UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (date of earliest event reported): January 2, 2020
PIERRE CORP.
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(Exact name of Registrant as specified in its charter)
Nevada 333-227286 467-4046237
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(State or other jurisdiction (Commission File No.) (IRS Employer
of incorporation) Identification No.)
750 N. San Vicente, Suite 800 West
West Hollywood, CA 90069
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(Address of principal executive offices, including Zip Code)
Registrant's telephone number, including area code: (818) 855-8199
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligations of the registrant under any of the
following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act
(17CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17
CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b)
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-14c))
Indicate by check mark whether the registrant is an emerging growth company as
defined in Rule 405 of the Securities Act of 1933 (ss.203.405 of this chapter)
or Rule 12b-2 of the Securities Exchange Act of 1934 (ss.204.12b-2 of this
chapter.
Emerging growth company [ ]
If an emerging growth company, indicate by check mark if the registrant has
elected not to use the extended transition period for complying with any new or
revised financial accounting standards provided pursuant to Section 13(a) of the
Exchange Act. [ ]
Securities registered pursuant to Section 12(b) of the Act:
Name of Each Exchange
Title of Each Class Trading Symbol(s) on Which Registered
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None N/A N/A
ITEM 1.01. ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT.
On January 2, 2020, Pierre Corp. (Company) entered into an Equity Purchase
Agreement with Tiger Trout Capital, LLC ("TTC")
Under the Agreement, TTC agreed to provide the Company with up to
$2,500,000 of funding through the purchase of shares of the Company's common
stock.
During the term of the Agreement, the Company, at its sole discretion, may
deliver a Put Notice to TTC which will specify the dollar amount which the
Company wants to draw down under the Agreement. The amount the Company can draw
down at any one time is the lesser of twice the daily trading volume of the
Company's common stock during the trading days immediately preceding the
delivery of a Put Notice or $1,000,000.
A closing will occur six trading days following the delivery of the Put
Notice. On any Closing Date, the Company will sell, and TTC will purchase, the
shares of the Company's common stock specified in the Put Notice.
The amount to be paid by TTC on a particular Closing Date will be
determined by dividing the dollar amount specified in the Put Notice by the
Purchase Price. The Purchase Price is 90% of the lowest trading price of the
Company's common stock during the five consecutive trading days immediately
following the delivery of a Put Notice.
The Company is under no obligation to submit any Put Notices.
The Equity Purchase Agreement will terminate on January 2, 2022. The
Company has agreed to file a registration statement with the Securities and
Exchange Commission so that the shares of common stock to be sold to TTC may be
sold in the public market.
Item 9.01 Financial Statement and Exhibits
Number Description
10.1 January 2, 2020 Equity Purchase Agreement with Tiger Trout Capital, LLC
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: January 2, 2020.
PIERRE CORP.
By: /s/ J. Jacob Isaacs
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J. Jacob Isaacs, Chief Executive Officer
EXHIBIT 10.1
EQUITY PURCHASE AGREEMENT
THIS EQUITY PURCHASE AGREEMENT (this "Agreement") is entered into as of
January 2, 2020 (the "Execution Date"), by and between Pierre Corp., a Nevada
corporation (the "Company"), and Tiger Trout Capital, LLC, a Wyoming Corporation
(the "Investor").
RECITALS
WHEREAS, the parties desire that, upon the terms and subject to the
conditions contained herein, the Company shall issue and sell to the Investor,
from time to time as provided herein, and the Investor shall purchase from the
Company up to Two Million, Five Hundred Thousand Dollars ($2,500,000.00) of the
Company's Common Stock (as defined below);
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 Investor hereby
agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
Section I.1 RECITALS. The parties acknowledge and agree that the recitals
set forth above are true and correct and are hereby incorporated in and made a
part of this Agreement.
Section I.2 DEFINED TERMS. As used in this Agreement, the following terms
shall have the following meanings specified or indicated (such meanings to be
equally applicable to both the singular and plural forms of the terms defined):
"Agreement" shall have the meaning specified in the preamble hereof.
"Available Amount" means, initially, the Maximum Commitment Amount, which
amount shall be reduced by the Investment Amount following each successful
Closing, each time the Investor purchases shares of Common Stock pursuant to a
Put.
"Average Daily Trading Volume" shall mean the average trading volume of
the Company's Common Stock in the ten (10) Trading Days immediately preceding
the respective Put Date.
"Bankruptcy Law" means Title 11, U.S. Code, or any similar federal or
state law for the relief of debtors.
"Claim Notice" shall have the meaning specified in Section IX.3(a).
"Clearing Costs" shall mean all of the Investor's broker and Transfer
Agent fees, excluding commissions.
"Clearing Date" shall be the date on which the Investor receives the Put
Shares as DWAC Shares in its brokerage account.
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"Closing" shall mean one of the closings of a purchase and sale of shares
of Common Stock pursuant to Section II.3.
"Closing Certificate" shall mean the closing "Officer's Certificate" of
the Company in the form of Exhibit B hereto.
"Closing Date" shall mean the date of any Closing hereunder.
"Commitment Period" shall mean the period commencing on the Execution
Date, and ending on the earlier of (i) the date on which the Investor shall have
purchased Put Shares pursuant to this Agreement equal to the Maximum Commitment
Amount, (ii) January 2, 2022, or (iii) written notice of termination by the
Company to the Investor (which shall not occur at any time that the Investor
holds any of the Put Shares).
"Commitment Shares" means a $75,000 worth of common shares with piggy back
registration rights issued by the Company to the Investor pursuant to Section
6.5.
"Common Stock" shall mean the Company's common stock, $0.001 par value per
share, and any shares of any other class of common stock whether now or
hereafter authorized, having the right to participate in the distribution of
dividends (as and when declared) and assets (upon liquidation of the Company).
"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" shall have the meaning specified in the preamble to this
Agreement. "Confidential Information" means any information disclosed by either
party to this Agreement, or their affiliates, agents or representatives, to the
other party to this Agreement, either directly or indirectly, in writing, orally
or by inspection of tangible objects (including, without limitation, documents,
formulae, business information, trade secrets, technology, strategies.
prototypes, samples, plant and equipment), which may or may not be designated as
"Confidential," "Proprietary" or some similar designation. Information
communicated orally shall be considered Confidential Information if such
information is confirmed in writing as being Confidential Information within ten
(10) Trading Days after the initial disclosure. Confidential Information may
also include information disclosed by third parties. Confidential Information
shall not, however, include any information which (i) was publicly known and
made generally available in the public domain prior to the time of disclosure by
the disclosing party; (ii) becomes publicly known and made generally available
after disclosure by the disclosing party to the receiving party through no
action or inaction of the receiving party; (iii) is already in the possession of
the receiving party at the time of disclosure by the disclosing party as shown
by the receiving party's files and records immediately prior to the time of
disclosure; (iv) is obtained by the receiving party from a third party without a
breach of such third party's obligations of confidentiality; (v) is
independently developed by the receiving party without use of or reference to
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the disclosing party's Confidential Information, as shown by documents and other
competent evidence in the receiving party's possession; or (vi) is required by
law to be disclosed by the receiving party, provided that the receiving party
gives the disclosing party prompt written notice of such requirement prior to
such disclosure and assistance in obtaining an order protecting the information
from public disclosure.
"Current Report" shall have the meaning set forth in Section VI.4.
"Custodian" means any receiver, trustee, assignee, liquidator or similar
official under any Bankruptcy Law.
"Damages" shall mean any loss, claim, damage, liability, cost and expense
(including, without limitation, reasonable attorneys' fees and disbursements and
costs and expenses of expert witnesses and investigation).
"Dispute Period" shall have the meaning specified in Section IX.3(a).
"Disqualification Event" shall have the meaning specified in Section IV.27.
"DTC" shall mean The Depository Trust Company, or any successor performing
substantially the same function for the Company.
"DTC/FAST Program" shall mean the DTC's Fast Automated Securities Transfer
Program. "DWAC" shall mean Deposit Withdrawal at Custodian as defined by the
DTC.
"DWAC Eligible" shall mean that (a) the Common Stock is eligible at DTC
for full services pursuant to DTC's operational arrangements, including, without
limitation, transfer through DTC's DWAC system, (b) the Company has been
approved (without revocation) by the DTC's underwriting department, (c) the
Transfer Agent is approved as an agent in the DTC/FAST Program, (d) the
Commitment Shares or Put Shares, as applicable, are otherwise eligible for
delivery via DWAC, and (e) the Transfer Agent does not have a policy prohibiting
or limiting delivery of the Commitment Shares or Put Shares, as applicable, via
DWAC.
"DWAC Shares" means shares of Common Stock that are (i) issued in
electronic form, (ii) freely tradable and transferable and without restriction
on resale and (iii) timely credited by the Company to the Investor's or its
designee's specified DWAC account with DTC under the DTC/FAST Program, or any
similar program hereafter adopted by DTC performing substantially the same
function.
"Environmental Laws" shall have the meaning set forth in Section IV.14.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder.
"Exchange Cap" shall have the meaning set forth in Section VII.1(c).
"Execution Date" shall have the meaning set forth in the preamble to this
Agreement.
"FINRA" shall mean the Financial Industry Regulatory Authority, Inc.
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"Indemnified Party" shall have the meaning specified in Section IX.2.
"Indemnifying Party" shall have the meaning specified in Section IX.2.
"Indemnity Notice" shall have the meaning specified in Section IX.3(b).
"Intellectual Property" shall mean all trademarks, trademark applications,
trade names, service marks, service mark registrations, service names, patents,
patent applications, patent rights, copyrights, inventions, licenses, approvals,
government authorizations, trade secrets or other intellectual property rights.
"Investment Amount" shall mean the dollar value equal to the amount of Put
Shares referenced in the Put Notice multiplied by the Purchase Price minus the
Clearing Costs.
"Investor" shall have the meaning specified in the preamble to this
Agreement. "Issuer Covered Person" shall have the meaning specified in Section
IV.27.
"Lien" means a lien, charge, pledge, security interest, encumbrance, right
of first refusal, preemptive right or any other restriction.
"Low Trade Price" shall mean for any date, the price determined by the
first of the following clauses that applies: (a) if the Common Stock is then
listed or quoted on a national exchange as included in the term Principal
Market, the lowest traded price of the Common Stock for such date (or the
nearest preceding date) on such national exchange on which the Common Stock is
then listed or quoted for trading as reported by Bloomberg L.P. or Quotestream,
a product of QuoteMedia, Inc. (based on a Trading Day from 9:30 a.m. (New York
City time) to 4:02 p.m. (New York City time)); (b) if the Common Stock is not
then traded on a national exchange, the lowest traded price of the Common Stock
for such date (or the nearest preceding date) on the OTCQX, OTCQB, OTC Pink or
OTC Bulletin Board (as applicable).
"Market Price" shall mean the one lowest trade price of the Common Stock
on the Principal Market during the Valuation Period, as reported by Bloomberg
Finance L.P. or other reputable source.
"Material Adverse Effect" shall mean any effect on the business,
operations, properties, or financial condition of the Company and/or the
Subsidiaries that is material and adverse to the Company and/or the Subsidiaries
and/or any condition, circumstance, or situation that would prohibit or
otherwise materially interfere with the ability of the Company and/or the
Subsidiaries to enter into and/or perform its obligations under any Transaction
Document.
"Maximum Commitment Amount" shall mean Two Million, Five Hundred Thousand
Dollars ($2,500,000.00).
"Person" shall mean an individual, a corporation, a partnership, an
association, a trust or other entity or organization, including a government or
political subdivision or an agency or instrumentality thereof.
"Principal Market" shall mean any of the national exchanges (i.e. NYSE,
NYSE AMEX, NASDAQ), or principal quotation systems (i.e. OTCQX, OTCQB, OTC Pink,
the OTC Bulletin Board), or other principal exchange or recognized quotation
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system which is at the time the principal trading platform or market for the
Common Stock.
"Purchase Price" shall mean 90% of the Market Price on such date on which
the Purchase Price is calculated in accordance with the terms and conditions of
this Agreement.
"Put" shall mean the right of the Company to require the Investor to
purchase shares of Common Stock, subject to the terms and conditions of this
Agreement.
"Put Date" shall mean any Trading Day during the Commitment Period that a
Put Notice is deemed delivered pursuant to Section II.2(b).
"Put Notice" shall mean a written notice, substantially in the form of
Exhibit A hereto, addressed to the Investor and setting forth the amount of Put
Shares which the Company intends to require the Investor to purchase pursuant to
the terms of this Agreement.
"Put Shares" shall mean all shares of Common Stock issued, or that the
Company shall be entitled to issue, per any applicable Put Notice in accordance
with the terms and conditions of this Agreement.
"Registration Rights Agreement" means that agreement in the form attached
hereto as Exhibit D.
"Registration Statement" shall have the meaning specified in Section VI.4.
"Regulation D" shall mean Regulation D promulgated under the Securities Act.
"Required Minimum" shall mean, as of any date, the maximum aggregate
number of shares of Common Stock then issued or potentially issuable in the
future pursuant to the Transaction Documents.
"Rule 144" shall mean Rule 144 promulgated under the Securities Act or any
similar provision then in force under the Securities Act.
"SEC" shall mean the United States Securities and Exchange Commission.
"SEC Documents" shall have the meaning specified in Section IV.5. "Securities"
means, collectively, the Put Shares and the Commitment Shares. "Securities Act"
shall mean the Securities Act of 1933, as amended.
"Short Sales" shall mean all "short sales" as defined in Rule 200 of
Regulation SHO under the Exchange Act.
"Subsidiary" or "Subsidiaries" means any Person the Company wholly-owns or
controls, or in which the Company, directly or indirectly, owns a majority of
the voting stock or similar voting interest, in each case that would be
disclosable pursuant to Item 601(b)(21) of Regulation S-K promulgated under the
Securities Act.
"Third Party Claim" shall have the meaning specified in Section IX.3(a).
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"Trading Day" shall mean a day on which the Principal Market shall be open
for business.
"Transaction Documents" shall mean this Agreement, the Registration Rights
Agreement, and all schedules and exhibits hereto and thereto.
"Transfer Agent" shall mean Direct Transfer, LLC, the current transfer
agent of the Company, and any successor transfer agent of the Company.
"Transfer Agent Instruction Letter" means the letter from the Company to
the Transfer Agent which instructs the Transfer Agent to issue the Put Shares
and the Commitment Shares pursuant to the Transaction Documents, in the form of
Exhibit C attached hereto.
"Valuation Period" shall mean the period of five (5) Trading Days
immediately following the date a Put Notice is delivered to the Investor ;
provided, however, that the Valuation Period shall instead begin on the next
Trading Day if the Put Notice is received by the Investors' after 4:00 p.m. EST
on any Trading day.
"Variable Security Holder" means any holder of any securities of the
Company in an amount in excess of $100,000 that (A) have or may have conversion
rights of any kind, contingent, conditional or otherwise, in which the number of
shares that may be issued pursuant to such conversion right varies with the
market price of the Common Stock, or (B) are or may become convertible into
Common Stock (including without limitation convertible debt, warrants or
convertible preferred stock), with a conversion price that varies with the
market price of the Common Stock, even if such security only becomes convertible
following an event of default, the passage of time, or another trigger event or
condition.
ARTICLE II
PURCHASE AND SALE OF COMMON STOCK
Section II.1 PUTS. Upon the terms and conditions set forth herein
(including, without limitation, the provisions of Article VII), the Company
shall have the right, but not the obligation, to direct the Investor, by its
delivery to the Investor of a Put Notice from time to time during the Commitment
Period, to purchase Put Shares in an amount, in each instance, up to but no
greater than the lesser of $1,000,000 or 200% of the Average Daily Trading
Volume (the "Put Cap").
Section II.2 MECHANICS.
(a) PUT NOTICE. At any time and from time to time during the Commitment
Period, except as provided in this Agreement, the Company may deliver a Put
Notice to Investor, subject to satisfaction of the conditions set forth in
Section VII and otherwise provided herein. The Company shall deliver, or cause
to be delivered, the Put Shares as DWAC Shares to the Investor within two (2)
Trading Days following the Valuation Period.
(b) DATE OF DELIVERY OF PUT NOTICE. A Put Notice shall be deemed delivered
on (i) the Trading Day it is received by e-mail by the Investor if such notice
is received on or prior to 8:30 a.m. EST or (ii) the immediately succeeding
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Trading Day if it is received by e-mail after 8:30 a.m. EST on a Trading Day or
at any time on a day which is not a Trading Day. The Company shall not deliver
another Put Notice to the Investor within ten (10) Trading Days of a prior Put
Notice.
Section II.3 CLOSINGS.
(a) TIMING. The Closing of a Put shall occur within one (1) Trading Day
following the end of the respective Valuation Period, whereby the Investor shall
deliver the Investment Amount by wire transfer of immediately available funds to
an account designated by the Company. In addition, on or prior to such Closing,
each of the Company and the Investor shall deliver to each other all documents,
instruments and writings required to be delivered or reasonably requested by
either of them pursuant to this Agreement in order to implement and effect the
transactions contemplated herein.
(b) RETURN OF SURPLUS. If the value of the Put Shares delivered to the Investor
causes the Company to exceed the Maximum Commitment Amount, then the Investor
shall return to the Company the surplus amount of Put Shares associated with
such Put and the Purchase Price with respect to such Put shall be reduced by any
Clearing Costs related to the return of such Put Shares.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF INVESTOR
The Investor represents and warrants to the Company that:
Section III.1 INTENT. The Investor is entering into this Agreement for its
own account, and the Investor has no present arrangement (whether or not legally
binding) at any time to sell the Securities to or through any Person in
violation of the Securities Act or any applicable state securities laws;
provided, however, that the Investor reserves the right to dispose of the
Securities at any time in accordance with federal and state securities laws
applicable to such disposition.
Section III.2 NO LEGAL ADVICE FROM THE COMPANY. The Investor acknowledges
that it has had the opportunity to review this Agreement and the transactions
contemplated by this Agreement with its own legal counsel and investment and tax
advisors. Except with respect to the representations, warranties and covenants
contained in this Agreement, the Investor is relying solely on such counsel and
advisors and not on any statements or representations of the Company or any of
its representatives or agents for legal, tax or investment advice with respect
to this investment, the transactions contemplated by this Agreement or the
securities laws of any jurisdiction.
Section III.3 ACCREDITED INVESTOR. The Investor is an accredited investor
as defined in Rule 501(a)(3) of Regulation D, and the Investor has such
experience in business and financial matters that it is capable of evaluating
the merits and risks of an investment in the Securities. The Investor
acknowledges that an investment in the Securities is speculative and involves a
high degree of risk.
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Section III.4 AUTHORITY. The Investor has the requisite power and authority
to enter into and perform its obligations under this Agreement and the other
Transaction Documents and to consummate the transactions contemplated hereby and
thereby. The execution and delivery of this Agreement and the other Transaction
Documents and the consummation by it of the transactions contemplated hereby and
thereby have been duly authorized by all necessary action and no further consent
or authorization of the Investor is required. Each Transaction Document to which
it is a party has been duly executed by the Investor, and when delivered by the
Investor in accordance with the terms hereof, will constitute the valid and
binding obligation of the Investor enforceable against it in accordance with its
terms, subject to applicable bankruptcy, insolvency, or similar laws relating
to, or affecting generally the enforcement of, creditors' rights and remedies or
by other equitable principles of general application.
Section III.5 NOT AN AFFILIATE. To the Investor's knowledge, the Investor
is not an officer, director or "affiliate" (as such term is defined in Rule 405
of the Securities Act) of the Company.
Section III.6 ORGANIZATION AND STANDING. The Investor is an entity duly
formed, validly existing and in good standing under the laws of the jurisdiction
of its formation with full right, limited liability company power and authority
to enter into and to consummate the transactions contemplated by this Agreement
and the other Transaction Documents.
Section III.7 ABSENCE OF CONFLICTS. The execution and delivery of this
Agreement and the other Transaction Documents, and the consummation of the
transactions contemplated hereby and thereby and compliance with the
requirements hereof and thereof, will not (a) violate any law, rule, regulation,
order, writ, judgment, injunction, decree or award binding on the Investor, (b)
violate any provision of any indenture, instrument or agreement to which the
Investor is a party or is subject, or by which the Investor or any of its assets
is bound, or conflict with or constitute a material default thereunder, (c)
result in the creation or imposition of any lien pursuant to the terms of any
such indenture, instrument or agreement, or constitute a breach of any fiduciary
duty owed by the Investor to any third party, or (d) require the approval of any
third-party (that has not been obtained) pursuant to any material contract,
instrument, agreement, relationship or legal obligation to which the Investor is
subject or to which any of its assets, operations or management may be subject.
Section III.8 DISCLOSURE; ACCESS TO INFORMATION. The Investor had an
opportunity to review copies of the SEC Documents filed on behalf of the Company
and has had access to all publicly available information with respect to the
Company; provided, however, that the Investor makes no representation or
warranty hereunder with respect to any SEC Document and is relying on the
representations and warranties of the Company in Article IV with respect to the
SEC Documents.
Section III.9 MANNER OF SALE. At no time was the Investor presented with
or solicited by or through any leaflet, public promotional meeting, television
advertisement or any other form of general solicitation or advertisement
regarding the Securities.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Investor that, except as set
forth in the disclosure schedules hereto that as of the Execution Date and at
each Closing Date:
Section IV.1 ORGANIZATION OF THE COMPANY. The Company is a corporation
duly incorporated, validly existing and in good standing under the laws of the
State of Nevada, with the requisite power and authority to own and use its
properties and assets and to carry on its business as currently conducted. 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. Each of the Company and the Subsidiaries is not in violation or
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 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.
Section IV.2 AUTHORITY. The Company has the requisite corporate power and
authority to enter into and perform its obligations under this Agreement and the
other Transaction Documents. The execution and delivery of this Agreement and
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 corporate action and no further consent or authorization of the
Company or its Board of Directors or stockholders is required. Each of this
Agreement and the other Transaction Documents has been duly executed and
delivered by the Company and constitutes a valid and binding obligation of the
Company enforceable against the Company in accordance with its terms, except as
such enforceability may be limited by applicable bankruptcy, insolvency, or
similar laws relating to, or affecting generally the enforcement of, creditors'
rights and remedies or by other equitable principles of general application.
Section IV.3 CAPITALIZATION. As of the Execution Date, the authorized
capital stock of the Company consists of (a) 1,000,000,000 shares of Common
Stock, par value of $0.00001 per share, of which approximately 29,288,163 shares
of Common Stock are issued and outstanding. Except as set forth on Schedule 4.3,
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. 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 4.3, 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
9
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 (other than the
Investor) 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. 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.
Section IV.4 LISTING AND MAINTENANCE REQUIREMENTS. The Common Stock is
registered pursuant to Section 12(b) or 12(g) of the Exchange Act, and the
Company has taken no action designed to, or which to its knowledge is likely to
have the effect of, terminating the registration of the Common Stock under the
Exchange Act, nor has the Company received any notification that the SEC is
contemplating terminating such registration. The Company has not, in the twelve
(12) months preceding the Execution Date, received notice from the Principal
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 Principal 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.
Section IV.5 SEC DOCUMENTS; DISCLOSURE. Except as set forth on Schedule
4.5, the Company has filed all reports, schedules, forms, statements and other
documents required to be filed by the Company under the Securities Act and the
Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, for the one
(1) year preceding the Execution Date (or such shorter period as the Company was
required by law or regulation to file such material) (the foregoing materials,
including the exhibits thereto and documents incorporated by reference therein,
being collectively referred to herein as the "SEC Documents") on a timely basis
or has received a valid extension of such time of filing and has filed any such
SEC Documents prior to the expiration of any such extension. As of their
respective dates, the SEC Documents complied in all material respects with the
requirements of the Securities Act and the Exchange Act, as applicable, and
other federal laws, rules and regulations applicable to such SEC Documents, and
none of the SEC Documents when filed 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. The financial
statements of the Company included in the SEC Documents comply as to form and
substance in all material respects with applicable accounting requirements and
the published rules and regulations of the SEC or other applicable rules and
regulations with respect thereto. Such financial statements have been prepared
in accordance with generally accepted accounting principles applied on a
consistent basis during the periods involved (except (a) as may be otherwise
indicated in such financial statements or the notes thereto or (b) in the case
of unaudited interim statements, to the extent they may not include footnotes or
may be condensed or summary statements) and fairly present in all material
respects the financial position of the Company as of the dates thereof and the
results of operations and cash flows for the periods then ended (subject, in the
case of unaudited statements, to normal, immaterial, year-end audit
adjustments). The Company maintains a system of internal accounting controls
appropriate for its size. There is no transaction, arrangement, or other
relationship between the Company and an unconsolidated or other off balance
10
sheet entity that is not disclosed by the Company in its financial statements or
otherwise that would be reasonably likely to have a Material Adverse Effect.
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 Investor 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 Investor will rely on the foregoing representation in
effecting transactions in securities of the Company.
Section IV.6 VALID ISSUANCES. The Securities are duly authorized and, when
issued and paid for in accordance with the applicable Transaction Documents,
will be validly issued, fully paid, and non-assessable, free and clear of all
Liens imposed by the Company, other than restrictions on transfer provided for
in the Transaction Documents and under the Securities Act.
Section IV.7 NO CONFLICTS. The execution, delivery and performance of this
Agreement and the other Transaction Documents by the Company, and the
consummation by the Company of the transactions contemplated hereby and thereby,
including, without limitation, the issuance of the Put Shares and the Commitment
Shares do not and will not: (a) result in a violation of the Company's or any
Subsidiary's certificate or articles of incorporation, by-laws or other
organizational or charter documents, (b) conflict with, or constitute a material
default (or an event that with notice or lapse of time or both would become a
material 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 of, any
agreement, indenture, instrument or any "lock-up" or similar provision of any
underwriting or similar agreement to which the Company or any Subsidiary is a
party, or (c) result in a violation of any federal, state or local law, rule,
regulation, order, judgment or decree (including federal and state securities
laws and regulations) applicable to the Company or any Subsidiary or by which
any property or asset of the Company or any Subsidiary is bound or affected
(except for such conflicts, defaults, terminations, amendments, accelerations,
cancellations and violations as would not, individually or in the aggregate,
have a Material Adverse Effect), nor is the Company otherwise in violation of,
conflict with or in default under any of the foregoing. The business of the
Company is not being conducted in violation of any law, ordinance or regulation
of any governmental entity, except for possible violations that either singly or
in the aggregate do not and will not have a Material Adverse Effect. The Company
is not required under federal, state or local law, rule or regulation to obtain
any consent, authorization or order of, or make any filing or registration with,
any court or governmental agency in order for it to execute, deliver or perform
any of its obligations under this Agreement or the other Transaction Documents
(other than any SEC, FINRA or state securities filings that may be required to
be made by the Company subsequent to any Closing or any registration statement
that may be filed pursuant hereto); provided that, for purposes of the
representation made in this sentence, the Company is assuming and relying upon
the accuracy of the relevant representations and agreements of Investor herein.
Section IV.8 NO MATERIAL ADVERSE CHANGE. No event has occurred that would
have a Material Adverse Effect on the Company or any Subsidiary that has not
been disclosed in subsequent SEC filings.
11
Section IV.9 LITIGATION AND OTHER PROCEEDINGS. Except as disclosed in the
SEC Documents or as set forth on Schedule 4.9, there are no actions, suits,
investigations, inquiries or proceedings pending or, to the knowledge of the
Company, threatened against or affecting the Company, any Subsidiary or any of
their respective properties, nor has the Company received any written or oral
notice of any such action, suit, proceeding, inquiry or investigation, which
would have a Material Adverse Effect or would require disclosure under the
Securities Act or the Exchange Act. No judgment, order, writ, injunction or
decree or award has been issued by or, to the knowledge of the Company,
requested of any court, arbitrator or governmental agency which would have a
Material Adverse Effect. Except as disclosed on Schedule 4.9, there has not
been, and to the knowledge of the Company, there is not pending or contemplated,
any investigation by the SEC involving the Company, any Subsidiary or any
current or former director or officer of the Company or any Subsidiary.
Section IV.10 REGISTRATION RIGHTS. Except as set forth on Schedule 4.10,
no Person (other than the Investor) has any right to cause the Company to effect
the registration under the Securities Act of any securities of the Company or
any Subsidiary.
Section IV.11 INVESTOR'S STATUS. The Company acknowledges and agrees that
the Investor is acting solely in the capacity of arm's length purchaser with
respect to the Transaction Documents and the transactions contemplated hereby
and thereby. The Company further acknowledges that the Investor 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
hereby and thereby and any advice given by the Investor or any of its
representatives or agents in connection with the Transaction Documents and the
transactions contemplated hereby and thereby is merely incidental to the
Investor's purchase of the Securities. The Company further represents to the
Investor that the Company's decision to enter into the Transaction Documents has
been based solely on the independent evaluation by the Company and its
representatives and advisors.
Section IV.12 NO GENERAL SOLICITATION; NO INTEGRATED OFFERING. Neither the
Company, any Subsidiary, nor any of their respective affiliates, nor any Person
acting on their behalf, has engaged in any form of general solicitation or
general advertising (within the meaning of Regulation D under the Securities
Act) in connection with the offer or sale of the Securities. Neither the
Company, any Subsidiary, nor any of their respective affiliates, nor any Person
acting on 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 require registration of the offer and sale of any of the Securities
under the Securities Act, whether through integration with prior offerings or
otherwise, or cause this offering of the Securities to be integrated with prior
offerings by the Company in a manner that would require stockholder approval
pursuant to the rules of the Principal Market on which any of the securities of
the Company are listed or designated. The issuance and sale of the Securities
hereunder does not contravene the rules and regulations of the Principal Market.
Section IV.13 INTELLECTUAL PROPERTY RIGHTS. The Company and the
Subsidiaries own or possess adequate rights or licenses to use all material
trademarks, trade names, service marks, service mark registrations, service
names, patents, patent rights, copyrights, inventions, licenses, approvals,
governmental authorizations, trade secrets and rights necessary to conduct their
12
respective businesses as now conducted. None of the Company's, nor any
Subsidiary's material Intellectual Property has expired or terminated, or, by
the terms and conditions thereof, could expire or terminate within two years
from the date of this Agreement. The Company does not have any knowledge of any
infringement by the Company and/or any Subsidiary of any material Intellectual
Property of others, or of any such development of similar or identical trade
secrets or technical information by others, and there is no claim, action or
proceeding being made or brought against, or to the Company's knowledge, being
threatened against, the Company and/or any Subsidiary regarding the infringement
of any Intellectual Property, which could reasonably be expected to have a
Material Adverse Effect.
Section IV.14 ENVIRONMENTAL LAWS. To the Company's knowledge, the Company
and each Subsidiary (i) is in compliance with any and all applicable foreign,
federal, state and local laws and regulations relating to the protection of
human health and safety, the environment or hazardous or toxic substances or
wastes, pollutants or contaminants ("Environmental Laws"), (ii) has received all
permits, licenses or other approvals required of it under applicable
Environmental Laws to conduct its respective businesses and (iii) is in
compliance with all terms and conditions of any such permit, license or
approval, except where, in each of the three foregoing clauses, the failure to
so comply could not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect.
Section IV.15 TITLE. Except as disclosed in the SEC Documents, the Company
and each Subsidiary has good and marketable title in fee simple to all real
property owned by it and good and marketable title in all personal property
owned by it that is material to the business of the Company and each Subsidiary,
in each case free and clear of all Liens and, except for 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 or any
Subsidiary and Liens for the payment of federal, state or other taxes, the
payment of which is neither delinquent nor subject to penalties. Any real
property and facilities held under lease by the Company or any Subsidiary is
held under valid, subsisting and enforceable leases with which the Company is in
compliance with such exceptions as are not material and do not interfere with
the use made and proposed to be made of such property and buildings by the
Company or any Subsidiary.
Section IV.16 INSURANCE. The Company and each Subsidiary is insured by
insurers of recognized financial responsibility against such losses and risks
and in such amounts as management of the Company believes to be prudent and
customary in the businesses in which the Company and each Subsidiary is engaged.
Neither the Company, nor any Subsidiary has been refused any insurance coverage
sought or applied for, and the Company has no reason to believe that it or any
Subsidiary will not be able to renew its existing insurance coverage as and when
such coverage expires or to obtain similar coverage from similar insurers as may
be necessary to continue its business at a cost that would not materially and
adversely affect the condition, financial or otherwise, or the earnings,
business or operations of the Company, taken as a whole.
Section IV.17 REGULATORY PERMITS. The Company and each Subsidiary possesses
all material certificates, authorizations and permits issued by the appropriate
federal, state or foreign regulatory authorities necessary to conduct its
businesses, and neither the Company, nor any Subsidiary has received any notice
of proceedings relating to the revocation or modification of any such
certificate, authorization or permit.
13
Section IV.18 TAX STATUS. The Company and each Subsidiary has made or
filed all federal and state income and all other material tax returns, reports
and declarations required by any jurisdiction to which it is subject (unless and
only to the extent that the Company has set aside on its books provisions
reasonably adequate for the payment of all unpaid and unreported taxes) and has
paid all taxes and other governmental assessments and charges that are material
in amount, shown or determined to be due on such returns, reports and
declarations, except those being contested in good faith and has set aside on
its books provision reasonably adequate for the payment of all taxes for periods
subsequent to the periods to which such returns, reports or declarations apply.
There are no unpaid taxes in any material amount claimed to be due by the taxing
authority of any jurisdiction, and the officers of the Company know of no basis
for any such claim.
Section IV.19 TRANSACTIONS WITH AFFILIATES. Except as set forth in the SEC
Documents, 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, 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 or partner, in each case in excess of the
lesser of (i) $120,000 or (ii) one percent of the average of the Company's total
assets at year-end for the last two completed fiscal years, other than for (i)
payment of salary or consulting fees for services rendered, (ii) reimbursement
for expenses incurred on behalf of the Company or any Subsidiary and (iii) other
employee benefits, including stock option agreements under any stock option plan
of the Company.
Section IV.20 APPLICATION OF TAKEOVER PROTECTIONS. The Company and its
board of directors have taken or will take prior to the Execution Date all
necessary action, if any, in order to render inapplicable any control share
acquisition, business combination, poison pill (including any distribution under
a rights agreement) or other similar anti-takeover provision under the
certificate of incorporation or the laws of the state of its incorporation which
is or could become applicable to the Investor as a result of the transactions
contemplated by this Agreement, including, without limitation, the Company's
issuance of the Securities and the Investor's ownership of the Securities.
Section IV.21 FOREIGN CORRUPT PRACTICES. Neither the Company, any
Subsidiary, nor to the knowledge of the Company, 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 the Foreign Corrupt Practices Act of 1977, as
amended.
14
Section IV.22 SARBANES-OXLEY. The Company is in compliance with all
provisions of the Sarbanes-Oxley Act of 2002, as amended, which are applicable
to it.
Section IV.23 CERTAIN FEES. No brokerage or finder's fees or commissions
are or will be payable by the Company 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
Investor 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 IV.23 that may be due in connection with the transactions
contemplated by the Transaction Documents.
Section IV.24 INVESTMENT COMPANY. The Company is not an "investment
company" within the meaning of the Investment Company Act of 1940, as amended.
Section IV.25 ACCOUNTANTS. The Company's accountants are set forth in the
SEC Documents and, to the knowledge of the Company, such accountants are an
independent registered public accounting firm as required by the Securities Act.
Section IV.26 NO MARKET MANIPULATION. Neither the Company, nor any
Subsidiary has, and to its knowledge no Person acting on either of their 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.
Section IV.27 NO DISQUALIFICATION EVENTS. None of the Company, any
Subsidiary, any of their predecessors, any affiliated issuer, any director,
executive officer, other officer of the Company or any Subsidiary participating
in the offering contemplated hereby, any beneficial owner of 20% or more of the
Company's outstanding voting equity securities, calculated on the basis of
voting power, nor any promoter (as that term is defined in Rule 405 under the
Securities Act) connected with the Company in any capacity at the time of sale
(each, an "Issuer Covered Person") is subject to any of the "Bad Actor"
disqualifications described in Rule 506(d)(1)(i) to (viii) under the Securities
Act (a "Disqualification Event"), except for a Disqualification Event covered by
Rule 506(d)(2) or (d)(3) under the Securities Act. The Company has exercised
reasonable care to determine whether any Issuer Covered Person is subject to a
Disqualification Event.
Section IV.28 MONEY LAUNDERING. The Company and each Subsidiary is in
compliance with, and has not previously violated, the USA PATRIOT ACT of 2001
and all other applicable U.S. and non-U.S. anti-money laundering laws and
regulations, including, but not limited to, the laws, regulations and Executive
Orders and sanctions programs administered by the U.S. Office of Foreign Assets
Control, including, but not limited, to (i) Executive Order 13224 of November
23, 2001 entitled, "Blocking Property and Prohibiting Transactions With Persons
Who Commit, Threaten to Commit, or Support Terrorism" (66 Fed. Reg. 49079
(2001)); and (ii) any regulations contained in 31 CFR, Subtitle B, Chapter V.
15
Section IV.29 ILLEGAL OR UNAUTHORIZED PAYMENTS; POLITICAL CONTRIBUTIONS.
Neither the Company, nor any Subsidiary has, nor, to the best of the Company's
knowledge (after reasonable inquiry of its officers and directors), any of the
officers, directors, employees, agents or other representatives of the Company,
any Subsidiary or any other business entity or enterprise with which the Company
is or has been affiliated or associated, has, directly or indirectly, made or
authorized any payment, contribution or gift of money, property, or services,
whether or not in contravention of applicable law, (a) as a kickback or bribe to
any Person or (b) to any political organization, or the holder of or any
aspirant to any elective or appointive public office except for personal
political contributions not involving the direct or indirect use of funds of the
Company.
Section IV.30 SHELL COMPANY STATUS. The Company is not currently an issuer
identified in Rule 144(i)(1)(i) under the Securities Act, is subject to the
reporting requirements of Section 13 or 15(d) of the Exchange Act, has filed all
reports and other materials required to be filed by Section 13 or 15(d) of the
Exchange Act, as applicable during the preceding 12 months, and, as of a date at
least one year prior to the Execution Date, has filed current "Form 10
information" with the SEC (as defined in Rule 144(i)(3) of the Securities Act)
reflecting its status as an entity that is no longer an issuer described in Rule
144(i)(1)(i) of the Securities Act.
Section IV.31 ABSENCE OF SCHEDULES. In the event that, at each Closing,
the Company does not deliver any disclosure schedule contemplated by this
Agreement, the Company hereby acknowledges and agrees that (i) each such
undelivered disclosure schedule shall be deemed to read as follows: "Nothing to
Disclose", and (ii) the Investor has not otherwise waived delivery of such
disclosure schedule.
ARTICLE V
COVENANTS OF INVESTOR
Section V.1 COMPLIANCE WITH LAW; TRADING IN SECURITIES. The Investor's
trading activities with respect to shares of Common Stock will be in compliance
with all applicable state and federal securities laws and regulations and the
rules and regulations of FINRA and the Principal Market.
Section V.2 SHORT SALES AND CONFIDENTIALITY. Neither the Investor, nor any
affiliate of the Investor acting on its behalf or pursuant to any understanding
with it, will execute any Short Sales during the period from the Execution Date
to the end of the Commitment Period. For the purposes hereof, and in accordance
with Regulation SHO, the sale after delivery of a Put Notice of such number of
shares of Common Stock reasonably expected to be purchased under a Put Notice
shall not be deemed a Short Sale. The Investor shall, until such time as the
transactions contemplated by this Agreement are publicly disclosed by the
Company in accordance with the terms of this Agreement, maintain the
confidentiality of the existence and terms of this transaction and the
information included in the Transaction Documents. The Investor agrees not to
disclose any Confidential Information of the Company to any third party, except
for attorneys, accountants, advisors who have a need to know such Confidential
Information and are bound by confidentiality, and shall not use any Confidential
Information for any purpose other than in connection with, or in furtherance of,
the transactions contemplated hereby. The Investor acknowledges that the
Confidential Information of the Company shall remain the property of the Company
and agrees that it shall take all reasonable measures to protect the secrecy of
any Confidential Information disclosed by the Company.
16
ARTICLE VI
COVENANTS OF THE COMPANY
Section VI.1 RESERVATION OF COMMON STOCK. On the Execution Date, the
Company will have executed and delivered the Transfer Agent Instruction Letter
to, among other things, reserve shares of Common Stock constituting at least
300% of the Required Minimum from its authorized and unissued Common Stock to
provide for issuances of Common Stock under the Transaction Documents including
any Shares from the Commitment Fee (the "Share Reserve"). The Company further
agrees to add additional shares of Common Stock to the Share Reserve in an
amount of shares requested by the Investor if as of the date of any such request
the number of shares being held in the Share Reserve is less than three (3)
times the number of shares of Common Stock obtained by dividing the remaining
balance on the Maximum Commitment Amount as of the date of the request by the
Purchase Price. The Company shall further require the Transfer Agent to hold the
shares of Common Stock reserved pursuant to the Share Reserve exclusively for
the benefit of the Investor. The Company agrees that in the event that the
Transfer Agent resigns as the Company's transfer agent, the Company shall engage
a suitable replacement transfer agent that will agree to serve as transfer agent
for the Company and be bound by the terms and conditions of the Transfer Agent
Instruction Letter within five (5) business days. The Company shall not
terminate the Transfer Agent as the Company's transfer agent without a signed
consent from the Investor.
Section VI.2 LISTING OF COMMON STOCK. The Company shall promptly secure
the listing of all of the Put Shares and Commitment Shares to be issued to the
Investor hereunder on the Principal Market (subject to official notice of
issuance) and shall use commercially reasonable best efforts to maintain, so
long as any shares of Common Stock shall be so listed, the listing of all such
Put Shares and Commitment Shares from time to time issuable hereunder. The
Company shall use its commercially reasonable efforts to continue the listing
and trading of the Common Stock on the Principal Market (including, without
limitation, maintaining sufficient net tangible assets) and will comply in all
respects with the Company's reporting, filing and other obligations under the
bylaws or rules of FINRA and the Principal Market. The Company shall not take
any action that would reasonably be expected to result in the delisting or
suspension of the Common Stock on the Principal Market. The Company shall
promptly, and in no event later than the following Trading Day, provide to the
Investor copies of any notices it receives from any Person regarding the
continued eligibility of the Common Stock for listing on the Principal Market.
The Company shall pay all fees and expenses in connection with satisfying its
obligations under this Section VI.2). The Company shall take all action
necessary to ensure that its Common Stock can be transferred electronically as
DWAC Shares.
Section VI.3 OTHER EQUITY LINES AND CONVERTIBLE NOTES. So long as this
Agreement remains in effect, the Company covenants and agrees that it will not,
without the prior written consent of the Investor, enter into any other equity
line of credit agreement with any other party or have any Variable Security
Holders, excluding the Investor, without the Investor's prior written consent,
which consent may be granted or withheld in the Investor's sole and absolute
discretion.
17
Section VI.4 FILING OF CURRENT REPORT AND REGISTRATION STATEMENT. The
Company agrees that it shall file a Current Report on Form 8-K, including the
Transaction Documents as exhibits thereto, with the SEC within the time required
by the Exchange Act, relating to the transactions contemplated by, and
describing the material terms and conditions of, the Transaction Documents (the
"Current Report"). The Company shall permit the Investor to review and comment
upon the final pre-filing draft version of the Current Report at least two (2)
Trading Days prior to its filing with the SEC, and the Company shall give
reasonable consideration to all such comments. The Investor shall use its
reasonable best efforts to comment upon the final pre-filing draft version of
the Current Report within one (1) Trading Day from the date the Investor
receives it from the Company. Subject to the terms of the Registration Rights
Agreement, the Company shall also file with the SEC, on or before the date that
is 90 days after the Execution Date, a registration statement on Form S-1 (the
"Registration Statement") covering only the resale of the Put Shares and
Commitment Shares.
Section VI.5 ISSUANCE OF COMMITMENT SHARES. In consideration for the
Investor's execution and delivery of, and performance under this Agreement, the
Company shall cause the Transfer Agent to issue the Commitment Shares to the
Investor on the Execution Date as set forth in the Transfer Agent Instruction
Letter. For the avoidance of doubt, all of the Commitment Shares shall be fully
earned as of the Execution Date, and the issuance of the Commitment Shares is
not contingent upon any other event or condition, including, without limitation,
the effectiveness of the Registration Statement or the Company's submission of a
Put Notice to the Investor and irrespective of any termination of this
Agreement.
Section VI.6 DUE DILIGENCE; CONFIDENTIALITY; NON-PUBLIC INFORMATION. The
Investor shall have the right, from time to time as the Investor may reasonably
deem appropriate, to perform reasonable due diligence on the Company during
normal business hours. The Company, each Subsidiary and their respective
officers and employees shall provide information and reasonably cooperate with
the Investor in connection with any reasonable request by the Investor related
to the Investor's due diligence of the Company. The Company agrees not to
disclose any Confidential Information of the Investor to any third party, except
for attorneys, accountants, advisors who have a need to know such Confidential
Information and are bound by confidentiality, and shall not use any Confidential
Information for any purpose other than in connection with, or in furtherance of,
the transactions contemplated hereby. The Company acknowledges that the
Confidential Information of the Investor shall remain the property of the
Investor and agrees that it shall take all reasonable measures to protect the
secrecy of any Confidential Information disclosed by the Investor. The Company
confirms that neither it nor any other Person acting on its behalf shall provide
the Investor or its agents or counsel with any information that constitutes or
might constitute material, non-public information, unless a simultaneous public
announcement thereof is made by the Company in the manner contemplated by
Regulation FD. In the event of a breach of the foregoing covenant by the Company
or any Person acting on its behalf (as determined in the reasonable good faith
judgment of the Investor), in addition to any other remedy provided herein or in
the other Transaction Documents, the Investor shall have the right to make a
public disclosure, in the form of a press release, public advertisement or
otherwise, of such material, non-public information without the prior approval
by the Company; provided the Investor shall have first provided notice to the
Company that it believes it has received information that constitutes material,
non-public information, and the Company shall have had at least twenty-four (24)
hours to publicly disclose such material, non-public information prior to any
such disclosure by the Investor, and the Company shall have failed to publicly
18
disclose such material, non-public information within such time period. The
Investor shall not have any liability to the Company, any Subsidiary, or any of
their respective directors, officers, employees, stockholders, affiliates or
agents, for any such disclosure. The Company understands and confirms that the
Investor shall be relying on the foregoing covenants in effecting transactions
in securities of the Company.
Section VI.7 PURCHASE RECORDS. The Company shall maintain records showing
the Available Amount at any given time and the date, Investment Amount and Put
Shares for each Put, contained in the applicable Put Notice.
Section VI.8 TAXES. The Company shall pay any and all transfer, stamp or
similar taxes that may be payable with respect to the issuance and delivery of
any shares of Common Stock to the Investor made under this Agreement.
Section VI.9 USE OF PROCEEDS. The Company will use the net proceeds from
the offering of Put Shares hereunder in the manner described in the Registration
Statement or the SEC Documents.
Section VI.10 OTHER TRANSACTIONS. The Company shall not enter into,
announce or recommend to its stockholders any agreement, plan, arrangement or
transaction in or of which the terms thereof would restrict, materially delay,
conflict with or impair the ability or right of the Company to perform its
obligations under the Transaction Documents, including, without limitation, the
obligation of the Company to deliver the Put Shares and the Commitment Shares to
the Investor in accordance with the terms of the Transaction Documents.
Section VI.11 INTEGRATION. In any case subject to the terms of the
Registration Rights Agreement, from and after the Execution Date, neither the
Company, nor or any of its Subsidiaries or affiliates will, and the Company
shall use its reasonable best efforts to ensure that no Person acting on their
behalf will, directly or indirectly, make any offers or sales of any security or
solicit any offers to buy any security, under circumstances that would require
registration of the offer and sale of any of the Securities under the Securities
Act.
Section VI.12 TRANSACTION DOCUMENTS. On the Execution Date, the Company
shall deliver to the Investor executed copies of all of the Transaction
Documents.
ARTICLE VII
CONDITIONS TO DELIVERY OF PUT NOTICES AND CONDITIONS TO CLOSING
Section VII.1 CONDITIONS PRECEDENT TO THE RIGHT OF THE COMPANY TO ISSUE A
PUT NOTICE . The right of the Company to issue a Put Notice to the Investor is
subject to the satisfaction of each of the conditions set forth below:
(a) ACCURACY OF INVESTOR'S REPRESENTATIONS AND WARRANTIES. The
representations and warranties of the Investor shall be true and correct in all
material respects as of the Execution Date and as of the date of each Closing as
though made at each such time.
19
(b) PERFORMANCE BY INVESTOR. Investor shall have performed, satisfied and
complied in all respects with all covenants, agreements and conditions required
by this Agreement to be performed, satisfied or complied with by the Investor at
or prior to such Closing.
(c) PRINCIPAL MARKET REGULATION. The Company shall not issue any Put
Shares, and the Investor shall not have the right to receive any Put Shares, if
the issuance of such Put Shares would exceed the aggregate number of shares of
Common Stock which the Company may issue without breaching the Company's
obligations under the rules or regulations of the Principal Market (the
"Exchange Cap").
(d) REGISTRATION STATEMENT. The Company shall not have the right to issue
any Put Shares if the Registration Statement, and any amendment or supplement
thereto, shall fail to be and remain effective for the resale by the Investor of
the Put Shares and Commitment Shares.
Section VII.2 FURTHER CONDITIONS PRECEDENT TO THE RIGHT OF THE COMPANY TO
ISSUE A PUT NOTICE . The right of the Company to issue a Put Notice to the
Investor is further subject to the satisfaction of each of the conditions set
forth below:
(a) REGISTRATION STATEMENT. The Registration Statement, and any amendment
or supplement thereto, shall be and remain effective for the resale by the
Investor of the Put Shares and Commitment Shares and (i) neither the Company nor
the Investor shall have received notice that the SEC has issued or intends to
issue a stop order with respect to such Registration Statement or that the SEC
otherwise has suspended or withdrawn the effectiveness of such Registration
Statement, either temporarily or permanently, or intends or has threatened to do
so and (ii) no other suspension of the use of, or withdrawal of the
effectiveness of, such Registration Statement or related prospectus shall exist.
The Company shall have prepared and filed with the SEC a final and complete
prospectus (the preliminary form of which shall be included in the Registration
Statement) and shall have delivered to the Investor a true and complete copy
thereof. Such prospectus shall be current and available for the resale by the
Investor of all of the Securities covered thereby.
(b) ACCURACY OF THE COMPANY'S REPRESENTATIONS AND WARRANTIES. The
representations and warranties of the Company shall be true and correct in all
material respects as of the Execution Date and as of the date of each Closing
(except for representations and warranties under the first sentence of Section
IV.3, which are specifically made as of the Execution Date and shall be true and
correct in all respects as of the Execution Date).
(c) PERFORMANCE BY THE COMPANY. The Company shall have performed, satisfied
and complied in all material respects with all covenants, agreements and
conditions required by this Agreement to be performed, satisfied or complied
with by the Company.
(d) NO INJUNCTION. No statute, rule, regulation, executive order, decree,
ruling or injunction shall have been enacted, entered, promulgated or adopted by
any court or governmental authority of competent jurisdiction that prohibits or
directly and materially adversely affects any of the transactions contemplated
by the Transaction Documents, and no proceeding shall have been commenced that
20
may have the effect of prohibiting or materially adversely affecting any of the
transactions contemplated by the Transaction Documents.
(e) ADVERSE CHANGES. Since the date of filing of the Company's most recent
SEC Document, no event that had or is reasonably likely to have a Material
Adverse Effect has occurred.
(f) NO SUSPENSION OF TRADING IN OR DELISTING OF COMMON STOCK. The trading
of the Common Stock shall not have been suspended by the SEC, the Principal
Market or FINRA, or otherwise halted for any reason, and the Common Stock shall
have been approved for listing or quotation on and shall not have been delisted
from the Principal Market. In the event of a suspension, delisting, or halting
for any reason, of the trading of the Common Stock, as contemplated by this
Section 7.2(f), the Investor shall have the right to return to the Company any
remaining amount of Put Shares associated with such Put, and the Purchase Price
with respect to such Put shall be reduced accordingly.
(g) BENEFICIAL OWNERSHIP LIMITATION. The number of Put Shares to be
purchased by the Investor shall not exceed the number of such shares that, when
aggregated with all other shares of Common Stock then owned by the Investor
beneficially or deemed beneficially owned by the Investor, would result in the
Investor owning more than the Beneficial Ownership Limitation (as defined
below), as determined in accordance with Section 16 of the Exchange Act and the
regulations promulgated thereunder. For purposes of this Section 7.2(g), in the
event that the amount of Common Stock outstanding, as determined in accordance
with Section 16 of the Exchange Act and the regulations promulgated thereunder,
is greater on a Closing Date than on the date upon which the Put Notice
associated with such Closing Date is given, the amount of Common Stock
outstanding on such Closing Date shall govern for purposes of determining
whether the Investor, when aggregating all purchases of Common Stock made
pursuant to this Agreement, would own more than the Beneficial Ownership
Limitation following such Closing Date. The "Beneficial Ownership Limitation"
shall be 4.99% of the number of shares of the Common Stock outstanding
immediately after giving effect to the issuance of shares of Common Stock
issuable pursuant to a Put Notice.
(h) PRINCIPAL MARKET REGULATION. The issuance of the Put Shares shall not
exceed the Exchange Cap.
(i) NO KNOWLEDGE. The Company shall have no knowledge of any event more
likely than not to have the effect of causing the Registration Statement to be
suspended or otherwise ineffective (which event is more likely than not to occur
within the fifteen (15) Trading Days following the Trading Day on which such Put
Notice is deemed delivered). The Company shall have no knowledge of any untrue
statement (or alleged untrue statement) of a material fact or omission (or
alleged omission) of a material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which they
were made, not misleading, in the registration Statement, any effective
registration statement filed pursuant to the Registration Rights Agreement or
any post-effective amendment or prospectus which is a part of the foregoing,
unless the Company has filed an amendment with the SEC or taken such other.
21
(j) NO VIOLATION OF SHAREHOLDER APPROVAL REQUIREMENT. The issuance of the
Put Shares shall not violate the shareholder approval requirements of the
Principal Market.
(k) OFFICER'S CERTIFICATE. On the date of delivery of each Put Notice, the
Investor shall have received the Closing Certificate executed by an executive
officer of the Company and to the effect that all the conditions to such Closing
shall have been satisfied as of the date of each such certificate.
(l) DWAC ELIGIBLE. The Common Stock must be DWAC Eligible and not subject to a
"DTC chill."
(m) SEC DOCUMENTS. All reports, schedules, registrations, forms,
statements, information and other documents required to have been filed by the
Company with the SEC pursuant to the reporting requirements of the Exchange Act
(other than Forms 8-K) shall have been filed with the SEC within the applicable
time periods prescribed for such filings under the Exchange Act.
(n) TRANSFER AGENT INSTRUCTION LETTER. The Transfer Agent Instruction
Letter shall have been executed and delivered by the Company to the Transfer
Agent and acknowledged and agreed to in writing by the Transfer Agent, and the
Company shall have no knowledge of any fact or circumstance that would prevent
the Transfer Agent from complying with the terms of the Transfer Agent
Instruction Letter.
(o) RESERVE. The Company shall have caused the Transfer Agent to maintain
the Share Reserve and have added any additional sufficient shares to the Share
Reserve pursuant to Section VI.1.
(p) MINIMUM PRICING. The lowest traded price of the Common Stock in the
five (5) Trading Days immediately preceding the respective Put Date must exceed
$0.001 per share.
(q) NO VIOLATION. No statute, regulation, order, guidance, decree, writ,
ruling or injunction shall have been enacted, entered, promulgated, threatened
or endorsed by any federal, state, local or foreign court or governmental
authority of competent jurisdiction, including, without limitation, the SEC,
which prohibits the consummation of or which would materially modify or delay
any of the transactions contemplated by the Transaction Documents.
(r) LEGAL OPINION. The Company shall cause to be delivered to the Investor
a written opinion of counsel satisfactory to the Investor, in form and substance
satisfactory to the Investor and its counsel, relating to the availability and
effectiveness of the Registration Statement, as supplemented by any prospectus
supplement or amendment thereto, and regarding the Company's compliance with the
Revised Nevada Statutes and the federal securities laws of the United States in
the issuance, sale and registration of the Put Shares and Commitment Shares.
22
ARTICLE
VIII LEGENDS
Section VIII.1 NO RESTRICTIVE STOCK LEGEND. No restrictive stock legend
shall be placed on the share certificates representing the Put Shares.
Section VIII.2 INVESTOR'S COMPLIANCE. Nothing in this Article VIII shall
affect in any way the Investor's obligations hereunder to comply with all
applicable securities laws upon the sale of the Common Stock.
ARTICLE IX
NOTICES; INDEMNIFICATION
Section IX.1 NOTICES. All notices, demands, requests, consents, approvals,
and other communications required or permitted hereunder shall be in writing
and, unless otherwise specified herein, shall be (a) personally served, (b)
deposited in the mail, registered or certified, return receipt requested,
postage prepaid, (c) delivered by reputable air courier service with charges
prepaid, or (d) transmitted by hand delivery, telegram, or e-mail as a PDF,
addressed as set forth below or to such other address as such party shall have
specified most recently by written notice given in accordance herewith. Any
notice or other communication required or permitted to be given hereunder shall
be deemed effective (i) upon hand delivery or delivery by e-mail at the address
designated below (if delivered on a business day during normal business hours
where such notice is to be received), or the first business day following such
delivery (if delivered other than on a business day during normal business hours
where such notice is to be received) or (ii) on the second business day
following the date of mailing by express courier service or on the fifth
business day after deposited in the mail, in each case, fully prepaid, addressed
to such address, or upon actual receipt of such mailing, whichever shall first
occur.
The addresses for such communications shall be:
If to the Company:
Pierre Corp.
750 N. San Vicente, Suite 800
West Hollywood, CA 90069
Email: joe@pierrecorp.com
Attention: Joseph Jacob Isaacs, President and Chief Executive Officer
If to the Investor:
Tiger Trout Capital, LLC
1357 Ashford Ave., Suite 2-267
San Juan, PR 00907
Email: alan@tigertroutcapital.com
Attention: Alan Masley, President
23
Either party hereto may from time to time change its address or e-mail for
notices under this Section IX.1 by giving at least ten (10) days' prior written
notice of such changed address to the other party hereto.
Section IX.2 INDEMNIFICATION. Each party hereto (an "Indemnifying Party")
agrees to indemnify and hold harmless the other party along with its officers,
directors, employees, and authorized agents and representatives, and each Person
or entity, if any, who controls such party within the meaning of Section 15 of
the Securities Act or Section 20 of the Exchange Act or the rules and
regulations thereunder (an "Indemnified Party") from and against any and all
Damages, joint or several, and any and all actions in respect thereof to which
the Indemnified Party becomes subject to, resulting from, arising out of or
relating to (i) any misrepresentation, breach of warranty or nonfulfillment of
or failure to perform any covenant or agreement on the part of the Indemnifying
Party contained in this Agreement, (ii) any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement, any
registration statement pursuant to the Registration Rights Agreement or any
post-effective amendment thereof or supplement thereto, or the omission or
alleged omission therefrom of a material fact required to be stated therein or
necessary to make the statements therein not misleading, (iii) any untrue
statement or alleged untrue statement of a material fact contained in any
preliminary prospectus or contained in the final prospectus (as amended or
supplemented, if the Company files any amendment thereof or supplement thereto
with the SEC) or the omission or alleged omission to state therein any material
fact necessary to make the statements made therein, in the light of the
circumstances under which the statements therein were made, not misleading, or
(iv) any violation or alleged violation by the Company of the Securities Act,
the Exchange Act, any state securities law or any rule or regulation under the
Securities Act, the Exchange Act or any state securities law, as such Damages
are incurred, except to the extent such Damages result primarily from the
Indemnified Party's failure to perform any covenant or agreement contained in
this Agreement or the Indemnified Party's negligence, recklessness, fraud,
willful misconduct or bad faith in performing its obligations under this
Agreement; provided, however, that the foregoing indemnity agreement shall not
apply to any Damages of an Indemnified Party to the extent, but only to the
extent, arising out of or based upon any untrue statement or alleged untrue
statement or omission or alleged omission made by an Indemnifying Party in
reliance upon and in conformity with written information furnished to the
Indemnifying Party by the Indemnified Party expressly for use in the
Registration Statement, any post-effective amendment thereof or supplement
thereto, or any preliminary prospectus or final prospectus (as amended or
supplemented).
Section IX.3 METHOD OF ASSERTING INDEMNIFICATION CLAIMS. All claims for
indemnification by any Indemnified Party under Section IX.2 shall be asserted
and resolved as follows:
IX.1 In the event any claim or demand in respect of which an Indemnified
Party might seek indemnity under Section IX.2 is asserted against or sought to
be collected from such Indemnified Party by a Person other than a party hereto
or an affiliate thereof (a "Third Party Claim"), the Indemnified Party shall
deliver a written notification, enclosing a copy of all papers served, if any,
and specifying the nature of and basis for such Third Party Claim and for the
Indemnified Party's claim for indemnification that is being asserted under any
provision of Section IX.2 against an Indemnifying Party, together with the
24
amount or, if not then reasonably ascertainable, the estimated amount,
determined in good faith, of such Third Party Claim (a "Claim Notice") with
reasonable promptness to the Indemnifying Party. If the Indemnified Party fails
to provide the Claim Notice with reasonable promptness after the Indemnified
Party receives notice of such Third Party Claim, the Indemnifying Party shall
not be obligated to indemnify the Indemnified Party with respect to such Third
Party Claim to the extent that the Indemnifying Party's ability to defend has
been prejudiced by such failure of the Indemnified Party. The Indemnifying Party
shall notify the Indemnified Party as soon as practicable within the period
ending thirty (30) calendar days following receipt by the Indemnifying Party of
either a Claim Notice or an Indemnity Notice (as defined below) (the "Dispute
Period") whether the Indemnifying Party disputes its liability or the amount of
its liability to the Indemnified Party under Section IX.2 and whether the
Indemnifying Party desires, at its sole cost and expense, to defend the
Indemnified Party against such Third Party Claim.
(i) If the Indemnifying Party notifies the Indemnified Party within the
Dispute Period that the Indemnifying Party desires to defend the Indemnified
Party with respect to the Third Party Claim pursuant to this Section IX.3(a),
then the Indemnifying Party shall have the right to defend, with counsel
reasonably satisfactory to the Indemnified Party, at the sole cost and expense
of the Indemnifying Party, such Third Party Claim by all appropriate
proceedings, which proceedings shall be vigorously and diligently prosecuted by
the Indemnifying Party to a final conclusion or will be settled at the
discretion of the Indemnifying Party (but only with the consent of the
Indemnified Party in the case of any settlement that provides for any relief
other than the payment of monetary damages or that provides for the payment of
monetary damages as to which the Indemnified Party shall not be indemnified in
full pursuant to Section IX.2). The Indemnifying Party shall have full control
of such defense and proceedings, including any compromise or settlement thereof;
provided, however, that the Indemnified Party may, at the sole cost and expense
of the Indemnified Party, at any time prior to the Indemnifying Party's delivery
of the notice referred to in the first sentence of this clause ((i)), file any
motion, answer or other pleadings or take any other action that the Indemnified
Party reasonably believes to be necessary or appropriate to protect its
interests; and provided, further, that if requested by the Indemnifying Party,
the Indemnified Party will, at the sole cost and expense of the Indemnifying
Party, provide reasonable cooperation to the Indemnifying Party in contesting
any Third Party Claim that the Indemnifying Party elects to contest. The
Indemnified Party may participate in, but not control, any defense or settlement
of any Third Party Claim controlled by the Indemnifying Party pursuant to this
clause ((i)), and except as provided in the preceding sentence, the Indemnified
Party shall bear its own costs and expenses with respect to such participation.
Notwithstanding the foregoing, the Indemnified Party may take over the control
of the defense or settlement of a Third Party Claim at any time if it
irrevocably waives its right to indemnity under Section IX.2 with respect to
such Third Party Claim.
(ii) If the Indemnifying Party fails to notify the Indemnified Party within
the Dispute Period that the Indemnifying Party desires to defend the Third Party
Claim pursuant to this Section IX.3(a), or if the Indemnifying Party gives such
notice but fails to prosecute vigorously and diligently or settle the Third
Party Claim, or if the Indemnifying Party fails to give any notice whatsoever
within the Dispute Period, then the Indemnified Party shall have the right to
defend, at the sole cost and expense of the Indemnifying Party, the Third Party
Claim by all appropriate proceedings, which proceedings shall be prosecuted by
the Indemnified Party in a reasonable manner and in good faith or will be
settled at the discretion of the Indemnified Party(with the consent of the
25
Indemnifying Party, which consent will not be unreasonably withheld). The
Indemnified Party will have full control of such defense and proceedings,
including any compromise or settlement thereof; provided, however, that if
requested by the Indemnified Party, the Indemnifying Party will, at the sole
cost and expense of the Indemnifying Party, provide reasonable cooperation to
the Indemnified Party and its counsel in contesting any Third Party Claim which
the Indemnified Party is contesting. Notwithstanding the foregoing provisions of
this clause ((ii)), if the Indemnifying Party has notified the Indemnified Party
within the Dispute Period that the Indemnifying Party disputes its liability or
the amount of its liability hereunder to the Indemnified Party with respect to
such Third Party Claim and if such dispute is resolved in favor of the
Indemnifying Party in the manner provided in clause ((iii)) below, the
Indemnifying Party will not be required to bear the costs and expenses of the
Indemnified Party's defense pursuant to this clause ((ii)) or of the
Indemnifying Party's participation therein at the Indemnified Party's request,
and the Indemnified Party shall reimburse the Indemnifying Party in full for all
reasonable costs and expenses incurred by the Indemnifying Party in connection
with such litigation. The Indemnifying Party may participate in, but not
control, any defense or settlement controlled by the Indemnified Party pursuant
to this clause ((ii)), and the Indemnifying Party shall bear its own costs and
expenses with respect to such participation.
(iii) If the Indemnifying Party notifies the Indemnified Party that it does
not dispute its liability or the amount of its liability to the Indemnified
Party with respect to the Third Party Claim under Section IX.2 or fails to
notify the Indemnified Party within the Dispute Period whether the Indemnifying
Party disputes its liability or the amount of its liability to the Indemnified
Party with respect to such Third Party Claim, the amount of Damages specified in
the Claim Notice shall be conclusively deemed a liability of the Indemnifying
Party under Section IX.2 and the Indemnifying Party shall pay the amount of such
Damages to the Indemnified Party on demand. If the Indemnifying Party has timely
disputed its liability or the amount of its liability with respect to such Third
Party Claim, the Indemnifying Party and the Indemnified Party shall proceed in
good faith to negotiate a resolution of such dispute; provided, however, that if
the dispute is not resolved within thirty (30) days after the Claim Notice, the
Indemnifying Party shall be entitled to institute such legal action as it deems
appropriate.
(b) In the event any Indemnified Party should have a claim under Section
IX.2 against the Indemnifying Party that does not involve a Third Party Claim,
the Indemnified Party shall deliver a written notification of a claim for
indemnity under Section IX.2 specifying the nature of and basis for such claim,
together with the amount or, if not then reasonably ascertainable, the estimated
amount, determined in good faith, of such claim (an "Indemnity Notice") with
reasonable promptness to the Indemnifying Party. The failure by any Indemnified
Party to give the Indemnity Notice shall not impair such party's rights
hereunder except to the extent that the Indemnifying Party demonstrates that it
has been irreparably prejudiced thereby. If the Indemnifying Party notifies the
Indemnified Party that it does not dispute the claim or the amount of the claim
described in such Indemnity Notice or fails to notify the Indemnified Party
within the Dispute Period whether the Indemnifying Party disputes the claim or
the amount of the claim described in such Indemnity Notice, the amount of
Damages specified in the Indemnity Notice will be conclusively deemed a
liability of the Indemnifying Party under Section IX.2 and the Indemnifying
Party shall pay the amount of such Damages to the Indemnified Party on demand.
If the Indemnifying Party has timely disputed its liability or the amount of its
liability with respect to such claim, the Indemnifying Party and the Indemnified
Party shall proceed in good faith to negotiate a resolution of such dispute;
provided, however, that if the dispute is not resolved within thirty (30) days
after the Claim Notice, the Indemnifying Party shall be entitled to institute
such legal action as it deems appropriate.
26
(c) The Indemnifying Party agrees to pay the Indemnified Party, promptly as
such expenses are incurred and are due and payable, for any reasonable legal
fees or other reasonable expenses incurred by them in connection with
investigating or defending any such claim.
(d) The indemnity provisions contained herein shall be in addition to (i)
any cause of action or similar rights of the Indemnified Party against the
Indemnifying Party or others, and (ii) any liabilities the Indemnifying Party
may be subject to.
ARTICLE X
MISCELLANEOUS
Section X.1 GOVERNING LAW. This Agreement shall be governed by and
interpreted in accordance with the laws of the State of Nevada without regard to
the principles of conflicts of law (whether of the State of Nevada or any other
jurisdiction).
Section X.2 ARBITRATION. Any disputes, claims, or controversies arising out
of or relating to the Transaction Documents, or the transactions, contemplated
thereby, or the breach, termination, enforcement, interpretation or validity
thereof, including the determination of the scope or applicability of this
Agreement to arbitrate, shall be referred to and resolved solely and exclusively
by binding arbitration to be conducted before the Judicial Arbitration and
Mediation Service ("JAMS" ), or its successor pursuant the expedited procedures
set forth in the JAMS Comprehensive Arbitration Rules and Procedures (the
"Rules" ), including Rules 16.1 and 16.2 of those Rules. The arbitration shall
be held in New York, New York, before a tribunal consisting of three (3)
arbitrators each of whom will be selected in accordance with the "strike and
rank" methodology set forth in Rule 15. Either party to this Agreement may,
without waiving any remedy under this Agreement, seek from any federal or state
court sitting in the State of Nevada any interim or provisional relief that is
necessary to protect the rights or property of that party, pending the
establishment of the arbitral tribunal. The costs and expenses of such
arbitration shall be paid by and be the sole responsibility of the Company,
including but not limited to the Investor's attorneys' fees and each
arbitrator's fees. The arbitrators' decision must set forth a reasoned basis for
any award of damages or finding of liability. The arbitrators' decision and
award will be made and delivered as soon as reasonably possibly and in any case
within sixty (60) days' following the conclusion of the arbitration hearing and
shall be final and binding on the parties and may be entered by any court having
jurisdiction thereof.
Section X.3 JURY TRIAL WAIVER. THE COMPANY AND THE INVESTOR HEREBY WAIVE A
TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY EITHER OF THE
PARTIES HERETO AGAINST THE OTHER IN RESPECT OF ANY MATTER ARISING OUT OF OR IN
CONNECTION WITH THE TRANSACTION DOCUMENTS.
Section X.4 ASSIGNMENT. This Agreement shall be binding upon and inure to
the benefit of the Company and the Investor and their respective successors.
Neither this Agreement nor any rights of the Investor or the Company hereunder
may be assigned by either party to any other Person.
27
Section X.5 NO THIRD PARTY BENEFICIARIES. This Agreement is intended for
the benefit of the Company and the Investor and their respective successors, and
is not for the benefit of, nor may any provision hereof be enforced by, any
other Person, except as set forth in Article IX.
Section X.6 TERMINATION. The Company may terminate this Agreement at any
time by written notice to the Investor, except while the Investor holds any of
the Put Shares, or if sooner, 30 days after delivery of the last Put Notice
resulting in Put Shares being issued to and held by the Investor. In addition,
this Agreement shall automatically terminate on the earlier of (i) the end of
the Commitment Period; (ii) the date that the Company sells and the Investor
purchases the Maximum Commitment Amount; or (iii) the date in which the
Registration Statement is no longer effective, or (iv) the date that, pursuant
to or within the meaning of any Bankruptcy Law, the Company commences a
voluntary case or any Person commences a proceeding against the Company, a
Custodian is appointed for the Company or for all or substantially all of its
property or the Company makes a general assignment for the benefit of its
creditors; provided, however, that the provisions of Articles III, IV, V, VI, IX
and the agreements and covenants of the Company and the Investor set forth in
Article X shall survive the termination of this Agreement for the maximum length
of time allowed under applicable law.
Section X.7 ENTIRE AGREEMENT. The Transaction Documents, together with the
exhibits and schedules thereto, contain the entire understanding of the Company
and the Investor with respect to the matters covered herein and therein 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.
Section X.8 FEES AND EXPENSES. Except as expressly set forth in the
Transaction Documents or any other writing 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 Investor. In addition, the Investor
shall withhold $10,000.00 from the Investment Amount with respect to the first
Put under this Agreement for reimbursement of Investor's legal fees relating to
the preparation of this Agreement.
Section X.9 COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which may be executed by less than all of the parties and
shall be deemed to be an original instrument which shall be enforceable against
the parties actually executing such counterparts and all of which together shall
constitute one and the same instrument. This Agreement may be delivered to the
other parties hereto by e-mail of a copy of this Agreement bearing the signature
of the parties so delivering this Agreement.
Section X.10 SEVERABILITY. In the event that any provision of this
Agreement becomes or is declared by a court of competent jurisdiction to be
illegal, unenforceable or void, this Agreement shall continue in full force and
effect without said provision; provided that such severability shall be
ineffective if it materially changes the economic benefit of this Agreement to
any party.
28
Section X.11 FURTHER ASSURANCES. Each party shall do and perform, or cause
to be done and performed, all such further acts and things, and shall execute
and deliver all such other agreements, certificates, instruments and documents,
as the other party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.
Section X.12 NO STRICT CONSTRUCTION. The language used in this Agreement
will be deemed to be the language chosen by the parties to express their mutual
intent, and no rules of strict construction will be applied against any party.
Section X.13 EQUITABLE RELIEF. The Company acknowledges that a breach by it
of its obligations hereunder will cause irreparable harm to the Investor by
vitiating the intent and purpose of the transaction contemplated hereby.
Accordingly, the Company acknowledges that the remedy at law for a breach of its
obligations under this Agreement will be inadequate and agrees, in the event of
a breach or threatened breach by the Company of the provisions of this
Agreement, that the Investor shall be entitled, in addition to all other
available remedies at law or in equity, and in addition to the penalties
assessable herein, to an injunction or injunctions restraining, preventing or
curing any breach of this Agreement and to enforce specifically the terms and
provisions hereof, without the necessity of showing economic loss and without
any bond or other security being required.
Section X.14 TITLE AND SUBTITLES. The titles and subtitles used in this
Agreement are used for the convenience of reference and are not to be considered
in construing or interpreting this Agreement.
Section X.15 AMENDMENTS; WAIVERS. No provision of this Agreement may be
amended or waived by the parties from and after the date that is one (1) Trading
Day immediately preceding the initial filing of the Registration Statement with
the SEC. Subject to the immediately preceding sentence, (i) no provision of this
Agreement may be amended other than by a written instrument signed by both
parties hereto and (ii) no provision of this Agreement may be waived other than
in a written instrument signed by the party against whom enforcement of such
waiver is sought. No failure or delay in the exercise of any power, right or
privilege hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise of any such power, right or privilege preclude other or further
exercise thereof or of any other right, power or privilege.
Section X.16 PUBLICITY. The Company and the Investor shall consult with
each other in issuing any press releases or otherwise making public statements
with respect to the transactions contemplated hereby and no party shall issue
any such press release or otherwise make any such public statement, other than
as required by law, without the prior written consent of the other parties,
which consent shall not be unreasonably withheld or delayed, except that no
prior consent shall be required if such disclosure is required by law, in which
such case the disclosing party shall provide the other party with prior notice
of such public statement. Notwithstanding the foregoing, the Company shall not
publicly disclose the name of the Investor without the prior written consent of
29
the Investor, except to the extent required by law. The Investor acknowledges
that this Agreement and all or part of the Transaction Documents may be deemed
to be "material contracts," as that term is defined by Item 601(b)(10) of
Regulation S-K, and that the Company may therefore be required to file such
documents as exhibits to reports or registration statements filed under the
Securities Act or the Exchange Act. The Investor further agrees that the status
of such documents and materials as material contracts shall be determined solely
by the Company, in consultation with its counsel.
** Signature Page Follows **
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed by their respective officers thereunto duly authorized as of the
Execution Date.
PIERRE CORP.
By: /S/ Joseph Jacob Isaacs
-------------------------
Name: Joseph Jacob Isaacs
Title: Chief Executive Officer
TIGER TROUT CAPITAL, LLC
By: /s/ Alan Masley
--------------------------
Name: Alan Masley
Title: President
** Signature Page to equity purchase agreement **
EXHIBIT A
FORM OF PUT NOTICE
TO: Tiger Trout Capital, LLC
DATE: __________________
We refer to the Equity Purchase Agreement, dated November 14, 2019 (the
"Agreement"), entered into by and between Pierre Corp. 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 Put Shares; and
2) Certify that, as of the date hereof, the conditions set forth in
Section 7.2 of the Agreement are satisfied.
PIERRE CORP.
By:
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Name: Joseph Jacob Isaacs
Title: Chief Executive Officer