Document:

Exhibit 10.5

Personal Employment Agreement

 

This Personal Employment Agreement
(“Agreement”) is entered into as of August 22, 2014,  2014 by and between Foamix Pharmaceuticals Ltd., a
company organized under the laws of the State of Israel, whose principal place of business is located at 2 Chaim Holzman St.,
Rehovot, Israel, (the “Company”) and Mr. Meir Eini (“Executive”).

 

		WHEREAS	Executive has been acting as the Chief Operating Officer (“COO”) of the Company
since 2003; and

 

		WHEREAS	In view of the contemplated listing of the Company’s shares on the NASDAQ Stock Market (“NASDAQ”),
and the anticipated expansion of the Company’s activities and in the Executive’s responsibilities, the Company and the Executive
(collectively: the “Parties” and each: a “Party”) wish to adjust the terms of the Executive’s
employment (as such were set in the Personal Employment Agreement by and between the Company and the Executive on January 2, 2003,
as such was amended from time to time, hereinafter: the “Original Agreement”) terms accordingly, as set forth
herein.

 

NOW THEREFORE, in consideration
of the mutual promises, covenants and other agreements contained herein, and intending to be legally bound, the parties hereto
hereby declare and agree as follows:

 

	1.	
Appointment; the Position

 

		1.1.	The Company hereby extends the appointment of Executive and Executive undertakes to continue to
act, as of the Commencement Date (as such term is defined below), as the COO.

 

		1.2.	In the performance of his tasks and duties and in carrying out his position as the COO of the Company,
Executive shall report to the Chief Executive Officer of the Company (the: “CEO”) and shall be subject to the
direction and control of the CEO.

 

		1.3.	During the Term (as such term is defined below), Executive’s employment shall be on a full time
basis. Executive undertakes to devote his entire business time and attention to the business of the Company and not to undertake
or accept any other paid or unpaid employment or occupation or engage in or be associated with, directly in any other businesses,
duties or pursuits without the prior consent of the Board.

 

		1.4.	Executive shall perform his duties diligently, in good faith and in furtherance of the Company’s
best interests. Executive agrees and undertakes to inform the Company, immediately after Executive becomes aware of it, of any
matter that may in any way raise a conflict of interest between Executive or any member of Executive’s family and the Company.
During the Term, Executive shall not receive any payment, compensation or benefit from any third party in connection, directly
or indirectly, with the execution of Executive’s employment with the Company.

 

		1.5.	Executive shall perform his duties hereunder at the Company’s offices in Israel, in the US and
elsewhere, it being understood and agreed that Executive’s position may involve significant travel abroad.

 

	2.	
Executive’s Representations and Warranties 

 

	 	Executive represents and warrants
that the execution and delivery of this Agreement and the fulfillment of Executive’s obligations and performance of the tasks and
duties entrusted to him: (a) will not constitute a default under or conflict with any agreement or undertaking that Executive may
be bound by, including, without limitation to the generality of the aforesaid, any confidentiality or non-competition agreement
towards any previous employer; and (b) do not require the consent of any person or entity.

 

    	 

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	3.	
Term of Employment 

 

		3.1.	This Agreement shall enter into effect immediately upon, and subject to, the consummation of the
Company’s initial public offering (IPO) on the NASDAQ (the: “Commencement Date”) and Executive’s employment shall
continue until it is terminated as hereafter provided (the term of Executive’s employment shall be referred to herein as the “Term”).
For the avoidance of doubt it is hereby agreed and acknowledged that the execution of this Agreement shall not be deemed as terminating
the Executive’s employment under the Original Agreement, and/or as affecting any of the Executive’s rights which were accumulated
under the Original Agreement up to the Commencement Date.

 

		3.2.	Either party to this Agreement may terminate Executive’s employment hereunder at its own discretion
at any time, by giving a prior written notice of six months to the other Party. Notwithstanding the aforesaid, in case that the
Company’s securities are no longer traded on the NASDAQ and/or on any other stock exchange, the notice period shall be automatically
reduced to three months.

 

		3.3.	Without derogating from the aforesaid the Company shall be entitled to terminate Executive’s employment
with the Company and the employment relationships shall be deemed immediately terminated (as of the notice given by the Company
to that effect) in the event of Cause (as defined hereafter) or in the event of Disability of Executive (as hereinafter defined).
“Cause” shall mean: (a) a material breach of trust including but not limited to any breach of Executive’s obligations
set out in Exhibit B hereto that causes material damage to the Company; or (b) any willful and continued failure to perform
any of Executive’s fundamental functions or duties, which was not cured within 7 days after receipt by Executive of written notice
thereof from the Board. “Disability” shall mean any physical or mental illness or injury as a result of which
Employee remains absent from work for a period of six (6) successive months, or an aggregate of six (6) months in any twelve (12)
month period. Disability shall occur upon the end of such six-month period; Executive’s employment shall be deemed as immediately
terminated in case of his death.

 

		3.4.	During the period following notice of termination by either party, unless
                                                          otherwise determined by the Company in a written notice to Executive, Executive shall continue to perform any and all of his
                                                          duties and shall cooperate with the Company and use his best efforts to assist the transition of his office to the person or
                                                          persons who will assume  the his responsibilities.

 

		3.5.	For avoidance of doubt, the discontinuance of Executive’s service as a director or chairman of
the Board, for any reason, shall not be deemed as termination of this Agreement or as a breach of this Agreement.

 

	4.	
Proprietary Information; Confidentiality and Non-Competition

 

Executive hereby undertakes
to be bound by the provisions of the Company’s Proprietary Information, Confidentiality and Non-Competition Agreement as
set out in Exhibit B hereto which Executive simultaneously herewith executes.

 

	5.	
Salary

 

		5.1.	Salary. The Company shall pay to Executive for the performance of his undertakings and tasks
and duties entrusted to him, an aggregate monthly salary in the gross amount set forth in Exhibit A hereto (the “Salary”).
Except as specifically set forth in this Agreement, the Salary includes any and all payments to which Executive is or may be entitled
from the Company hereunder and under any applicable law, regulation or agreement. The Salary is to be paid to Executive in accordance
with the Company’s normal and reasonable payroll practices, after deduction of all applicable taxes and like payments.

 

    	 

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		5.2.	Executive hereby declares and explicitly agrees that his office with the Company is of managerial
level that requires special degree of trust, and therefore the provisions of the Hours of Work and Rest Law 5711-1951 shall not
apply to his employment.

 

		5.3.	Payment of the Salary shall be made no later than the 9th day of each calendar month after the
month for which the Salary is being paid.

 

	6.	
Insurance and Social Benefits

 

		6.1.	The Company and the Executive have decided to apply the terms of the general permit with regard
to employers’ payments to pension funds and to insurance funds, instead of the severance payments, as published in the official
records (“Yalkut Pirsumim”) 4569 of June 30, 1998, which full version is attached to this Argeement as Exhibit
C, and forms an integral part of this Agreement. Therefore, subject to the terms of the Extension Order for Comprehensive
Pension Insurance in the Industry pursuant to the Collective Agreements Law 5717-1957 (the “Extension Order”)
as may be amended from time to time, the Company shall insure Executive as per his choice, either at a pension fund or under an
accepted Manager’s Insurance Scheme(the “Insurance Scheme”). The Company will, on a monthly basis pay to
the Insurance Scheme for the benefit of Executive and shall deduct from Executive’s Salary a respective payment towards such Insurance
Scheme. Unless requested otherwise by Executive, the Insurance Scheme shall be of a managers’ insurance type. The contribution
to the Insurance Scheme will be as follows: (i) the Company will pay an amount equal to 5% (five percent) of the Salary towards
savings, and shall deduct from the Salary an amount equal to 5% (five percent) of the Salary and pay such amount towards savings
on Executive’s behalf; and (ii) the Company will pay an amount equal to 8 1/3% (eight percent and one third of a percent) of the
Salary towards a severance compensation.

 

		6.2.	Under the terms of the Extension Order, to the extent permitted under applicable law, and notwithstanding
any terms of the Insurance Scheme, the Company’s payments for Employees’ Insurance Scheme substitute the statutory
severance pay for all intents and purposes pursuant to Section 14 of the Severance Pay Law (1963) and will be the full and only
compensation to be paid by the Company to Executive in such circumstances in respect of severance pay. In accordance with article
7 to the Extension Order, the Company’s payments for severance pay may not be returned to the Company unless:

 

		6.2.1	Executive’s entitlement for severance pay has been deprived by a judgment, under the provisions
of sections 16 or 17 of the Severance Pay Law (1963), and as long as it was so deprived; or

 

		6.2.2	Executive has withdrawn monies from his pension fund, before he or his heirs were entitled to do
so under the rules of such fund in case of an “Entitling Event”. For the purposes of this Section, “Entitling
Event” shall mean: death, disability or retirement at the age of 60 or more.

 

		6.3	The Company and Executive shall either open and maintain or use an existing (previously used by
Executive) Educational Fund (Keren Hishtalmut; hereinafter: the “Fund”). The terms of the Fund and the amounts
to be paid by the Company and the Executive shall be as set forth in Exhibit A. For the avoidance of doubt, no amount remitted
by the Company to the Fund will be considered as part of the Salary for purposes of any deduction therefrom or calculations of
severance pay or otherwise.

 

	 	6.4	The
Company shall pay an amount of up to 2.5% of the Salary towards an insurance coverage for the event of loss of working ability
(Ovdan Kosher Avoda).

 

		6.5	Executive will bear any and all taxes applicable to an employee in connection
with any amounts paid by Executive and the Company to the Insurance Scheme under this Section 6.

 

    	 

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		6.6	In the event of termination of Executive’s employment by either Executive
or the Company, other than for Cause, the Company shall transfer to Executive’s possession the Insurance Scheme and the Fund.

 

	7.	
Additional Benefits

 

		7.1.	The Company shall bear all expenses related to Executive’s use of a cellular phone, in Israel and
abroad.

 

		7.2.	Executive shall be entitled to be reimbursed for Executive’s necessary and actual business out
of pocket expenses in accordance with the Company’s policies, as the same may change from time to time.

 

		7.3.	The Company shall pay the Executive “per diem” payments with regard to Executive’s business
travels abroad (whether by way of a fixed payment per day, or by way of reimbursement for Executive’s out-of-pocket expenses incurred
in connection with such business travels.

 

		7.4.	Subject to the Board’s approval and discretion, Executive shall be entitled to a performance based
bonus payment based on the attainment of certain performance metrics that shall be set by the Board from time to time, and subject
to any approvals that may be required from the Company’s shareholders. Any bonus granted to Executive will not form part
of Executive’s Salary or social benefits and will not be taken into account for the purpose of calculating Executive’s social or
other benefits of any kind.

 

		7.5.	Executive shall be entitled to an annual vacation as set forth in Exhibit A. The Company
shall be entitled to direct use of vacation days at its discretion. Vacation days may be carried forward from one year to the next.

 

		7.6.	Executive’s entitlement to sick leave shall be in accordance with applicable law (but Executive
shall be entitled to 100% payment for sick leave from the first day of his absence).

 

		7.7.	Executive shall be entitled to Recreation Pay (Dmei Havra’a) pursuant to the applicable extension
order.

 

		7.8.	Executive may inform the Company in writing that he wishes to receive the remuneration due to him
under this Agreement by way of payment to a private company controlled by Executive (“Executive’s Entity”), in
which case, within thirty (30) days from receipt of Executive’s notice in this regard:

 

		7.8.1.	The Company, the Executive and the Executive’s Entity shall execute any additional agreements and
undertakings, as shall be reasonably requested by the Company, based on legal advice, in order to ensure that the Company is not
exposed to any financial and/or or other exposure due to such changes in Executive’s terms of service (including, without limitation,
in case that Executive, or any other third party, asserts that notwithstanding the aforesaid changes, the Executive remained an
employee of the Company.

 

		7.8.2.	Subject to Section 7.8.1 above, the Company shall start paying Executive’s Entity all payments
and benefits which were otherwise due to Executive under this Agreement (including, without limitation, all payments due under
Section 6 above, under this Section 7 and under Exhibit B of this Agreement, as well as all payments which were to be made
by the Company to third parties under the said provisions) + VAT as applicable.

 

		7.8.3.	Executive shall confirm in writing that the payment to the Executive’s Entity, as aforesaid, shall
not derogate from Executive’s undertakings and liabilities under this Agreement.

 

    	 

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	8.	
Miscellaneous

 

		8.1.	The preamble to this Agreement and the exhibits and schedules thereto, constitute an integral part
hereof. Headings are included for reference purposes only and are not to be used in interpreting this Agreement.

 

		8.2.	The laws of the State of Israel shall apply to this Agreement and the sole and exclusive jurisdiction
in any matter arising out of or in connection with this Agreement shall be the Tel-Aviv Regional Labor Court.

 

		8.3.	The provisions of this Agreement are in lieu of the provisions of any collective bargaining agreement,
and therefore, no collective bargaining agreement shall apply with respect to the relationships between the parties hereto (subject
to applicable mandatory provisions of law).

 

		8.4.	The Company shall withhold, or charge Executive with all taxes and other compulsory payments as
required under all applicable laws with respect to all payments, benefits and other compensation payable to Executive in connection
with Executive’s employment with Company.

 

		8.5.	The Company shall be entitled to offset from any payments to which Executive shall be entitled
hereunder, any amounts which the Company shall be entitled to receive from Executive at such time.

 

		8.6.	No failure, delay of forbearance of either party in exercising any power or right hereunder shall
in any way restrict or diminish such party’s rights and powers under this Agreement, or operate as a waiver of any breach or nonperformance
by either party of any terms of conditions hereof.

 

		8.7.	In the event it shall be determined under any applicable law that a certain provision set forth
in this Agreement is invalid or unenforceable, such determination shall not affect the remaining provisions of this Agreement unless
the business purpose of this Agreement is substantially frustrated thereby.

 

		8.8.	This Agreement constitutes the entire understanding and agreement between the parties hereto, supersedes
any and all prior discussions, agreements (including without limitation, the Original Agreement, which is hereby substituted by
this Agreement) and correspondence with regard to all subject matters hereof, and may not be amended, modified or supplemented
in any respect, except by a subsequent writing executed by both parties hereto.

 

		8.9.	Executive acknowledges and confirms that all terms of Executive’s employment are personal and confidential,
and undertakes to keep such terms in confidence and refrain from disclosing such terms to any third party.

 

		8.10.	This Agreement serves also as a notification for Employee regarding his terms of employment in
pursuant of the Notification to Employee (terms of Employment) Law, 5762 – 2002.

 

IN WITNESS WHEREOF, the parties
have executed this Agreement as of the date first above written.

 

	The Company: Foamix PharmaceuticalsLtd.	 	Meir Eini:	 
	 	 	 	 
	/s/ Dov Tamarkin	 	/s/ Meir Eini
	 	 	 
	By:   Dov Tamarkin	 	Signature	 

 

    	 

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Exhibit A 

 

To Personal Employment Agreement by and
between

 

Foamix Pharmaceuticals Ltd. (the “Company”)
and Mr. Meir Eini (the “Executive”)

 

Executive’s Remuneration

 

	ID Number of Executive	05-326044-4
	Executive’s Personal Address	
        2 Hashaked St., Nes Ziona, Israel

         

	Monthly Salary (NIS)	NIS 90,000 (ninety thousand New Israeli Shekels) 
	Bonus	Executive may also be eligible for a gross annual performance bonus of up to 6 months’ Salary, which bonus shall be conditioned upon attainment of individual performance targets and corporate goals to be determined by the Board and the Company’s shareholders, as applicable, and subject also to Executive’s continuous employment with the Company or any of its affiliates in the position of COO throughout the period to which the respective bonus applies. The Company may decide, from time to time that the Company shall not grant bonuses to the Executive with regard to a specific year. Further – the Company may modify the parameters for the grant of bonus during the respective calendar year, in response to special or unforeseen events. The Board may set targets for a period of more than one year, in which case Executive will be entitled to the bonus (per each year included in such multi-year period) only upon achieving such targets at the end of such period.  If Executives’ employment is terminated by the Company other than for “Cause” prior to the bonus payment date, the bonus shall be prorated to reflect the actual amount of time Executive was employed by the Company during the year for which the bonus was earned.  If Executive’s employment terminates for Cause, Executive shall not be entitled to receive the annual performance bonus or any portion thereof.
	Vacation Days per Year	30 calendar days of annual paid vacation.
	Car	The Company shall reimburse Executive for his expenses related to the purchase, maintenance and use of the car used by Executive in the performance of his duties under this Agreement, in the amount of NIS 7,600 per month. The Company shall also bear all tax expenses related to such reimbursement of expenses, up to an amount of NIS 7,600 per month.
	Keren Hishtalmut	The Company and Executive shall maintain an advanced study fund (Keren Hishtalmut according to law). The Company shall contribute to such Fund an amount equal to 7.5% of the Salary, and Executive shall contribute to such fund an amount equal to 2.5% the Salary. Executive hereby instructs the Company to transfer to such fund the amount of the Executive’s and the Company’s contribution from each monthly Salary payment. The funds in such Fund shall be released to the Executive upon termination of this Agreement. 

 

	The Company: Foamix Pharmaceuticals Ltd.	 	Meir Eini:	 
	 	 	 	 
	/s/ Dov Tamarkin	 	/s/ Meir Eini
	 	 	 
	By:   Dov Tamarkin	 	Signature	 

 

    	 

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Exhibit B

 

to Personal Employment Agreement by and
between Foamix Pharmaceuticals Ltd. (the “Company”) and Meir Eini (the: “Executive”)

 

  Company’s Proprietary Information, Confidentiality  

and Non-Competition Agreement

 

	1.	
General

 

		1.1.	All the capitalized terms herein shall have the meanings ascribed to them in the Employment Agreement
to which this Exhibit is attached (the “Agreement”); For purposes of any undertaking of the Executive toward
the Company, the term Company shall include all subsidiaries and affiliates of the Company.

 

		1.2.	Executive’s obligations and representations and the Company’s rights under this Exhibit shall apply
as of the commencement of the employment relationship between the Company and the Executive, regardless of the date of execution
of the Agreement.

 

	2.	
Confidentiality; Proprietary Information

 

		2.1.	Executive acknowledges and agrees that Executive will have access to confidential and proprietary
information (whether originated by the Company or received from third parties) concerning the business and financial activities
of the Company, including information relating to the Company’s research and development, banking, investments, investors, properties,
employees, marketing plans, customers, suppliers, trade secrets, test results, processes, data, know-how, improvements, inventions,
techniques and products (actual or planned). Such information, whether documentary, written, oral or computer generated, shall
be referred to as “Proprietary Information”.

 

		2.2.	Proprietary Information shall be deemed to include any and all proprietary information disclosed
by or on behalf of the Company and irrespective of form but excluding information that the Executive is able to show, through clear
and convincing evidence, (i) was known to Executive prior to Executive’s association with the Company; (ii) is or shall become
part of the public knowledge except as a result of the breach of the Agreement or this Exhibit by the Executive; (iii) reflects
general skills and experience gained during Executive’s engagement by the Company; or (iv) reflects information and data generally
known in the industries or trades in which the Company operates.

 

		2.3.	Executive agrees that all Proprietary Information and all patents, trademarks, copyrights and other
intellectual property and all ownership rights in connection therewith, shall be the sole property of the Company and its assigns.
At all times, both during Executive’s engagement by the Company and after Executive’s termination, Executive will keep in confidence
and trust all Proprietary Information, and the Executive will not use or disclose any Proprietary Information or anything relating
to it without the written consent of the Company, except as may be necessary in the ordinary course of performing Executive’s duties
under the Agreement.

 

		2.4.	Upon termination of Executive’s employment with the Company, Executive will promptly deliver to
the Company all documents and materials of any nature pertaining to Executive’s work with the Company, and will not take with Executive
any documents or materials or copies thereof containing any Proprietary Information.

 

    	 

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		2.5.	At all times, both during Executive’s employment with the Company and thereafter, Executive will
keep in confidence and trust all information in connection with his employment terms with the Company, including, without limitation,
Executive’s salary, social and other benefits, and any other related information (the “Employment Terms”). Executive
will not disclose or discuss any of Executive’s Employment Terms or anything relating to it, except with Executive’s legal counsel,
without the written consent of the Company.

 

		2.6.	Executive’s undertakings set forth in this Section 2 shall remain in full force and effect after
termination of this Agreement or any renewal thereof until the Proprietary Information becomes part of the public domain, if ever,
except as a result of the breach of the Agreement or this Exhibit by the Executive.

 

	3.	
Disclosure and Assignment of Inventions

 

		3.1.	Executive understands that the Company is engaged in a continuous program of research, development,
and production and marketing in connection with its business.

 

		3.2.	From and after the date Executive first became employed with the Company, Executive undertakes
and covenants that Executive will promptly disclose in confidence to the Company all inventions, improvements, designs, concepts,
formulas, techniques, methods, systems, processes, know how, computer software programs, databases, mask works and trade secrets,
whether or not patentable, copyrightable or protectible as trade secrets, that are made or conceived or first reduced to practice
or created by Executive, either alone or jointly with others, during the period of Executive’s employment and in connection with
Executive’s employment (“Inventions”).

 

		3.3.	Executive agrees that all Inventions that (a) are developed using equipment, supplies, facilities
or trade secrets of the Company, (b) result from work performed by Executive for the Company, or (c) relate to the Company’s business
or current or anticipated research and development, will be regarded as Service Invention in the meaning of the Israeli Patent
Law, 5727-1967 and will be the sole and exclusive property of the Company (“Company Inventions”). The conditions
set out in (a), (b) and (c) above are several and not cumulative, and any invention meeting one or more of such conditions shall
be designated a Company Invention.

 

		3.4.	Executive hereby irrevocably transfers and assigns to the Company all worldwide patents, patent
applications, copyrights, mask works, trade secrets and other intellectual property rights in any Company Invention, and any and
all moral rights that Executive may have in or with respect to any Company Invention, and expressly waives any right to any consideration
of any kind with regard to the Company Inventions, the assignment of such and any use thereof, including without limitation any
royalty payment and other payment with respect thereto.

 

		3.5.	Executive agrees to assist the Company, at the Company’s expense, in every reasonable way to obtain
for the Company and enforce patents, copyrights, mask work rights, and other legal protections for the Company’s Inventions in
any and all countries. Executive will execute any documents that the Company may reasonably request for use in obtaining or enforcing
such patents, copyrights, mask work rights, trade secrets and other legal protections. Such obligation shall continue beyond the
termination of Executive’s employment with the Company for a period of 2 years. Executive hereby irrevocably designates and appoints
the Company and its authorized officers and agents as Executive’s agent and attorney in fact, coupled with an interest to act for
and on Executive’s behalf and in Executive’s stead to execute and file any document needed to apply for or prosecute any patent,
copyright, trademark, trade secret, any applications regarding same or any other right or protection relating to any Proprietary
Information (including Company Inventions), and to do all other lawfully permitted acts to further the prosecution and issuance
of patents, copyrights, trademarks, trade secrets or any other right or protection relating to any Proprietary Information (including
Company Inventions), with the same legal force and effect as if executed by the Executive himself.

 

    	 

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	4.	 
 

 

		4.1.	Both Company and Executive acknowledge Executive’s right for freedom of occupation whilst protecting
the Company’s legitimate interests. Therefore Executive agrees and undertakes that, so long as Executive is employed by the Company
and for a period of twelve (12) months thereafter, Executive will not, directly or indirectly, as owner, partner, joint venturer,
stockholder, employee, broker, agent, principal, trustee, corporate officer, director, licensor or in any capacity whatsoever engage
in, become financially interested in, be employed by, or otherwise render services to, any business or venture that is engaged
in any activities involving products, information, processes, technology or equipment that are or could reasonably and imminently
be directly competitive to those of the Company or any of its subsidiaries or affiliates, as conducted as of the date of termination
of Executive’s employment with the Company; provided, however, that Executive may own any securities of any corporation
which is engaged in such business and is publicly owned and traded but in an amount not to exceed at any one time one percent (1%)
of any class of stock or securities of such company, and so long as Executive has no role in the publicly owned and traded company
as director, employee, consultant or otherwise. Executive agrees and understand that his Salary (set forth in Exhibit A) includes
adequate compensation for his undertakings in this Section 4.1 and is at least 20% higher than it would have been should the Executive
had not taken said undertakings.

 

		4.2.	Executive agrees and undertakes that during the period of Executive’s employment and for a period
of twelve (12) months following effective termination, Executive will not, directly or indirectly, including personally or in any
business in which Executive is an officer, director, advisor or shareholder of more than 1% of the equity or voting rights, for
any purpose or in any place, solicit for employment or hire any person employed by the Company (or retained by the Company as a
consultant, if such consultant is prevented thereby from continuing to render its services to the Company) on the date of such
termination or during the preceding twelve (12) months.

 

		4.3.	If any one or more of the terms contained in this Section 4 shall for any reason be held to be
excessively broad with regard to time, geographic scope or activity, the term shall be construed in a manner to enable it to be
enforced to the fullest extent compliant with applicable Israeli law.

 

	 	Date:	Name:	Signature:
	 	 	 	 
	 	22/8/2014	Meir Eini	/s/ Meir
Eini

 

    	 

    	- 10 -ex10_1.htm

Exhibit 10.1

 

THIS SUBSCRIPTION AGREEMENT RELATES TO AN OFFERING OF A CONVERTIBLE NOTE (THE “NOTE”) IN AN OFFSHORE TRANSACTION TO PERSONS WHO ARE NOT U.S. PERSONS (AS DEFINED HEREIN) PURSUANT TO REGULATION S UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “1933 ACT”).

 

THE NOTE TO WHICH THIS SUBSCRIPTION AGREEMENT (THE “SUBSCRIPTION AGREEMENT”) RELATES HAS NOT BEEN REGISTERED UNDER THE 1933 ACT, OR ANY U.S. STATE SECURITIES LAWS, AND, UNLESS SO REGISTERED, IT MAY NOT BE OFFERED OR SOLD, DIRECTLY OR INDIRECTLY, IN THE UNITED STATES OR TO A U.S. PERSON EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF REGULATION S UNDER THE 1933 ACT, PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE 1933 ACT, OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE 1933 ACT AND IN EACH CASE ONLY IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS. IN ADDITION, HEDGING TRANSACTIONS INVOLVING THE NOTE MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE 1933 ACT. “UNITED STATES” AND “U.S. PERSON” ARE AS DEFINED BY REGULATION S UNDER THE 1933 ACT.

 

FORM OF SUBSCRIPTION AGREEMENT

(Offshore Subscribers)

 

TO:          Basta Holdings Corp. (the “Company”), a Nevada company with offices at 1111 Kane Concourse, Suite 518, Bay Harbor Islands, FL 33154

 

Purchase of Convertible Note

 

	1.	Subscription

 

1.1          On the basis of the representations and warranties and subject to the terms and conditions set forth herein, _____ (the “Subscriber”) hereby irrevocably subscribes for and agrees to purchase convertible notes (the “Note”) from the Company for an aggregate purchase price of $500,000 (the “Subscription Proceeds”), substantially in the form attached to this Subscription Agreement as Exhibit “A” (the subscription and agreement to purchase being the “Subscription”).

 

1.2          On the basis of the representations and warranties and subject to the terms and conditions set forth herein, the Company hereby irrevocably agrees to sell the Note to the Subscriber.

 

1.3          Subject to the terms hereof, the Subscription will be effective upon its acceptance by the Company.

 

1.4          Unless otherwise provided, all dollar amounts referred to in this Subscription Agreement are in lawful money of the United States of America.

 

	2.	Payment

 

2.1          The Subscription Proceeds pertaining to the purchase of the Note shall be paid on or before the Closing Date (as defined in Section 4.1, below) by cheque or wire transfer to the Company.

 

  

  

  

 

	3.	Documents Required from Subscriber

 

3.1          The Subscriber must:

 

	 	(a)	complete, sign and return to the Company an executed copy of this Subscription Agreement prior to the Closing Date; and,

 

	 	(b)	complete, sign and return to the Company as soon as possible, on request by the Company, any documents, questionnaires, notices and undertakings as may be required by regulatory authorities and applicable law (collectively the “Transaction Documents.”)

 

	4.	Closing

 

4.1          There shall be no formal closing ceremony with respect to the transactions contemplated by this Agreement. Instead, the parties shall execute and exchange the Transaction Documents by facsimile and email and the closing of the transactions contemplated by this Agreement shall be deemed to have occurred (the “Closing”) on the date (the “Closing Date”) that the Company receives the Subscription Proceeds in full. There may be multiple Closings

 

	5.	Acknowledgements of Subscriber

 

	5.1	The Subscriber acknowledges and agrees that:

 

	 	(a)	Neither the Note nor the shares of common stock (“Shares”) that may be issued upon a conversion of the Note (the Note and the Shares may be hereinafter referred to collectively as the “Securities”) have been or will be registered under the 1933 Act, or under any state securities or “blue sky” laws of any state of the United States, and, unless so registered, none of them may be offered or sold in the United States or, directly or indirectly, to a U.S. Person, as that term is defined in Regulation S under the 1933 Act (“Regulation S”), except in accordance with the provisions of Regulation S, pursuant to an effective registration statement under the 1933 Act, or pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the 1933 Act and in each case in accordance with applicable state securities laws;

 

	 	(b)	The Company has not undertaken to, and will have no obligation to, register the Securities, or any of them, under the 1933 Act;

 

	 	(c)	It has received and carefully read this Subscription Agreement;

 

	 	(d)	the decision to execute this Subscription Agreement and acquire the Note hereunder has not been based upon any oral or written representation as to fact or otherwise made by or on behalf of the Company, and such decision is based entirely upon a review of information (the adequacy of which is hereby acknowledged) about the Company that is available to any member of the public on the EDGAR database maintained by the U.S. Securities and Exchange Commission (the “SEC”) at www.sec.gov;

 

	 	(e)	there are risks associated with an investment in the Company including, by way of example and not in limitation, the specific risks identified in the Company’s most recent periodic reports filed with the SEC and available for viewing at the SEC’s website at www.SEC.gov;

 

	 	(f)	It and its advisor(s) have had a reasonable opportunity to ask questions of and receive answers from the Company in connection with the sale of the Note hereunder, and to obtain additional information, to the extent possessed or obtainable by the Company without unreasonable effort or expense;

 

  

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	 	(g)	all information which the Subscriber has provided to the Company is correct and complete as of the date the Subscription Agreement is signed, and if there should be any change in such information prior to this Subscription Agreement being executed by the Company, the Subscriber will immediately provide the Company with such information;

 

	 	(h)	the Company is entitled to rely on the representations and warranties of the Subscriber contained in this Subscription Agreement and the Subscriber will hold the Company harmless from any loss or damage it may suffer as a result of the Subscriber’s failure to correctly complete this Subscription Agreement;

 

	 	(i)	the Subscriber has been advised to consult the Subscriber’s own legal, tax and other advisors with respect to the merits and risks of an investment in the Securities and with respect to applicable resale restrictions, and it is solely responsible (and the Company is not in any way responsible) for compliance with:

 

	 	(i)	any applicable laws of the jurisdiction in which the Subscriber is resident in connection with the distribution of the Securities hereunder, and

 

	 	(ii)	applicable resale restrictions;

 

	 	(j)	none of the Securities are listed on any stock exchange or automated dealer quotation system and no representation has been made to the Subscriber that any of the Securities will become listed on any stock exchange or automated dealer quotation system, except that currently certain market makers make market in the Shares of the Company on the OTC Bulletin Board operated by the Financial Industry Regulatory Authority (“FINRA”);

 

	 	(k)	none of the Securities may be offered or sold by the Subscriber to a U.S. Person (as defined in Section 6.2, below, or for the account or benefit of a U.S. Person (other than a distributor) prior to the end of the Distribution Compliance Period (as defined herein);

 

	 	(l)	the Subscriber is not acquiring the Note as a result of, and will not itself engage in, any “directed selling efforts” (as that term is defined in Regulation S under the 1933 Act) in the United States in respect of the Securities which would include any activities undertaken for the purpose of, or that could reasonably be expected to have the effect of, conditioning the market in the United States for the resale of any of the Securities; provided, however, that the Subscriber may sell or otherwise dispose of the Securities pursuant to registration thereof under the 1933 Act and any applicable state securities laws or under an exemption from such registration requirements;

 

	 	(m)	the Company will refuse to register any transfer of the Securities not made in accordance with the provisions of Regulation S, pursuant to an effective registration statement under the 1933 Act or pursuant to an available exemption from the registration requirements of the 1933 Act and in each case in accordance with applicable state securities laws;

 

	 	(n)	neither the SEC nor any other securities commission or similar regulatory authority has reviewed or passed on the merits of the Securities;

 

	 	(o)	no documents in connection with the sale of the Note hereunder have been reviewed by the SEC or any state securities administrators;

 

	 	(p)	there is no government or other insurance covering any of the Securities;

 

	 	(q)	the issuance and sale of the Securities to the Subscriber will not be completed if it would be unlawful or if, in the discretion of the Company acting reasonably, it is not in the best interests of the Company;

 

  

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	 	(r)	the Subscriber is purchasing the Securities pursuant to an exemption from the registration and the prospectus requirements of applicable securities legislation on the basis that the Subscriber is not a resident of either the United States or Canada and, as a consequence:

 

	 	(i)	is restricted from using most of the civil remedies available under securities legislation,

 

	 	(ii)	may not receive information that would otherwise be required to be provided under securities legislation, and

 

	 	(iii)	the Company is relieved from certain obligations that would otherwise apply under securities legislation; and

 

	 	(s)	the statutory and regulatory basis for the exemption from U.S. registration requirements claimed for the offer of the Note, although in technical compliance with Regulation S, would not be available if the offering is part of a plan or scheme to evade the registration provisions of the 1933 Act or any applicable state securities laws; .

 

	6.	Representations, Warranties and Covenants of the Subscriber

 

6.1          The Subscriber hereby represents and warrants to and covenants with the Company (which representations, warranties and covenants shall survive the Closing), and acknowledges that the Company is relying thereon, that:

 

	 	(a)	the Subscriber is not a U.S. Person as that term is defined in Regulation S;

 

	 	(b)	the Subscriber is not acquiring the Note for the account or benefit of, directly or indirectly, any U.S. Person as that term is defined in Regulation S;

 

	 	(c)	the Subscriber is resident in the jurisdiction set out under the heading “Name and Address of Subscriber” on the signature page of this Subscription Agreement and the sale of the Securities to the Subscriber as contemplated in this Subscription Agreement complies with or is exempt from the applicable securities legislation of the jurisdiction of residence of the Subscriber;

 

	 	(d)	the Subscriber has the legal capacity and competence to enter into and execute this Subscription Agreement and to take all actions required pursuant hereto and, if the Subscriber is a corporation, it is duly incorporated and validly subsisting under the laws of its jurisdiction of incorporation and all necessary approvals by its directors, shareholders and others have been obtained to authorize execution and performance of this Subscription Agreement on behalf of the Subscriber;

 

	 	(e)	if the Subscriber is a corporation or other entity, the entering into of this Subscription Agreement and the transactions contemplated hereby do not and will not result in the violation of any of the terms and provisions of any law applicable to, or the constating documents of, the Subscriber or of any agreement, written or oral, to which the Subscriber may be a party or by which the Subscriber is or may be bound;

 

	 	(f)	the Subscriber has duly executed and delivered this Subscription Agreement and upon acceptance thereof by the Company it will constitutes a valid and binding agreement of the Subscriber enforceable against the Subscriber in accordance with its terms;

 

	 	(g)	the Subscriber is acquiring the Securities as principal for its own account for investment purposes only and not for the account of any other person and not for distribution, assignment or resale to others, and no other person has a direct or indirect beneficial interest in such Securities, and it has not subdivided its interest in the Securities with any other person;

 

  

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	 	(h)	the Subscriber is outside the United States when receiving and executing this Subscription Agreement and is acquiring the Note as principal for the Subscriber’s own account for investment purposes only, and not with a view to, or for, resale, distribution or fractionalisation thereof, in whole or in part, and no other person has a direct or indirect beneficial interest in the Securities;

 

	 	(i)	the Subscriber is aware that an investment in the Company is speculative and involves certain risks, including the possible loss of the entire investment and it has carefully read and considered the matters set forth under the heading “Risk Factors” appearing in the Company’s Forms 10-K, 10-Q, 8-K and any other filings filed with the SEC;

 

	 	(j)	the Subscriber has made an independent examination and investigation of an investment in the Securities and the Company and has depended on the advice of its legal and financial advisors and agrees that the Company will not be responsible in any way whatsoever for the Subscriber’s decision to invest in the Securities and the Company;

 

	 	(k)	the Subscriber (i) has adequate net worth and means of providing for its current financial needs and possible personal contingencies, (ii) has no need for liquidity in this investment, and (iii) is able to bear the economic risks of an investment in the Securities for an indefinite period of time;

 

	 	(l)	the Subscriber understands and agrees that the Company and others will rely upon the truth and accuracy of the acknowledgements, representations and agreements contained in this Subscription Agreement and agrees that if any of such acknowledgements, representations and agreements are no longer accurate or have been breached, the Subscriber shall promptly notify the Company;

 

	 	(m)	the Subscriber has the legal capacity and competence to enter into and execute this Subscription Agreement and to take all actions required pursuant hereto;

 

	 	(n)	the Subscriber has duly executed and delivered this Subscription Agreement and it constitutes a valid and binding agreement of the Subscriber enforceable against the Subscriber in accordance with its terms;

 

	 	(o)	the Subscriber is not an underwriter of, or dealer in, the Company’s Shares, nor is the Subscriber participating, pursuant to a contractual agreement or otherwise, in the distribution of any of the Shares;

 

	 	(p)	the Subscriber is not an underwriter of, or dealer in, the Company’s Shares, nor is the Subscriber participating, pursuant to a contractual agreement or otherwise, in the distribution of any of the Securities;

 

	 	(q)	the Subscriber understands and agrees that offers and sales of any of the Securities prior to the expiration of restricted period after the date of original issuance of the Securities (the six month period hereinafter referred to as the “Distribution Compliance Period”) shall only be made in compliance with the safe harbor provisions set forth in Regulation S, pursuant to the registration provisions of the 1933 Act or an exemption therefrom, and that all offers and sales after the Distribution Compliance Period shall be made only in compliance with the registration provisions of the 1933 Act or an exemption therefrom and in each case only in accordance with applicable state securities laws;

 

	 	(r)	the Subscriber agrees not to engage in any hedging transactions involving any of the Securities unless such transactions are in compliance with the provisions of the 1933 Act and in each case only in accordance with applicable state securities laws;

 

	 	(s)	the Subscriber (i) is able to fend for itself in the Subscription; (ii) has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of its investment in the Securities and the Company; and (iii) has the ability to bear the economic risks of its prospective investment and can afford the complete loss of such investment;

 

  

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	 	(t)	the Subscriber will indemnify the Company against, and will hold the Company and, where applicable, its respective directors, officers, employees, agents, advisors and shareholders harmless from, any and all loss, liability, claim, damage and expense whatsoever (including, but not limited to, any and all fees, costs and expenses whatsoever reasonably incurred in investigating, preparing or defending against any claim, lawsuit, administrative proceeding or investigation whether commenced or threatened) arising out of or based upon any representation or warranty of the Subscriber contained herein or in any document furnished by the Subscriber to the Company in connection herewith being untrue in any material respect or any breach or failure by the Subscriber to comply with any covenant or agreement made by the Subscriber to the Company in connection therewith;

 

	 	(u)	the Subscriber is not aware of any advertisement of any of the Securities and is not acquiring the Securities as a result of any form of general solicitation or general advertising including advertisements, articles, notices or other communications published in any newspaper, magazine or similar media or broadcast over radio or television, or any seminar or meeting whose attendees have been invited by general solicitation or general advertising; and

 

	 	(v)	no person has made to the Subscriber any written or oral representations:

 

	 	(i)	that any person will resell or repurchase any of the Securities,

 

	 	(ii)	that any person will refund the purchase price of any of the Securities,

 

	 	(iii)	as to the future price or value of any of the Securities, or

 

	 	(iv)	that any of the Securities will be listed and posted for trading on any stock exchange or automated dealer quotation system or that application has been made to list and post any of the Securities of the Company on any stock exchange or automated dealer quotation system, except that currently the Company’s common shares are quoted on the over-the-counter market operated by the Over-The-Counter Bulletin Board operated by FINRA.

 

6.2          In this Subscription Agreement, the term “U.S. Person” shall have the meaning ascribed thereto in Regulation S.

 

	7.	Acknowledgement and Waiver

 

7.1          The Subscriber has acknowledged that the decision to purchase the Securities was solely made on the basis of information available to the Subscriber on the EDGAR database maintained by the SEC at www.sec.gov. The Subscriber hereby waives, to the fullest extent permitted by law, any rights of withdrawal, rescission or compensation for damages to which the Subscriber might be entitled in connection with the distribution of the Securities.

 

	8.	Legending of Subject Securities

 

8.1          The Subscriber hereby acknowledges that that upon the issuance thereof, and until such time as the same is no longer required under the applicable securities laws and regulations, the certificates representing any of the Securities will bear a legend in substantially the following form:

 

	 	 	“THESE SECURITIES WERE ISSUED IN AN OFFSHORE TRANSACTION TO PERSONS WHO ARE NOT U.S. PERSONS (AS DEFINED HEREIN) PURSUANT TO REGULATION S UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “1933 ACT”).

 

  

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	 	 	ACCORDINGLY, NONE OF THE SECURITIES TO WHICH THIS CERTIFICATE RELATES HAVE BEEN REGISTERED UNDER THE 1933 ACT, OR ANY U.S. STATE SECURITIES LAWS, AND, UNLESS SO REGISTERED, NONE MAY BE OFFERED OR SOLD IN THE UNITED STATES (AS DEFINED HEREIN) OR, DIRECTLY OR INDIRECTLY, TO U.S. PERSONS (AS DEFINED HEREIN) EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE 1933 ACT AND IN EACH CASE ONLY IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS. IN ADDITION, HEDGING TRANSACTIONS INVOLVING THE SECURITIES MAY NOT BE CONDUCTED UNLESS IN ACCORDANCE WITH THE 1933 ACT. “UNITED STATES” AND “U.S. PERSON” ARE AS DEFINED BY REGULATION S UNDER THE 1933 ACT.”

 

8.2          The Subscriber hereby acknowledges and agrees to the Company making a notation on its records or giving instructions to the registrar and transfer agent of the Company in order to implement the restrictions on transfer set forth and described in this Subscription Agreement.

 

	9.	Costs

 

9.1          The Subscriber acknowledges and agrees that all costs and expenses incurred by the Subscriber (including any fees and disbursements of any special counsel retained by the Subscriber) relating to the purchase of the Note or to the conversion of the Note or the Conversion Shares shall be borne by the Subscriber.

 

	10.	Governing Law

 

10.1        This Subscription Agreement is governed by the laws of the State of Nevada and the federal laws applicable thereto. The Subscriber, in its personal or corporate capacity and, if applicable, on behalf of each beneficial purchaser for whom it is acting, irrevocably attorns to the jurisdiction of the courts of the State of Nevada.

 

	11.	Survival

 

11.1         This Subscription Agreement, including without limitation the representations, warranties and covenants contained herein, shall survive and continue in full force and effect and be binding upon the parties hereto notwithstanding the completion of the purchase of the Note by the Subscriber pursuant hereto.

 

	12.	Assignment

 

12.1         This Subscription Agreement is assignable.

 

	13.	Severability

 

13.1         The invalidity or unenforceability of any particular provision of this Subscription Agreement shall not affect or limit the validity or enforceability of the remaining provisions of this Subscription Agreement.

 

	14.	Entire Agreement

 

14.1         Except as expressly provided in this Subscription Agreement and in the agreements, instruments and other documents contemplated or provided for herein, this Subscription Agreement contains the entire agreement between the parties with respect to the sale of the Securities and there are no other terms, conditions, representations or warranties, whether expressed, implied, oral or written, by statute or common law, by the Company or by anyone else. This subscription may only be amended by instrument in writing signed by the parties hereto.

 

	15.	Notices

 

15.1         All notices and other communications hereunder shall be in writing and shall be deemed to have been duly given if mailed or transmitted by any standard form of telecommunication. Notices to the Subscriber shall be directed to the address on the signature page of this Subscription Agreement and notices to the Company shall be directed to it at Basta Holdings Corp., 1111 Kane Concourse, Suite 518, Bay Harbor Islands, FL 33154, Attention: President.

 

  

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	16.	Counterparts and Electronic Means

 

16.1         This Subscription Agreement may be executed in any number of counterparts, each of which, when so executed and delivered, shall constitute an original and all of which together shall constitute one instrument. Delivery of an executed copy of this Subscription Agreement by electronic facsimile transmission or other means of electronic communication capable of producing a printed copy will be deemed to be execution and delivery of this Subscription Agreement as of the date hereinafter set forth.

 

	17.	Registration Instructions

 

17.1         The Subscriber hereby directs the Company to cause any Note issued pursuant to this Subscription Agreement to be registered on the books of the Company as directed on the signature page of this Agreement.

 

IN WITNESS WHEREOF the Subscriber has duly executed this Subscription Agreement as of the date of acceptance by the Company.

 

	 	Name of Subscriber – Please type or print)
	 	 
	 	/s/
	 	 
	 	 
	 	 
	 	(Address of Subscriber)
	 	 
	 	 
	 	(City, State or Province, Postal Code of Subscriber)
	 	 
	 	 
	 	(Country of Subscriber)
	 	 
	 	 
	 	(Fax and/or E-mail Address of Subscriber)

  

 

  

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A C C E P T A N C E

 

The above-mentioned Subscription Agreement in respect of the Note is hereby accepted by Basta Holdings Corp.

 

DATED at Miami, Florida, the 21st day of August, 2014.

 

	BASTA HOLDINGS CORP. 	 
	 	 	 
	Per:	 	 
	 	Jacob Gitman, President	 

 

  

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EXHIBIT “A”

 

Form of Convertible Note

 

THE SECURITIES REPRESENTED HEREBY AND THE SECURITIES INTO WHICH THIS SECURITY IS CONVERTIBLE HAVE BEEN OFFERED IN AN OFFSHORE TRANSACTION TO A PERSON WHO IS NOT A U.S. PERSON (AS DEFINED HEREIN) PURSUANT TO REGULATION S UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “1933 ACT”). 

 

NONE OF THE SECURITIES REPRESENTED HEREBY NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLE HAVE BEEN REGISTERED UNDER THE 1933 ACT, OR ANY U.S. STATE SECURITIES LAWS, AND, UNLESS SO REGISTERED, MAY NOT BE OFFERED OR SOLD, DIRECTLY OR INDIRECTLY, IN THE UNITED STATES OR TO A U.S. PERSON EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF REGULATION S UNDER THE 1933 ACT, PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE 1933 ACT, OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE 1933 ACT AND IN EACH CASE ONLY IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS. IN ADDITION, HEDGING TRANSACTIONS INVOLVING THIS SECURITY AND THE SECURITIES INTO WHICH THIS SECURITY IS CONVERTIBLE MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE 1933 ACT. “UNITED STATES” AND “U.S. PERSON” ARE AS DEFINED BY REGULATION S UNDER THE 1933 ACT. 

 

Dated: August ___, 2014

 

          U.S. 500,000

 

CONVERTIBLE NOTE

 

FOR VALUE RECEIVED, BASTA HOLDINGS CORP. (the “Company”) promises to pay to ____, of _____, or his registered assigns (the “Holder”), the principal sum of Five Hundred Thousand Dollars ($500,000) in lawful currency of the United States (the “Principal Amount”) on August __, 2015, or such earlier date as the Note may be permitted to be repaid as provided hereunder (the “Maturity Date”), with 6% annual interest, to the Holder on the earlier of (i) the Conversion Date (as hereafter defined) and (ii) the Maturity Date (except that, if any such date is not a Business Day, then such payment shall be due on the next succeeding Business Day) in cash. The Company may prepay any portion of the Principal Amount without the prior written consent of the Holder.

 

This Note is subject to the following additional provisions:

 

	1.	Other Agreements.

 

1.1          This Note has been issued pursuant to a subscription agreement between the Company and the Holder dated August ___, 2014 (the “Subscription Agreement”) pursuant to which the Holder purchased this Note, and this Note is subject in all respects to the terms of the Subscription Agreement and incorporates the terms of the Subscription Agreement to the extent that they do not conflict with the terms of this Note. This Note may be transferred or assigned.

 

	2.	Events of Default.

 

2.1          “Event of Default”, wherever used herein, means any one of the following events (whatever the reason and whether it shall be voluntary or involuntary or effected by operation of law or pursuant to any judgment, decree or order of any court, or any order, rule or regulation of any administrative or governmental body):

 

  

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	 	(a)	any default in the payment of the Principal Amount of this Note, free of any claim of subordination, as and when the same shall become due and payable (whether on a Conversion Date or the Maturity Date or by acceleration or otherwise);

 

	 	(b)	the Company shall fail to observe or perform any other covenant or agreement contained in this Note or the Subscription Agreement which failure is not cured, if possible to cure, within 30 calendar days after notice of such default is sent by the Holder to the Company; or

 

	 	(c)	the Company or any of its subsidiaries (each a “Subsidiary”) shall commence, or there shall be commenced against the Company or any Subsidiary a case under any applicable bankruptcy or insolvency laws as now or hereafter in effect or any successor thereto, or the Company or any Subsidiary commences any other proceeding under any reorganization, arrangement, adjustment of debt, relief of debtors, dissolution, insolvency or liquidation or similar law of any jurisdiction whether now or hereafter in effect relating to the Company or any Subsidiary or there is commenced against the Company or any Subsidiary any such bankruptcy, insolvency or other proceeding which remains undismissed for a period of 60 days; or the Company or any Subsidiary is adjudicated insolvent or bankrupt; or any order of relief or other order approving any such case or proceeding is entered; or the Company or any Subsidiary suffers any appointment of any custodian or the like for it or any substantial part of its property which continues undischarged or unstayed for a period of 60 days; or the Company or any Subsidiary makes a general assignment for the benefit of creditors; or the Company shall fail to pay, or shall state that it is unable to pay, or shall be unable to pay, its debts generally as they become due; or the Company or any Subsidiary shall call a meeting of its creditors with a view to arranging a composition, adjustment or restructuring of its debts; or the Company or any Subsidiary shall by any act or failure to act expressly indicate its consent to, approval of or acquiescence in any of the foregoing; or any corporate or other action is taken by the Company or any Subsidiary for the purpose of effecting any of the foregoing.

 

2.2          If any Event of Default occurs, the full Principal Amount, together with interest and other amounts owing in respect thereof to the date of acceleration shall become, at the Holder’s election, immediately due and payable in cash. Upon payment of the full Principal Amount, together with interest and other amounts owing in respect thereof, in accordance herewith, this Note shall promptly be surrendered to or as directed by the Company. The Holder need not provide and the Company hereby waives any presentment, demand, protest or other notice of any kind, and the Holder may immediately and without expiration of any grace period enforce any and all of its rights and remedies hereunder and all other remedies available to it under applicable law. Such declaration may be rescinded and annulled by the Holder at any time prior to payment hereunder and the Holder shall have all rights as a Note holder until such time, if any, as the full payment under this Section shall have been received by it. No such rescission or annulment shall affect any subsequent Event of Default or impair any right consequent thereon.

 

	3.	Conversion.

 

3.1          At any time after the Financing Date until this Note is no longer outstanding, this Note may be converted into Conversion Shares at any time and from time-to-time, in whole or in part, at the option of the Holder. The Holder shall effect conversions by delivering to the Company the form of Notice of Conversion attached hereto as Annex A (a “Notice of Conversion”), specifying therein the amount of principal to be converted and the date on which such conversion is to be effected (a “Conversion Date”); provided that the date upon which any such conversion may be effected may not be less than 5 calendar days following the date of delivery of the Notice of Conversion. If no Conversion Date is specified in a Notice of Conversion, the Conversion Date shall be the date that is 5 calendar days after such Notice of Conversion is delivered to the Company. To effect conversions hereunder, the Holder shall not be required to physically surrender the Note to the Company unless the entire principal amount of this Note has been so converted. Conversions hereunder shall have the effect of lowering the outstanding principal amount of this Note in an amount equal to the applicable conversion. The Holder and the Company shall maintain records showing the principal amount converted and the date of such conversions. The Company shall deliver any objection to any Notice of Conversion within 10 business days of receipt of such notice. The Holder, by acceptance of this Note, acknowledges and agrees that, by reason of the provisions of this paragraph, following conversion of a portion of this Note, the unpaid and unconverted principal amount of this Note may be less than the amount stated on the face hereof.

 

  

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3.2          Not later than five Trading Days after any Conversion Date, the Company will deliver to the Holder a certificate or certificates representing the Conversion Shares (bearing such legends as may be required by applicable law and those required by the Subscription Agreement) representing the number of Conversion Shares being acquired upon the conversion of Note.

 

3.3          The conversion price (the “Conversion Price”) in effect on any Conversion Date shall be shall mean $6.70.

 

3.4          At any time after the Financing Date until this Note is no longer outstanding, this Note may be converted into Conversion Shares at any time and from time-to-time, in whole or in part, at the option of the Company. The Company shall effect conversions by delivering to the Holder written notice of conversion specifying therein the amount of principal to be converted and the date on which such conversion is to be effected (a “Conversion Date”);

 

3.5          The Company covenants that it will at all times reserve and keep available out of its authorized and unissued shares of Common Stock such number of shares as is necessary in order to ensure that a sufficient number are available for the purpose of issuance of Conversion Shares upon conversion of this Note, free from pre-emptive rights or any other actual contingent purchase rights of Persons other than the Holder. The Company covenants that all Conversion Shares shall, upon issue, be duly and validly authorized, issued and fully paid and non-assessable.

 

3.6          Upon a conversion hereunder the Company shall not be required to issue stock certificates representing fractions of any Conversion Shares, and the number of Conversion Shares shall be rounded up or down to the nearest whole number.

 

3.7          If the Company, at any time while this Note is outstanding: (A) pays a stock dividend or otherwise makes a distribution or distributions in shares of its Common Stock or any other equity or equity equivalent securities payable in shares of Common Stock, (B) subdivides outstanding shares of Common Stock into a larger number of shares, (C) combines (including by way of reverse stock split) outstanding shares of Common Stock into a smaller number of shares, or (D) issues by reclassification of shares of the Common Stock any shares of capital stock of the Company, then the Conversion Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding before such event and of which the denominator shall be the number of shares of Common Stock outstanding after such event. Any adjustment made pursuant to this Section shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification.

 

	4.	Repayment

 

4.1          Repayment of this Note, including all interest, shall be due on the Maturity Date, unless earlier converted into common shares.

 

	5.	Interest

 

5.1          Interest on the Principal Amount shall be calculated at 6%, per annum, and be payable on May 15th of each year that the Note remains outstanding.

 

  

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	6.	Notices

 

6.1          Any and all notices or other communications or deliveries to be provided by the Holder hereunder, including, without limitation, any Notice of Conversion, shall be in writing and delivered personally, by facsimile, sent by a nationally recognized overnight courier service, addressed to the Company, at the address set forth above, or such other address or facsimile number as the Company may specify for such purposes by notice to the Holder delivered in accordance with this Section. Any and all notices or other communications or deliveries to be provided by the Company hereunder shall be in writing and delivered personally, by facsimile, sent by a nationally recognized overnight courier service addressed to the Holder at the facsimile telephone number or address of such Holder appearing on the books of the Company, or if no such facsimile telephone number or address appears, at the address of the Holder to which this Note was delivered. Any notice or other communication or deliveries hereunder shall be deemed given and effective on the earliest of (i) the date of transmission, if such notice or communication is delivered via facsimile at the facsimile telephone number specified in this Section prior to 5:30 p.m. (Eastern Standard Time), (ii) the date after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile telephone number specified in this Section later than 5:30 p.m. (Eastern Standard Time) on any date and earlier than 11:59 p.m. (Eastern Standard Time) on such date, (iii) the second business day following the date of mailing, if sent by nationally recognized overnight courier service, or (iv) upon actual receipt by the party to whom such notice is required to be given.

 

	7.	Definitions.

 

7.1          For the purposes hereof, in addition to the terms defined elsewhere in this Note: (i) capitalized terms not otherwise defined herein have the meanings given to such terms in the Subscription Agreement, and (ii) the following terms shall have the following meanings:

 

	 	(a)	“Business Day” means any day except Saturday, Sunday and any day which shall be a federal legal holiday in the United States or a day on which banking institutions in the State of Florida are authorized or required by law or other government action to close.

 

	 	(b)	“Common Stock” means the common stock, par value $0.001 per share, of the Company and stock of any other class into which such shares may hereafter have been reclassified or changed.

 

	 	(c)	“Conversion Date” has the meaning set forth in Section 3.5 hereof.

 

	 	(d)	“Conversion Price” has the meaning set forth in Section 3.4 hereof.

 

	 	(e)	“Conversion Share” means shares of the Company’s Common Stock into which principal and Interest due pursuant to this Note may be converted.

 

	 	(f)	“Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

	 	(g)	“Financing Date” means the date on which the Principal Amount is delivered to the Company by the Investor.

 

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

 

	 	(i)	“Trading Day” means a day on which the shares of Common Stock are traded on a trading market on which the shares of Common Stock are then listed or quoted, provided, that in the event that the shares of Common Stock are not listed or quoted, then Trading Day shall mean a Business Day.

 

	8.	Replacement of Note if lost or destroyed.

 

If this Note shall be mutilated, lost, stolen or destroyed, the Company shall execute and deliver, in exchange and substitution for and upon cancellation of a mutilated Note, or in lieu of or in substitution for a lost, stolen or destroyed Note, a new Note for the principal amount of this Note so mutilated, lost, stolen or destroyed but only upon receipt of evidence of such loss, theft or destruction of such Note, and of the ownership hereof, and indemnity, if requested, all reasonably satisfactory to the Company.

 

  

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	9.	Governing law.

 

All questions concerning the construction, validity, enforcement and interpretation of this Note shall be governed by and construed and enforced in accordance with the internal laws of the State of Florida, without regard to the principles of conflicts of law thereof.

 

	10.	Waivers

 

Any waiver by the Company or the Holder of a breach of any provision of this Note shall not operate as or be construed to be a waiver of any other breach of such provision or of any breach of any other provision of this Note. The failure of the Company or the Holder to insist upon strict adherence to any term of this Note on one or more occasions shall not be considered a waiver or deprive that party of the right thereafter to insist upon strict adherence to that term or any other term of this Note. Any waiver must be in writing.

 

	11.	Usury

 

If any provision of this Note is invalid, illegal or unenforceable, the balance of this Note shall remain in effect, and if any provision is inapplicable to any Person or circumstance, it shall nevertheless remain applicable to all other Persons and circumstances. If it shall be found that any interest or other amount deemed interest due hereunder violates applicable laws governing usury, the applicable rate of interest due hereunder shall automatically be lowered to equal the maximum permitted rate of interest. The Company covenants (to the extent that it may lawfully do so) that it shall not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law or other law which would prohibit or forgive the Company from paying all or any portion of the principal of or interest on this Note as contemplated herein, wherever enacted, now or at any time hereafter in force, or which may affect the covenants or the performance of this indenture, and the Company (to the extent it may lawfully do so) hereby expressly waives all benefits or advantage of any such law, and covenants that it will not, by resort to any such law, hinder, delay or impeded the execution of any power herein granted to the Holder, but will suffer and permit the execution of every such as though no such law has been enacted.

 

	12.	Next business day

 

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

 

IN WITNESS WHEREOF, the Company has caused this Convertible Note to be duly executed by a duly authorized officer as of the date first above indicated.

 

	 	BASTA HOLDINGS CORP. 
	 	 	 
	 	By:	 
	 	 	Jacob Gitman, President

title:    President

 

  

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ANNEX A

 

NOTICE OF CONVERSION

 

The undersigned hereby elects to convert principal under the Convertible Note of Basta Holdings Corp., a Nevada corporation (the “Company”), due on __________, into shares of the Company’s common stock (each a “Share”) as of the date written below. The undersigned will pay all transfer taxes, intangible or other taxes payable with respect hereto and is delivering herewith such certificates and opinions as reasonably requested by the Company in accordance therewith. No fee will be charged to the holder for any conversion.

 

The undersigned agrees to comply with the prospectus delivery requirements under the applicable securities laws in connection with any transfer of the aforesaid Shares.

 

Conversion calculations:

 

Date to Effect Conversion:

 

Principal Amount of Note to be Converted:

 

Accrued Interest to be Converted:

 

Number of Shares to be issued:

 

Signature:

  

 

Name:

  

 

Address:

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