Document:

EX-10.3

 Exhibit 10.3 

AMENDMENT NO. 10 AND WAVIER TO SECOND AMENDED AND 

RESTATED LOAN AND SECURITY AGREEMENT 

THIS AMENDMENT NO. 10 AND WAIVER TO SECOND AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT dated as of February 12, 2019 (this
“Amendment”), is among NICHOLAS FINANCIAL, INC., a Florida corporation (the “Borrower”), BANK OF AMERICA, N.A., in its capacity as agent (in such capacity, the “Agent”), and each of the Lenders
party hereto. 
 RECITALS: 

WHEREAS, the Borrower, the lenders from time to time party thereto (collectively, the “Lenders”) and the Agent have entered
into a Second Amended and Restated Loan and Security Agreement dated as of January 12, 2010 (as amended, restated, supplemented or otherwise modified prior to the date hereof, the “Loan Agreement”); 

WHEREAS, the Borrower has requested that the Agent and the Lenders waive compliance with certain provisions of the Loan Agreement and the
Borrower has requested that the Agent and the Lenders amend certain provisions of the Loan Agreement; and 
 WHEREAS, subject to the terms
and conditions set forth below, the Agent and the Lenders party hereto are willing to grant such waivers and amend the Loan Agreement. 

NOW, THEREFORE, in furtherance of the foregoing, the parties hereto, in consideration of their mutual covenants and agreements hereinafter set
forth and intending to be legally bound hereby, covenant and agree as follows: 

Section 1.    DEFINITIONS; INCORPORATION BY REFERENCE. All capitalized
terms used and not defined herein shall have the meanings given them in the Loan Agreement and the rules of construction set forth in Section 1.4 of the Loan Agreement shall apply to this Amendment. The recitals hereto are hereby incorporated
by reference. 
 Section 2.    AMENDMENTS TO LOAN AGREEMENT. 

(a)    Section 1.2 of the Loan Agreement is hereby amended by adding a new definition of “Amendment
No. 10 Effective Date” in the appropriate alphabetical order to read as follows: 
 “Amendment No. 10
Effective Date” means February 12, 2019.” 
 (b)    Section 1.2 of the Loan Agreement is
hereby amended by amending the definition of “Maximum Revolver Amount” in its entirety to read as follows: 

“Maximum Revolver Amount” means $140,000,000. 

  
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 (c)    Section 9.18 of the Loan Agreement is hereby
amended by amending the following section in its entirety to read as follows: 
 (d)    Minimum
Interest Coverage. The Borrower shall not permit the ratio, calculated as of each month end for the three-month period then ended, of (a) the sum of Adjusted Net Earnings from Operations for such period, plus interest expense and any
provision for income taxes for such period (numerator) to (b) aggregate interest expense for such period (denominator) (the “Interest Coverage Ratio”), to be less than (i) 0.00 to 1.00, as of September 30, 2018, (ii) 0.80
to 1.00 as of October 31, 2018, (iii) 1.00 to 1.00 as of November 30, 2018, (iv) 0.44 to 1.00 as of December 31, 2018, (v) 0.20 to 1.00 as of January 31, 2019 and (vi) 1.00 to 1.00 as of each month end thereafter. For purposes of
the calculation of the Interest Coverage Ratio, (x) the Borrower’s Adjusted Net Earnings from Operations shall be reduced by the amount of the increase, if any, in the (i) Charge Off Shortfall and (ii) the Loss Reserve Shortfall,
from the first day of such 3 month period to the last day of such 3 month period and (y) the Borrower shall be permitted to add back to Adjusted Net Earnings from Operations in the relevant period the (i) waiver and amendment fee in an
amount not to exceed $200,000 in connection with the amendments hereto made on the Amendment No. 9 Effective Date, provided that such add back shall be permitted for the three-month period ended January 31, 2019 and (ii) waiver and
amendment fee in an amount not to exceed $140,000 in connection with the amendments hereto made on the Amendment No. 10 Effective Date, provided that such add back shall be permitted for the three-month period ended April 30, 2019. 

(e)    Schedule 1.1 to the Loan Agreement is hereby amended and restated in its entirety to read as set
forth on Exhibit A attached hereto. 
 Section 3.    WAIVER. Subject to
the terms and conditions set forth herein and in reliance upon the representations and warranties set forth herein, the Agent and the Lenders hereby waive compliance by the Borrower with the provisions of Section 9.18 for the measurement period
ending November 30, 2018. The foregoing waiver is a one-time waiver and applies only to the specified circumstance and does not modify or otherwise affect the Borrower’s obligations to comply with
such provision of the Loan Agreement any other provision of the Loan Documents in any other instance. By virtue of the waiver herein, the Borrower hereby affirms and agrees that no other Event of Default has occurred or is continuing. The waiver set
forth in this Section 4 is limited to the extent set forth above and no other terms, covenants or provisions of the Loan Documents are intended to be affected hereby. For the avoidance of doubt, the effectiveness of Section 4 of this
Amendment is subject to Section 5 of this Amendment. 

Section 4.    CONDITIONS PRECEDENT. The parties hereto agree that the
amendments and waivers set forth in Section 2 and Section 3 above shall not be effective until the date of satisfaction of each of the following conditions precedent: 

(a)    Documentation. The Agent shall have received (i) a counterpart of this Amendment, duly
executed and delivered by the Borrower and each of the Lenders party to the Loan Agreement and (ii) such other documents and certificates as the Agent or its counsel may reasonably request relating to the organization, existence and good
standing of the Borrower, the authorization of this Amendment and any other legal matters relating to the Borrower or the transactions contemplated hereby. 

  
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 (b)    “Know your customer”
Information. If requested, the Agent shall have received “know your customer” information, including: 

(i)    documentation and information, if requested by Agent or any Lender, from the Borrower in connection
with applicable “know your customer” and anti-money-laundering rules and regulations, including the PATRIOT Act, in each case at least five days prior to the date hereof; 

(ii)    if the Borrower qualifies as a “legal entity customer” under the Beneficial Ownership
Regulation shall deliver a Beneficial Ownership Certification in relation to such Borrower at least five days prior to the date hereof. 

(c)    Amendment and Waiver Fee. The Borrower shall have paid to the Agent, for the ratable benefit
of the Lenders a fee for the amendment and waiver of the Loan Agreement in the amount of $140,000. 

(d)    Fees and Expenses. All fees and expenses payable to the Agent, including the fees and
expenses of counsel to the Agent, shall have been paid in full. 
 Section 5.    REPRESENTATIONS
AND WARRANTIES. 
 (a)    In order to induce the Agent and the Lenders to enter into this Amendment,
the Borrower represents and warrants to the Agent and the Lenders as follows: 
 (i)    The
representations and warranties made by the Borrower in Article 8 of the Loan Agreement are true and correct on and as of the date hereof, except to the extent that such representations and warranties expressly relate to an earlier date in
which case such representations and warranties are true and correct on and as of such earlier date. 

(ii)    Since the date of the Financial Statements delivered to the Lenders, no material adverse change has
occurred in the Borrower’s property, business, operations or conditions (financial or otherwise). 

(iii)    No Default or Event of Default has occurred and is continuing or will exist after giving effect to
this Amendment. 
 (b)    In order to induce the Agent and the Lenders to enter into this Amendment, the
Borrower represents and warrants to the Agent and the Lenders that this Amendment has been duly authorized, executed and delivered by it and constitutes its legal, valid and binding obligation. 

  
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 Section 6.    MISCELLANEOUS 

(a)    Ratification and Confirmation of Loan Documents. The Borrower hereby consents, acknowledges
and agrees to the amendments set forth herein and hereby confirms and ratifies in all respects the Loan Documents to which the Borrower is a party. 

(b)    Fees and Expenses. The Borrower shall pay on demand all reasonable costs and expenses of the
Agent in connection with the preparation, reproduction, execution, and delivery of this Amendment and any other documents prepared in connection herewith, including, without limitation, the reasonable fees and out-of-pocket expenses of counsel for the Agent. 

(c)    Headings. Section and subsection headings in this Amendment are included herein for
convenience of reference only and shall not constitute a part of this Amendment for any other purpose or be given any substantive effect. 

(d)    Governing Law; Waiver of Jury Trial. This Amendment shall be governed by and construed in
accordance with the laws of the State of New York, and shall be further subject to the provisions of Sections 15.3 and 15.4 of the Loan Agreement. 

(e)    Counterparts. This Amendment may be executed in any number of counterparts, each of which
when executed and delivered shall be deemed to be an original, and all of which when taken together shall constitute one and the same agreement. Delivery of an executed counterpart of a signature page of this Amendment by facsimile or electronic
transmission (including .pdf files) shall be effective as delivery of a manually executed counterpart hereof. 

(f)    Entire Agreement. This Amendment, together with all the Loan Documents (collectively, the
“Relevant Documents”), sets forth the entire understanding and agreement of the parties hereto in relation to the subject matter hereof and supersedes any prior negotiations and agreements among the parties relating to such subject
matter. No promise, condition, representation or warranty, express or implied, not set forth in the Relevant Documents shall bind any party hereto, and no such party has relied on any such promise, condition, representation or warranty. Each of the
parties hereto acknowledges that, except as otherwise expressly stated in the Relevant Documents, no representations, warranties or commitments, express or implied, have been made by any party to the other. None of the terms or conditions of this
Amendment may be changed, modified, waived or canceled orally or otherwise except in a writing signed by the Agent for such purpose. 

(g)    Enforceability. Should any one or more of the provisions of this Amendment be determined to
be illegal or unenforceable as to one or more of the parties hereto, all other provisions nevertheless shall remain effective and binding on the parties hereto. 

(h)    Successors and Assigns. This Amendment shall be binding upon and inure to the benefit of the
Borrower, the Agent, each Lender and their respective successors and assigns (subject to Section 13.2 of the Loan Agreement). 

  
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 The following parties have caused this Amendment to be executed as of the date first written
above. 
  

			
	BORROWER:
	
	NICHOLAS FINANCIAL, INC.
		
	By:	 	 
	Name:	 	 
	Title:	 	 

 Signature Page to Amendment No. 10 and Waiver to 

Second Amended and Restated Loan Agreement – Nicholas Financial, Inc. 

 
			
	AGENT:
	
	BANK OF AMERICA, N.A., as the Agent
		
	By:	 	 
	Name:	 	 
	Title:	 	 

  

			
	LENDERS:
	
	BANK OF AMERICA, N.A., as a Lender
		
	By:	 	 
	Name:	 	 
	Title:	 	 

 Signature Page to Amendment No. 10 and Waiver to 

Second Amended and Restated Loan Agreement – Nicholas Financial, Inc. 

 
			
	FIRST TENNESSEE BANK NATIONAL ASSOCIATION, as a Lender
		
	By:	 	 
	Name:	 	 
	Title:	 	 

 Signature Page to Amendment No. 10 and Waiver to 

Second Amended and Restated Loan Agreement – Nicholas Financial, Inc. 

 
			
	BMO HARRIS BANK, N.A., as a Lender
		
	By:	 	 
	Name:	 	 
	Title:	 	 

 Signature Page to Amendment No. 10 and Waiver to 

Second Amended and Restated Loan Agreement – Nicholas Financial, Inc. 

 
			
	WELLS FARGO BANK, NATIONAL ASSOCIATION, as a Lender
		
	By:	 	 
	Name:	 	 
	Title:	 	 

 Signature Page to Amendment No. 10 and Waiver to 

Second Amended and Restated Loan Agreement – Nicholas Financial, Inc. 

 EXHIBIT A 

Amended Schedule 1.1 to the Loan Agreement 

SCHEDULE 1.1 
 COMMITMENTS OF LENDERS:

  

					
	Lender	  	Revolver Commitment	  	Pro Rata share
	Bank of America, N.A.	  	  $56,000,000	  	40.0000%
	First Tennessee Bank National Association	  	  $21,777,000	  	15.5555%
	Wells Fargo Bank, National Association	  	  $37,331,000	  	26.6665%
	BMO Harris Bank, N.A	  	  $24,892,000	  	17.7780%
	         TOTAL
	  	$140,000,000	  	100%ex-10.1

 SUBSCRIPTION AGREEMENT
 

 This Subscription Agreement (this “Agreement”) is being delivered to the purchaser identified on the signature page to this Agreement (the “Subscriber”) in connection with its investment in Bullfrog Gold Corp., a Delaware corporation (the “Company”). The Company is conducting a private placement (the “Offering”) of units (“Units”), with each Unit consisting of one (1) share of the Company’s common stock and a warrant, as more fully described below, at a purchase price of Five Cents ($0.05) per Unit (the “Purchase Price”). Each Unit will consist of: (i) one(1) share of the Company’s common stock (the “Common Stock”), par value $0.0001 per share (the “Shares”) (or, at the election of any purchaser who would, as a result of purchase of Units become a beneficial owner of five (5%) percent or greater of the outstanding Common Stock of the Company, one share of the Company’s Series B Preferred Stock, par value $0.0001 per share, which is convertible into one (1) share of Common Stock, with such rights and designations as set forth in the form of Certificate of Designation, attached hereto as Exhibit A, (the “Preferred Shares”)), and (ii) a two  (2)  year warrant to purchase fifty percent  (50% or one-half warrant)  of the number of Shares purchased in the Offering  (the “Warrant Shares”) at a per share exercise price of $0.10 (the “Exercise Price”), substantially in the form attached hereto as Exhibit B (the “Warrants”). In the event the Company’s next financing is completed at lesser prices or terms than herein, the pricing and terms of this Agreement will be timely adjusted downward to match the subsequent terms. Subscribers who would so qualify have the option of purchasing Units including the Preferred Shares by electing such option on page 14 of this Agreement.  For purposes of this Agreement, the term “Securities” shall refer to the Units, the Shares, the Preferred Shares, the Common Stock into which the Preferred Shares are convertible, the Warrants, and the Warrant Shares. The financing shall not exceed one million US dollars.
 

 IMPORTANT INVESTOR NOTICES
 

 NO OFFERING LITERATURE OR ADVERTISEMENT IN ANY FORM MAY BE RELIED UPON IN THE OFFERING OF THESE SECURITIES EXCEPT FOR THIS SUBSCRIPTION AGREEMENT AND ANY SUPPLEMENTS HERETO (THE “AGREEMENT”), AND NO PERSON HAS BEEN AUTHORIZED TO MAKE ANY REPRESENTATIONS EXCEPT THOSE CONTAINED HEREIN.
 

 THIS AGREEMENT IS CONFIDENTIAL AND THE CONTENTS HEREOF MAY NOT BE REPRODUCED, DISTRIBUTED OR DIVULGED BY OR TO ANY PERSONS OTHER THAN THE RECIPIENT OR ITS REPRESENTATIVE, ACCOUNTANT OR LEGAL COUNSEL, WITHOUT THE PRIOR WRITTEN CONSENT OF THE COMPANY.  EACH PERSON WHO ACCEPTS DELIVERY OF THIS AGREEMENT, ACKNOWLEDGES AND AGREES TO THE FOREGOING RESTRICTIONS.
 

 THIS AGREEMENT DOES NOT PURPORT TO BE ALL-INCLUSIVE OR TO CONTAIN ALL OF THE INFORMATION THAT YOU MAY DESIRE IN EVALUATING THE COMPANY, OR AN INVESTMENT IN THE OFFERING. THIS SUBSCRIPTION AGREEMENT DOES NOT CONTAIN ALL OF THE INFORMATION THAT WOULD NORMALLY APPEAR IN A PROSPECTUS FOR AN OFFERING REGISTERED UNDER THE SECURITIES ACT.  YOU MUST CONDUCT AND RELY ON YOUR OWN EVALUATION OF THE COMPANY AND THE TERMS OF THE OFFERING, INCLUDING THE MERITS AND RISKS INVOLVED, IN DECIDING WHETHER TO INVEST IN THE OFFERING.
 

 THIS AGREEMENT CONTAINS A SUMMARY OF CERTAIN PROVISIONS OF VARIOUS DOCUMENTS RELATING TO THE OPERATIONS OF THE COMPANY.  THESE SUMMARIES DO NOT PURPORT TO BE COMPLETE AND ARE QUALIFIED IN THEIR ENTIRETY BY REFERENCE TO THE TEXTS OF THE ORIGINAL DOCUMENTS.
 

 

 

 
 

 THIS AGREEMENT DOES NOT CONSTITUTE AN OFFER OR SOLICITATION OF AN OFFER TO ANY PERSON OR IN ANY JURISDICTION WHERE SUCH OFFER OR SOLICITATION IS UNLAWFUL OR NOT AUTHORIZED.  EACH PERSON WHO ACCEPTS DELIVERY OF THIS SUBSCRIPTION AGREEMENT AGREES TO RETURN IT AND ALL RELATED DOCUMENTS IF SUCH PERSON DOES NOT PURCHASE ANY OF THE SECURITIES DESCRIBED HEREIN.
 

 NEITHER THE DELIVERY OF THIS AGREEMENT AT ANY TIME NOR ANY SALE OF SECURITIES HEREUNDER SHALL IMPLY THAT INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.  THE COMPANY WILL EXTEND TO EACH PROSPECTIVE INVESTOR (AND TO ITS REPRESENTATIVE, ACCOUNTANT OR LEGAL COUNSEL, IF ANY) THE OPPORTUNITY, PRIOR TO ITS PURCHASE OF UNITS, TO ASK QUESTIONS OF AND RECEIVE ANSWERS FROM THE COMPANY CONCERNING THE OFFERING AND TO OBTAIN ADDITIONAL INFORMATION, TO THE EXTENT THE COMPANY POSSESSES THE SAME OR CAN ACQUIRE IT WITHOUT UNREASONABLE EFFORT OR EXPENSE, IN ORDER TO VERIFY THE ACCURACY OF THE INFORMATION SET FORTH HEREIN.  ALL SUCH ADDITIONAL INFORMATION SHALL ONLY BE PROVIDED IN WRITING AND IDENTIFIED AS SUCH BY THE COMPANY THROUGH ITS DULY AUTHORIZED OFFICERS AND/OR DIRECTORS ALONE; NO ORAL INFORMATION OR INFORMATION PROVIDED BY ANY BROKER OR THIRD PARTY MAY BE RELIED UPON.
 

 NO REPRESENTATIONS, WARRANTIES OR ASSURANCES OF ANY KIND ARE MADE OR SHOULD BE INFERRED WITH RESPECT TO THE ECONOMIC RETURN, IF ANY, THAT MAY ACCRUE TO AN INVESTOR IN THE COMPANY.
 

 THIS AGREEMENT CONTAINS FORWARD-LOOKING STATEMENTS REGARDING THE COMPANY’S PERFORMANCE, STRATEGY, PLANS, OBJECTIVES, EXPECTATIONS, BELIEFS AND INTENTIONS.  THE OUTCOME OF THE EVENTS DESCRIBED IN THESE FORWARD-LOOKING STATEMENTS IS SUBJECT TO SUBSTANTIAL RISKS, AND ACTUAL RESULTS COULD DIFFER MATERIALLY.  THE SECTIONS ENTITLED “EXECUTIVE SUMMARY,” “RISK FACTORS,” AND “DESCRIPTION OF BUSINESS,” IN ANY SEC FILING OR REPORT, AS WELL AS THIS AGREEMENT GENERALLY, CONTAINS DISCUSSIONS OF SOME OF THE FACTORS THAT COULD CONTRIBUTE TO THESE DIFFERENCES.
 

 THIS SUBSCRIPTION AGREEMENT AND THE SEC FILINGS AND REPORTS INCLUDE DATA OBTAINED FROM INDUSTRY PUBLICATIONS AND REPORTS, WHICH THE COMPANY BELIEVES TO BE RELIABLE SOURCES; HOWEVER, NEITHER THE ACCURACY NOR COMPLETENESS OF THIS DATA IS GUARANTEED. WE HAVE NEITHER INDEPENDENTLY VERIFIED THIS DATA NOR SOUGHT THE CONSENT OF SUCH SOURCES TO REFER TO THEIR REPORTS IN THIS SUBSCRIPTION AGREEMENT.
 

 THE OFFERING PRICE OF THE UNITS HAS BEEN DETERMINED ARBITRARILY.  THE PRICE OF THE UNITS AND THE COMMON OR PREFERRED STOCK AND WARRANTS DOES NOT NECESSARILY BEAR ANY RELATIONSHIP TO THE ASSETS, EARNINGS OR BOOK VALUE OF THE COMPANY, OR TO POTENTIAL ASSETS, EARNINGS, OR BOOK VALUE OF THE COMPANY.  THERE IS NO ACTIVE TRADING MARKET IN THE COMPANY’S COMMON STOCK AND THERE CAN BE NO ASSURANCE THAT AN ACTIVE TRADING MARKET IN ANY OF THE COMPANY’S SECURITIES WILL DEVELOP OR BE MAINTAINED.
 

 

 

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 A LIMITED NUMBER OF SHARES OF COMMON STOCK MAY BE ELIGIBLE FOR TRADING PRIOR TO REGISTRATION OF THE SECURITIES SOLD IN THE OFFERING, AND SUCH REGISTRATION MAY BE DELAYED IN CERTAIN CIRCUMSTANCES.  THE PRICE OF SHARES QUOTED ON THE OTC BULLETIN BOARD OR TRADED ON ANY EXCHANGE MAY BE IMPACTED BY A LACK OF LIQUIDITY OR AVAILABILITY OF SHARES FOR PUBLIC SALE AND ALSO WILL NOT NECESSARILY BEAR ANY RELATIONSHIP TO THE ASSETS, EARNINGS, BOOK VALUE OR POTENTIAL PROSPECTS OF THE COMPANY OR APPLICABLE QUOTED OR TRADING PRICES THAT MAY EXIST FOLLOWING REGISTRATION OR THE LAPSE OF RESTRICTIONS ON THE SECURITIES SOLD PURSUANT TO THE OFFERING OR OTHER RESTRICTIONS. SUCH PRICES SHOULD NOT BE CONSIDERED ACCURATE INDICATORS OF FUTURE QUOTED OR TRADING PRICES THAT MAY SUBSEQUENTLY EXIST FOLLOWING.
 

 THE COMPANY RESERVES THE RIGHT, IN ITS SOLE DISCRETION, TO REJECT ANY SUBSCRIPTION IN WHOLE OR IN PART FOR ANY REASON OR FOR NO REASON. THE COMPANY IS NOT OBLIGATED TO NOTIFY RECIPIENTS OF THIS SUBSCRIPTION AGREEMENT WHETHER ALL OF THE UNITS OFFERED HEREBY HAVE BEEN SOLD.
 

 SUBSCRIBERS MAY BE DEEMED TO BE IN POSSESSION OF MATERIAL NON-PUBLIC INFORMATION WITHIN THE MEANING OF THE UNITED STATES SECURITIES LAWS AND REGULATIONS REGARDING A PUBLIC COMPANY. THIS AGREEMENT CONTAINS CONFIDENTIAL INFORMATION CONCERNING THE COMPANY, AND HAS BEEN PREPARED SOLELY FOR USE IN CONNECTION WITH THE OFFERING DESCRIBED HEREIN. ANY USE OF THIS INFORMATION FOR ANY PURPOSE OTHER THAN IN CONNECTION WITH THE CONSIDERATION OF AN INVESTMENT IN THE SECURITIES OF THE COMPANY THROUGH THE OFFERING DESCRIBED HEREIN MAY SUBJECT THE USER TO CIVIL AND/OR CRIMINAL LIABILITY. THE RECIPIENT, BY ACCEPTING THIS SUBSCRIPTION AGREEMENT, AGREES NOT TO: (I) DISTRIBUTE OR REPRODUCE THIS SUBSCRIPTION AGREEMENT, IN WHOLE OR IN PART, AT ANY TIME, WITHOUT THE PRIOR WRITTEN CONSENT OF THE COMPANY; (II) TO KEEP CONFIDENTIAL THE EXISTENCE OF THIS DOCUMENT AND THE INFORMATION CONTAINED HEREIN OR MADE AVAILABLE IN CONNECTION WITH ANY FURTHER INVESTIGATION OF THE COMPANY; AND (III) REFRAIN FROM TRADING IN THE PUBLICLY-TRADED SECURITIES OF THE COMPANY OR ANY OTHER RELEVANT COMPANY FOR SO LONG AS SUCH RECIPIENT IS IN POSSESSION OF THE MATERIAL NON-PUBLIC INFORMATION CONTAINED HEREIN. SUBSCRIBERS ARE ADVISED THAT THEY SHOULD SEEK THEIR OWN LEGAL COUNSEL PRIOR TO EFFECTUATING ANY TRANSACTIONS IN THE PUBLICLY TRADED COMPANY’S SECURITIES.
 

 FOR RESIDENTS OF ALL STATES
 

 THIS OFFERING IS BEING MADE SOLELY TO “ACCREDITED INVESTORS,” AS SUCH TERM IS DEFINED IN RULE 501 OF REGULATION D UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”).  THE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OR THE SECURITIES LAWS OF ANY STATE AND WILL BE OFFERED AND SOLD IN RELIANCE UPON THE EXEMPTION FROM REGISTRATION AFFORDED BY SECTION 4(2) THEREUNDER AND REGULATION D (RULE 506) OF THE SECURITIES ACT AND CORRESPONDING PROVISIONS OF STATE SECURITIES LAWS.
 

 

 

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 THE SECURITIES OFFERED HEREBY ARE SUBJECT TO RESTRICTION ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE SECURITIES ACT AND APPLICABLE STATE LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM.  INVESTORS SHOULD BE AWARE THAT THEY WILL BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME.
 

 THE SECURITIES OFFERED HEREBY HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION (“SEC”), ANY STATE SECURITIES COMMISSION OR ANY OTHER REGULATORY AUTHORITY, NOR HAVE ANY OF THE FOREGOING AUTHORITIES PASSED UPON OR ENDORSED THE MERITS OF THIS OFFERING OR THE ACCURACY OR ADEQUACY OF THIS SUBSCRIPTION AGREEMENT.  ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
 

 PROSPECTIVE INVESTORS SHOULD NOT CONSTRUE THE CONTENTS OF THIS AGREEMENT AS INVESTMENT, LEGAL, BUSINESS, OR TAX ADVICE.  EACH INVESTOR SHOULD CONTACT HIS, HER OR ITS OWN ADVISORS REGARDING THE APPROPRIATENESS OF THIS INVESTMENT AND THE TAX CONSEQUENCES THEREOF, WHICH MAY DIFFER DEPENDING ON AN INVESTOR’S PARTICULAR FINANCIAL SITUATION.  IN NO EVENT SHOULD THIS AGREEMENT BE DEEMED OR CONSIDERED TO BE TAX ADVICE PROVIDED BY THE COMPANY.
 

 FOR FLORIDA RESIDENTS ONLY
 

 THE UNITS REFERRED TO HEREIN WILL BE SOLD TO, AND ACQUIRED BY, THE HOLDER IN A TRANSACTION EXEMPT UNDER § 517.061 OF THE FLORIDA SECURITIES ACT.  THE UNITS HAVE NOT BEEN REGISTERED UNDER SAID ACT IN THE STATE OF FLORIDA.  IN ADDITION, ALL FLORIDA RESIDENTS SHALL HAVE THE PRIVILEGE OF VOIDING THE PURCHASE WITHIN THREE (3) DAYS AFTER THE FIRST TENDER OF CONSIDERATION IS MADE BY SUCH SUBSRIBER TO THE COMPANY, AN AGENT OF THE COMPANY, OR AN ESCROW AGENT OR WITHIN THREE DAYS AFTER THE AVAILABILITY OF THAT PRIVILEGE IS COMMUNICATED TO SUCH SUBSCRIBER, WHICHEVER OCCURS LATER
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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 1.
 SUBSCRIPTION AND PURCHASE PRICE
 

 (a)
 Offering.  The Company will raise up to $1,200,000 by the Final Closing Date (as defined below). No subscriptions will be accepted for an aggregate of more than $1,200,000 under this Offering. 
 

 (b)
 Subscription.  Subject to the conditions set forth in Section 2 hereof, the Subscriber hereby subscribes for and agrees to purchase the number of Units indicated on page 14 hereof on the terms and conditions described herein.  
 

 (c)
 Purchase of Units.  The Subscriber understands and acknowledges that the purchase price to be remitted to the Company in exchange for the Units shall be set at Five Cents ($0.05) per Unit, for an aggregate purchase price as set forth on page 14  hereof (the “Aggregate Purchase Price”). In the event the Company’s next financing is completed at lesser prices or terms than herein, the pricing and terms of this Agreement will be timely adjusted downward to match the subsequent terms. The Subscriber’s delivery of this Agreement to the Company shall be accompanied by payment for the Units subscribed for hereunder, payable in United States Dollars by wire transfer of immediately available funds delivered contemporaneously with the Subscriber’s delivery of this Agreement to the Company in accordance with the wire instructions provided in Exhibit C. The Subscriber understands and agrees that, subject to Section 2 and applicable laws, by executing this Agreement, it is entering into a binding agreement.
 

 2.
 ACCEPTANCE, OFFERING TERM AND CLOSING PROCEDURES
 

 (a)
 Acceptance or Rejection. Subject to full, faithful and punctual performance and discharge by the Company of all of its duties, obligations and responsibilities as set forth in this Agreement and any other agreement entered into between the Subscriber and the Company relating to this subscription (collectively, the "Transaction Documents"), the Subscriber shall be legally bound to purchase the Units pursuant to the terms and conditions set forth in this Agreement.  For the avoidance of doubt, upon the occurrence of the failure by the Company to fully, faithfully and punctually perform and discharge any of its duties, obligations and responsibilities as set forth in any of the Transaction Documents, which shall have been performed or otherwise discharged prior to the Closing, the Subscriber may, on or prior to the Closing (as defined below), at its sole and absolute discretion, elect not to purchase the Units and provide instructions to the escrow agent under the Escrow Agreement to receive the full and immediate refund of the Aggregate Purchase Price. The Subscriber understands and agrees that the Company reserves the right to reject this subscription for Units in whole or part in any order at any time prior to the Closing for any reason, notwithstanding the Subscriber’s prior receipt of notice of acceptance of the Subscriber’s subscription.  In the event the Closing does not take place because of (i) the rejection of subscription for Units by the Company; or (ii) the election not to purchase the Units by the Subscriber; or (iii) failure to effectuate an initial closing on or prior to November 16, 2018 (unless extended in the discretion of the Board of Directors) for any reason or no reason, this Agreement and any other Transaction Documents shall thereafter be terminated and have no force or effect, and the parties shall take all steps to ensure that the Aggregate Purchase Price submitted to the Company’s bank account as specified in Exhibit C herein shall promptly be returned or caused to be returned to the Subscriber without interest thereon or deduction therefrom.
 

 (b)
 Closing.  The closing of the purchase and sale of the Units hereunder (the “Closing”) shall take place at the offices of Bullfrog Gold Corp., 897 Quail Run Drive, Grand Junction, CO 81505 or such other place as determined by the Company and may take place in one of more closings.  Closings shall take place on a Business Day promptly following the satisfaction of the conditions set forth in Section 7 below, as determined by the Company (the “Closing Date”). “Business Day” shall mean from the hours of 9:00 a.m. (Eastern Time) through 5:00 p.m. (Eastern Time) of a day other than a Saturday, Sunday or other day on which commercial banks in New York, New York are authorized or required to be closed. The Units purchased by the Subscriber will be delivered by the Company promptly following the Final Closing Date (as defined below) of the Offering.  The initial closing of the Offering shall be referred to as the “Initial Closing” and such date of the Initial Closing shall be referred to as the “Initial Closing Date”.  The last Closing of the Offering shall be referred to as the “Final Closing” and such date of the Final Closing, shall be referred to as the “Final Closing Date”. The Company agrees to leave the present Offering open up to and including February 9, 2019 and the Company and the subscriber acknowledge and agree that there may be multiple Closings prior to the Final Closing date.
 

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 (c)
 Following Acceptance or Rejection.  The Subscriber acknowledges and agrees that this Agreement and any other documents delivered in connection herewith will be held by the Company. In the event that this Agreement is not accepted by the Company for whatever reason, which the Company expressly reserves the right to do, this Agreement, the Aggregate Purchase Price received (without interest thereon) and any other documents delivered in connection herewith will be returned to the Subscriber at the address of the Subscriber as set forth in this Agreement. If this Agreement is accepted by the Company, the Company is entitled to treat the Aggregate Purchase Price received as an interest free loan to the Company until such time as the Subscription is accepted.
 

 (f)
 Extraordinary Events Regarding Common Stock.  In the event that the Company shall (a) issue additional shares of Common Stock as a dividend or other distribution on outstanding Common Stock, (b) subdivide its outstanding shares of Common Stock, or (c) combine its outstanding shares of the Common Stock into a smaller number of shares of Common Stock, then, in each such event, the Purchase Price shall, simultaneously with the happening of such event, be adjusted by multiplying the then Purchase Price by a fraction, the numerator of which shall be the number of shares of Common Stock outstanding immediately prior to such event and the denominator of which shall be the number of shares of Common Stock outstanding immediately after such event, and the product so obtained shall thereafter be the Purchase Price then in effect. The Purchase Price, as so adjusted, shall be readjusted in the same manner upon the happening of any successive event or events described herein. The number of Shares or Preferred Shares, as the case may be, and Warrants that the Subscriber shall thereafter be issued and obtain on the exercise hereof, be entitled to receive shall be adjusted to a number determined by multiplying the number of shares of Common Stock that would otherwise (but for the provisions of this Section) be issuable on such exercise by a fraction of which (a) the numerator is the Purchase Price that would otherwise (but for the provisions of this Section) be in effect, and (b) the denominator is the Purchase Price in effect on the date of such exercise.
 

 (g)
 Certificate as to Adjustments.  In each case of any adjustment or readjustment in the Shares or Preferred Shares issuable hereunder or Warrant Shares issuable upon the exercise of the Warrants, the Company at its expense will promptly cause its Chief Executive Officer, Chief Financial Officer or other appropriate designee to compute such adjustment or readjustment in accordance with the terms hereof and of the Warrant and prepare a certificate setting forth such adjustment or readjustment and showing in detail the facts upon which such adjustment or readjustment is based, including a statement of (a) the consideration received or receivable by the Company for any additional shares of Common Stock (or Other Securities) issued or sold or deemed to have been issued or sold, (b) the number of shares of Common Stock (or Other Securities) outstanding or deemed to be outstanding, and (c) the Purchase Price and the number of Shares or Preferred Shares to be received and Warrant Shares to be received upon exercise of the Warrant, in effect immediately prior to such adjustment or readjustment and as adjusted or readjusted as provided herein. The Company will forthwith mail a copy of each such certificate to the Subscriber and of the Warrant and any Warrant Agent of the Company.
 

 3.
 THE SUBSCRIBER’S REPRESENTATIONS, WARRANTIES AND COVENANTS
 

 The Subscriber hereby acknowledges, agrees with and represents, warrants and covenants to the Company, as follows:
 

 (a)
 The Subscriber has full power and authority to enter into this Agreement, the execution and delivery of which has been duly authorized, if applicable, and this Agreement constitutes a valid and legally binding obligation of the Subscriber, except as may be limited by bankruptcy, reorganization, insolvency, moratorium and similar laws of general application relating to or affecting the enforcement of rights of creditors, and except as enforceability of the obligations hereunder are subject to general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or law).
 

 (b)
 The Subscriber acknowledges its understanding that the Offering and sale of the Securities is intended to be exempt from registration under the Securities Act of 1933, as amended (the “Securities Act”), by virtue of Section 4(2) of the Securities Act and the provisions of Regulation D promulgated thereunder (“Regulation D”).  In furtherance thereof, the Subscriber represents and warrants to the Company and its affiliates as follows:
 

 

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 (i)
 The Subscriber realizes that the basis for the exemption from registration may not be available if, notwithstanding the Subscriber’s representations contained herein, the Subscriber is merely acquiring the Securities for a fixed or determinable period in the future, or for a market rise, or for sale if the market does not rise. The Subscriber does not have any such intention.
 

 (ii)
 The Subscriber realizes that the basis for exemption would not be available if the Offering is part of a plan or scheme to evade registration provisions of the Securities Act or any applicable state or federal securities laws.
 

 (iii)
 The Subscriber is acquiring the Securities solely for the Subscriber’s own beneficial account, for investment purposes, and not with a view towards, or resale in connection with, any distribution of the Securities.
 

 (iv)
 The Subscriber has the financial ability to bear the economic risk of the Subscriber’s investment, has adequate means for providing for its current needs and contingencies, and has no need for liquidity with respect to an investment in the Company.
 

 (v)
 The Subscriber and the Subscriber’s attorney, accountant, purchaser representative and/or tax advisor, if any (collectively, the “Advisors”) has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of a prospective investment in the Securities. If other than an individual, the Subscriber also represents it has not been organized solely for the purpose of acquiring the Securities.
 

 (vi)
 The Subscriber (together with its Advisors, if any) has received all documents requested by the Subscriber, if any, has carefully reviewed them and understands the information contained therein, prior to the execution of this Agreement.
 

 (c)
 The Subscriber is not relying on the Company or any of its employees, agents, sub-agents or advisors with respect to the legal, tax, economic and related considerations involved in this investment. The Subscriber has relied on the advice of, or has consulted with, only its Advisors. Each Advisor, if any, has disclosed to the Subscriber in writing (a copy of which is annexed to this Agreement) the specific details of any and all past, present or future relationships, actual or contemplated, between the Advisor and the Company or any affiliate or sub-agent thereof.
 

 (d)
 The Subscriber has carefully considered the potential risks relating to the Company and a purchase of the Securities, and fully understands that the Securities are a speculative investment that involves a high degree of risk of loss of the Subscriber’s entire investment. Among other things, the Subscriber has carefully considered each of the risks described under the heading “Risk Factors” in the Company’s SEC Filings, which risk factors are incorporated herein by reference, and any additional disclosures in the nature of Risk Factors described herein.
 

 (e)
 The Subscriber will not sell or otherwise transfer any Securities without registration under the Securities Act or an exemption therefrom, and fully understands and agrees that the Subscriber must bear the economic risk of its purchase because, among other reasons, the Securities have not been registered under the Securities Act or under the securities laws of any state and, therefore, cannot be resold, pledged, assigned or otherwise disposed of unless they are subsequently registered under the Securities Act and under the applicable securities laws of such states, or an exemption from such registration is available.  In particular, the Subscriber is aware that the Securities are “restricted securities,” as such term is defined in Rule 144 promulgated under the Securities Act (“Rule 144”), and they may not be sold pursuant to Rule 144 unless all of the conditions of Rule 144 are met. The Subscriber understands that any sales or transfers of the Securities are further restricted by state securities laws and the provisions of this Agreement.
 

 (f)
 No oral or written representations or warranties have been made, or information furnished, to the Subscriber or its Advisors, if any, by the Company or any of its officers, employees, agents, sub-agents, affiliates, advisors or subsidiaries in connection with the Offering, other than any representations of the Company contained herein, and in subscribing for the Units, the Subscriber is not relying upon any representations other than those contained herein.
 

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 (g)
 The Subscriber’s overall commitment to investments that are not readily marketable is not disproportionate to the Subscriber’s net worth, and an investment in the Securities will not cause such overall commitment to become excessive.
 

 (h)
 The Subscriber understands and agrees that the certificates for the Securities shall bear substantially the following legend until (i) such Securities shall have been registered under the Securities Act and effectively disposed of in accordance with a registration statement that has been declared effective or (ii) in the opinion of counsel acceptable to the Subscriber, such Securities may be sold without registration under the Securities Act, as well as any applicable “blue sky” or state securities laws:
 

 THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY APPLICABLE STATE SECURITIES LAWS.  SUCH SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT PURPOSES AND MAY NOT BE OFFERED FOR SALE, SOLD, DELIVERED AFTER SALE, TRANSFERRED, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FILED BY THE ISSUER WITH THE U.S. SECURITIES AND EXCHANGE COMMISSION COVERING SUCH SECURITIES UNDER THE SECURITIES ACT OR AN OPINION OF COUNSEL THAT SUCH REGISTRATION IS NOT REQUIRED.
 

 (i)
 Neither the SEC nor any state securities commission has approved the Securities or passed upon or endorsed the merits of the Offering. There is no government or other insurance covering any of the Securities.
 

 (j)
 The Subscriber and its Advisors, if any, have had a reasonable opportunity to ask questions of and receive answers from a person or persons acting on behalf of the Company concerning the Offering and the business, financial condition, results of operations and prospects of the Company, and all such questions have been answered to the full satisfaction of the Subscriber and its Advisors, if any.
 

 (k)
 (i)
 In making the decision to invest in the Securities the Subscriber has relied solely upon the information provided by the Company in the Transaction Documents.  To the extent necessary, the Subscriber has retained, at its own expense, and relied upon appropriate professional advice regarding the investment, tax and legal merits and consequences of this Agreement and the purchase of the Securities hereunder.  The Subscriber disclaims reliance on any statements made or information provided by any person or entity in the course of Subscriber’s consideration of an investment in the Securities other than the Transaction Documents.  
 

 (ii)
 The Subscriber represents and warrants that: (i) the Subscriber was contacted regarding the sale of the Securities by the Company (or an authorized agent or representative thereof) with whom the Subscriber had a prior substantial pre-existing relationship  and (ii) no Securities were offered or sold to it by means of any form of general solicitation or general advertising, and in connection therewith, the Subscriber did not (A) receive or review any advertisement, article, notice or other communication published in a newspaper or magazine or similar media or broadcast over television or radio, whether closed circuit, or generally available; or (B) attend any seminar meeting or industry investor conference whose attendees were invited by any general solicitation or general advertising; or (C) observe any website or filing of the Company with the SEC in which any offering of securities by the Company was described and as a result learned of any offering of securities by the Company.
 

 (l)
 The Subscriber has taken no action that would give rise to any claim by any person for brokerage commissions, finders’ fees or the like relating to this Agreement or the transactions contemplated hereby.
 

 (m)
 The Subscriber is not relying on the Company or any of its employees, agents, or advisors with respect to the legal, tax, economic and related considerations of an investment in the Units, and the Subscriber has relied on the advice of, or has consulted with, only its own Advisors.
 

 

 - 8 -
 

 
 

 (n) 
 The Subscriber acknowledges that any estimates or forward-looking statements or projections furnished by the Company to the Subscriber were prepared by the management of the Company in good faith, but that the attainment of any such projections, estimates or forward-looking statements cannot be guaranteed by the Company or its management and should not be relied upon.
 

 (o)
 No oral or written representations have been made, or oral or written information furnished, to the Subscriber or its Advisors, if any, in connection with the Offering that are in any way inconsistent with the information contained herein.
 

 (p)
 (For ERISA plans only) The fiduciary of the ERISA plan (the “Plan”) represents that such fiduciary has been informed of and understands the Company’s investment objectives, policies and strategies, and that the decision to invest “plan assets” (as such term is defined in ERISA) in the Company is consistent with the provisions of ERISA that require diversification of plan assets and impose other fiduciary responsibilities. The Subscriber or Plan fiduciary (i) is responsible for the decision to invest in the Company; (ii) is independent of the Company and any of its affiliates; (iii) is qualified to make such investment decision; and (iv) in making such decision, the Subscriber or Plan fiduciary has not relied primarily on any advice or recommendation of the Company or any of its affiliates.
 

 (q)
 This Agreement is not enforceable by the Subscriber unless it has been accepted by the Company, and the Subscriber acknowledges and agrees that the Company reserves the right to reject any subscription for any reason.
 

 (r)
 The Subscriber will indemnify and hold harmless the Company and, where applicable, its directors, officers, employees, agents, advisors, affiliates and shareholders, and each other person, if any, who controls any of the foregoing from and against 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) (a “Loss”) 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 herein or therein; provided, however, that the Subscriber shall not be liable for any Loss that in the aggregate exceeds the Subscriber’s Aggregate Purchase Price tendered hereunder.
 

 (s)
 The Subscriber is, and on each date on which the Subscriber continues to own restricted Securities from the Offering will be, an “Accredited Investor” as defined in Rule 501(a) under the Securities Act. In general, an “Accredited Investor” is deemed to be an institution with assets in excess of $5,000,000 or individuals with a net worth in excess of $1,000,000 (excluding such person’s residence) or annual income exceeding $200,000 or $300,000 jointly with his or her spouse.
 

 (t)
 The Subscriber, either alone or together with its representatives, has such knowledge, sophistication and experience in business and financial matters so as to be capable of evaluating the merits and risks of the Offering, and has so evaluated the merits and risks of such investment. The Subscriber has not authorized any person or entity to act as its Purchaser Representative (as that term is defined in Regulation D of the General Rules and Regulations under the Securities Act) in connection with the Offering. The Subscriber is able to bear the economic risk of an investment in the Securities and, at the present time, is able to afford a complete loss of such investment. 
 

 (u)
 The Subscriber has reviewed, or had an opportunity to review, all of the SEC Filings (as defined below), and all “Risk Factors” and “Forward Looking Statements” disclaimers contained therein.  In addition, the Subscriber has reviewed and acknowledges it has such knowledge, sophistication, and experience in securities matters.
 

 

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 4.
 THE COMPANY’S REPRESENTATIONS, WARRANTIES AND COVENANTS
 

 The Company hereby acknowledges, agrees with and represents, warrants and covenants to the Subscriber, as follows:
 

 (a)
 Organization and Qualification.  The Company is a corporation duly organized, validly existing and in good standing under the laws of the state of Delaware.  The Company is duly qualified to do business, and is in good standing in the states required due to (a) the ownership or lease of real or personal property for use in the operation of the Company's business or (b) the nature of the business conducted by the Company.  The Company has all requisite power, right and authority to own, operate and lease its properties and assets, to carry on its business as now conducted, to execute, deliver and perform its obligations under this Agreement and the other Transaction Documents to which it is a party, and to carry out the transactions contemplated hereby and thereby.  All actions on the part of the Company and its officers and directors necessary for the authorization, execution, delivery and performance of this Agreement and the other Transaction Documents, the consummation of the transactions contemplated hereby and thereby, and the performance of all of the Company's obligations under this Agreement and the other Transaction Documents have been taken or will be taken prior to the Closing.  This Agreement has been, and the other Transaction Documents to which the Company is a party on the Closing will be, duly executed and delivered by the Company, and this Agreement is, and each of the other Transaction Documents to which it is a party on the Closing will be, a legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms.
 

 (b)
 Issuance of Securities.  The Securities to be issued to the Subscriber pursuant to this Agreement, when issued and delivered in accordance with the terms of this Agreement, will be duly and validly issued and will be fully paid and non-assessable.
 

 (c)
 Authorization; Enforcement.  The execution, delivery and performance of this Agreement and the other Transaction Documents by the Company, and the consummation of the transactions contemplated hereby and thereby, will not (a) constitute a violation (with or without the giving of notice or lapse of time, or both) of any provision of any law or any judgment, decree, order, regulation or rule of any court, agency or other governmental authority applicable to the Company, (b) require any consent, approval or authorization of, or declaration, filing or registration with, any person, (c) result in a default (with or without the giving of notice or lapse of time, or both) under, acceleration or termination of, or the creation in any party of the right to accelerate, terminate, modify or cancel, any agreement, lease, note or other restriction, encumbrance, obligation or liability to which the Company is a party or by which it is bound or to which any assets of the Company are subject, (d) result in the creation of any lien or encumbrance upon the assets of the Company, or upon any Shares (or Preferred Shares) or other securities of the Company, (e) conflict with or result in a breach of or constitute a default under any provision of those certain articles of incorporation or those certain bylaws of the Company, or (f) invalidate or adversely affect any permit, license, authorization or status used in the conduct of the business of the Company.
 

 (d)
 SEC Filings. The Company is subject to, and in full compliance with, the reporting requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The Company has made available to each Subscriber through the EDGAR system true and complete copies of each of the Company’s Quarterly Reports on Form 10-Q, Annual Reports on Form 10-K and Current Reports on Form 8-K, in each case filed (collectively, the “SEC Filings”), and all such SEC Filings are incorporated herein by reference.  The SEC Filings, when they were filed with the SEC (or, if any amendment with respect to any such document was filed, when such amendment was filed), complied in all material respects with the applicable requirements of the Exchange Act and the rules and regulations thereunder and did not, as of such date, contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. All reports and statements required to be filed by the Company under the Exchange Act have been filed, together with all exhibits required to be filed therewith. The Company and each of its direct and indirect subsidiaries, if any (collectively, the “Subsidiaries”), are engaged in all material respects only in the business described in the SEC Filings, and the SEC Filings contain a complete and accurate description in all material respects of the business of the Company and the Subsidiaries.
 

 

 - 10 -
 

 
 

 (e)
 No Financial Advisor.  The Company acknowledges and agrees that the Subscriber is acting solely in the capacity of an arm’s length purchaser with respect to the Securities and the transactions contemplated hereby. The Company further acknowledges that the Subscriber 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 advice given by the Subscriber or any of its representatives or agents in connection with this Agreement and the transactions contemplated hereby is merely incidental to the Subscriber’s purchase of the Units. The Company further represents to the Subscriber that the Company’s decision to enter into this Agreement has been based solely on the independent evaluation of the transactions contemplated hereby by the Company and its representatives.
 

 (f)
 Indemnification.  The Company will indemnify and hold harmless the Subscriber and, where applicable, its directors, officers, employees, agents, advisors and shareholders, from and against any and all Loss arising out of or based upon any representation or warranty of the Company contained herein or in any document furnished by the Company to the Subscriber in connection herewith being untrue in any material respect or any breach or failure by the Company to comply with any covenant or agreement made by the Company to the Subscriber in connection therewith; provided, however, that the Company’s liability shall not exceed the Subscriber’s Aggregate Purchase Price tendered hereunder.
 

 (g)
 Capitalization and Additional Issuances.  The authorized and outstanding capital stock of the Company on a fully diluted basis as of the date of this Agreement and the Final Closing Date (not including the Securities) are set forth in the SEC Filings.  Except as set forth in the SEC Filings, there are no options, warrants, or rights to subscribe to, securities, rights, understandings or obligations convertible into or exchangeable for or giving any right to subscribe for any shares of capital stock or other equity interest of the Company or any of the Subsidiaries.  The only officer, director, employee and consultant stock option or stock incentive plan or similar plan currently in effect or contemplated by the Company is described in the SEC Filings.  There are no outstanding agreements or preemptive or similar rights affecting the Company's Common Stock.
 

 (h)
 Private Placements.  Assuming the accuracy of the Subscriber’s representations and warranties set forth in Section 3, no registration under the Securities Act is required for the offer and sale of the Securities by the Company to the Subscribers as contemplated hereby. 
 

 (j)
 Investment Company.  The Company is not, and is not an affiliate of, and immediately after receipt of payment for the Shares will not be or be an affiliate of, an “investment company” within the meaning of the Investment Company Act of 1940, as amended.  The Company shall conduct its business in a manner so that it will not become subject to the Investment Company Act.
 

 5.
 OTHER AGREEMENTS OF THE PARTIES
 

 (a)
 Furnishing of Information.  As long as any Subscriber owns Securities, the Company covenants to timely file (or obtain extensions in respect thereof and file within the applicable grace period) all reports required to be filed by the Company after the date hereof pursuant to the Exchange Act.  As long as any Subscriber owns Securities, if the Company is not required to file reports pursuant to the Exchange Act, it will prepare and furnish to the Subscribers and make publicly available in accordance with Rule 144(c) under the Securities Act such information as is required for the Subscribers to sell the Securities under Rule 144.  The Company further covenants that it will take such further action as any holder of Securities may reasonably request, all to the extent required from time to time to enable such person to sell such Securities without registration under the Securities Act within the limitation of the exemptions proved by Rule 144 under the Securities Act.  As it pertains to the foregoing, the Company agrees and covenants that it will accept opinions from counsel acceptable to the Subscriber, in Subscriber’s sole discretion, that such Securities may be sold without registration under the Securities Act.
 

 (b)
 Shareholder Rights Plan.  No claim will be made or enforced by the Company or, to the knowledge of the Company, any other person that any Subscriber is an “Acquiring Person” under any shareholder rights plan or similar plan or arrangement in effect or hereafter adopted by the Company, or that any Subscriber could be deemed to trigger the provisions of any such plan or arrangement, by virtue of receiving Securities under the Transaction Documents or under any other agreement between the Company and the Subscribers.  
 

 

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 (c)
 Securities Laws Disclosure; Publicity.    The Company shall not publicly disclose the name of any Subscriber, or include the name of any Subscriber in any filing with the SEC or any regulatory agency, without the prior written consent of such Subscriber, except to the extent such disclosure is required by law.
 

 (d)
 Integration.  The Company shall not, and shall use its best efforts to ensure that no affiliate of the Company shall, after the date hereof, sell, offer for sale or solicit offers to buy or otherwise negotiate in respect of any security that would be integrated with the offer or sale of the Securities in a manner that would require the registration under the Securities Act of the sale of the Securities to the Subscribers.
 

 (e)
 Reservation of Securities.  The Company shall maintain a reserve from its duly authorized shares of Common Stock for issuance pursuant to the Transaction Documents in such amount as may be required to fulfill its obligations in full under the Transaction Documents.  In the event that at any time the then authorized shares of Common Stock are insufficient for the Company to satisfy its obligations in full under the Transaction Documents, the Company shall promptly take such actions as may be required to increase the number of authorized shares, including without limitation promptly preparing and filing any proxy or information statement with the SEC for purposes of a special meeting to authorize the issuance of additions shares to Subscribers, which in no event shall be filed more than ten (10) business days following the date on which the Company becomes aware that it may have inadequate authorized capital.  The Subscribers acknowledge that certain Subscribers shall be entitled to subscribe for the Preferred Shares.  The Preferred Shares shall be equivalent in all respects to the Shares, and shall be convertible into Shares upon a liquidation or dissolution of the Company.
 

 (f)
 Use of Proceeds.  Subject to the following exception, the Company covenants and agrees the proceeds of the Offering shall be applied as disclosed in public documents and for working capital and general corporate purposes. Prior to the earlier of 12 months from the final Closing Date and the completion of the Company’s intended Canadian Listing (as defined below), no more than$15,000 of the use of proceeds of this offering will be utilized to pay any curr3ently accrued expenses , fees and salaries owing to any directors or officers of the company. 
 

 (g)
 Quotation.  As long as any Subscriber owns Securities, the Company shall use its best efforts to maintain eligibility for the Company’s Common Stock on the OTCQB or a national securities exchange.
 

 (h)
 DTC Eligibility.  For as long as any Subscriber owns Securities, the Company shall use its best efforts to maintain full eligibility of the Company’s Common Stock for electronic clearance and settlement services through the Depository Trust Company
 

 (i)
 Canadian Listing.  The Company will use its reasonable commercial efforts to effect a listing of its Common Stock on a recognized stock exchange in Canada (that being on either the TSX Venture Exchange or the Canadian Securities Exchange) within 12 months from the Final Closing Date hereof (the “Canadian Listing”).
 

 (j)
 Right of First Refusal.  Prior to earlier of 12  months from the Final Closing Date and the completion of the Company’s Canadian Listing, and provided that the Subscriber still holds the Units acquired under this Offering, the Company hereby provide the Subscriber with a “ROFR”, to participate pro rata in accordance with number of Units acquired by the Subscriber under this Offering, in any private equity or debt offering, including any equity linked offerings (each, a “Subsequent Financing”) proposed by the Company with any individual or entity; excepting an investment by a strategic partner at terms greater than those in the subject subscription agreement. For avoidance of any doubt, such ROFR does not extend to any merger, acquisition, joint venture, licensing arrangement or any other similar form of non-capital raising transaction. 
 

 6.
 CONDITIONS TO ACCEPTANCE OF SUBSCRIPTION
 

 The Company’s right to accept the subscription of the Subscriber is conditioned upon satisfaction of the following conditions precedent on or before the date the Company accepts such subscription:
 

 (a)
 As of the Closing, no legal action, suit or proceeding shall be pending that seeks to restrain or prohibit the transactions contemplated by this Agreement.
 

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 (b)
 The representations and warranties of the Company contained in this Agreement shall have been true and correct in all material respects on the date of this Agreement and shall be true and correct as of the Closing as if made on the Closing Date.
 

 7.
 MISCELLANEOUS PROVISIONS
 

 (a)
 All parties hereto have been represented by counsel, and no inference shall be drawn in favor of or against any party by virtue of the fact that such party’s counsel was or was not the principal draftsman of this Agreement.
 

 (b)
 Each of the parties hereto shall be responsible to pay the costs and expenses of its own legal counsel in connection with the preparation and review of this Agreement and related documentation.
 

 (c)
 Neither this Agreement, nor any provisions hereof, shall be waived, modified, discharged or terminated except by an instrument in writing signed by the party against whom any waiver, modification, discharge or termination is sought.
 

 (d)
 The representations, warranties and agreement of the Subscriber and the Company made in this Agreement shall survive the execution and delivery of this Agreement and the delivery of the Securities.
 

 (e)
 Any party may send any notice, request, demand, claim or other communication hereunder to the Subscriber at the address set forth on the signature page of this Agreement or to the Company at its primary office (including personal delivery, expedited courier, messenger service, fax, ordinary mail or electronic mail), but no such notice, request, demand, claim or other communication will be deemed to have been duly given unless and until it actually is received by the intended recipient. Any party may change the address to which notices, requests, demands, claims and other communications hereunder are to be delivered by giving the other parties written notice in the manner herein set forth.
 

 (f)
 Except as otherwise provided herein, this Agreement shall be binding upon, and inure to the benefit of, the parties to this Agreement and their heirs, executors, administrators, successors, legal representatives and assigns.  If the Subscriber is more than one person or entity, the obligation of the Subscriber shall be joint and several and the agreements, representations, warranties and acknowledgments contained herein shall be deemed to be made by, and be binding upon, each such person or entity and its heirs, executors, administrators, successors, legal representatives and assigns. This Agreement sets forth the entire agreement and understanding between the parties as to the subject matter hereof and merges and supersedes all prior discussions, agreements and understandings of any and every nature among them.
 

 (g)
 This Agreement is not transferable or assignable by the Subscriber.
 

 (h)
 This Agreement shall be governed by and construed in accordance with the laws of the State of New York, without giving effect to conflicts of law principles.
 

 (i)
 The Company and the Subscriber hereby agree that any dispute that may arise between them arising out of or in connection with this Agreement shall be adjudicated before a court located in the City of New York, Borough of Manhattan, and they hereby submit to the exclusive jurisdiction of the federal and state courts of the State of New York located in the City of New York, Borough of Manhattan with respect to any action or legal proceeding commenced by any party, and irrevocably waive any objection they now or hereafter may have respecting the venue of any such action or proceeding brought in such a court or respecting the fact that such court is an inconvenient forum, relating to or arising out of this Agreement or any acts or omissions relating to the sale of the securities hereunder, and consent to the service of process in any such action or legal proceeding by means of registered or certified mail, return receipt requested, postage prepaid, in care of the address set forth herein or such other address as either party shall furnish in writing to the other.
 

 

 

 - 13 -
 

 
 

 (j)
 WAIVER OF JURY TRIAL.  IN ANY ACTION, SUIT, OR PROCEEDING IN ANY JURISDICTION BROUGHT BY ANY PARTY AGAINST ANY OTHER PARTY, THE PARTIES EACH KNOWINGLY AND INTENTIONALLY, TO THE GREATEST EXTENT PERMITTED BY APPLICABLE LAW, HEREBY ABSOLUTELY, UNCONDITIONALLY, IRREVOCABLY AND EXPRESSLY WAIVES FOREVER TRIAL BY JURY.
 

 (k)
 This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.
 

 

 

 

 

 

 [Signature Pages Follow]
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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 ALL SUBSCRIBERS MUST COMPLETE THIS PAGE
 

 IN WITNESS WHEREOF, the Subscriber has executed this Agreement on the ____ day of ______________, 2019.
 

 	 	 	
	  
	 x  $0.05  for each Unit      =
	  

	 Units subscribed for
	  
	       Aggregate Purchase Price

 

 The undersigned Subscriber hereby elects to purchase Units consisting of 
  ̈ Common Stock
  ̈ Series B Preferred Stock (by 5% or greater holders only)
 Manner in which Title is to be held (Please Check One):
 	 	 	 	 	 	
	 1.
	 ___
	 Individual
	 7.
	 ___
	 Trust/Estate/Pension or Profit sharing Plan
 Date Opened:______________

	 2.
	 ___
	 Joint Tenants with Right of Survivorship
	 8.
	 ___
	 As a Custodian for
 ________________________________
 Under the Uniform Gift to Minors Act of the State of
 ________________________________

	 3.
	 ___
	 Community Property
	 9.
	 ___
	 Married with Separate Property

	 4.
	 ___
	 Tenants in Common
	 10.
	 ___
	 Keogh

	 5.
	 ___
	 Corporation/Partnership/ Limited Liability Company
	 11.
	 ___
	 Tenants by the Entirety

	 6.
	 ___
	 IRA
	  
	  
	  

 

 ALTERNATIVE DISTRIBUTION INFORMATION
 To direct distribution to a party other than the registered owner, complete the information below. YOU MUST COMPLETE THIS SECTION IF THIS IS AN IRA INVESTMENT.
 Name of Firm (Bank, Brokerage, Custodian):_____________________________
 Account Name: ____________________________________
 Account Number: __________________________________
 Representative Name: _______________________________
 Representative Phone Number: ________________________
 Address: __________________________________________
 City, State, Zip: ____________________________________
 

 - 15 -
 

 
 IF MORE THAN ONE SUBSCRIBER, EACH SUBSCRIBER MUST SIGN.
INDIVIDUAL SUBSCRIBERS MUST COMPLETE THIS PAGE 17.
SUBSCRIBERS WHICH ARE ENTITIES MUST COMPLETE PAGE 18.
 EXECUTION BY NATURAL PERSONS
 	 	 	
	 _____________________________________________________________________________
 Exact Name in Which Title is to be Held

	 _________________________________
 Name (Please Print)
	  
	 _________________________________
 Name of Additional Subscriber

	 _________________________________
 Residence: Number and Street
	  
	 _________________________________
 Address of Additional Subscriber

	 _________________________________
 City, State and Zip Code
	  
	 _________________________________
 City, State and Zip Code

	 _________________________________
 Social Security Number
	  
	 _________________________________
 Social Security Number

	 _________________________________
 Telephone Number
	  
	 _________________________________
 Telephone Number

	 _________________________________
 Fax Number (if available)
	  
	 ________________________________
 Fax Number (if available)

	 _________________________________
 E-Mail (if available)
	  
	 ________________________________
 E-Mail (if available)

	 __________________________________
 (Signature)
 

	  
	 ________________________________
 (Signature of Additional Subscriber)

	 ACCEPTED this ___ day of _________ 2019, on behalf of the Company.

	  
	 

 By:
 _________________________________
 Name:  
Title: 

	  
	  

 

 

 

 [SIGNATURE PAGE FOR SUBSCRIPTION AGREEMENT]
 

 

 - 16 -
 

 
 

 EXECUTION BY SUBSCRIBER WHICH IS AN ENTITY
 (Corporation, Partnership, LLC, Trust, Etc.)
 

 	 	
	 _____________________________________________________________________________
 Name of Entity (Please Print)

	 Date of Incorporation or Organization:

	 State of Principal Office:

	 Federal Taxpayer Identification Number:
 ____________________________________________
 Office Address
 

 ____________________________________________
 City, State and Zip Code
 

 ____________________________________________
 Telephone Number
 

 ____________________________________________
 Fax Number (if available)
 

 ____________________________________________
 E-Mail (if available)

	  
	 By: _________________________________
Name:
Title:

	 [seal]
 Attest: _________________________________
 (If Entity is a Corporation)
	 _________________________________
 _________________________________
 Address

	  
	  

	 ACCEPTED this ____ day of __________ 2019, on behalf of the Company.

	  
	 

 

 By: _________________________________
Name: 
Title: 

 

 

 [SIGNATURE PAGE FOR SUBSCRIPTION AGREEMENT]
 

 

 - 17 -
 

 
 INVESTOR QUESTIONNAIRE
 Instructions:  Check all boxes below which correctly describe you.
 
 o
 You are (i) a bank, as defined in Section 3(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”), (ii) a savings and loan association or other institution, as defined in Section 3(a)(5)(A) of the Securities Act, whether acting in an individual or fiduciary capacity, (iii) a broker or dealer registered pursuant to Section 15 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), (iv) an insurance company as defined in Section 2(13) of the Securities Act, (v) an investment company registered under the Investment Company Act of 1940, as amended (the “Investment Company Act”), (vi) a business development company as defined in Section 2(a)(48) of the Investment Company Act, (vii) a Small Business Investment Company licensed by the U.S. Small Business Administration under Section 301 (c) or (d) of the Small Business Investment Act of 1958, as amended, (viii) a plan established and maintained by a state, its political subdivisions, or an agency or instrumentality of a state or its political subdivisions, for the benefit of its employees and you have total assets in excess of $5,000,000, or (ix) an employee benefit plan within the meaning of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”) and (1) the decision that you shall subscribe for and purchase shares of common stock and warrants to purchase common stock (the “Units”), is made by a plan fiduciary, as defined in Section 3(21) of ERISA, which is either a bank, savings and loan association, insurance company, or registered investment adviser, or (2) you have total assets in excess of $5,000,000 and the decision that you shall subscribe for and purchase the Shares is made solely by persons or entities that are accredited investors, as defined in Rule 501 of Regulation D promulgated under the Securities Act (“Regulation D”) or (3) you are a self-directed plan and the decision that you shall subscribe for and purchase the Units is made solely by persons or entities that are accredited investors.
 
 o
 You are a private business development company as defined in Section 202(a)(22) of the Investment Advisers Act of 1940, as amended.
 
 o
 You are an organization described in Section 501(c)(3) of the Internal Revenue Code of 1986, as amended (the “Code”), a corporation, Massachusetts or similar business trust or a partnership, in each case not formed for the specific purpose of making an investment in the Units and its underlying securities in excess of $5,000,000.
 
 o
 You are a director or executive officer of the Company.
 
 o
 You are a natural person whose individual net worth, or joint net worth with your spouse, exceeds $1,000,000 (excluding residence) at the time of your subscription for and purchase of the Units.
 o
 You are a natural person who had an individual income in excess of $200,000 in each of the two most recent years or joint income with your spouse in excess of $300,000 in each of the two most recent years, and who has a reasonable expectation of reaching the same income level in the current year.
 o
 You are a trust, with total assets in excess of $5,000,000, not formed for the specific purpose of acquiring the Units and whose subscription for and purchase of the Units is directed by a sophisticated person as described in Rule 506(b)(2)(ii) of Regulation D.
 o
 You are an entity in which all of the equity owners are persons or entities described in one of the preceding paragraphs.
 

 

 

 - 18 -
 

 
 Check all boxes below which correctly describe you.
 

 With respect to this investment in the Units, your:
 Investment Objectives:  
 p Aggressive Growth 
 p Speculation
 Risk Tolerance:  
 o Low Risk  
 o Moderate Risk  
 p High Risk
 Are you associated with a FINRA Member Firm?  
 o Yes  
 o No
 Your initials (Subscriber and co-Subscriber, if applicable) are required for each item below:
 ____   ____  
 I/We understand that this investment is not guaranteed.
 ____   ____  
 I/We are aware that this investment is not liquid.
 ____   ____  
 I/We are sophisticated in financial and business affairs and are able to evaluate the risks and merits of an investment in this offering.
 ____   ____  
 I/We confirm that this investment is considered “high risk.” (This type of investment is considered high risk due to the inherent risks including lack of liquidity and lack of diversification.  Success or 
failure of private placements such as this is dependent on the corporate issuer of these securities and is outside the control of the investors. While potential loss is limited to the amount invested, such loss is possible.)
 The Subscriber hereby represents and warrants that all of its answers to this Investor Questionnaire are true as of the date of its execution of the Subscription Agreement pursuant to which it purchased the Units.
 	 	
	 

___________________________________
Name of Subscriber  [please print]
 ___________________________________
 Signature of Subscriber (Entities please
 provide signature of Subscriber’s duly
 authorized signatory.)
 ___________________________________
 Name of Signatory (Entities only)
 ___________________________________
 Title of Signatory (Entities only)
	 

___________________________________
Name of Co- Subscriber  [please print]
 ___________________________________
 Signature of Co- Subscriber

 

 

 

 [SIGNATURE PAGE FOR INVESTOR QUESTIONNAIRE]
 

 

 - 19 -
 

 
 

 Exhibit A
 

 Series B Preferred Stock Certificate of Designation
 

 See Attached.
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
 Exhibit B
 

 Form of Warrant
 

 See Attached.
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
 Exhibit C
 

 Wire Instructions

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