Document:

shmp_ex10-1

  Exhibit 10.1

 

SECURITIES
PURCHASE AGREEMENT

 

This
Securities Purchase Agreement (this “Agreement”) is dated as
of December 16, 2020, between NaturalShrimp Incorporated, a Nevada
corporation (the “Company”), and the
purchaser identified on the signature page hereto (including its
successors and assigns, the “Purchaser”).

 

WHEREAS, subject to
the terms and conditions set forth in this Agreement and pursuant
to Section 4(a)(2) of the Securities Act of 1933, as amended (the
“Securities
Act”), and Rule 506 promulgated thereunder, the
Company desires to issue and sell to the Purchaser, and the
Purchaser desires to purchase from the Company, securities of the
Company as more fully described in this Agreement.

 

NOW,
THEREFORE, IN CONSIDERATION of the mutual covenants contained in
this Agreement, and for other good and valuable consideration the
receipt and adequacy of which are hereby acknowledged, the Company
and the Purchaser agrees as follows:

 

ARTICLE I.

DEFINITIONS

 

1.1           Definitions.
In addition to the terms defined elsewhere in this Agreement: (a)
capitalized terms that are not otherwise defined herein have the
meanings given to such terms in the Certificate of Designation (as
defined herein), and (b) the following terms have the meanings set
forth in this Section 1.1:

 

“Acquiring Person” shall
have the meaning ascribed to such term in Section 4.5.

 

“Action” shall have the
meaning ascribed to such term in Section 3.1(j).

 

“Affiliate” means any
Person that, directly or indirectly through one or more
intermediaries, controls or is controlled by or is under common
control with a Person, as such terms are used in and construed
under Rule 405 under the Securities Act.

 

“Board of Directors” 
means the board of directors of the Company.

 

“Business Day” means any
day except any Saturday, any Sunday, any day which is a federal
legal holiday in the United States or any day on which banking
institutions in the State of New York are authorized or required by
law or other governmental action to close.

 

 “Certificate
of Designation” means the Certificate of Designation
to be filed prior to the Closing by the Company with the Secretary
of State of the State of Nevada, in the form of Exhibit A attached
hereto.

 

“Closing Date” means the
Trading Day on which all of the Transaction Documents have been
executed and delivered by the applicable parties thereto in
connection with the Closing, and, to the extent applicable, all
conditions precedent to (i) the Purchaser’s obligations to
pay the Subscription Amount as to the Closing and (ii) the
Company’s obligations to deliver the Securities as to the
Closing, in each case, have been satisfied or waived.

 

 

 

 

“Closing” means the
closing of the purchase and sale of the Securities pursuant to
Section 2.1, which shall occur on the Closing Date. The Closing
will be for the purchase of up to five thousand (5,000) Preferred
Shares at the purchase price of $5,000,000, equal to $1,000 per
Preferred Share.

 

“Commission” means the
United States Securities and Exchange Commission.

 

“Commitment Shares” means
six million (6,000,000) Shares issued upon the Closing as an equity
incentive.

 

 “Common
Stock” means the common stock of the Company, par
value $0.0001 per share, and any other class of securities into
which such securities may hereafter be reclassified or
changed.

 

“Common Stock Equivalents”
means any securities of the Company or the Subsidiaries which would
entitle the holder thereof to acquire at any time Common Stock,
including, without limitation, any debt, preferred stock, right,
option, warrant or other instrument that is at any time convertible
into or exercisable or exchangeable for, or otherwise entitles the
holder thereof to receive, Common Stock.

 

“Company Counsel” means
Lucosky
Brookman LLP.

 

“Conversion Shares” shall
have the meaning as set forth in the Certificate of
Designation.

 

“Disclosure Schedules”
shall have the meaning ascribed to such term in Section
3.1.

 

“Dividend” means twelve
percent (12%) per annum of the stated value of any purchased
Preferred Share, paid quarterly by the Company, and at the
Company’s discretion, in cash or in Preferred
Stock.

 

“Evaluation Date” shall
have the meaning ascribed to such term in Section
3.1(r).

 

“Event of Default”
means any of the following events: (i) the suspension, cessation
from trading or delisting of the Company's Common Stock on the
Principal Market for a period of two (2) consecutive trading days
or more; (ii) the failure by the Company to timely comply with the
reporting requirements of the Exchange Act (including applicable
extension periods); (iii) the failure for any reason by the Company
to issue Commitment Shares, Dividends or Conversion Shares to the
Purchaser within the required time periods; (iv) the Company
breaches any representation, warranty, covenant or other term of
condition contained in the definitive agreements between the
parties; (v) the Company files for Bankruptcy or receivership or
any money judgment writ, liquidation or a similar process is
entered by or filed against the Company for more than $50,000 and
remains unvacated, unbonded or unstayed for a period of twenty (20)
calendar days; (vi) any cessation of operations by the Company or
failure by the Company to maintain any assets, intellectual,
personal or real property or other assets which are necessary to
conduct its business (vii) the Company shall lose the "bid" price
for its Common stock on the Principal Market; or (viii) if at any
time the Common Stock is no longer DWAC eligible.

 

 

2

 

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

 

“FCPA” means the Foreign
Corrupt Practices Act of 1977, as amended.

 

“GAAP” means generally
accepted accounting principles in the U.S.

 

 “Intellectual
Property Rights” shall have the meaning ascribed to
such term in Section 3.1(o).

 

“Liens” means a lien,
charge, pledge, security interest, encumbrance, right of first
refusal, preemptive right or other restriction.

 

“Material Adverse Effect”
shall have the meaning assigned to such term in Section
3.1(b).

 

“Material Permits” shall
have the meaning ascribed to such term in Section
3.1(m).

 

“Person” means an
individual or corporation, partnership, trust, incorporated or
unincorporated association, joint venture, limited liability
company, joint stock company, government (or an agency or
subdivision thereof) or other entity of any kind.

 

“Preferred Stock” means,
five thousand (5,000) shares of the Company’s Series D
Preferred Stock issued hereunder having the rights, preferences and
privileges set forth in the Certificate of Designation, in the form
of Exhibit A
hereto.

 

 “Proceeding”
means an action, claim, suit, investigation or proceeding
(including, without limitation, an informal investigation or
partial proceeding, such as a deposition), whether commenced or
threatened.

 

“Purchaser Party” shall
have the meaning ascribed to such term in Section 4.7.

 

“Registration Statement”
means any Registration Statement under which the shares of the
Company’s common stock is registered.

 

“Required Approvals” shall
have the meaning ascribed to such term in Section
3.1(e).

 

 “Rule
144” means Rule 144 promulgated by the Commission
pursuant to the Securities Act, as such Rule may be amended or
interpreted from time to time, or any similar rule or regulation
hereafter adopted by the Commission having substantially the same
purpose and effect as such Rule.

 

 

 

3

 

“Rule 424” means Rule 424
promulgated by the Commission pursuant to the Securities Act, as
such Rule may be amended or interpreted from time to time, or any
similar rule or regulation hereafter adopted by the Commission
having substantially the same purpose and effect as such
Rule.

 

“SEC Reports” shall have
the meaning ascribed to such term in Section 3.1(g).

 

 “Securities”
means the Preferred Stock or the common shares into which the
Preferred Stock is converted.

 

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

 

 “Short
Sales” means all “short sales” as defined
in Rule 200 of Regulation SHO under the Exchange Act (but shall not
be deemed to include the location and/or reservation of borrowable
shares of Common Stock).

 

“Stated Value” means
$1,200 per share of Series D Preferred Stock.

 

“Subscription Amount”
shall mean the aggregate amount to be paid for the Preferred Stock
purchased hereunder as specified on the signature page under the
heading “Subscription Amount,” in United States dollars and in immediately
available funds.

 

“Subsidiary” means any
subsidiary of the Company as set forth on Schedule 3.1(a) and shall,
where applicable, also include any direct or indirect subsidiary of
the Company formed or acquired after the date hereof.

 

“Trading Day” means a day
on which the principal Trading Market is open for
trading.

 

“Trading Market” means any
of the following markets or exchanges on which the Common Stock is
listed or quoted for trading on the date in question: the NYSE MKT,
the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq
Global Select Market, the New York Stock Exchange, the OTCQB or the
OTC Markets (or any successors to any of the
foregoing).

 

“Transaction Documents”
means this Agreement, the Certificate of Designation, all exhibits
and schedules thereto and hereto and any other documents or
agreements executed in connection with the transactions
contemplated hereunder.

 

“Transfer Agent” means
TransShare Corporation the current transfer agent of the Company,
with a mailing address of 2849 Executive Drive, Suite 200,
Clearwater, FL 33762 and any successor transfer agent of the
Company.

 

 

 

4

 

 

ARTICLE II.

PURCHASE AND SALE

 

2.1 Closing. Upon the terms and
subject to the conditions set forth herein, substantially
concurrent with the execution and delivery of this Agreement by the
parties hereto, the Company agrees to sell, and each Purchaser
agrees to purchase, up to five
thousand (5,000) shares of Preferred Stock at price of
$1,000 per share of Preferred Stock. Each Purchaser shall deliver
to the Company, via wire transfer immediately available funds equal
to the Purchaser’s Subscription Amount as set forth on the
signature page hereto executed by the Purchaser, and the Company
shall deliver to the Purchaser such number of shares of the
Preferred Stock purchased, as determined pursuant to Section 2.2(a)
and such Purchaser shall deliver the other items set forth in
Section 2.2 deliverable at the Closing. Upon satisfaction of the
covenants and conditions set forth in Sections 2.2 and 2.3, the
Closing shall occur at the offices of Company Counsel or such other
location as the parties shall mutually agree.

 

2.2.   
Deliveries.

 

(a) On or prior to the
Closing Date (or as otherwise indicated below), the Company shall
deliver or cause to be delivered to each Purchaser the
following:

 

(i) This Agreement duly
executed by the Company;

 

(ii) one
or more certificates evidencing up to five thousand (5,000) shares
of Preferred Stock, representing the Purchased Shares for a
purchase price of $1,000 per Preferred Share;

 

(iii) one
or more certificates evidencing up to six million (6,000,000)
shares of Common Stock (in the specific amounts specified on the
Purchaser’s signature page hereto), representing the
Commitment Shares; and

 

(iv) one
or more irrevocable letters of instruction to the Company's
Transfer Agent, instructing the Transfer Agent to maintain for the
benefit of the relevant Purchasers, up to an aggregate of
163,636,364 shares of its common stock (32,727 shares of Common
Stock to be reserved per share of Preferred Stock purchased by each
Purchaser).

 

(b) On or prior to the
Closing Date, each Purchaser shall deliver or cause to be delivered
to the Company, as applicable, the following:

 

(i) This Agreement duly
executed by the Purchaser; and

 

(ii)           the
Purchaser’s Subscription Amount by wire transfer to the
account specified in writing by the Company together with the
subscription form attached as an Exhibit below.

 

 

 

5

 

 

2.3

Closing
Conditions.

 

(a) The obligations of
the Company hereunder in connection with the Closing are subject to
the following conditions being met:

 

(i) the accuracy in all
material respects on the applicable Closing Date of the
representations and warranties of the Purchaser contained herein
(unless as of a specific date therein in which case they shall be
accurate as of such date);

 

(ii) all
obligations, covenants and agreements of the Purchaser required to
be performed at or prior to the applicable Closing Date shall have
been performed;

 

(iii) the
delivery to the Purchasers of a written waiver approving the
transaction contemplated hereby from the Company’s existing
investment banker; and

 

(iv) the
delivery by the Purchaser of the items set forth in Section 2.2(b)
of this Agreement.

 

(b) The obligations of
the Purchaser hereunder in connection with the Closing are subject
to the following conditions being met:

 

(i) the accuracy in all
material respects when made and on the applicable Closing Date of
the representations and warranties of the Company contained herein
(unless as of a specific date therein);

 

(ii) all
obligations, covenants and agreements of the Company required to be
performed at or prior to the applicable Closing Date shall have
been performed;

 

(iii) the
delivery by the Company of the items set forth in Section 2.2(a) of
this Agreement;

 

(iv) there
shall have been no Material Adverse Effect with respect to the
Company since the date hereof; and

 

(v) from the date
hereof to the applicable Closing Date, trading in the Common Stock
shall not have been suspended by the Commission or the
Company’s principal Trading Market and, at any time prior to
the applicable Closing Date, trading in securities generally as
reported by Bloomberg L.P. shall not have been suspended or
limited, or minimum prices shall not have been established on
securities whose trades are reported by such service, or on any
Trading Market, nor shall a banking moratorium have been declared
either by the United States or New York State authorities nor shall
there have occurred any material outbreak or escalation of
hostilities or other national or international calamity of such
magnitude in its effect on, or any material adverse change in, any
financial market which, in each case, in the reasonable judgment of
the Purchaser, makes it impracticable or inadvisable to purchase
the Securities at the Closing.

 

 

 

6

 

 

ARTICLE III.

REPRESENTATIONS AND WARRANTIES

 

3.1           Representations
and Warranties of the Company. Except as set forth in the
Disclosure Schedules, which Disclosure Schedules shall be deemed a
part hereof and shall qualify any representation or otherwise made
herein to the extent of the disclosure contained in the
corresponding section of the Disclosure Schedules, the Company
hereby makes the following representations and warranties to the
Purchaser:

 

(a) Subsidiaries. All of the direct
and indirect subsidiaries of the Company are set forth on
Schedule 3.1(a).
The Company owns, directly or indirectly, all of the capital stock
or other equity interests of each Subsidiary, and all of the issued
and outstanding shares of capital stock of each Subsidiary are
validly issued and are fully paid, non-assessable and free of
preemptive and similar rights to subscribe for or purchase
securities. If the Company has no subsidiaries, all other
references to the Subsidiaries or any of them in the Transaction
Documents shall be disregarded.

 

(b) Organization and Qualification.
The Company and each of the Subsidiaries is an entity duly
incorporated or otherwise organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation or
organization, with the requisite power and authority to own and use
its properties and assets and to carry on its business as currently
conducted. Neither the Company nor any Subsidiary is in violation
nor default of any of the provisions of its respective certificate
or articles of incorporation, bylaws or other organizational or
charter documents. Each of the Company and the Subsidiaries is duly
qualified to conduct business and is in good standing as a foreign
corporation or other entity in each jurisdiction in which the
nature of the business conducted or property owned by it makes such
qualification necessary, except where the failure to be so
qualified or in good standing, as the case may be, could not have
or reasonably be expected to result in: (i) a material adverse
effect on the legality, validity or enforceability of any
Transaction Document, (ii) a material adverse effect on the results
of operations, assets, business, prospects or condition (financial
or otherwise) of the Company and the Subsidiaries, taken as a
whole, or (iii) a material adverse effect on the Company’s
ability to perform in any material respect on a timely basis its
obligations under any Transaction Document (any of (i), (ii) or
(iii), a “Material
Adverse Effect”) and no Proceeding has been instituted
in any such jurisdiction revoking, limiting or curtailing or
seeking to revoke, limit or curtail such power and authority or
qualification.

 

 

7

 

(c) Authorization; Enforcement. The
Company has the requisite corporate power and authority to enter
into and to consummate the transactions contemplated by this
Agreement and each of the other Transaction Documents and otherwise
to carry out its obligations hereunder and thereunder. The
execution and delivery of this Agreement and each of the other
Transaction Documents by the Company and the consummation by it of
the transactions contemplated hereby and thereby have been duly
authorized by all necessary action on the part of the Company and
no further action is required by the Company, the Board of
Directors or the Company’s stockholders in connection
herewith or therewith other than in connection with the Required
Approvals. This Agreement and each other Transaction Document to
which it is a party has been (or upon delivery will have been) duly
executed by the Company and, when delivered in accordance with the
terms hereof and thereof, will constitute the valid and binding
obligation of the Company enforceable against the Company in
accordance with its terms, except: (i) as limited by general
equitable principles and applicable bankruptcy, insolvency,
reorganization, moratorium and other laws of general application
affecting enforcement of creditors’ rights generally, (ii) as
limited by laws relating to the availability of specific
performance, injunctive relief or other equitable remedies and
(iii) insofar as indemnification and contribution provisions may be
limited by applicable law.

 

(d) No Conflicts. The execution,
delivery and performance by the Company of this Agreement and the
other Transaction Documents to which it is a party, the issuance
and sale of the Securities and the consummation by it of the
transactions contemplated hereby and thereby do not and will not:
(i) conflict with or violate any provision of the Company’s
or any Subsidiary’s certificate or articles of incorporation,
bylaws or other organizational or charter documents, (ii) conflict
with, or constitute a default (or an event that with notice or
lapse of time or both would become a default) under, result in the
creation of any Lien upon any of the properties or assets of the
Company or any Subsidiary, or give to others any rights of
termination, amendment, acceleration or cancellation (with or
without notice, lapse of time or both) of, any agreement, credit
facility, debt or other instrument (evidencing a Company or
Subsidiary debt or otherwise) or other understanding to which the
Company or any Subsidiary is a party or by which any property or
asset of the Company or any Subsidiary is bound or affected, or
(iii) subject to the Required Approvals, conflict with or result in
a violation of any law, rule, regulation, order, judgment,
injunction, decree or other restriction of any court or
governmental authority to which the Company or a Subsidiary is
subject (including federal and state securities laws and
regulations), or by which any property or asset of the Company or a
Subsidiary is bound or affected; except in the case of each of
clauses (ii) and (iii), such as could not have or reasonably be
expected to result in a Material Adverse Effect.

 

 

8

 

(e) Filings, Consents and
Approvals. The Company has timely filed all quarterly and
annual reports required to be filed by it with the SEC pursuant to
the reporting requirements of the Securities Exchange Act of 1934,
as amended (the “1934 Act”) (all of the foregoing filed
prior to the date hereof and all exhibits included therein and
financial statements and schedules thereto and documents (other
than exhibits to such documents) incorporated by reference therein,
being hereinafter referred to herein as the “SEC
Documents”). The Company has delivered to Purchaser true and
complete copies of the SEC Documents, except for such exhibits and
incorporated documents, and except as such Documents are available
EDGAR filings on the SEC’s sec.gov website. As of their
respective dates, the SEC Documents complied in all material
respects with the requirements of the 1934 Act and the rules and
regulations of the SEC promulgated thereunder applicable to the SEC
Documents, and none of the SEC Documents, at the time they were
filed with the SEC, contained any untrue statement of a material
fact or omitted to state a material fact required to be stated
therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not
misleading. None of the statements made in any such SEC Documents
is, or has been, required to be amended or updated under applicable
law (except for such statements as have been amended or updated in
subsequent filings prior the date hereof). As of their respective
dates, the financial statements of the Company included in the SEC
Documents complied as to form in all material respects with
applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto. Such financial
statements have been prepared in accordance with United States
generally accepted accounting principles, consistently applied,
during the periods involved and fairly present in all material
respects the consolidated financial position of the Company and its
consolidated Subsidiaries as of the dates thereof and the
consolidated results of their operations and cash flows for the
periods then ended (subject, in the case of unaudited statements,
to normal year-end audit adjustments). Except as set forth in the
financial statements of the Company included in the SEC Documents,
the Company has no liabilities, contingent or otherwise, other than
(i) liabilities incurred in the ordinary course of business
subsequent to November 30, 2020, and (ii) obligations under
contracts and commitments incurred in the ordinary course of
business and not required under generally accepted accounting
principles to be reflected in such financial statements, which,
individually or in the aggregate, are not material to the financial
condition or operating results of the Company. The Company is
subject to the reporting requirements of the 1934 Act. For the
avoidance of doubt, filing of the documents required in this
Section 3(g) via the SEC’s Electronic Data Gathering,
Analysis, and Retrieval system (“EDGAR”) shall satisfy
all delivery requirements of this Section 3(g).

 

The
Company is not required to obtain any consent, waiver,
authorization or order of, give any notice to, or make any filing
or registration with, any court or other federal, state, local or
other governmental authority or other Person in connection with the
execution, delivery and performance by the Company of the
Transaction Documents, other than: (i) the filings required
pursuant to Section 4.4 of this Agreement, (ii) the notice and/or
application(s) to each applicable Trading Market for the issuance
and sale of the Securities, and (iii) such filings as are required
to be made under applicable state and federal securities laws
(collectively, the “Required
Approvals”).

 

 

 

9

 

(f) Issuance of the Securities. The
Securities are duly authorized and, when issued and paid for in
accordance with the applicable Transaction Documents, will be duly
and validly issued, fully paid and nonassessable, free and clear of
all Liens imposed by the Company other than restrictions on
transfer provided for in the Transaction Documents.

 

(g) Capitalization. The
capitalization of the Company is as set forth on Schedule 3.1(g), which
Schedule 3.1(g)
shall also include the number of shares of Common Stock owned
beneficially, and of record, by Affiliates of the Company as of the
date hereof. Except as set forth on Schedule 3.1(g), the Company
has not issued any capital stock since its most recently filed periodic report under the
Exchange Act, other than pursuant to the exercise of
employee stock options under the Company’s stock option
plans, the issuance of shares of Common Stock to employees pursuant
to the Company’s employee stock purchase plans and pursuant
to the conversion and/or exercise of Common Stock Equivalents
outstanding as of the date of the most recently filed periodic
report under the Exchange Act (“SEC Reports”). No
Person has any right of first refusal, preemptive right, right of
participation, or any similar right to participate in the
transactions contemplated by the Transaction Documents. Except as
set forth on Schedule
3.1(g) and except as a result of the purchase and sale of
the Securities, there are no outstanding options, warrants, scrip
rights to subscribe to, calls or commitments of any character
whatsoever relating to, or securities, rights or obligations
convertible into or exercisable or exchangeable for, or giving any
Person any right to subscribe for or acquire any shares of Common
Stock, or contracts, commitments, understandings or arrangements by
which the Company or any Subsidiary is or may become bound to issue
additional shares of Common Stock or Common Stock Equivalents. The
issuance and sale of the Securities will not obligate the Company
to issue shares of Common Stock or other securities to any Person
and will not result in a right of any holder of Company securities
to adjust the exercise, conversion, exchange or reset price under
any of such securities. All of the outstanding shares of capital
stock of the Company are duly authorized, validly issued, fully
paid and nonassessable, have been issued in compliance with all
federal and state securities laws, and none of such outstanding
shares was issued in violation of any preemptive rights or similar
rights to subscribe for or purchase securities. No further approval
or authorization of any stockholder, the Board of Directors or
others is required for the issuance and sale of the Securities.
There are no stockholders agreements, voting agreements or other
similar agreements with respect to the Company’s capital
stock to which the Company is a party or, to the knowledge of the
Company, between or among any of the Company’s
stockholders.

 

(h) Intentionally
omitted.

 

(i) Intentionally
omitted.

 

 

10

 

(j) Litigation. Except as disclosed
in Schedule 3.1(j),
there is no action, suit, inquiry, notice of violation, proceeding
or investigation pending or, to the knowledge of the Company,
threatened against or affecting the Company, any Subsidiary or any
of their respective properties before or by any court, arbitrator,
governmental or administrative agency or regulatory authority
(federal, state, county, local or foreign) (collectively, an
“Action”) which (i)
adversely affects or challenges the legality, validity or
enforceability of any of the Transaction Documents or the
Securities or (ii) could, if there were an unfavorable decision,
have or reasonably be expected to result in a Material Adverse
Effect. Neither the Company nor any Subsidiary, nor any director or
officer thereof, is or has been the subject of any Action involving
a claim of violation of or liability under federal or state
securities laws or a claim of breach of fiduciary duty. There has
not been, and to the knowledge of the Company, there is not pending
or contemplated, any investigation by the Commission involving the
Company or any current or former director or officer of the
Company. The Commission has not issued any stop order or other
order suspending the effectiveness of any registration statement
filed by the Company or any Subsidiary under the Exchange Act or
the Securities Act.

 

(k) Labor Relations. Except as
disclosed in Schedule
3.1(k), no labor dispute exists or, to the knowledge of the
Company, is imminent with respect to any of the employees of the
Company, which could reasonably be expected to result in a Material
Adverse Effect. None of the Company’s or its
Subsidiaries’ employees is a member of a union that relates
to such employee’s relationship with the Company or such
Subsidiary, and neither the Company nor any of its Subsidiaries is
a party to a collective bargaining agreement, and the Company and
its Subsidiaries believe that their relationships with their
employees are good. To the knowledge of the Company, no executive
officer of the Company or any Subsidiary, is, or is now expected to
be, in violation of any material term of any employment contract,
confidentiality, disclosure or proprietary information agreement or
non-competition agreement, or any other contract or agreement or
any restrictive covenant in favor of any third party, and the
continued employment of each such executive officer does not
subject the Company or any of its Subsidiaries to any liability
with respect to any of the foregoing matters. The Company and its
Subsidiaries are in compliance with all U.S. federal, state, local
and foreign laws and regulations relating to employment and
employment practices, terms and conditions of employment and wages
and hours, except where the failure to be in compliance could not,
individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect.

 

(l) Compliance. Neither the Company
nor any Subsidiary: (i) is in default under or in violation of (and
no event has occurred that has not been waived that, with notice or
lapse of time or both, would result in a default by the Company or
any Subsidiary under), nor has the Company or any Subsidiary
received notice of a claim that it is in default under or that it
is in violation of, any indenture, loan or credit agreement or any
other agreement or instrument to which it is a party or by which it
or any of its properties is bound (whether or not such default or
violation has been waived) except as disclosed in Schedule 3.1(l), (ii) is in
violation of any judgment, decree or order of any court, arbitrator
or other governmental authority, except as set forth on
Schedule 3.1(l) or
(iii) is or has been in violation of any statute, rule, ordinance
or regulation of any governmental authority, including without
limitation all foreign, federal, state and local laws relating to
taxes, other than tax payments related to payroll that are late,
environmental protection, occupational health and safety, product
quality and safety and employment and labor matters, except in each
case as could not have or reasonably be expected to result in a
Material Adverse Effect.

 

 

11

 

(m) Regulatory Permits. The Company
and the Subsidiaries possess all certificates, authorizations and
permits issued by the appropriate federal, state, local or foreign
regulatory authorities necessary to conduct their respective
businesses as described in the SEC Reports, except where the
failure to possess such permits could not reasonably be expected to
result in a Material Adverse Effect (“Material Permits”), and
neither the Company nor any Subsidiary has received any notice of
proceedings relating to the revocation or modification of any
Material Permit.

 

(n) Title to Assets. Except as
disclosed in Schedule 3.1(n), the Company and the Subsidiaries have
good and marketable title in fee simple to all real property owned
by them and good and marketable title in all personal property
owned by them that is material to the business of the Company and
the Subsidiaries, in each case free and clear of all Liens, except
for (i) Liens as do not materially affect the value of such
property and do not materially interfere with the use made and
proposed to be made of such property by the Company and the
Subsidiaries and (ii) Liens for the payment of federal, state or
other taxes, for which appropriate reserves have been made therefor
in accordance with GAAP and, the payment of which is neither
delinquent nor subject to penalties. Any real property and
facilities held under lease by the Company and the Subsidiaries are
held by them under valid, subsisting and enforceable leases with
which the Company and the Subsidiaries are in
compliance.

 

(o) Intellectual Property. The
Company and the Subsidiaries have, or have rights to use, all
patents, patent applications, trademarks, trademark applications,
service marks, trade names, trade secrets, inventions, copyrights,
licenses and other intellectual property rights and similar rights
as described in the SEC Reports as necessary or required for use in
connection with their respective businesses and which the failure
to so have could have a Material Adverse Effect (collectively, the
“Intellectual
Property Rights”). Except as disclosed on Schedule 3.1(o), none of, and
neither the Company nor any Subsidiary has received a notice
(written or otherwise) that any of, the Intellectual Property
Rights has expired, terminated or been abandoned, or is expected to
expire or terminate or be abandoned, within two (2) years from the
date of this Agreement. Neither the Company nor any Subsidiary has
received, since the date of the latest audited financial statements
included within the SEC Reports, a written notice of a claim or
otherwise has any knowledge that the Intellectual Property Rights
violate or infringe upon the rights of any Person, except as could
not have or reasonably be expected to not have a Material Adverse
Effect. To the knowledge of the Company, all such Intellectual
Property Rights are enforceable and there is no existing
infringement by another Person of any of the Intellectual Property
Rights. The Company and its Subsidiaries have taken reasonable
security measures to protect the secrecy, confidentiality and value
of all of their intellectual properties, except where failure to do
so could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.

 

(p) Insurance. Except as set forth
on Schedule 3.1(p),
the Company and the Subsidiaries are insured by insurers of
recognized financial responsibility against such losses and risks
and in such amounts as are prudent and customary in the businesses
in which the Company and the Subsidiaries are engaged, including,
but not limited to, directors and officers insurance coverage at
least equal to the aggregate Subscription Amount. Neither the
Company nor any Subsidiary has any reason to believe that it will
not be able to renew its existing insurance coverage as and when
such coverage expires or to obtain similar coverage from similar
insurers as may be necessary to continue its business without a
significant increase in cost.

 

 

12

 

(q) Transactions with Affiliates and
Employees. Except as set forth in the SEC Reports, none of
the officers or directors of the Company or any Subsidiary and, to
the knowledge of the Company, none of the employees of the Company
or any Subsidiary is presently a party to any transaction with the
Company or any Subsidiary (other than for services as employees,
officers and directors), including any contract, agreement or other
arrangement providing for the furnishing of services to or by,
providing for rental of real or personal property to or from,
providing for the borrowing of money from or lending of money to or
otherwise requiring payments to or from any officer, director or
such employee or, to the knowledge of the Company, any entity in
which any officer, director, or any such employee has a substantial
interest or is an officer, director, trustee, stockholder, member
or partner, in each case in excess of $120,000 other than for: (i)
payment of salary or consulting fees for services rendered, (ii)
reimbursement for expenses incurred on behalf of the Company and
(iii) other employee benefits, including stock option agreements
under any stock option plan of the Company. Except as set forth on
Schedule 3.1(q),
all employee salaries and contractor fees have been paid to date
and no such amounts are outstanding or past due.

 

(r) Sarbanes-Oxley; Internal Accounting
Controls. Except as may be disclosed in the SEC Reports, the
Company and the Subsidiaries are in compliance with any and all
applicable requirements of the Sarbanes-Oxley Act of 2002 that are
effective as of the date hereof, and any and all applicable rules
and regulations promulgated by the Commission thereunder that are
effective as of the date hereof and as of each Closing Date.
Except as disclosed in the SEC
Reports, the Company and the Subsidiaries maintain a system of
internal accounting controls sufficient to provide reasonable
assurance that: (i) transactions are executed in accordance with
management’s general or specific authorizations, (ii)
transactions are recorded as necessary to permit preparation of
financial statements in conformity with GAAP and to maintain asset
accountability, (iii) access to assets is permitted only in
accordance with management’s general or specific
authorization, and (iv) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and
appropriate action is taken with respect to any differences. The
Company and the Subsidiaries have established disclosure controls
and procedures (as defined in Exchange Act Rules 13a-15(e) and
15d-15(e)) for the Company and the Subsidiaries and designed such
disclosure controls and procedures to ensure that information
required to be disclosed by the Company in the reports it files or
submits under the Exchange Act is recorded, processed, summarized
and reported, within the time periods specified in the
Commission’s rules and forms. The Company’s certifying
officers have evaluated the effectiveness of the disclosure
controls and procedures of the Company and the Subsidiaries as of
the end of the period covered by the most recently filed periodic
report under the Exchange Act (such date, the
“Evaluation
Date”). The Company
presented in its most recently filed periodic report under the
Exchange Act the conclusions of the certifying officers about the
effectiveness of the disclosure controls and procedures based on
their evaluations as of the Evaluation Date. Since the Evaluation
Date, there have been no changes in the internal control over
financial reporting (as such term is defined in the Exchange Act)
of the Company and its Subsidiaries that have materially affected,
or is reasonably likely to materially affect, the internal control
over financial reporting of the Company and its
Subsidiaries.

 

 

13

 

(s) Certain Fees. No brokerage or
finder’s fees or commissions are or will be payable by the
Company or any Subsidiary to any broker, financial advisor or
consultant, finder, placement agent, investment banker, bank or
other Person with respect to the transactions contemplated by the
Transaction Documents. The Purchaser shall have no obligation with
respect to any fees or with respect to any claims made by or on
behalf of other Persons for fees of a type contemplated in this
Section that may be due in connection with the transactions
contemplated by the Transaction Documents.

 

(t) Private Placement. Assuming the
accuracy of the Purchaser’s representations and warranties
set forth in Section 3.2, no registration under the Securities Act
is required for the offer and sale of the Securities by the Company
to the Purchaser as contemplated hereby. The issuance and sale of
the Securities hereunder does not contravene the rules and
regulations of the Trading Market.

 

(u) Investment Company. The Company
is not, and is not an Affiliate of, and immediately after receipt
of payment for the Securities, 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 an
“investment company” subject to registration under the
Investment Company Act of 1940, as amended.

 

(v) Registration Rights. No Person
has any right to cause the Company to effect the registration under
the Securities Act of any securities of the Company or any
Subsidiary.

 

(w) Listing and Maintenance
Requirements. The Company has not in the twelve (12) months
preceding the date hereof, received notice from any Trading Market
on which the Common Stock is or has been listed or quoted to the
effect that the Company is not in compliance with the listing or
maintenance requirements of such Trading Market. The Company is and
has no reason to believe that it will not in the foreseeable future
continue to be, in compliance with all such listing and maintenance
requirements.

 

(x) [RESERVED]

 

(y) Disclosure. Except with respect
to the material terms and conditions of the transactions
contemplated by the Transaction Documents, the Company confirms
that neither it nor any other Person acting on its behalf has
provided the Purchaser or its agents or counsel with any
information that it believes constitutes or might constitute
material, non-public information. The Company understands and
confirms that the Purchaser will rely on the foregoing
representation in effecting transactions in securities of the
Company. All of the disclosure furnished by or on behalf of the
Company to the Purchaser regarding the Company and its
Subsidiaries, their respective businesses and the transactions
contemplated hereby, including the Disclosure Schedules to this
Agreement, is true and correct and does not contain any untrue
statement of a material fact or omit to state any material fact
necessary in order to make the statements made therein, in light of
the circumstances under which they were made, not misleading. The
press releases disseminated by the Company during the twelve months
preceding the date of this Agreement taken as a whole do not
contain any 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 light of the circumstances under
which they were made and when made, not misleading. The Company
acknowledges and agrees that the Purchaser does not make and has
not made any representations or warranties with respect to the
transactions contemplated hereby other than those specifically set
forth in Section 3.2 hereof.

 

 

14

 

(z) No Integrated Offering.
Assuming the accuracy of the Purchaser’s representations and
warranties set forth in Section 3.2, neither the Company, nor any
of its Affiliates, nor any Person acting on its or their behalf
has, directly or indirectly, made any offers or sales of any
security or solicited any offers to buy any security, under
circumstances that would cause this offering of the Securities to
be integrated with prior offerings by the Company for purposes of
(i) the Securities Act which would require the registration of any
such securities under the Securities Act, or (ii) any applicable
shareholder approval provisions of any Trading Market on which any
of the securities of the Company are listed or
designated.

 

(aa) Tax
Status. Except for matters that would not, individually or
in the aggregate, have or reasonably be expected to result in a
Material Adverse Effect, the Company and its Subsidiaries each (i)
has made or filed all United States federal, state and local income
and all foreign income and franchise tax returns, reports and
declarations required by any jurisdiction to which it is subject,
(ii) has paid all taxes and other governmental assessments and
charges that are material in amount, shown or determined to be due
on such returns, reports and declarations and (iii) has set aside
on its books provision reasonably adequate for the payment of all
material taxes for periods subsequent to the periods to which such
returns, reports or declarations apply. There are no unpaid taxes
in any material amount claimed to be due by the taxing authority of
any jurisdiction, and the officers of the Company or of any
Subsidiary know of no basis for any such claim. Immediately after
closing of this transaction, the Company covenants to pay to the
Past Due Taxes.

 

(bb) No
General Solicitation. Neither the Company nor any person
acting on behalf of the Company has offered or sold any of the
Securities by any form of general solicitation or general
advertising. The Company has offered the Securities for sale only
to the Purchaser.

 

(cc) Foreign
Corrupt Practices. Neither the Company nor any Subsidiary,
nor to the knowledge of the Company or any Subsidiary, any agent or
other person acting on behalf of the Company or any Subsidiary,
has: (i) directly or indirectly, used any funds for unlawful
contributions, gifts, entertainment or other unlawful expenses
related to foreign or domestic political activity, (ii) made any
unlawful payment to foreign or domestic government officials or
employees or to any foreign or domestic political parties or
campaigns from corporate funds, (iii) failed to disclose fully any
contribution made by the Company or any Subsidiary (or made by any
person acting on its behalf of which the Company is aware) which is
in violation of law or (iv) violated in any material respect any
provision of FCPA.

 

(dd) Accountants.
The Company’s accounting firm is set forth on Schedule 3.1(dd) of the
Disclosure Schedules. To the knowledge and belief of the Company,
such accounting firm: (i) is a registered public accounting firm as
required by the Exchange Act and (ii) shall express its opinion
with respect to the financial statements to be included in the
Company’s Annual Report for the fiscal year ending March 31,
2021.

 

 

15

 

(ee) Acknowledgment
Regarding Purchaser’s Purchase of Securities. The
Company acknowledges and agrees that the Purchaser is acting solely
in the capacity of an arm’s length purchaser with respect to
the Transaction Documents and the transactions contemplated
thereby. The Company further acknowledges that the Purchaser is not
acting as a financial advisor or fiduciary of the Company (or in
any similar capacity) with respect to the Transaction Documents and
the transactions contemplated thereby and any advice given by the
Purchaser or any of its representatives or agents in connection
with the Transaction Documents and the transactions contemplated
thereby is merely incidental to the Purchaser’s purchase of
the Securities. The Company further represents to the Purchaser
that the Company’s decision to enter into this Agreement and
the other Transaction Documents has been based solely on the
independent evaluation of the transactions contemplated hereby by
the Company and its representatives.

 

(ff) Acknowledgment
Regarding Purchaser’s Trading Activity. Anything in this Agreement or elsewhere herein
to the contrary notwithstanding, it is understood and acknowledged
by the Company that: (i) the Purchaser has not been asked by the
Company to agree, nor has the Purchaser agreed, to desist from
purchasing or selling, securities of the Company, or
“derivative” securities based on securities issued by
the Company or to hold the Securities for any specified term, (ii)
past or future open market or other transactions by the Purchaser,
specifically including, without limitation,
“derivative” transactions, before or after a closing of
this or future private placement transactions, may negatively
impact the market price of the Company’s publicly-traded
securities (iii) Omit and (iv) the Purchaser shall not be deemed to
have any affiliation with or control over any arm’s length
counter-party in any “derivative” transaction.
The Company further understands and acknowledges that (y) the
Purchaser may engage in hedging activities at various times during
the period that the Securities are outstanding, and (z) such
hedging activities (if any) could reduce the value of the existing
stockholders’ equity interests in the Company at and after
the time that the hedging activities are being conducted.  The
Company acknowledges that such aforementioned hedging activities do
not constitute a breach of any of the Transaction
Documents.

 

(gg) Regulation
M Compliance.  The Company has not, and to its
knowledge no one acting on its behalf has, (i) taken, directly or
indirectly, any action designed to cause or to result in the
stabilization or manipulation of the price of any security of the
Company to facilitate the sale or resale of any of the Securities,
(ii) sold, bid for, purchased, or paid any compensation for
soliciting purchases of, any of the Securities, or (iii) paid or
agreed to pay to any Person any compensation for soliciting another
to purchase any other securities of the Company, other than, in the
case of clauses (ii) and (iii), compensation paid to the
Company’s placement agent in connection with the placement of
the Securities.

 

(hh) Reserved.

 

 

16

 

(ii) Stock
Option Plans. Each stock option granted by the Company under
the Company’s stock option plan was granted (i) in accordance
with the terms of the Company’s stock option plan and (ii)
with an exercise price at least equal to the fair market value of
the Common Stock on the date such stock option would be considered
granted under GAAP and applicable law. No stock option granted
under the Company’s stock option plan has been backdated. The
Company has not knowingly granted, and there is no and has been no
Company policy or practice to knowingly grant, stock options prior
to, or otherwise knowingly coordinate the grant of stock options
with, the release or other public announcement of material
information regarding the Company or its Subsidiaries or their
financial results or prospects.

 

(jj) Office
of Foreign Assets Control. Neither the Company nor any
Subsidiary nor, to the Company's knowledge, any director, officer,
agent, employee or affiliate of the Company or any Subsidiary is
currently subject to any U.S. sanctions administered by the Office
of Foreign Assets Control of the U.S. Treasury Department
(“OFAC”).

 

(kk) U.S.
Real Property Holding Corporation. The Company is not and
has never been a U.S. real property holding corporation within the
meaning of Section 897 of the Internal Revenue Code of 1986, as
amended, and the Company shall so certify upon Purchaser’s
request.

 

(ll) Bank
Holding Company Act. Neither the Company nor any of its
Subsidiaries or Affiliates is subject to the Bank Holding Company
Act of 1956, as amended (the “BHCA”) and to regulation
by the Board of Governors of the Federal Reserve System (the
“Federal
Reserve”). Neither the Company nor any of its
Subsidiaries or Affiliates owns or controls, directly or
indirectly, five percent (5%) or more of the outstanding shares of
any class of voting securities or twenty-five percent or more of
the total equity of a bank or any entity that is subject to the
BHCA and to regulation by the Federal Reserve. Neither the Company
nor any of its Subsidiaries or Affiliates exercises a controlling
influence over the management or policies of a bank or any entity
that is subject to the BHCA and to regulation by the Federal
Reserve.

 

(mm) Money
Laundering. The operations of the Company and its
Subsidiaries are and have been conducted at all times in compliance
with applicable financial record-keeping and reporting requirements
of the Currency and Foreign Transactions Reporting Act of 1970, as
amended, applicable money laundering statutes and applicable rules
and regulations thereunder (collectively, the “Money Laundering Laws”),
and no action, suit or proceeding by or before any court or
governmental agency, authority or body or any arbitrator involving
the Company or any Subsidiary with respect to the Money Laundering
Laws is pending or, to the knowledge of the Company or any
Subsidiary, threatened.

 

3.2           Representations
and Warranties of the Purchaser. The Purchaser hereby
represents and warrants as of the date hereof and as of the Closing
Dates to the Company as follows (unless as of a specific date
therein):

 

 

17

 

(a)           Organization;
Authority. The Purchaser is either an individual or an
entity duly incorporated or formed, validly existing and in good
standing under the laws of the jurisdiction of its incorporation or
formation with full right, corporate, partnership, limited
liability company or similar power and authority to enter into and
to consummate the transactions contemplated by the Transaction
Documents and otherwise to carry out its obligations hereunder and
thereunder. The execution and delivery of the Transaction Documents
and performance by the Purchaser of the transactions contemplated
by the Transaction Documents have been duly authorized by all
necessary corporate, partnership, limited liability company or
similar action, as applicable, on the part of the Purchaser. Each
Transaction Document to which it is a party has been duly executed
by the Purchaser, and when delivered by the Purchaser in accordance
with the terms hereof, will constitute the valid and legally
binding obligation of the Purchaser, enforceable against it in
accordance with its terms, except: (i) as limited by general
equitable principles and applicable bankruptcy, insolvency,
reorganization, moratorium and other laws of general application
affecting enforcement of creditors’ rights generally, (ii) as
limited by laws relating to the availability of specific
performance, injunctive relief or other equitable remedies and
(iii) insofar as indemnification and contribution provisions may be
limited by applicable law.

 

(b)           Own
Account. The Purchaser understands that the Securities are
“restricted securities” and have not been registered
under the Securities Act or any applicable state securities law and
is acquiring the Securities as principal for its own account and
not with a view to or for distributing or reselling such Securities
or any part thereof in violation of the Securities Act or any
applicable state securities law, has no present intention of
distributing any of such Securities in violation of the Securities
Act or any applicable state securities law and has no direct or
indirect arrangement or understandings with any other persons to
distribute or regarding the distribution of such Securities in
violation of the Securities Act or any applicable state securities
law (this representation and warranty not limiting the
Purchaser’s right to sell the Securities pursuant to the
Registration Statement or otherwise in compliance with applicable
federal and state securities laws).

 

 (c)           Purchaser
Status. At the time the Purchaser was offered the
Securities, it was, and as of the date hereof it is and on each
date on which it converts any shares of Preferred Stock, either:
(i) an “accredited investor” as defined in Rule
501(a)(1), (a)(2), (a)(3), (a)(7) or (a)(8) under the Securities
Act or (ii) a “qualified institutional buyer” as
defined in Rule 144A(a) under the Securities Act.

 

(d)           Experience
of the Purchaser. The Purchaser, 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 prospective investment in
the Securities, and has so evaluated the merits and risks of such
investment. The Purchaser 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.

 

 

 

18

 

(e) General
Solicitation. The Purchaser is not purchasing the Securities
as a result of any advertisement, article, notice or other
communication regarding the Securities published in any newspaper,
magazine or similar media or broadcast over television or radio or
presented at any seminar or any other general solicitation or
general advertisement.

 

The
Company acknowledges and agrees that the representations contained
in Section 3.2 shall not modify, amend or affect the
Purchaser’s right to rely on the Company’s
representations and warranties contained in this Agreement or any
representations and warranties contained in any other Transaction
Document or any other document or instrument executed and/or
delivered in connection with this Agreement or the consummation of
the transaction contemplated hereby.

 

 

ARTICLE IV.

OTHER AGREEMENTS OF THE PARTIES

 

4.1           Transfer
Restrictions.

 

(a) The Securities may
only be disposed of in compliance with state and federal securities
laws. As a condition of transfer, any such transferee shall agree
in writing to be bound by the terms of this Agreement and shall
have the rights and obligations of the Purchaser under this
Agreement.

 

(b) The Purchaser
agrees to the imprinting, so long as is required by this Section
4.1, of a legend on any of the Securities in the following
form:

 

THIS
SECURITY HAS NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE
COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE
UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE “SECURITIES ACT”), AND,
ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR
PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT
SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND
IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY
A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE
SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY.
THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN
ACCOUNT WITH A REGISTERED BROKER-DEALER OR OTHER LOAN WITH A
FINANCIAL INSTITUTION THAT IS AN “ACCREDITED INVESTOR”
AS DEFINED IN RULE 501(a) UNDER THE SECURITIES ACT OR OTHER LOAN
SECURED BY SUCH SECURITIES.

 

The
Company acknowledges and agrees that the Purchaser may from time to
time pledge pursuant to a bona fide margin agreement with a
registered broker-dealer or grant a security interest in some or
all of the Securities to a financial institution that is an
“accredited investor” as defined in Rule 501(a) under
the Securities Act and who agrees to be bound by the provisions of
this Agreement and, if required under the terms of such
arrangement, the Purchaser may transfer pledged or secured
Securities to the pledgees or secured parties. Such a pledge or
transfer would not be subject to approval of the Company and no
legal opinion of legal counsel of the pledgee, secured party or
pledgor shall be required in connection therewith. Further, no
notice shall be required of such pledge. At the appropriate
Purchaser’s expense, the Company will execute and deliver
such reasonable documentation as a pledgee or secured party of
Securities may reasonably request in connection with a pledge or
transfer of the Securities, including, if the Securities are
registered under a registration statement, the preparation and
filing of any required prospectus supplement under Rule 424(b)(3)
under the Securities Act or other applicable provision of the
Securities Act to appropriately amend the list of selling
stockholders thereunder.

 

 

 

19

 

4.2           Acknowledgment
of Dilution of Voting Power. The Company acknowledges that
the issuance of the Securities will result in dilution of the
voting power of the outstanding shares of Common Stock, which
dilution will be substantial.

 

4.3           Integration.
The Company shall not sell, offer for sale or solicit offers to buy
or otherwise negotiate in respect of any security (as defined in
Section 2 of the Securities Act) 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
or that would be integrated with the offer or sale of the
Securities for purposes of the rules and regulations of any Trading
Market such that it would require shareholder approval prior to the
closing of such other transaction unless shareholder approval is
obtained before the closing of such subsequent
transaction.

 

4.4           Securities
Laws Disclosure; Publicity. The Company and the Purchaser
shall consult with each other in issuing any other press releases
with respect to the transactions contemplated hereby including for
the initial press release pursuant to Section 4.8, and neither the
Company nor the Purchaser shall issue any such press release nor
otherwise make any such public statement without the prior consent
of the Company, with respect to any press release of the Purchaser,
or without the prior consent of the Purchaser, with respect to any
press release of the Company, which consent shall not unreasonably
be withheld or delayed, except if such disclosure is required by
law, in which case the disclosing party shall promptly provide the
other party with prior notice of such public statement or
communication. Notwithstanding the foregoing, the Company shall not
publicly disclose the name of the Purchaser, or include the name of
the Purchaser in any filing with the Commission or any regulatory
agency or Trading Market, without the prior written consent of the
Purchaser, except: (a) as required by federal securities law in
connection with the filing of final Transaction Documents with the
Commission and (b) to the extent such disclosure is required by law
or Trading Market regulations, in which case the Company shall
provide the Purchaser with prior notice of such disclosure
permitted under this clause (b).

 

4.5           Shareholder
Rights Plan. No claim will be made or enforced by the
Company or, with the consent of the Company, any other Person, that
the Purchaser is an “Acquiring Person” under any
control share acquisition, business combination, poison pill
(including any distribution under a rights agreement) or similar
anti-takeover plan or arrangement in effect or hereafter adopted by
the Company, or that the Purchaser 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 Purchaser.

 

4.6           Non-Public
Information. Except with respect to the material terms and
conditions of the transactions contemplated by the Transaction
Documents, the Company covenants and agrees that neither it, nor
any other Person acting on its behalf, will provide the Purchaser
or its agents or counsel with any information that the Company
believes constitutes material non-public information, unless prior
thereto the Purchaser shall have entered into a written agreement
with the Company regarding the confidentiality and use of such
information. The Company understands and confirms that the
Purchaser shall be relying on the foregoing covenant in effecting
transactions in securities of the Company.

 

 

20

 

4.7           Indemnification
of Purchaser. Subject to the provisions of this Section 4.7,
the Company will indemnify and hold the Purchaser and their
respective directors, officers, shareholders, members, partners,
employees and agents (and any other Persons with a functionally
equivalent role of a Person holding such titles notwithstanding a
lack of such title or any other title), each Person who controls
the Purchaser (within the meaning of Section 15 of the Securities
Act and Section 20 of the Exchange Act), and the directors,
officers, shareholders, agents, members, partners or employees (and
any other Persons with a functionally equivalent role of a Person
holding such titles notwithstanding a lack of such title or any
other title) of such controlling persons (each, a
“Purchaser
Party”) harmless from any and all losses, liabilities,
obligations, claims, contingencies, damages, costs and expenses,
including all judgments, amounts paid in settlements, court costs
and reasonable attorneys’ fees and costs of investigation
that any such Purchaser Party may suffer or incur as a result of or
relating to (a) any breach of any of the representations,
warranties, covenants or agreements made by the Company in this
Agreement or in the other Transaction Documents or (b) any action
instituted against the Purchaser Parties in any capacity, or any of
them or their respective Affiliates, by any stockholder of the
Company who is not an Affiliate of such Purchaser Party, with
respect to any of the transactions contemplated by the Transaction
Documents (unless such action is based upon a breach of such
Purchaser Party’s representations, warranties or covenants
under the Transaction Documents or any agreements or understandings
such Purchaser Party may have with any such stockholder or any
violations by such Purchaser Party of state or federal securities
laws or any conduct by such Purchaser Party which constitutes
fraud, gross negligence, willful misconduct or malfeasance). If any
action shall be brought against any Purchaser Party in respect of
which indemnity may be sought pursuant to this Agreement, such
Purchaser Party shall promptly notify the Company in writing, and
the Company shall have the right to assume the defense thereof with
counsel of its own choosing reasonably acceptable to the Purchaser
Party. Any Purchaser Party shall have the right to employ separate
counsel in any such action and participate in the defense thereof,
but the fees and expenses of such counsel shall be at the expense
of such Purchaser Party except to the extent that (i) the
employment thereof has been specifically authorized by the Company
in writing, (ii) the Company has failed after a reasonable period
of time to assume such defense and to employ counsel or such
defense once started is subsequently delayed owing to lack of
timely payment by the Company of legal fees and expenses or (iii)
in such action there is, in the reasonable opinion of counsel, a
material conflict on any material issue between the position of the
Company and the position of such Purchaser Party, in which case the
Company shall be responsible for the reasonable fees and expenses
of no more than one such separate counsel. The Company will not be
liable to any Purchaser Party under this Agreement (y) for any
settlement by a Purchaser Party effected without the
Company’s prior written consent, which shall not be
unreasonably withheld or delayed; or (z) to the extent, but only to
the extent that a loss, claim, damage or liability is attributable
to any Purchaser Party’s breach of any of the
representations, warranties, covenants or agreements made by such
Purchaser Party in this Agreement or in the other Transaction
Documents. The
indemnification required by this Section 4.7 shall be made by
periodic payments of the amount thereof during the course of the
investigation or defense, as and when bills are received or are
incurred. The indemnity agreements contained herein shall be in
addition to any cause of action or similar right of any Purchaser
Party against the Company or others and any liabilities the Company
may be subject to pursuant to law.

 

 

 

21

 

4.8             Certain
Transactions and Confidentiality. The Purchaser, covenants
that neither it, nor any Affiliate acting on its behalf or pursuant
to any understanding with it will (i) execute any Short Sales, of
any of the Company’s securities during the period commencing
with the execution of this Agreement and ending at such time that
the transactions contemplated by this Agreement are first publicly
announced pursuant to the initial press release as described in
Section 4.4 or (ii) from the date hereof until the earlier of the
12 month anniversary of the date hereof and the date that the
Preferred Stock is no longer outstanding, execute any Short Sales
of the Common Stock (a “Prohibited Short Sale”).
The Purchaser covenants that until such time as the transactions
contemplated by this Agreement are publicly disclosed by the
Company pursuant to the initial press release as described in
Section 4.4, the Purchaser will maintain the confidentiality of the
existence and terms of this transaction and the information
included in the Transaction Documents and the Disclosure Schedules.
Notwithstanding the foregoing, and notwithstanding anything
contained in this Agreement to the contrary, the Company expressly
acknowledges and agrees that (i) the Purchaser does not make any
representation, warranty or covenant hereby that it will not engage
in effecting transactions in any securities of the Company after
the time that the transactions contemplated by this Agreement are
first publicly announced pursuant to the initial press release as
described in Section 4.4, (ii) except for a Prohibited Short Sale,
the Purchaser shall not be restricted or prohibited from effecting
any transactions in any securities of the Company in accordance
with applicable securities laws from and after the time that the
transactions contemplated by this Agreement are first publicly
announced pursuant to the initial press release as described in
Section 4.4 and (iii) the Purchaser shall have no duty of
confidentiality to the Company or its Subsidiaries after the
issuance of the initial press release as described in Section
4.4. 

 

4.9 Form D; Blue Sky Filings. The
Company agrees to timely file a Form D with respect to the
Securities as required under Regulation D and to provide a copy
thereof, promptly upon request of the Purchaser. The Company shall
take such action as the Company shall reasonably determine is
necessary in order to obtain an exemption for, or to qualify the
Securities for, sale to the Purchaser under applicable securities
or “Blue Sky” laws of the states of the United States,
and shall provide evidence of such actions promptly upon request of
the Purchaser.

 

4.10           Redemption.
The Company shall have the right to redeem the Securities,
in accordance with the Certificate of
Designation.

 

4.11           Dividends 
The Company shall pay a dividend as
provided in the Certificate of Designation.

 

4.12           [reserved].

 

4.13          
Event of
Default Upon an Event of
Default, it shall be a Triggering Event and the Holder shall have
the rights as provided in the Certificate of
Designation.

 

 

 

22

 

 

ARTICLE V.

MISCELLANEOUS

 

5.1           Termination. 
This Agreement may be terminated by the Purchaser, as to the
Purchaser’s obligations hereunder, if the Closing has not
been consummated within five (5) Business Days of the date hereof;
provided,
however, that such
termination will not affect the right of any party to sue for any
breach by any other party (or parties).

 

5.2           Fees
and Expenses. Except as expressly set forth in the
Transaction Documents to the contrary, each party shall pay the
fees and expenses of its advisers, counsel, accountants and other
experts, if any, and all other expenses incurred by such party
incident to the negotiation, preparation, execution, delivery and
performance of this Agreement. The Company shall pay all Transfer
Agent fees (including, without limitation, any fees required for
same-day processing of any instruction letter delivered by the
Company), stamp taxes and other taxes and duties levied in
connection with the delivery of any Securities to the
Purchaser.

 

5.3           Entire
Agreement. The Transaction Documents, together with the
exhibits and schedules thereto, contain the entire understanding of
the parties with respect to the subject matter hereof and thereof
and supersede all prior agreements and understandings, oral or
written, with respect to such matters, which the parties
acknowledge have been merged into such documents, exhibits and
schedules.

 

5.4           Notices.
Any and all notices or other communications or deliveries required
or permitted to be provided hereunder shall be in writing and shall
be deemed given and effective on the earliest of: (a) the date of
transmission, if such notice or communication is delivered via
facsimile at the facsimile number set forth on the signature pages
attached hereto at or prior to 5:30 p.m. (New York City time) on a
Trading Day, (b) the next Trading Day after the date of
transmission, if such notice or communication is delivered via
facsimile at the facsimile number set forth on the signature pages
attached hereto on a day that is not a Trading Day or later than
5:30 p.m. (New York City time) on any Trading Day, (c) the second
(2nd)
Trading Day following the date of mailing, if sent by U.S.
nationally recognized overnight courier service or (d) upon actual
receipt by the party to whom such notice is required to be given.
The address for such notices and communications shall be as set
forth on the signature pages attached hereto.

 

5.5           Amendments;
Waivers. No provision of this Agreement may be waived,
modified, supplemented or amended except in a written instrument
signed, in the case of an amendment, by the Company and the holders
of at least 75% in interest of the Securities then outstanding or,
in the case of a waiver, by the party against whom enforcement of
any such waived provision is sought. No waiver of any default with
respect to any provision, condition or requirement of this
Agreement shall be deemed to be a continuing waiver in the future
or a waiver of any subsequent default or a waiver of any other
provision, condition or requirement hereof, nor shall any delay or
omission of any party to exercise any right hereunder in any manner
impair the exercise of any such right.

 

5.6           Headings.
The headings herein are for convenience only, do not constitute a
part of this Agreement and shall not be deemed to limit or affect
any of the provisions hereof.

 

 

23

 

5.7           Successors
and Assigns. This Agreement shall be binding upon and inure
to the benefit of the parties and their successors and permitted
assigns. The Company may not assign this Agreement or any rights or
obligations hereunder without the prior written consent of the
Purchaser (other than by merger). The Purchaser may assign any or
all of its rights under this Agreement to any Person to whom the
Purchaser assigns or transfers any Securities, provided that such
transferee agrees in writing to be bound, with respect to the
transferred Securities, by the provisions of the Transaction
Documents that apply to the “Purchaser.”

 

5.8           No
Third-Party Beneficiaries. This Agreement is intended for
the benefit of the parties hereto and their respective successors
and permitted assigns and is not for the benefit of, nor may any
provision hereof be enforced by, any other Person, except as
otherwise set forth in Section 4.7 and this Section
5.8.

 

5.9           Governing
Law. All questions concerning the construction, validity,
enforcement and interpretation of the Transaction Documents shall
be governed by and construed and enforced in accordance with the
internal laws of the State of Nevada, without regard to the
principles of conflicts of law thereof. Each party agrees that all
legal proceedings concerning the interpretations, enforcement and
defense of the transactions contemplated by this Agreement and any
other Transaction Documents (whether brought against a party hereto
or its respective affiliates, directors, officers, shareholders,
partners, members, employees or agents) shall be commenced
exclusively in the state or federal courts sitting in the Borough
of Manhattan, New York, New York Each party hereby irrevocably
submits to the exclusive jurisdiction of the state and federal
courts sitting in the Borough of Manhattan, New York, New York for
the adjudication of any dispute hereunder or in connection herewith
or with any transaction contemplated hereby or discussed herein
(including with respect to the enforcement of any of the
Transaction Documents), and hereby irrevocably waives, and agrees
not to assert in any suit, action or proceeding, any claim that it
is not personally subject to the jurisdiction of any such court,
that such suit, action or proceeding is improper or is an
inconvenient venue for such proceeding. Each party hereby
irrevocably waives personal service of process and consents to
process being served in any such suit, action or proceeding by
mailing a copy thereof via registered or certified mail or
overnight delivery (with evidence of delivery) to such party at the
address in effect for notices to it under this Agreement and agrees
that such service shall constitute good and sufficient service of
process and notice thereof. Nothing contained herein shall be
deemed to limit in any way any right to serve process in any other
manner permitted by law. If either party shall commence an action,
suit or proceeding to enforce any provisions of the Transaction
Documents, then, in addition to the obligations of the Company
under Section 4.7, the prevailing party in such action, suit or
proceeding shall be reimbursed by the other party for its
reasonable attorneys’ fees and other costs and expenses
incurred with the investigation, preparation and prosecution of
such action or proceeding.

 

5.10           Survival.
The representations and warranties contained herein shall survive
each Closing and the delivery of the Securities.

 

 

24

 

5.11           Execution.
This Agreement may be executed in two or more counterparts, all of
which when taken together shall be considered one and the same
agreement and shall become effective when counterparts have been
signed by each party and delivered to each other party, it being
understood that the parties need not sign the same counterpart. In
the event that any signature is delivered by facsimile transmission
or by e-mail delivery of a “.pdf” format data file,
such signature shall create a valid and binding obligation of the
party executing (or on whose behalf such signature is executed)
with the same force and effect as if such facsimile or
“.pdf” signature page were an original
thereof.

 

5.12           Severability.
If any term, provision, covenant or restriction of this Agreement
is held by a court of competent jurisdiction to be invalid,
illegal, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions set forth herein shall
remain in full force and effect and shall in no way be affected,
impaired or invalidated, and the parties hereto shall use their
commercially reasonable efforts to find and employ an alternative
means to achieve the same or substantially the same result as that
contemplated by such term, provision, covenant or restriction. It
is hereby stipulated and declared to be the intention of the
parties that they would have executed the remaining terms,
provisions, covenants and restrictions without including any of
such that may be hereafter declared invalid, illegal, void or
unenforceable.

 

5.13           Rescission
and Withdrawal Right. Notwithstanding anything to the
contrary contained in (and without limiting any similar provisions
of) any of the other Transaction Documents, whenever any Purchaser
exercises a right, election, demand or option under a Transaction
Document and the Company does not timely perform its related
obligations within the periods therein provided, then the Purchaser
may rescind or withdraw, in its sole discretion from time to time
upon written notice to the Company, any relevant notice, demand or
election in whole or in part without prejudice to its future
actions and rights.

 

5.14           Replacement
of Securities. If any certificate or instrument evidencing
any Securities is mutilated, lost, stolen or destroyed, the Company
shall issue or cause to be issued in exchange and substitution for
and upon cancellation thereof (in the case of mutilation), or in
lieu of and substitution therefor, a new certificate or instrument,
but only upon receipt of evidence reasonably satisfactory to the
Company of such loss, theft or destruction. The applicant for a new
certificate or instrument under such circumstances shall also pay
any reasonable third-party costs (including customary indemnity)
associated with the issuance of such replacement
Securities.

 

5.15           Remedies.
In addition to being entitled to exercise all rights provided
herein or granted by law, including recovery of damages, the
Purchaser and the Company will be entitled to specific performance
under the Transaction Documents. The parties agree that monetary
damages may not be adequate compensation for any loss incurred by
reason of any breach of obligations contained in the Transaction
Documents and hereby agree to waive and not to assert in any action
for specific performance of any such obligation the defense that a
remedy at law would be adequate.

 

5.16           
Payment Set Aside.
To the extent that the Company makes a payment or payments to the
Purchaser pursuant to any Transaction Document or the Purchaser
enforces or exercises its rights thereunder, and such payment or
payments or the proceeds of such enforcement or exercise or any
part thereof are subsequently invalidated, declared to be
fraudulent or preferential, set aside, recovered from, disgorged by
or are required to be refunded, repaid or otherwise restored to the
Company, a trustee, receiver or any other Person under any law
(including, without limitation, any bankruptcy law, state or
federal law, common law or equitable cause of action), then to the
extent of any such restoration the obligation or part thereof
originally intended to be satisfied shall be revived and continued
in full force and effect as if such payment had not been made or
such enforcement or setoff had not occurred.

 

 

 

25

 

5.17           Liquidated
Damages. The Company’s obligations to pay any partial
liquidated damages or other amounts owing under the Transaction
Documents is a continuing obligation of the Company and shall not
terminate until all unpaid partial liquidated damages and other
amounts have been paid notwithstanding the fact that the instrument
or security pursuant to which such partial liquidated damages or
other amounts are due and payable shall have been
canceled.

 

5.18           Saturdays,
Sundays, Holidays, etc. If the last or appointed day for the
taking of any action or the expiration of any right required or
granted herein shall not be a Business Day, then such action may be
taken or such right may be exercised on the next succeeding
Business Day.

 

5.19           Construction.
The parties agree that each of them and/or their respective counsel
have reviewed and had an opportunity to revise the Transaction
Documents and, therefore, the normal rule of construction to the
effect that any ambiguities are to be resolved against the drafting
party shall not be employed in the interpretation of the
Transaction Documents or any amendments thereto. In addition, each
and every reference to share prices and shares of Common Stock in
any Transaction Document shall be subject to adjustment for reverse
and forward stock splits, stock dividends, stock combinations and
other similar transactions of the Common Stock that occur after the
date of this Agreement.

 

5.20           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.

 

 

 

(Signature Pages Follow)

 

 

26

 

IN
WITNESS WHEREOF, the parties hereto have caused this Securities
Purchase Agreement to be duly executed by their respective
authorized signatories as of the date first indicated
above.

 

 

	

NATURALSHRIMP INCORPORATED

	

Address for Notice:

15150 Preston Road

Suite 300

	

By:__________________________________________

     Name:
Gerald Easterling

     Title:
Chief Executive Officer

 

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

	

Dallas, TX 75248

	

 

Attn:
Lucosky Brookman LLP

Email:
jlucosky@lucbro.com; sbrookman@lucbro.com

 

 

	
 

 

 

[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK

SIGNATURE
PAGE FOR PURCHASER FOLLOWS]

 

 

 

27

 

[PURCHASER
SIGNATURE PAGE TO SECURITIES PURCHASE AGREEMENT]

 

IN
WITNESS WHEREOF, the undersigned have caused this Securities
Purchase Agreement to be duly executed by their respective
authorized signatories as of the date first indicated
above.

 

Name of
Purchaser:

Signature of Authorized Signatory of
Purchaser: __________________________

Name of
Authorized Signatory:

Title
of Authorized Signatory:

Address
for Notice to Purchaser:

 

 

 

Address
for Delivery of Securities to Purchaser (if not same as address for
notice):

 

 

 

Facsimile
Number:

 

Subscription
Amount: $

Subscription
Date:

Shares
of Preferred Stock:

Commitment
Shares:

 

 

28

 

 

Exhibit A

Certificate of
Designation

 

 

 

 

 

 

 

 

 

 

 

 

 

29

 

 

[list
of Disclosure Schedules: content to be provided by
Company]:

(please read each section for specific content, topic below listed
for convenience only)

 

Schedule 3.1(a) - subsidiaries

 

Schedule 3.1(g) - capitalization

 

Schedule 3.1(j) - litigation

 

Schedule 3.1(k) - labor disputes

 

Schedule 3.1(l) - compliance

 

Schedule 3.1(n) - title to assets

 

Schedule 3.1(o) -intellectual property

 

Schedule 3.1(p) - insurance

 

Schedule 3.1(q) -transactions with affiliates and
employees

 

Schedule 3.1(aa) - tax status

 

Schedule 3.1(dd) - accountants

 

 

 

30

 

 

FORM OF CLOSING NOTICE

 

TO:

 

DATE:
December 16, 2020

 

We
refer to the Securities Purchase Agreement, dated December 16, 2020
(the “Agreement”), entered into
by and between NaturalShrimp Incorporated and you. Capitalized
terms defined in the Agreement shall, unless otherwise defined
herein, have the same meaning when used herein.

 

We
hereby:

 

1)            

Give you notice
that we require you to purchase _____ shares of Series D Preferred
Stock; and

 

2)            

The purchase price
per share, pursuant to the terms of the Agreement, is $1,000;
and

 

3)            

Certify that, as of
the date hereof, the conditions set forth in Section 2.3 of the Agreement,
as related to the obligations of the Company, are
satisfied.

 

Closing
will occur in accordance with the terms and conditions of Section 2
of the Agreement.

 

NATURALSHRIMP
INCORPORATED.

 

By:                                                                           

Name:                      

Gerald
Easterling

Title:                      

Chief Executive
Officer

 

 

 

31

 

 

Schedule 3.1(a)

 

As of the date hereof, NaturalShrimp
Incorporated., a Nevada corporation,
has the following wholly and partially-owned
subsidiaries:

 

	

Subsidiary Name

	
 

	

Jurisdiction of Incorporation

	

NaturalShrimp
Corporation

	
 

	

Delaware

	

NaturalShrimp
Global, Inc.

	
 

	

Delaware

	

Natural
Aquatic Systems, Inc.

	
 

	

Texas

	

NaturalShimp/Ecoponex,
LLC (51%)

	
 

	

Texas

 

 

 

 

 

 

 

 

 

 

 

 

32

 

 

Schedule 3.1(g)

 

As of the date hereof, NaturalShrimp
Incorporated., a Nevada corporation,
has the following capitalization:

 

Common Stock

 

●

Common
stock, $0.0001 par value, 900,000,000 shares
authorized

●

533,693,794
issued and outstanding as of the date hereof

 

Preferred Stock

 

●

Series
A Convertible Preferred stock, $0.0001 par value, 5,000,000 shares
authorized, 5,000,000 shares issued and outstanding as of the date
hereof

●

Series
B Convertible Preferred stock, $0.0001 par value, 5,000 shares
authorized, 1,672 shares issued and outstanding as of the date
hereof

 

 

 

33

 

 

Schedule 3.1(j)

 

Vista Capital Investments, LLC

 

On
April 30, 2019, a complaint was filed against the Company in the
U.S. District Court in Dallas, Texas alleging that the Company
breached a provision in a common stock purchase warrant (the
“Vista Warrant”) issued by the Company to Vista Capital
Investments, LLC (“Vista”). Vista alleged that the
Company failed to issue certain shares of the Company’s
Common Stock as was required under the terms of the Warrant. Vista
sought money damages in the approximate amount of $7,000,000, as
well as costs and reimbursement of expenses.

 

On
April 9, 2020, the Company, Vista and David Clark
(“Clark’), a principal of Vista, (the
“Parties”) entered into a Settlement Agreement and
Release (the “Settlement Agreement”) whereby the
Company shall (i) pay to Vista the sum of $75,000, which the
Company wired on April 10, 2020, and (ii) issue to Vista 17,500,000
shares of the Company’s Common Stock (the “Settlement
Shares”). For a period of time equal to 90-days from the date
of the settlement, or July 8, 2020, the Company shall have the
right, but not the obligation, to purchase back from Vista
8,750,000 of the Settlement Shares at a price equal to the greater
of (i) the volume weighted-average trading price of the
Company’s common shares over the five preceding trading days
prior to the date of the delivery of the Company’s written
notice of such repurchase or (ii) $0.02 per share. On May 18, 2020,
the Company received $50,000 as consideration for waiving the
purchase option on the Settlement Shares, thereby allowing Vista to
retain all of the Settlement Shares. The Vista warrants outstanding
were cancelled as part of the Settlement Agreement.

 

RGA Labs, Inc.

 

On
February 18, 2020, RGA Labs, Inc. (“RGA”) filed suit
against the Company in the Illinois Circuit Court (23rd District)
alleging that the Company owed RGA money pursuant to a written
contract for the design and manufacture of certain water treatment
equipment commissioned by the Company. The Company disputed the
allegations and has counterclaimed against RGA for additional costs
and expenses incurred by the Company in correcting, repairing and
retro-fitting the equipment to enable it to work in the
Company’s facilities. The amount in controversy is not
material.

 

Gary Shover

 

A
shareholder of NaturalShrimp Holdings, Inc. (“NSH”),
Gary Shover, filed suit against the Company on August 11, 2020 in
the Northern District of Texas, Dallas Division, alleging breach of
contract for the Company’s failure to exchange common shares
of the Company for shares Mr. Shover owns in NSH. The Company has
filed its answer to the complaint and is seeking to settle the
matter with Mr. Shover with the approval of the Federal District
Court. A settlement stipulation has been prepared and approved by
the parties and will be filed with the Court along with a proposed
order.

 

 

34

 

 

Schedule 3.1(k)

 

There
are no labor disputes.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

35

 

 

Schedule 3.1(l)

 

The
Company is not out of compliance with any matters related to this
item.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

36

 

 

Schedule 3.1(n)

 

There
are no exceptions under this provision.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

37

 

 

Schedule 3.1(o)

 

There
are no exceptions under this provision.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

38

 

 

Schedule 3.1(p)

 

There
are no exceptions under this schedule that need to be
included.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

39

 

 

Schedule 3.1(q)

 

There
are no transactions with affiliates or employees that have not
already been disclosed under the Company’s SEC
filings.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

40

 

 

Schedule 3.1(aa)

 

The
Company is taxed as a C-Corp.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

41

 

 

Schedule 3.1(dd)

 

Turner,
Stone & Company, L.L.P.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

42Exhibit 10.1

 

STRICTLY CONFIDENTIAL

 

Execution

 

December 21, 2020

 

Broad Street Principal Investments, L.L.C.

200 West Street

New York, New York 10282

 

		Re:	MDC Partners Inc. (the “Company”)
 – Series 4 Convertible Preferred Shares

 

This letter agreement
(this “Letter Agreement”) is made in reference to: (a) the articles of amendment designating the Series 4 convertible
preference shares (the “Preferred Shares”) in the capital of the Company (the “Articles of Amendment”)
filed by MDC Partners Inc. (the “Company”) on March 7, 2017 under the Canada Business Corporations Act (the
 “CBCA”) and (b) the securities purchase agreement between the Company and Broad Street Principal Investments,
L.L.C. (the “Holder”) dated February 14, 2017 (the “SPA”). Capitalized terms used and not
defined in this Letter Agreement shall have the meanings given to them in the Articles of Amendment.

 

		1)	Subject only to:

 

		a)	execution of the Transaction Agreement (the “Transaction Agreement”) by and
among Stagwell Media LP, a Delaware limited partnership (“Stagwell”),
the Company and certain other parties named therein, in substantially the form which, together with all material agreements and
documents ancillary thereto, was provided to the Holder prior to entry into this Letter Agreement (the “Draft Transaction
Agreement”),

 

		b)	the final Transaction Agreement, together with all material agreements and documents ancillary
thereto, remaining in substantially the form of the Draft Transaction Agreement, and the transactions contemplated thereby (the
 “Contemplated Stagwell Transaction”) being consummated in accordance with the terms, conditions and agreements
set forth in the Transaction Agreement, without waiver, modification or amendment of any term, condition or agreement that has
a material and adverse impact on the Holder; and

 

		c)	the satisfaction of the Documentation Condition,

 

the Holder,
in its capacity as the holder of all of the issued and outstanding Preferred Shares, hereby: (A) agrees to provide its consent
to the Company’s entry into the Transaction Agreement and the consummation of the Contemplated Stagwell Transaction for all
purposes pursuant to the Articles of Amendment and the SPA; (B) agrees that the Contemplated Stagwell Transaction shall be a “Fundamental
Change” as defined in the SPA but the consummation of the Contemplated Stagwell Transaction shall not be a “Specified
Event”, “Disposition Event” nor “Qualifying Transaction” for purposes of the SPA or the Articles
of Amendment; (C) agrees that solely as it relates to the consummation of the Contemplated Stagwell Transaction there shall be
no adjustment to the Base Liquidation Preference, or Conversion Price (other than as contemplated by the Term Sheet), (D) agrees
that it shall, at any meeting of the shareholders of the Company, duly called for purposes of approving the Contemplated Stagwell
Transaction, appear at such meeting in person or by proxy or otherwise cause the Preferred Shares to be counted as present thereat
for purpose of establishing a quorum and vote, or cause to be voted at such meeting, all of the Preferred Shares in favor of the
Contemplated Stagwell Transaction, and (E) waives and releases any and all rights of dissent or appraisal under the Delaware General
Corporation Law in connection with the MDC Merger (as defined in the Transaction Agreement) (the foregoing (A) – (E), the
 “Consent and Waiver”).

 

     

     

    

 

		2)	Each of the Company and the Holder shall and shall cause its respective Affiliates to, from time
to time at the request of the other party hereto, furnish such other party such further information or assurances, execute and
deliver such additional documents, instruments and conveyances, and take such other actions and do such other things, as may be
reasonably necessary or desirable to carry out the provisions of this Letter Agreement and give effect to the transactions contemplated
hereby (the “Transactions”), including for the avoidance of doubt in the case of the Holder executing a form
of formal shareholder consent setting forth the applicable terms of the Consent and Waiver.

 

		3)	As consideration for the Consent and Waiver, the Company hereby agrees to the terms set forth in
the term sheet attached as Exhibit A (the “Term Sheet”). The Holder’s obligation to provide the Consent
and Waiver is subject to and conditioned upon the entry by the parties hereto into definitive documentation (“Definitive
Documentation”) in form and substance reasonably satisfactory to each of the Holder and the Company setting forth the
terms contained in the Term Sheet and no other material terms or conditions (the “Documentation Condition”).
Each of the Company and the Holder agree to use best efforts to negotiate the Definitive Documentation in good faith and enter
into such Definitive Documentation as promptly as practicable and in no event later than 30 days from the date hereof. The obligations
set forth in the Definitive Documentation shall be subject to the satisfaction or waiver of the conditions to the consummation
of the Contemplated Stagwell Transaction (such consummation, the “Closing”). The parties agree that if the Documentation
Condition is not satisfied within 60 days of the date hereof, then, upon 10 days written notice from the Holder to the Company,
by virtue of the failure to satisfy the Documentation Condition the Consent and Waiver (including, without limitation, with respect
to the entry by the Company into the Transaction Agreement) shall be automatically revoked and shall be of no force and effect,
and the Holder will have no obligation to provide the Consent and Waiver; provided that the foregoing shall not relieve the Holder
of its obligation to use best efforts to negotiate the Definitive Documentation. The parties further agree that in the event that
the Transaction Agreement includes terms, provisions, agreements or conditions that materially and disproportionately adversely
affect the Holder relative to holders of other preferred securities of the Company in their capacity as such or otherwise materially
and adversely affect the Holder in a manner that (a) is not addressed by the transactions contemplated by the Term Sheet (which
for the avoidance of doubt, addresses the anticipated dilution of the Holder’s equity stake in the Company and the change
of control transaction contemplated by the Contemplated Stagwell Transaction) or (b) is not described in the draft press release
or the investor deck provided to the Holder prior to the execution hereof or (c) is not discussed in the board meeting of the Company
at which a representative of the Holder was present prior to the execution hereof, then if the Holder notified the Company of such
issue within five days following the date hereof, and the parties could not, in good faith, resolve such issue in mutual agreement
within fifteen days following delivery of such notice by the Holder, the Holder shall be entitled to revoke the Consent and Waiver
by delivering the Company a written notice to that effect at the end of such fifteen day period.

 

		4)	Other than as set forth in the Term Sheet, all terms of the Preferred Shares as currently set forth
in the Articles of Amendment and all of the terms of the SPA will remain in effect and will not otherwise be amended, including,
without limitation, the rights of the Holder with respect to any “Fundamental Change” “Qualifying Transaction”
or “Specified Event” that may occur after the date hereof (other than, in each case, the Contemplated Stagwell Transaction).

 

		5)	The Company shall reimburse Holder’s reasonable, documented out-of-pocket costs and expenses
(not to exceed $300,000) in connection with the execution, delivery and performance of this Letter Agreement, the Term Sheet and
the Definitive Documentation.

 

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		6)	THIS LETTER AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE
OF DELAWARE WITHOUT GIVING EFFECT TO ANY CHOICE OR CONFLICT OF LAW PROVISION OR RULE (WHETHER OF THE STATE OF DELAWARE OR ANY OTHER
JURISDICTION) THAT WOULD CAUSE THE APPLICATION OF THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF DELAWARE, EXCEPT TO THE
EXTENT THE LAWS OF THE PROVINCE OF ONTARIO ARE MANDATORILY APPLICABLE. All actions arising out of, relating to or in connection
with this this Letter Agreement or any of the Transactions shall be heard and determined exclusively in the Court of Chancery of
the State of Delaware (the “Chancery Court”) and any state appellate court therefrom within the State of Delaware
(or if, but only if, the Chancery Court lacks subject matter jurisdiction, any other state or federal court located in the State
of Delaware and any appellate court therefrom). Each of the Company and the Holder (i) irrevocably submits itself to the personal
jurisdiction of the Chancery Court or, if, but only if, the Chancery Court lacks subject matter jurisdiction, any other state or
federal court located in the State of Delaware and any appellate court therefrom with respect to any dispute arising out of, relating
to or in connection with this Letter Agreement or any of the Transactions, (ii) irrevocably waives, and agrees not to assert by
way of motion, defense or otherwise, in any action or proceeding arising out of, relating to or in connection with this Letter
Agreement or any of the Transactions, any claim that it is not subject personally to the jurisdiction of the above-named courts,
that its property is exempt or immune from attachment or execution, that the action or proceeding arising out of, relating to or
in connection with this Letter Agreement or any of the Transactions is brought in an inconvenient forum, that the venue of the
action or proceeding arising out of, relating to or in connection with this Letter Agreement or any of the Transactions is improper,
or that this Letter Agreement or any of the Transactions may not be enforced in or by the above-named courts, (iii) agrees that
it will not bring any action arising out of, relating to or in connection with this Letter Agreement or any of the Transactions
in any court other than the courts of the State of Delaware, as described above, and (iv) agrees to service of process in the manner
set forth in Section 6.02 of the SPA. Nothing in this paragraph shall prevent any party from bringing an action or proceeding in
any jurisdiction to enforce any judgment of the Chancery Court or any other state or federal court located in the State of Delaware
or any appellate court therefrom, as applicable.

 

		7)	Each of the Company and the Holder agree that irreparable damage would occur in the event that
any of the provisions of this Letter Agreement were not performed in accordance with their specific terms or were otherwise breached
and that monetary damages, even if available, would be not be an adequate remedy therefor. Each party agrees that, in the event
of any breach or threatened breach by any other party of any covenant or obligation contained in this Letter Agreement, the non-breaching
party shall be entitled, prior to the valid termination of this Letter Agreement (in addition to any other remedy that may be available
to it whether in law or equity, including monetary damages), to (i) a decree or order of specific performance to enforce the observance
and performance of such covenant or obligation, and (ii) an injunction restraining such breach or threatened breach, in each case,
without the posting of any bond or other security

 

		8)	This Letter Agreement may be executed in any number of counterparts and by different parties hereto
in separate counterparts, and delivered by means of electronic mail transmission or otherwise, each of which when so executed and
delivered shall be deemed to be an original and all of which when taken together shall constitute one and the same agreement. This
Letter Agreement shall inure to the benefit of, and be binding upon, the Company’s successors and assigns and the Holder’s
successor and assigns and no other person; provided that neither party may assign its respective rights or delegate its respective
obligations under this Letter Agreement, whether by operation of law or otherwise and any assignment by the Company or the Holder
in contravention hereof shall be null and void; provided further that no transaction contemplated by the Transaction Agreement
shall be deemed to be an assignment of the Company of its rights hereunder.

 

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		9)	If any provision of this Letter Agreement shall be held to be illegal, invalid or unenforceable
under any applicable Law, then such contravention or invalidity shall not invalidate the entire Letter Agreement. Such provision
shall be deemed to be modified to the extent necessary to render it legal, valid and enforceable, and if no such modification shall
render it legal, valid and enforceable, then this Letter Agreement shall be construed as if not containing the provision held to
be invalid, and the rights and obligations of the parties hereto shall be construed and enforced accordingly.

 

		10)	This Letter Agreement (including the exhibits hereto) constitutes the entire agreement, and supersede
all other prior agreements and understandings (both written and oral), between the Company and the Holder with respect to the subject
matter hereof.

 

 

 

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left blank.]

 

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	 	Very truly yours,
	 	 	 
	 	MDC Partners Inc.
	 	 	 
	 	 	 
	 	By:	/s/ David Ross
	 	 	Name: David Ross
	 	 	Title: General Counsel & EVP, Strategy and Corporate Development

 

 

 

 

Acknowledged and agreed this 21st day of December,
2020.

 

Broad Street Principal Investments, L.L.C.,
as Holder

 

 

	By:	/s/ Bradley Gross
	 	Name: Bradley Gross
	 	Title:  Vice President

  

     

     

    

 

Exhibit
A: Term Sheet

 

 

	Redemption	The terms of the Preferred Shares will be amended to provide the Holder with a right to redeem, one day prior to Closing and upon at least 10 business days prior written notice provided by the Company to the Holder, up to $30,000,000 worth of its Preferred Shares subject to satisfaction of the conditions to Closing, for an aggregate price of $25,000,000 in consideration of a subordinated note or loan payable with a 3 year maturity and 8% interest per annum, accrued and compounded.  The Company shall have the right to prepay all or portion of the unsecured subordinated note or loan, as applicable, at any time without penalty. The subordinated note or loan, as applicable, shall not be subject to transfer restrictions other than under applicable law. For avoidance of doubt, the remaining Preferred Shares not subject to the redemption above shall continue to remain outstanding.
	Conversion Price	The Conversion Price of the Preferred Shares not subject to the redemption above, if any, will be reduced from U.S.$7.42 to U.S.$5.00.
	Base Liquidation Preference	The Accretion Rate shall be 8.00% and from and after March 7, 2022 through March 14, 2024, the Accretion Rate shall be 6.00%, and from and after March 15, 2024, the Accretion Rate shall be 0% per annum and the Base Liquidation Preference per Convertible Preference Share will not increase during any period subsequent to March 14, 2024.
	Company Board of Directors; Participation Rights	Sections 4.06 and 4.11 of the SPA will be amended to change the Minimum Ownership Threshold to be the ownership by the Holder of at least 50% of the number of Preferred Shares held by it immediately following the closing of the transactions set forth in the SPA, excluding the Preferred Shares subject to redemption as described under “Redemption” above.
	Consent Right	Section 4.12 of the SPA will be amended to reduce the applicable percentage of aggregate voting power from 5% to 2%
	Fundamental Change Definition	The definition of “Fundamental Change” in the Articles of Amendment will be amended to include (i) a take private of 100% of the Company by Stagwell and (ii) deregistration of the Company such that no class of Common Shares is listed on a nationally recognized U.S. exchange, or any similar transaction to (i) or (ii) materially and adversely impacting the liquidity of the Holder’s investment in the Company as compared to Holder’s liquidity immediately following consummation of the Contemplated Stagwell Transaction.
	CBCA Statutory Protections	The terms under the new Certificate of Incorporation under Delaware law shall include: (i) any voting rights and protections the Holder would lose as a result of the re-domiciliation of the Company from the jurisdiction of the CBCA to that of the Delaware General Corporation Law, including, without limitation, the rights and protections provided under Section 176(1) of the CBCA, (ii) series vote on a per Preferred Share basis (not on an as converted basis) with respect to the rights and protections provided under Section 176(1) of the CBCA and including with respect to amendments effected through mergers or otherwise, and (iii) any other material voting rights or minority protections the Holder would lose as a result of the re-domiciliation of the Company from the jurisdiction of the CBCA to that of the Delaware General Corporation Law as determined by the parties negotiating in good faith.

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