end of clause (xxvii) thereof with “; and”; and

                                                                  
    (iv)                inserting
the following as clause (xxviii) thereof:

“(xxviii)Bank
Loans with a Stated Maturity greater than seven years after the date of acquisition of such Bank Loans, unless approved by the
Administrative Agent in its sole discretion.”

(m)            
The definition of “Portfolio Limitations” in Section 2 of Annex II to the Credit Agreement is hereby
amended by replacing the value “40%” in clause (i) thereof with the value “25%”.

(n)              
Annex II-A-2 to the Credit Agreement is hereby replaced with Schedule I hereto.

 

    	4

 

    	 

    

(o)              
 Annex II-A-4 to the Credit Agreement is hereby replaced with Schedule II hereto.

(p)              
Annex II-B-1 to the Credit Agreement is hereby replaced with Schedule III hereto.

(q)              
Annex II-B-2 to the Credit Agreement is hereby replaced with Schedule IV hereto.

(r)               
Annex II-B-3 to the Credit Agreement is hereby replaced with Schedule V hereto.

(s)              
Annex II-B-4 to the Credit Agreement is hereby replaced with Schedule VI hereto.

(t)               
Annex II-B-5 to the Credit Agreement is hereby replaced with Schedule VII hereto.

(u)              
Annex II-C-1 to the Credit Agreement is hereby replaced with Schedule VIII hereto.

(v)              
Annex II-C-2 to the Credit Agreement is hereby replaced with Schedule IX hereto.

(w)        
     Annex II-C-5 to the Credit Agreement is hereby replaced with Schedule X hereto.

(x)              
Schedule 8 to the Credit Agreement is hereby amended by deleting IDC from the list of Approved Pricing Services therein.

(y)              
The signature page of Deutsche Bank AG, New York Branch, as Lender, on and after December 20, 2013 shall be replaced with
its signature page hereto.

Section 2.               
Conditions Precedent. It shall be a condition precedent to the effectiveness of this Sixth Amendment that each of
the following conditions are satisfied:

(a)               
Agreements. The Administrative Agent shall have received executed counterparts of this Sixth Amendment and the December
2013 Fee Letter duly executed and delivered by an Authorized Representative of the Borrower.

(b)              
Evidence of Authority. The Administrative Agent shall have received:

(1)              
a certificate of an Authorized Representative of the Borrower and a Responsible Officer (which could be the same person
as the Authorized Representative), dated the Sixth Amendment Closing Date, as to:

 

    	5

 

    	 

    

 (i)   
 the authority of the Borrower to execute and deliver this Sixth Amendment and to perform its obligations under the Amended
Credit Agreement, the Notes, and each other Credit Document executed by it, in each case as amended by this Sixth Amendment and
each other instrument, agreement or other document to be executed in connection with the transactions contemplated in connection
herewith and therewith;

(ii)     the authority and signatures of those Persons authorized on behalf of the Borrower to execute and deliver this Sixth Amendment
and the other Credit Documents to be executed and delivered in connection with this Sixth Amendment and to act with respect to
this Sixth Amendment and each other Credit Document executed or to be executed by the Borrower, upon which certificate each Lender,
including each assignee (whether or not it shall have then become a party hereto), may conclusively rely until it shall have received
a further certificate of the Borrower canceling or amending such prior certificates; and

(iii)     the absence of any changes in the Organic Documents of the Borrower since the copies delivered in connection with the closing
of the Fourth Amendment to Credit Agreement; and

(2)           
such other instruments, agreements or other documents (certified if requested) as the Administrative Agent may reasonably
request.

(c)               
The Administrative Agent shall have received a certificate of an Authorized Representative of the Borrower and a Responsible
Officer (which could be the same person as the Authorized Representative), in each case on behalf of the Borrower dated as of the
Sixth Amendment Closing Date, in form and substance reasonably satisfactory to the Administrative Agent (which shall be deemed
to have been given under the Credit Agreement), to the effect that, as of such date:

(1)              
all conditions set forth in this Section 2 (CONDITIONS PRECEDENT) have been fulfilled;

(2)              
all representations and warranties of the Borrower set forth in Article 5 of the Credit Agreement (REPRESENTATIONS
AND WARRANTIES) are true and correct in all material respects as if made on the Sixth Amendment Closing Date (unless expressly
made as of a certain date, in which case it shall be true and correct in all material respects as of such date);

(3)              
all representations and warranties set forth in each of the Collateral Documents are true and correct in all material respects
as if made on the Sixth Amendment Closing Date (unless expressly made as of a certain date, in which case it shall be true and
correct in all material respects as of such date); and

(4)              
no Default or Event of Default shall be continuing.

(d)              
Opinion of Counsel. The Administrative Agent shall have received a legal opinion from Dechert LLP, counsel to the
Borrower, the Manager and FB Income, in form and

 

    	6

 

    	 

    

substance reasonable satisfactory to
the Administrative Agent covering such matters as the Administrative Agent may reasonably request.

(e)               
Manager Letter. The Administrative Agent shall have received from the Manager a letter in the form of Exhibit A
hereto addressed to the Administrative Agent amending and restating the Manager Letter entered into in connection with the Credit
Agreement.

(f)               
Equity Owner Letter. The Administrative Agent shall have received from the Equity Owner a letter in the form of Exhibit B
hereto addressed to the Administrative Agent amending and restating the Equity Owner Letter entered into in connection with the
Credit Agreement.

(g)              
FB Income Letter. The Administrative Agent shall have received from FB Income a letter in the form of Exhibit C
hereto addressed to the Administrative Agent amending and restating the FB Income Letter entered into in connection with the Credit
Agreement.

(h)              
Closing Fees, Expenses, etc. The Administrative Agent shall have received for its own account, or for the account
of the Lenders, as the case may be, all fees, costs and expenses then due and payable to it under the Credit Agreement and the
December 2013 Fee Letter.

(i)                
After giving effect to any requested Borrowing on the Sixth Amendment Closing Date (1) the aggregate principal amount
of all Loans outstanding will not exceed the Maximum Commitment and (2) the Overcollateralization Test is satisfied.

(j)                
Satisfactory Legal Form. All limited liability company and other actions or proceedings taken or required to be taken
in connection with the transactions contemplated hereby and all agreements, instruments, documents and opinions of counsel executed,
submitted, or delivered pursuant to or in connection with this Sixth Amendment by or on behalf of the Borrower shall be reasonably
satisfactory in form and substance to the Administrative Agent and its counsel; all certificates and opinions delivered pursuant
to this Sixth Amendment shall be addressed to the Administrative Agent and the Lenders, or the Administrative Agent and the Lenders
shall be expressly entitled to rely thereon; the Administrative Agent and its counsel shall have received all information, and
such number of counterpart originals or such certified or other copies of such information, as the Administrative Agent or its
counsel may reasonably request; and all legal matters incident to the transactions contemplated by this Sixth Amendment shall be
reasonably satisfactory to counsel to the Administrative Agent.

Section 3.               
Miscellaneous.

(a)               
GOVERNING LAW. THIS SIXTH AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE
OF NEW YORK INCLUDING SECTIONS 5-1401 AND 5-1402 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK WITHOUT REGARD
TO CONFLICT OF LAW PRINCIPLES.

 

    	7

 

    	 

    

(b)              
 Amendments, Etc. None of the terms of this Sixth Amendment may be changed, waived, discharged or terminated unless
such change, waiver, discharge or termination is in writing signed by the Borrower and the Administrative Agent (or other applicable
party thereto as the case may be), and each such waiver or consent shall be effective only in the specific instance and for the
specific purpose for which given.

(c)               
Severability. If any one or more of the covenants, agreements, provisions or terms of this Sixth Amendment shall
be for any reason whatsoever held invalid, then such covenants, agreements, provisions or terms shall be deemed severable from
the remaining covenants, agreements, provisions or terms of this Sixth Amendment and shall in no way affect the validity or enforceability
of the other provisions of this Sixth Amendment.

(d)              
Counterparts. This Sixth Amendment may be executed by the parties hereto in separate counterparts, each of which
when so executed and delivered shall be an original, but all such counterparts shall together constitute one and the same instrument.

(e)               
Successors and Assigns. All covenants and agreements contained herein shall be binding upon, and inure to the benefit
of the parties hereto and their respective successors and permitted assigns.

(f)               
Captions. The captions and section headings appearing herein are included solely for convenience of reference and
are not intended to affect the interpretation of any provision of this Sixth Amendment.

(g)              
Entire Agreement. This Sixth Amendment constitutes a final and complete integration of all prior expressions by the
parties hereto with respect to the subject matter hereof and shall (together with the Amended Credit Agreement and the Security
Agreement) constitute the entire agreement among the parties hereto with respect to the subject matter hereof, superseding all
previous oral statements and other writings with respect thereto.

[Signature pages follow]

 

    	8

 

    	 

    

IN WITNESS WHEREOF,
the parties hereto have caused this Sixth Amendment to be duly executed and delivered as of the day and year first above written.

	 	 	BORROWER
	 	 	 
	 	 	 
	 	 	BROAD STREET FUNDING LLC,
	 	 	as Borrower
	 	 	 
	 	 	By:	/s/ Gerald F. Stahlecker
	 	 	Name:	Gerald F. Stahlecker
	 	 	Title:	Executive Vice President

 

    	[Signature
                                         Page to Sixth Amendment]

 

    	 

    

	 		ADMINISTRATIVE
AGENT
	 		 
	 	 	 
	 	 	DEUTSCHE BANK AG, NEW YORK
	 	 	BRANCH
    as Administrative Agent
	 	 	 
	 	 	By:	/s/
    Ian R. Jackson
	 	 	Name:	
    Ian R. Jackson
	 	 	Title:	Director
	 	 	 	 
	 	 	 	 
	 	 	By:	/s/ Satish Ramakrishna 
	 	 	Name:	Satish Ramakrishna
	 	 	Title:	Managing Director
	 	 	

    	[Signature
                                         Page to Sixth Amendment]

 

    	 

    

	 	 	 
	 	 	DEUTSCHE BANK AG, NEW YORK
	 	 	BRANCH,
    as Lender
	 	 	 
	 	 	By:	/s/
    Ian R. Jackson
	 	 	Name:	
    Ian R. Jackson
	 	 	Title:	Director
	 	 	 	 
	 	 	 	 
	 	 	By:	/s/ Satish Ramakrishna 
	 	 	Name:	Satish Ramakrishna
	 	 	Title:	Managing Director
	 	 	

The Commitment of Deutsche Bank AG,
New York Branch, as Lender is as follows:

 

	Type of Commitment	Amount of Commitment	Percentage of Tranche
	Tranche A Commitment	$125,000,000	100%
	Tranche B Commitment	$0	0%
	Tranche C Commitment	$0	0%
	 	 	 
	Total Commitment	$125,000,000	 
	Applicable Percentage	100%

                                                           

                                                           
	 

    	[Signature
                                         Page to Sixth Amendment]

 

    	 

    

SCHEDULE I

Annex II-A-2

Base Margin Requirement – Bank
Loans

	 	
        Outstanding
        Facility Size

	 	
        Greater
        than or equal to

        $400 million
	
        Greater
        than or equal to $150 million and less than $400 million

	 	
        Number
        Of Pricing Sources

	
        Spread To Maturity
	
        Greater
        than 5
	
        2, 3, 4
        or 5
	
        Greater
        than 5
	
        2, 3, 4
        or 5

	Less than or equal to 2.50%	15%	18%	25%	28%
	Greater than 2.50% and less than or equal to 6.00%	17%	20%	27%	30%
	Greater than 6.00% and less than or equal to 9.00%	22%	25%	32%	35%
	Greater than 9.00% and less than or equal to 12.00%	28%	31%	38%	41%
	Greater than 12.00% and less than or equal to 15.00%	32%	35%	42%	45%
	Greater than 15.00% and less than or equal to 18.00%	37%	40%	47%	50%
	Greater than 18.00% and less than or equal to 20.00%	42%	45%	52%	55%
	Greater than 20.00%	TBA	TBA	TBA	TBA

 

“TBA” means as advised
to the Manager/Borrower, in writing, by the Administrative Agent on a case by case basis and, until so advised, 100%.

The base rate will be determined based
on a linear interpolation of the loan spread to maturity between the table boundaries. The minimum base rate will be the rate in
the 250bps loan spread level.

    	Schedule
I                                         

 

    	 

    

SCHEDULE II

Annex II-A-4

Base Margin Requirement – Corporate
Bond Securities

	
        Bond Price
        (Credit Spread Larger than 20.00%, Maturity Less than 1 year)
	
        Margin
        Rate

	Larger than 75	38.7%
	Equal to or larger than 60 and less than or equal to 75	43.2%
	Less than 60	100%

 

 

* Corporate Bond Securities with Credit
Spreads greater than 20% will only be financed up to 20% of the aggregate Market Value of all Eligible Investments.

 

    	Schedule
II

 

    	 

    

SCHEDULE III

Annex II-B-1

Additional Margin Requirement –
Bank Loans

	
        Principal
        Balance
	
        Margin
        Rate

	Greater than $10 million and less than or equal to $20 million 	3.5%	 
	Greater than $20 million and less than or equal to $30 million 	7%	 
	Greater than $30 million and less than or equal to $40 million 	8.5%	 
	Greater than $40 million 	TBA	 

 

“TBA” means as advised,
in writing, by the Administrative Agent on a case by case basis, and until so advised, 100%.

    	Schedule
III

 

    	 

    

SCHEDULE IV

Annex II-B-2

Additional Margin Requirement –
Bank Loans

	
        Aggregate
        Market Value for such Bank Loans and Corporate Bond Securities of a single Obligor (when summing up the Obligor concentration across
        the entire portfolio) as a percentage of the aggregate Market Value for all Eligible Investments
	
        Additional
        Margin Requirement

	Greater than 5% and less than or equal to 15%	4.5%	 
	Greater than 15% and less than or equal to 25%	13%	 
	Greater than 25% 	100%	 

 

    	Schedule
IV

 

    	 

    

SCHEDULE V

Annex II-B-3

Additional Margin Requirement –
Bank Loans

	
        Aggregate
        Market Value for such Bank Loans of a single Obligor Industry (when summing up the industry concentration across the entire portfolio)
        as a percentage of the aggregate Market Value for all Eligible Investments
	
        Additional
        Margin Requirement

	Greater than 15% and less than or equal to 25%	4.5%	 
	Greater than 25% and less than or equal to 50%	17%	 
	Greater than 50%	43%	 

 

     

	Schedule
V

 

    	 

    

SCHEDULE VI

Annex II-B-4

Additional Margin Requirement –
Bank Loans

	
        Market
        Value for such Bank Loan as a percentage of the Outstanding Facility Size
	
        Additional
        Margin Requirement

	Greater than 5% and less than or equal to 10%	6.5%	 
	Greater than 10% and less than or equal to 25%	13%	 
	Greater than 25% and less than or equal to 50%	43%	 
	Greater than 50%	100%	 

 

    	Schedule
VI

 

    	 

    

SCHEDULE VII

Annex II-B-5

Additional Margin Requirement –
Bank Loans

	
        Aggregate
        Market Value for all Second Lien Loans as a percentage of the aggregate Market Value of all Eligible Investments
	
        Additional
        Margin Requirement

	Greater than 10% and less than or equal to 15%	5%	 
	Greater than 15% and less than or equal to 20%	10%	 
	Greater than 20% and less than or equal to 25%	15%	 
	Greater than 25%	100%	 

 

    	Schedule
VII                                         

 

    	 

    

SCHEDULE VIII

Annex II-C-1

Additional Margin Requirement –
Corporate Bond Securities

	
        Issue Size
	
        Additional
        Margin Requirement

	Less than $200 million	9%	 

 

 

	
        Aggregate
        Market Value for such Bank Loans and Corporate Bond Securities of a single Obligor as a percentage of the aggregate Market Value
        for all Eligible Investments
	
        Additional
        Margin Requirement

 

	Greater than 5% and less than or equal to 15%	4.5%	 
	Greater than 15% and less than or equal to 25%	13%	 
	Greater than 25% 	100%	 

    	Schedule
VIII

 

    	 

    

SCHEDULE IX

Annex II-C-2

Additional Margin Requirement –
Corporate Bond Securities

	
        Par Value
        for such Corporate Bond Securities as a percentage of the Outstanding Facility Size
	
        Additional
        Margin Requirement

	Greater than 5% and less than or equal to 10%	6.5%	 
	Greater than 10% and less than or equal to 25%	13%	 
	Greater than 25% and less than or equal to 50%	43%	 
	Greater than 50%	100%	 

 

 

    	Schedule
IX

  

    	 

    

SCHEDULE X

Annex II-C-5

Additional Margin Requirement –
Corporate Bond Securities

	
        Aggregate
        Market Value for all Corporate Bond Securities with such Obligor Sector (when summing up the sector concentration across the entire
        portfolio) as a percentage of the aggregate Market Value for all Eligible Investments
	
        Additional
        Margin Requirement

	Greater than 25% and less than or equal to 50%	4.5%	 
	Greater than 50%	25%	 

  

    	Schedule
Xsrer_ex101.htm

EXHIBIT 10.1

 

SECURITIES PURCHASE AGREEMENT

This SECURITIES PURCHASE AGREEMENT (the “Agreement”), dated as of December 12, 2013, by and between SEARCHCORE, INC., a Nevada corporation, with headquarters located at 26497 Rancho Parkway South, Lake Forest, CA 92630 (the “Company”), and ASHER ENTERPRISES, INC., a Delaware corporation, with its address at 1 Linden Place, Suite 207, Great Neck, NY 11021 (the “Buyer”).

WHEREAS:

A. The Company and the Buyer are executing and delivering this Agreement in reliance upon the exemption from securities registration afforded by the rules and regulations as promulgated by the United States Securities and Exchange Commission (the “SEC”) under the Securities Act of 1933, as amended (the “1933 Act”);

B. Buyer desires to purchase and the Company desires to issue and sell, upon the terms and conditions set forth in this Agreement an 8% convertible note of the Company, in the form attached hereto as Exhibit A, in the aggregate principal amount of $63,000.00 (together with any note(s) issued in replacement thereof or as a dividend thereon or otherwise with respect thereto in accordance with the terms thereof, the “Note”), convertible into shares of common stock, $0.001 par value per share, of the Company (the “Common Stock”), upon the terms and subject to the limitations and conditions set forth in such Note.

C. The Buyer wishes to purchase, upon the terms and conditions stated in this Agreement, such principal amount of Note 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 Note.

a. Purchase of Note. On the Closing Date (as defined below), the Company shall issue and sell to the Buyer and the Buyer agrees to purchase from the Company such principal amount of Note as is set forth immediately below the Buyer’s name on the signature pages hereto.

  

1

  

 

b. Form of Payment. On the Closing Date (as defined below), (i) the Buyer shall pay the purchase price for the Note to be issued and sold to it at the Closing (as defined below) (the “Purchase Price”) by wire transfer of immediately available funds to the Company, in accordance with the Company’s written wiring instructions, against delivery of the Note in the principal amount equal to the Purchase Price as is set forth immediately below the Buyer’s name on the signature pages hereto, and (ii) the Company shall deliver such duly executed Note on behalf of the Company, to the Buyer, against delivery of such Purchase Price.

c. Closing Date. Subject to the satisfaction (or written waiver) of the conditions thereto set forth in Section 6 and Section 7 below, the date and time of the issuance and sale of the Note pursuant to this Agreement (the “Closing Date”) shall be 12:00 noon, Eastern Standard Time on or about December 16, 2013, or such other mutually agreed upon time. The closing of the transactions contemplated by this Agreement (the “Closing”) shall occur on the Closing Date at such location as may be agreed to by the parties.

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

a. Investment Purpose. As of the date hereof, the Buyer is purchasing the Note and the shares of Common Stock issuable upon conversion of or otherwise pursuant to the Note (including, without limitation, such additional shares of Common Stock, if any, as are issuable (i) on account of interest on the Note, (ii) as a result of the events described in Sections 1.3 and 1.4(g) of the Note or (iii) in payment of the Standard Liquidated Damages Amount (as defined in Section 2(f) below) pursuant to this Agreement, such shares of Common Stock being collectively referred to herein as the “Conversion Shares” and, collectively with the Note, 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.

b. Accredited Investor Status. The Buyer is an “accredited investor” as that term is defined in Rule 501(a) of Regulation D (an “Accredited Investor”).

c. 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.

  

2

  

 

d. Information. The Buyer and its advisors, if any, have been, and for so long as the Note remain outstanding will continue to be, furnished with all materials relating to the business, finances and operations of the Company and materials relating to the offer and sale of the Securities which have been requested by the Buyer or its advisors. The Buyer and its advisors, if any, have been, and for so long as the Note remain outstanding will continue to be, 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. Neither such inquiries nor any other due diligence investigation conducted by Buyer or any of its advisors or representatives shall modify, amend or affect Buyer’s right to rely on the Company’s representations and warranties contained in Section 3 below. 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.

e. 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.

f. Transfer or Re-sale. The Buyer understands that (i) the sale or re-sale of the Securities has not been and is not being 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(f) and who is an Accredited Investor, (d) the Securities are sold pursuant to Rule 144, or (e) the Securities are sold pursuant to Regulation S under the 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 bonafide margin account or other lending arrangement.

  

3

  

 

g. Legends. The Buyer understands that the Note and, until such time as the Conversion Shares have been registered under the 1933 Act or 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 Conversion 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. In the event that the Company does not accept the opinion of counsel provided by the Buyer with respect to the transfer of Securities pursuant to an exemption from registration, such as Rule 144 or Regulation S, at the Deadline, it will be considered an Event of Default pursuant to Section 3.2 of the Note.

  

4

  

 

h. 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.

 

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

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 or financial condition 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 a 50% or larger equity or other ownership interest.

b. Authorization; Enforcement. (i) The Company has all requisite corporate power and authority to enter into and perform this Agreement, the Note 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 Note by the Company 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 Conversion Shares issuable upon conversion or exercise thereof) 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 Note, each of such instruments will constitute, a legal, valid and binding obligation of the Company enforceable against the Company in accordance with its terms.

 

  

5

  

 

c. Capitalization. As of the date hereof, the authorized capital stock of the Company consists of: (i) 200,000,000 shares of Common Stock, $0.001 par value per share, of which 39,368,772 shares are issued and outstanding; and (ii) 20,000,000 authorized shares of Preferred Stock, $0.001 par value per share, of which no shares are issued and outstanding; no shares are reserved for issuance pursuant to the Company’s stock option plans, approximately 250,000 shares are reserved for issuance pursuant to securities (other than the Note and two prior convertible promissory notes in favor of the Buyer: (a) prior convertible promissory note in favor of the Buyer dated July 11, 2013 in the amount of $53,000.00 for which 3,100,000 shares of Common Stock are presently reserved and (b) prior convertible promissory note in favor of the Buyer dated August 22, 2013 in the amount of $32,50.00 for which 1,600,000 shares of Common Stock are presently reserved) exercisable for, or convertible into or exchangeable for shares of Common Stock and 7,900,000 shares are reserved for issuance upon conversion of the Note. 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, other than as set forth above (i) there are no outstanding options, warrants, 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 Note or the Conversion Shares. The Company has made available to the Buyer through EDGAR 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 Executive on behalf of the Company as of the Closing Date.

d. 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, 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.

  

6

  

 

e. Acknowledgment of Dilution. The Company understands and acknowledges the potentially dilutive effect to the Common Stock upon the issuance of the Conversion Shares upon conversion of the Note. The Company further acknowledges that its obligation to issue Conversion Shares upon conversion of the Note in accordance with this Agreement, the Note 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, the Note by the Company and the consummation by the Company of the transactions contemplated hereby and thereby (including, without limitation, the issuance and reservation for issuance of the Conversion Shares) 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 Note in accordance with the terms hereof or thereof or to issue and sell the Note in accordance with the terms hereof and to issue the Conversion Shares upon conversion of the Note. 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 “OTCBB”) and does not reasonably anticipate that the Common Stock will be delisted by the OTCBB 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.

  

7

  

 

g. SEC Documents; Financial Statements. The Company has timely filed 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 September 30, 2013, 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.

  

8

  

 

h. Absence of Certain Changes. Since September 30, 2013, there has 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.

j. Patents, Copyrights, etc. To the Company’s knowledge, 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.

  

9

  

 

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. Except for arm’s length transactions pursuant to which the Company or any of its Subsidiaries makes payments in the ordinary course of business upon terms no less favorable than the Company or any of its Subsidiaries could obtain from third parties and other than the grant of stock options disclosed on Schedule 3(c), and those transactions included in the Company’s SEC Documents, 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.

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(d) 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, 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).

  

10

  

 

o. Acknowledgment Regarding Buyer’ 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’ 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 September 30, 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.

  

11

  

 

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 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.

  

12

  

 

u. Insurance. The Company and each of its Subsidiaries are insured by insurers of recognized financial responsibility against such losses and risks and in such amounts as management of the Company believes to be prudent and customary in the businesses in which the Company and its Subsidiaries are engaged. Neither the Company nor any such Subsidiary has any reason to believe that it will not be able to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business at a cost that would not have a Material Adverse Effect. Upon written request the Company will provide to the Buyer true and correct copies of all policies relating to directors’ and officers’ liability coverage, errors and omissions coverage, and commercial general liability coverage.

 

v. Internal Accounting Controls. The Company and each of its Subsidiaries maintain a system of internal accounting controls sufficient, in the judgment of the Company’s board of directors, to provide reasonable assurance that (i) transactions are executed in accordance with management’s general or specific authorizations, (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with generally accepted accounting principles and to maintain asset accountability, (iii) access to assets is permitted only in accordance with management’s general or specific authorization and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences.

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.

  

13

  

 

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 materially 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 under Section 3.4 of the Note.

4. COVENANTS.

a. Best Efforts. The parties shall use their best efforts to satisfy timely each of the conditions described in Section 6 and 7 of this Agreement.

b. Form D; Blue Sky Laws. The Company agrees to file a Form D with respect to the Securities as required under Regulation D and to provide a copy thereof to the Buyer promptly after such filing. The Company shall, on or before the Closing Date, take such action as the Company shall reasonably determine is necessary to qualify the Securities for sale to the Buyer at the applicable closing pursuant to this Agreement under applicable securities or “blue sky” laws of the states of the United States (or to obtain an exemption from such qualification), and shall provide evidence of any such action so taken to the Buyer on or prior to the Closing Date.

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

  

14

  

 

d. Right of First Refusal. Unless it shall have first delivered to the Buyer, at least seventy two (72) hours prior to the closing of such Future Offering (as defined herein), written notice describing the proposed Future Offering, including the terms and conditions thereof and proposed definitive documentation to be entered into in connection therewith, and providing the Buyer an option during the seventy two (72) hour period following delivery of such notice to purchase the securities being offered in the Future Offering on the same terms as contemplated by such Future Offering (the limitations referred to in this sentence and the preceding sentence are collectively referred to as the “Right of First Refusal”) (and subject to the exceptions described below), the Company will not conduct any equity financing (including debt with an equity component) (“Future Offerings”) during the period beginning on the Closing Date and ending twelve (12) months following the Closing Date. In the event the terms and conditions of a proposed Future Offering are amended in any respect after delivery of the notice to the Buyer concerning the proposed Future Offering, the Company shall deliver a new notice to the Buyer describing the amended terms and conditions of the proposed Future Offering and the Buyer thereafter shall have an option during the seventy two (72) hour period following delivery of such new notice to purchase its pro rata share of the securities being offered on the same terms as contemplated by such proposed Future Offering, as amended. The foregoing sentence shall apply to successive amendments to the terms and conditions of any proposed Future Offering. The Right of First Refusal shall not apply to any transaction involving (i) issuances of securities in a firm commitment underwritten public offering (excluding a continuous offering pursuant to Rule 415 under the 1933 Act) or (ii) issuances of securities as consideration for a merger, consolidation or purchase of assets, or in connection with any strategic partnership or joint venture (the primary purpose of which is not to raise equity capital), or in connection with the disposition or acquisition of a business, product or license by the Company. The Right of First Refusal also shall not apply to the issuance of securities upon exercise or conversion of the Company’s options, warrants or other convertible securities outstanding as of the date hereof or to the grant of additional options or warrants, or the issuance of additional securities, under any Company stock option or restricted stock plan approved by the shareholders of the Company, and shall terminate upon satisfaction in full of the Company’s obligations under the Note. The Right of First Refusal also shall not apply to any present or Future Offerings in excess of $100,000.

e. Expenses. At the 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. The Company’s obligation with respect to this transaction to reimburse Buyer’ expenses shall be $3,000.

f. Financial Information. Upon written request the Company agrees to send or 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 one (1) day 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.

g. [INTENTIONALLY DELETED]

  

15

  

 

h. Listing. The Company shall promptly secure the listing of the Conversion 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 Conversion Shares from time to time issuable upon conversion of the Note. 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 OTCBB or any equivalent replacement exchange (including the OTCQB maintained by OTC Markets Group, Inc. (the “OTCQB”), 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 OTCBB 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.

i. Corporate Existence. So long as the Buyer beneficially owns any Note, 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 OTCBB, OTCQB, Nasdaq, Nasdaq SmallCap, NYSE or AMEX.

j. 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.

k. 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 under Section 3.4 of the Note.

l. Failure to Comply with the 1934 Act. So long as the Buyer beneficially owns the Note, 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.

  

16

  

 

m. Trading Activities. Neither the Buyer nor its affiliates has an open short position in the common stock of the Company and the Buyer agrees 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.

5. 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 Conversion Shares in such amounts as specified from time to time by the Buyer to the Company upon conversion of the Note in accordance with the terms thereof (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. Prior to registration of the Conversion Shares under the 1933 Act or the date on which the Conversion Shares may be sold pursuant to Rule 144 without any restriction as to the number of Securities as of a particular date that can then be immediately sold, all such certificates shall bear the restrictive legend specified in Section 2(g) of this Agreement. The Company warrants that: (i) no instruction other than the Irrevocable Transfer Agent Instructions referred to in this Section 5, and stop transfer instructions to give effect to Section 2(f) hereof (in the case of the Conversion Shares, prior to registration of the Conversion Shares under the 1933 Act or the date on which the Conversion Shares may be sold pursuant to Rule 144 without any restriction as to the number of Securities as of a particular date that can then be immediately sold), 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 and the Note; (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 Conversion Shares to be issued to the Buyer upon conversion of or otherwise pursuant to the Note as and when required by the Note and 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 Conversion Shares issued to the Buyer upon conversion of or otherwise pursuant to the Note as and when required by the Note and this Agreement. Nothing in this Section shall affect in any way the Buyer’s obligations and agreement set forth in Section 2(g) 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, and, in the case of the Conversion Shares, 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 5 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.

  

17

  

 

6. Conditions to the Company’s Obligation to Sell. The obligation of the Company hereunder to issue and sell the Note to the Buyer at the Closing is subject to the satisfaction, at or before the 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:

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

b. The Buyer shall have delivered the Purchase Price in accordance with Section 1(b) above.

c. 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 the 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 the Closing Date.

d. 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.

7. Conditions to The Buyer’s Obligation to Purchase. The obligation of the Buyer hereunder to purchase the Note at the Closing is subject to the satisfaction, at or before the 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:

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

  

18

  

 

b. The Company shall have delivered to the Buyer the duly executed Note (in such denominations as the Buyer shall request) in accordance with Section 1(b) above.

c. The Irrevocable Transfer Agent Instructions, in form and substance satisfactory to a majority-in-interest of the Buyer, shall have been delivered to and acknowledged in writing by the Company’s Transfer Agent.

d. 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 certificates with respect to the Company’s Certificate of Incorporation, By-laws and Board of Directors’ resolutions relating to the transactions contemplated hereby.

e. 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.

f. 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.

g. The Conversion Shares shall have been authorized for quotation on the OTCBB and trading in the Common Stock on the OTCBB shall not have been suspended by the SEC or the OTCBB.

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

 

  

19

  

 

8. 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 and county of Nassau. 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 upon forum 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.

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.

  

20

  

 

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, 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 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 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:

If to the Company, to:

SEARCHCORE, INC.

26497 Rancho Parkway South

Lake Forest, CA 92630

Attn: JAMES PAKULIS, Chief Executive Officer

facsimile: [enter fax number]

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

The Lebrecht Group, APLC

Attn: Brian A. Lebrecht, Esq.

406 W. South Jordan Parkway, Suite 160

South Jordan, UT 84095

facsimile: (801) 983-4958

If to the Buyer:

ASHER ENTERPRISES, INC.

1 Linden Pl., Suite 207

Great Neck, NY. 11021

Attn: Curt Kramer, President

facsimile: 516-498-9894

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

Naidich Wurman Birnbaum & Maday LLP

80 Cuttermill Road, Suite 410

Great Neck, NY 11021

facsimile: 516-466-3555

  

21

  

 

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(f), 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, OTCBB 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, OTCBB (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.

  

22

  

 

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.

SEARCHCORE, INC.

By: /s/ JAMES PAKULIS

JAMES PAKULIS

Chief Executive Officer

ASHER ENTERPRISES, INC.

By: /s/ Curt Kramer

Name: Curt Kramer

Title: President

1 Linden Pl., Suite 207

Great Neck, NY. 11021

AGGREGATE SUBSCRIPTION AMOUNT:

 

	Aggregate Principal Amount of Note:	 	$	63,000.00	 
	 	 	 	 	 
	Aggregate Purchase Price: 	 	$	63,000.00	 

 

3809(4) 12-12-13

jpakulis@searchcore.com;

munjit-j@sbcglobal.net

BAL@clydeesnow.com

 

 

23

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